EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made and
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entered into as of September 22, 1999 among Boston Life Sciences, Inc., a
Delaware corporation (the "Company"), and the parties who have executed this
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Agreement and whose names appear on Schedule I hereto (each party listed on
Schedule I hereto is sometimes individually referred to herein as a "Purchaser"
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and all such parties are sometimes collectively referred to herein as the
"Purchasers").
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This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
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Agreement").
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The Company and the Purchasers hereby agree as follows:
1. Definitions
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Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" has meaning set forth in Section 3(o) hereof.
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"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
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respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," controlling" and "controlled" have meanings
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correlative to the foregoing.
"AMEX" has the meaning set forth in Section 2(d) hereof.
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"Business Day" means any day except Saturday, Sunday and any day which
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shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Closing Date" shall mean the Closing Date as defined in the Purchase
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Agreement.
"Commission" means the Securities and Exchange Commission.
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"Common Stock" means the Company's Common Stock, par value $.01 per
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share.
"Effectiveness Date" means the earlier of (i) the fifth Business Day
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after the Company has received notice (written or oral) from the Commission that
the Commission Staff will not be reviewing the Registration Statement or has no
further comments on the Registration Statement or (ii) the 100th day following
the Filing Date; provided, however, that the Effectiveness Date shall be
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extended to up to the 130th day following the Filing Date if the Initial
Registration Statement is not declared effective by the Commission prior to the
130th day following the Filing Date due to delays which are solely attributable
to the Commission, so long as the Company responds to any comments received from
the Commission in a commercially reasonable manner and as promptly as
practicable, but in no event later than ten (10) Business Days.
"Effectiveness Period" has the meaning set forth in Section 2(a)
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hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Event" has the meaning set forth in Section 2(d) hereof.
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"Filing Date" means as soon as practicable but in no event later than
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the 30th day following the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may be,
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from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c) hereof.
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"Indemnifying Party" has the meaning set forth in Section 5(c) hereof.
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"Initial Registration Statement" has the meaning set forth in Section
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2(a) hereof.
"Losses" has the meaning set forth in Section 5(a) hereof.
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"Majority Holders" means the Holders of at least sixty (60%) percent
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of the Registrable Securities.
"Nasdaq" has the meaning set forth in Section 2(d).
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"NYSE" has the meaning set forth in Section 2(d).
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"Person" means an individual or a corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
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(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
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Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock issued or
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issuable upon (i) conversion of or with respect to the Securities, (ii) payment
of interest or any other payments in respect of the Securities, (iii) exercise
of the Warrants, and (iv) any shares of the Company's capital stock issued with
respect to (i), (ii) or (iii) as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise. Registrable
Securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) such securities shall
have been publicly distributed pursuant to Rule 144, or (iii) all such
securities held by any Holder may immediately be sold by the Holder thereof
under the Securities Act without restriction as to volume or otherwise. For
purposes of this Agreement, the number of shares of Registrable Securities
outstanding at any time shall be determined by adding (i) the number of shares
of
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Common Stock outstanding which are Registrable Securities and (ii) the maximum
number of shares of Common Stock issuable pursuant to then convertible
securities which upon issuance would be Registrable Securities.
"Registration Delay Payment" has the meaning set forth in Section 2(d)
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hereof.
"Registration Statement" means the Initial Registration Statement and
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any additional registration statements contemplated by Sections 2(a), 2(b) and
7(d), including (in each case) the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
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the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
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the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
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the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities" means the Company's 8% convertible debentures issuable
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pursuant to the Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
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"Special Counsel" means one special counsel to the Holders, for which
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the Holders will be reimbursed by the Company pursuant to Section 4.
"Trading Day" means a day on which the Nasdaq (or in the event the
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Common Stock is not traded on Nasdaq, such other securities market on which the
Common Stock is listed) is open for trading.
"Underlying Shares" means the shares of Common Stock issuable upon
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conversion of the Securities and exercise of the Warrants.
"Underwritten Registration or Underwritten Offering" means a
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registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement, whether on a firm commitment or best efforts basis.
"Warrants" means the warrants issuable pursuant to the Purchase
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Agreement.
2. Registration Requirements
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(a) Filing and Effectiveness Obligations. On or prior to the Filing
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Date, the Company shall prepare and file with the Commission a Registration
Statement (the "Initial Registration Statement") which shall cover all
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Registrable Securities for an offering to be made on a continuous basis pursuant
to a "Shelf" registration statement under Rule 415. The Initial Registration
Statement shall be
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on Form S-3 or any successor form (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith,
subject to the reasonable consent of the Majority Holders). The Company shall
(i) not permit any securities other than the Registrable Securities and
securities set forth in Schedule 2.1(r) of the Purchase Agreement to be included
in the Initial Registration Statement and (ii) use its best efforts to cause the
Initial Registration Statement to be declared effective under the Securities Act
as promptly as possible after the filing thereof, but in any event on or prior
to the Effectiveness Date, and to keep such Initial Registration Statement
continuously effective, subject to Section 3(r) and except that any delays which
are solely attributable to changes required by the Purchasers in the
Registration Statement with respect to information relating to the Purchasers,
or to the failure of the Purchasers to conduct their review of the Registration
Statement pursuant to Section 3(a) shall not be deemed to be a violation of this
obligation, under the Securities Act until the date which is five (5) years
after the date that such Initial Registration Statement is declared effective by
the Commission or such earlier date when all Registrable Securities covered by
such Initial Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144 as determined by counsel to the Company
pursuant to a written opinion letter, addressed to the Holders and the Company's
transfer agent to such effect (the "Effectiveness Period"). The Registration
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Statement shall state, to the extent permitted by Rule 416, that it also covers
such indeterminate number of shares of Common Stock as may be required to effect
conversion of the Securities (and payment of interest thereon) or exercise of
the Warrants, in each case to prevent dilution resulting from stock splits,
stock dividends or similar events, or by reason of changes in the Conversion
Price in accordance with the terms of the Securities or by reason of changes in
the Exercise Price (as defined in the Warrants) in accordance with the terms of
the Warrants. If the Commission does not permit the Company to register such an
indeterminate number of shares of Common Stock, or if the Company chooses not to
register an indeterminate number of shares of Common Stock, the number of shares
of Common Stock initially included in the Initial Registration Statement shall
be no less than 1.2 times the sum of the number of Securities and Warrants that
are then issuable upon conversion of the Securities (based on the Conversion
Price (as defined in the Securities) as would then be in effect at such time)
and the exercise of the Warrants, without regard to any limitation on the
Investor's ability to convert the Securities or exercise the Warrants. In
addition, upon the occurrence of a Reset Event (as defined in the Securities)
pursuant to Section 4.2(b) of the Securities or Section 3(b) of the Warrant, the
Company shall be required to file, within ten (10) business days of such Reset
Event, a registration statement covering the product of 1.2 and the number
Underlying Shares, less the number of Underlying Shares for which a registration
statement is then effective. The Company shall use its best efforts to cause
such registration statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event on or prior to
that date which is thirty (30) days after the filing date thereof. All
calculations of the above amount shall be made without regard to any limitation
on conversions of Securities or exercises of Warrants.
(b) Underwritten Offering. In addition to the Initial Registration
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Statement, at any time when there is not an effective Registration Statement
covering the Registrable Securities, if the Holders of a majority of the
Registrable Securities covered by a Registration Statement so elect on or after
March 22, 2000 an offering of Registrable Securities pursuant to such
Registration Statement may be effected on no more than one (1) occasion in the
form of an Underwritten Offering. In such event, and if the managing
underwriters advise the Company and such Holders in writing that in their
opinion the amount of Registrable Securities proposed to be sold in such
Underwritten Offering exceeds the amount of Registrable Securities which can be
sold in such Underwritten Offering, there shall be included in such Underwritten
Offering the amount of such Registrable Securities which in the opinion of such
managing underwriters can be sold, and such amount shall be allocated pro rata
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among the Holders proposing to sell Registrable Securities in such Underwritten
Offering.
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(c) Underwriter. If any of the Registrable Securities are to be sold
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in an Underwritten Offering, the investment banker in interest that will
administer the offering will be selected by the Holders of a majority of the
Registrable Securities included in such offering. No Holder may participate in
any Underwritten Offering hereunder unless such Holder (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
arrangements.
(d) Penalties. If (i) the Initial Registration Statement covering
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all the applicable Registrable Securities and required to be filed by the
Company pursuant to this Agreement is not (A) filed with the Commission on or
before the Filing Date or (B) declared effective by the Commission on or before
the applicable Effectiveness Date, (ii) on any day after the Registration
Statement has been declared effective by the Commission (A) sales of all the
Registrable Securities required to be included on a Registration Statement
cannot be made pursuant to the 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, or to register sufficient shares of Common Stock but
excluding any periods during which the Registrable Securities cannot be sold due
to any update or amendment of the Registration Statement pursuant to Section
3(b) hereof , provided that each such period shall not exceed twenty (20)
Business Days, or in the event of a black-out period declared by the Company
pursuant to Section 3(r) hereof) or (B) the Common Stock is not listed or
included for quotation on the National Market System of the Nasdaq Stock Market
or the Nasdaq Smallcap Market ("Nasdaq"), the New York Stock Exchange ("NYSE")
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or the American Stock Exchange (the "AMEX") after being so listed or included
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for quotation or (iii) the Company shall otherwise fail to file a Registration
Statement required by Section 2(a) hereof, (each such event specified in (i),
(ii) and (iii) above, an "Event"), then, as partial relief for the damages to
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any Holder by reason of any such delay in or reduction of its ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each Holder an
amount in cash (a "Registration Delay Payment") equal to the then outstanding
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principal amount of the Securities (and, in the case of Holders, the principal
amount of Securities from which such Registrable Securities were converted)
multiplied by two hundredths (.020) times the sum of: (i) the number of months
(prorated for partial months) after the end of the Effectiveness Date and prior
to the date the Registration Statement is declared effective by the Commission,
provided, however, that there shall be excluded from such period any delays
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which are solely attributable to changes required by the Purchasers in the
Registration Statement with respect to information relating to the Purchasers,
or to the failure of the Purchasers to conduct their review of the Registration
Statement pursuant to Section 3(a); (ii) the number of months (prorated for
partial months) that sales cannot be made pursuant to the Registration Statement
after the Registration Statement has been declared effective (including, without
limitation, when sales cannot be made by reason of the Company's failure to
properly supplement or amend the Prospectus in accordance with the terms of this
Agreement, or otherwise, but excluding when such sales cannot be made solely by
reason of any act or omission solely attributable to the Purchasers and
excluding any periods during which the Registrable Securities cannot be sold due
to any update or amendment of the Registration Statement pursuant to Section
3(b) hereof, provided that each such period shall not exceed twenty (20)
Business Days, or in the event of a black-out period declared by the Company
pursuant to Section 3(r) hereof); or (iii) the number of months (prorated for
partial months) that the Common Stock is not listed or included for quotation on
the Nasdaq, NYSE or AMEX or that trading thereon is halted after the
Registration Statement has been declared effective. The Company shall pay any
Required Registration Delay Payments to each Holder in cash on the last Business
Day of each month during which an Event has occurred and is continuing. In the
event the Company fails to make a Registration Delay Payment in a timely manner,
such Registration Delay Payment shall bear interest at the rate of 2.0% per
month (prorated for partial months) until paid in full. Notwithstanding the
foregoing, if a Purchaser elects to
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exercise the penalty set forth in this Section 2(d), such Purchaser shall not be
entitled to declare an Event of Default pursuant to Section 3.1(i) of the
Securities.
(e) Form S-3 Eligibility. The Company represents and warrants that
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it meets the registrant eligibility and transaction requirements for the use of
Form S-3 (for primary and secondary offerings) for the registration of the sale
of Registrable Securities by the Purchasers and any other Holders and the
Company shall file all reports required to be filed by the Company with the
Commission in a timely manner so as to maintain such eligibility for the use of
Form S-3.
3. Registration Procedures
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In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Preparation of Registration Statement. Prepare and file with the
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Commission on or prior to the Filing Date a Registration Statement on Form S-3
or its successor form (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3 such registration shall be on
another appropriate form in accordance herewith (which shall include a Plan of
Distribution substantially in the form of Exhibit A annexed hereto, unless in
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connection with an Underwritten Offering) or in connection with an Underwritten
Offering hereunder, such other form agreed to by the Company and by a majority-
in-interest of Holders of Registrable Securities to be covered by such
Registration Statement) (except if otherwise directed by the Majority Holders),
and cause the Registration Statement to become effective and remain effective as
provided herein; provided, however, that not less than three (3) Business Days
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prior to the filing of the Registration Statement or any related Prospectus or
any amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall, if reasonably practicable
(i) furnish to the Holders, their Special Counsel and any managing underwriters,
copies of all such documents proposed to be filed (including documents
incorporated by reference), which documents will be subject to the review of
such Holders, their Special Counsel and such managing underwriters, and (ii)
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to such Holders and such underwriters,
to conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file the Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Majority Holders, their
Special Counsel or any managing underwriters shall reasonably object, and will
not request acceleration of such Registration Statement without prior notice to
such counsel. The sections of such Registration Statement covering information
with respect to the Holders, the Holder's beneficial ownership of securities of
the Company or the Holders intended method of disposition of Registrable
Securities shall conform to the information provided to the Company by each of
the Holders.
(b) Amendments. (i) Prepare and file with the Commission such
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amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously effective
for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the
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Registration Statement as so amended or in such Prospectus as so supplemented.
In the event the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover 120% of the Registrable
Securities issued or issuable upon conversion of the Securities and exercise of
the Warrants, the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefore, if applicable),
or both, so as to cover 120% of the Registrable Securities, in each case, as
soon as practicable, but in any event within twenty (20) Business Days after the
necessity therefor arises (based on the Conversion Price of the Securities and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. The provisions of Section 2(d) above shall be applicable with
respect to such obligation, with the ninety (90) days running from the day after
the date on which the Company reasonably first determines (or reasonably should
have determined) the need therefor.
(c) Notifications. Notify the Holders of Registrable Securities to
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be sold, their Special Counsel and any managing underwriters as promptly as
possible (and, in the case of (i)(C) below, not later than the first Business
Day after effectiveness) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement and (C) with respect to the Registration Statement or any post-
effective amendment, when the same has become effective; (ii) of any request by
the Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (vi) of the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (vii) the
beginning and end of a black-out period pursuant to Section 3(r).
(d) Suspensions. Use its best efforts to avoid the issuance of, or,
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if issued, obtain the withdrawal of (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Supplements and Post-Effective Amendments. If requested by any
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managing underwriter or the Holders of a majority in interest of the Registrable
Securities to be sold in connection with an Underwritten Offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
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Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the opinion of counsel for the Company, violate applicable law.
(f) Copies of Registration Statement. Furnish to each Holder, their
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Special Counsel, and any managing underwriters, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(g) Copies of Prospectus. Promptly deliver to each Holder, their
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Special Counsel, and any underwriters, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders and any underwriters in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(h) Blue Sky. Prior to any public offering of Registrable
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Securities, use its best efforts to register or qualify or cooperate with the
selling Holders, any underwriters and their Special Counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
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required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(i) Certificates. Cooperate with the Holders and any managing
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underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
applicable law and the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such managing underwriters or Holders may request at least
three (3) Business Days prior to any sale of Registrable Securities.
(j) Supplements and Amendments. Upon the occurrence of any event
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contemplated by Section 3(c)(vi), as promptly as possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(k) Listing. Cause all Registrable Securities relating to such
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Registration Statement to be listed on Nasdaq and any other securities exchange,
quotation system, market or over-the-counter bulletin board, if any, on which
similar securities issued by the Company are then listed as and when required
pursuant to the Purchase Agreement, subject to compliance with Rule
4460(i)(10(D) of the Nasdaq National Market.
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(l) Underwriting Agreement. Enter into such agreements (including an
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underwriting agreement in form, scope and substance as is customary in
Underwritten Offerings) and take all such other actions in connection therewith
(including those reasonably requested by any managing underwriters and the
Holders of a majority of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable Securities, and
whether or not an underwriting agreement is entered into, (i) make such
representations and warranties to such Holders and such underwriters as are
customarily made by issuers to underwriters in underwritten public offerings,
and confirm the same if and when requested; (ii) in the case of an Underwritten
Offering obtain and deliver copies thereof to the managing underwriters, if any,
or in the case of non-Underwritten Offerings, if reasonably requested by the
selling Holders (and at the expense of such selling Holders), obtain and deliver
copies thereof to such selling Holders, of opinions of counsel to the Company
and updates thereof addressed to each such underwriter, in form, scope and
substance reasonably satisfactory to any such managing underwriters and Special
Counsel to the selling Holders covering the matters customarily covered in
opinions requested in Underwritten Offerings and such other matters as may be
reasonably requested by such Special Counsel and underwriters; (iii) immediately
prior to the effectiveness of the Registration Statement, and, in the case of an
Underwritten Offering, at the time of delivery of any Registrable Securities
sold pursuant thereto, and, in the case of non-Underwritten Offerings, at such
time as the selling Holders may reasonably request (and at the expense of such
selling Holders), obtain and deliver copies to the Holders and the managing
underwriters, if any, of "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if required, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data is, or is required to be, included in the Registration
Statement), addressed to each of the underwriters, if any, in form and substance
as are customary in connection with Underwritten Offerings; (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the selling Holders and the
underwriters, if any, than those set forth in Section 5 (or such other
provisions and procedures acceptable to the managing underwriters, if any, and
holders of a majority of Registrable Securities participating in such
Underwritten Offering; and (v) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registrable Securities
being sold, their Special Counsel and any managing underwriters to evidence the
continued validity of the representations and warranties made pursuant to clause
3(1)(i) above and to evidence compliance with any customary conditions contained
in the underwriting agreement or other agreement entered into by the Company.
(m) Due Diligence. Make available for inspection by the selling
-------------
Holders, any representative of such Holders, any underwriter participating in
any disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where normally
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors, agents and employees of the
Company and its subsidiaries to supply all information in each case reasonably
requested by any such Holder, representative, underwriter, attorney or
accountant in connection with the Registration Statement; provided, however,
-------- -------
that if any information is determined in good faith by the Company in writing to
be of a confidential nature at the time of delivery of such information, then
prior to delivery of such information, the Company and the Holders shall enter
into a confidentiality agreement reasonably acceptable to the Company and the
Holders providing that such information shall be kept confidential unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities (provided,
--------
however, that the Company shall be given notice of any such pending disclosure
-------
so that the Company may seek a protective order); (ii) disclosure of such
information, in the opinion of counsel to such Person, is required by law; (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person; or (iv) such
information becomes available to such Person from a source other
9
than the Company and such source is not known by such Person to be bound by a
confidentiality agreement with the Company.
(n) Earnings Statement. Comply in all material respects with all
------------------
applicable rules and regulations of the Commission and make generally available
to its securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 not later than 45 days after the end of
any 3-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
best efforts Underwritten Offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(o) Information. The Company may require each selling Holder to
-----------
furnish to the Company information regarding such Holder and the distribution of
such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request, and such
shall not form the basis for penalties pursuant to Section 2(d) hereof.
The Company shall hold in confidence and not make any disclosure of
information concerning a Holder 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 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 or any other agreement. The Company agrees that it shall,
upon learning that disclosure of such information concerning a Holder is sought
in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Holder prior to making such disclosure, and
allow the Holder, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v),
3(c)(vi) or 3(c)(vii), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it
10
is advised in writing (the "Advice") by the Company that the use of the
-------
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of a Holder
in accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which a Holder has
entered into a contract for sale prior to the Holder's receipt of a notice from
the Company of the happening of any event of the kind described in Section
3(c)(ii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(c)(vii) and for which the Holder has
not yet settled.
(p) Responses to the Commission. The Company agrees to respond fully
---------------------------
and completely to any and all comments on a Registration Statement received from
the Commission staff as promptly as possible but, for non-Underwritten
Offerings, in no event later than ten (10) Business Days of the receipt of such
comments, regardless of whether such comments are in oral or written form.
(q) Confirmation of Effectiveness. Within two (2) Business Days
-----------------------------
after a Registration Statement which covers applicable Registrable Securities is
ordered effective by the Commission, 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 Holders whose Registrable Securities
are included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit B.
---------
(r) Black-out Periods. Subject to the last sentence of this Section
-----------------
3(r), notwithstanding anything to the contrary in this Agreement, the Company
may delay the filing or effectiveness of the Registration Statement, other than
the Initial Registration Statement, or by written notice require that the
Holders immediately cease sales of Registrable Securities (for a period not to
exceed thirty (30) consecutive days in any one instance and for a period not to
exceed sixty (60) calendar days in any twelve-month period) pursuant to a
Registration Statement at any time that (i) the Company becomes engaged in a
business activity or negotiation which is not disclosed in a Registration
Statement (or the prospectus included therein) which the Company reasonably
believes must be disclosed therein under applicable law and which the Company
desires to keep confidential for business purposes, (ii) the Company determines
that a particular disclosure so determined to be required to be disclosed
therein would be premature or would adversely affect the Company or its business
or prospects or (iii) the Registration Statement can no longer be used under the
existing rules and regulations promulgated under the Securities Act (each of
(i), (ii) or (iii), a "Material Condition"). The Company shall not be required
------------------
to disclose to the Holders which of the reasons specified in (i), (ii) or (iii)
above is the basis for requiring a suspension of sales due to the occurrence of
a Material Condition. The Company will use its commercially reasonable best
efforts to ensure that the use of the Registration Statement (and the prospectus
included therein) may be resumed as soon as it is practicable. The Company may
not suspend sales of Registrable Securities under a Registration Statement
pursuant to this Section 3(r) more than two times during any twelve-month
period.
4. Registration Expenses
---------------------
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
other than with regard to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
reasonable fees and expenses (A) with respect to filings required to be made
with Nasdaq and each other securities exchange or market on which Registrable
Securities are required
11
hereunder to be listed and (B) in compliance with state securities or Blue Sky
laws (including, without limitation, fees and disbursements of counsel for the
Holders in connection with Blue Sky qualifications of the Registrable Securities
and determination of the eligibility of the Registrable Securities for
investment under the laws of such jurisdictions as the managing underwriters, if
any, or the Holders of a majority of Registrable Securities may designate)),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is requested by the managing underwriters, if any, or
by the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
Holders, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) reasonable fees and expenses of all other Persons retained
by the Company in connection with the consummation of the transactions
contemplated by this Agreement; provided, however, that any expenses
-------- -------
attributable to amendments to the Registration Statement necessitated by
transfers of Registrable Securities by the Holders, as well as any underwriting
discounts, commissions and transfer taxes relating to the Registrable Securities
included in the offering by the Holders, fees and disbursements for accountants
for the Holders, and any other expenses incurred by the Holders not expressly
included above shall be borne by the Holders and not by the Company. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. Notwithstanding anything contained in this Section 4 to the contrary,
the Holders shall be responsible for all fees and expenses relating to an
Underwritten Offering.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
------------------------------
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all joint or several losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees) and
expenses (collectively, together with actions, proceedings or inquiries by any
regulatory or self-regulatory organization, whether commenced or threatened,
"Losses"), as incurred, arising out of or relating to (i) any untrue or alleged
-------
untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which they
were made), except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon and in conformity with information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, which information was reasonably relied on by the
Company for use therein or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
prospectus or in any amendment or supplement thereto (provided that the Company
amended any disclosure with respect to the method of distribution upon written
notice from the Holders that such section of the Prospectus should be revised in
any way) or (ii) any violation or alleged violation by the Company of the
Securities Act, the
12
Exchange Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of
Registrable Securities. The Company shall not, however, be liable for any Losses
to any Holder with respect to any untrue or alleged untrue statement of material
fact or omission or alleged omission of material fact if such statement or
omission was made in a preliminary Prospectus and the applicable purchaser did
not receive a copy of the final Prospectus (or any amendment or supplement
thereto) at or prior to the confirmation of the sale of the Registrable
Securities in any case where such delivery is required by the Securities Act and
the untrue or alleged untrue statement of material fact or omission or alleged
omission of material fact contained in such preliminary Prospectus was corrected
in the final Prospectus (or any amendment or supplement thereto), unless the
failure to deliver such final Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 3(g) of this Agreement. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
--------------------------
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or based solely upon any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of
prospectus, or arising out of or based solely upon any omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading to the extent, but only to the extent, that such untrue statement
or omission is contained in any information so furnished in writing by such
Holder to the Company specifically for inclusion in the Registration Statement
or such Prospectus or to the extent that such information relates to such Holder
or such Holder's proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder expressly for use
in the Registration Statement, such Prospectus or such form of prospectus;
provided, however, that the indemnity agreement contained in this Section 5(b)
-------- -------
shall not apply to amounts paid in settlement of any Losses if such settlement
is effected without the prior written consent of such Holder. In no event shall
the liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
--------------------------------------
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
-----------------
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
------------------
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
---------
however, that the failure of any Indemnified Party to give such notice shall not
-------
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have
13
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the reasonable expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party, which notice
shall be delivered no more frequently than on a monthly basis (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a)
------------
or 5(b) is unavailable to an Indemnified Party because of a failure or refusal
of a court of competent jurisdiction to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. In no event shall any selling Holder be required to
contribute an amount under this Section 5(d) in excess of the net proceeds
received by such Holder upon sale of the Registrable Securities pursuant to the
Registration Statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
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.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Rule 144
--------
14
As long as any Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or l5(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as any Holder owns Registrable Securities, if the Company
is not required to file reports pursuant to Section 13(a) or l5(d) of the
Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Underlying Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions referred to in the
Purchase Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
7. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a Holder
--------
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
--------------------------
subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as set forth herein or disclosed in Schedule 2.1(r) of the Purchase
---------------
Agreement, neither the Company nor any of its subsidiaries has previously
entered into any agreement granting any registration rights with respect to any
of its securities to any Person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority of the then
outstanding Registrable Securities, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company under
the Securities Act unless the rights so granted are subordinated in all respects
to the rights in full of the Holders set forth in Section 2 herein, and are not
otherwise in conflict or inconsistent with the provisions of this Agreement.
This Agreement, together with the Purchase Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
(c) No Piggyback on Registrations. Except as disclosed on Schedule
----------------------------- --------
2.1(c) or Schedule 2.1(r) of the Purchase Agreement, neither the Company nor
------ ---------------
any of its securityholders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statements and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its securityholders, unless the right so granted is
subordinated in all
15
respects to the rights in full of the Holders set forth herein, and is not
otherwise in conflict or inconsistent with the provisions of this Agreement.
(d) Piggy-Back Registrations. Except as provided herein if, at any
------------------------
time when there is not an effective Registration Statement covering the
Registrable Securities, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within ten (10) days after receipt
of such notice, any such Holder shall so request in writing, (which request
shall specify the Registrable Securities intended to be disposed of by the
Holders), the Company will use reasonable efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the Holder, to the extent requisite to permit
the disposition of the Registrable Securities so to be registered, provided that
if at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not
-------- -------
be required to register any Registrable Securities pursuant to this Section 7(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement, then if the Company after
consultation with the Underwriter's representative should reasonably determine
that the inclusion of such Registrable Securities would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
Registrable Securities then proposed to be sold by the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration) or (y) none
of the Registrable Securities of the Holders shall be included in such
registration statement if the Company, after consultation with the
underwriter(s), recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
-------- -------
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company). Notwithstanding the foregoing, the
Company shall not file any registration statement under the Securities Act
(other than on Form S-4 or Form S-8) relating to the offer and sale of any
equity securities of the Company, or offer or sell any equity securities of the
Company in a transaction exempt from registration pursuant to Regulation S under
the Securities Act, until such time as the Initial Registration Statement has
been effective for a period of sixty (60) Trading Days, which period shall be
tolled if the effectiveness of the Initial Registration Statement is suspended
for any reason whatsoever.
(e) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by
16
the Company and the Majority Holders; provided, however, that for the purposes
-------- -------
of this sentence, Registrable Securities that are owned, directly or indirectly,
by the Company, or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders; provided, however, that the
-------- -------
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence. Any
amendment or waiver effected in accordance with this Section shall be binding
upon each Holder, each future Holder, and the Company. Upon effectiveness of
each such amendment or waiver, the Company shall promptly give written notice
thereof to the Holders who have not previously consented thereto in writing.
(f) Notices. Any notice or other communication required or permitted
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to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if received by
5:00 p.m. eastern time where such notice is to be received), or the first
Business Day following such delivery (if received after 5:00 p.m. eastern time
where such notice is to be received) or (b) on the second Business Day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications are (i) if to the Company to Boston Life
Sciences, Inc., 000 Xxxxxxx Xxxxxx, 0/xx/ Xxxxx, Xxxxxx, XX 00000, attn. Xxxxxx
Xxxxxx, Chief financial Officer, fax no. (000) 000-0000, with copies to Ropes &
Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, fax no. 000-000-0000, attn.
Xxxxxx X. Xxxxxx and (ii) if to any Purchaser to the address set forth on
Schedule I hereto with copies to those specified on the signature pages hereto
and to Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn: Xxxxx Xxxx, Esq., fax no. (000) 000-0000 or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
(g) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
the Majority Holders. No Holder shall assign, transfer, sell or otherwise
dispose of this Agreement or any of the rights or obligations hereunder without
the prior written consent of the Company, except that a Holder may assign some
or all of its rights hereunder (i) to an "affiliate" of such Holder (as such
term is defined in the Securities Exchange Act of 1934) or (ii) to any other
Holder, without the consent of the Company; provided that each permitted
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assignee agrees to be bound by and to comply with the provisions of this
Agreement. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.
(h) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(i) Governing Law. The corporate laws of the State of Delaware shall
-------------
govern all issues concerning the relative rights of the Company and the
Purchasers as its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of
17
any dispute 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 improper. Each party hereby irrevocably waives personal service
of process and consent 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.
(j) Cumulative Remedies. The remedies provided herein are cumulative
-------------------
and not exclusive of any remedies provided by law.
(k) 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 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.
(l) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(m) Shares Held by The Company and its Affiliates. Whenever the
---------------------------------------------
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(n) Revision of SEC Position on Warrants. In the event the rules and
------------------------------------
regulations of the Commission or the policies of the staff of the Commission are
modified and as a result thereof the Company and the Company's counsel
determines in good faith that it may be practicable and in the interests of the
Company and the Holders to register the exercise of the Warrants so that the
Warrant Shares may be freely resold without maintaining an effective
registration statement under the Securities Act for resales, the Company and the
Holders agree to cooperate in good faith to effect such amendments to this
Agreement as may be appropriate to provide that the Company may fulfill its
obligations hereunder with respect to the Warrants and the Warrant Shares by
maintaining an effective registration statement under the Securities Act
covering the exercise of the Warrants rather than the resale of the Warrant
Shares.
18
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
BOSTON LIFE SCIENCES, INC.
By:________________________________________
Name:
Title:
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD.
By: Xxxxx Xxxxxxx Asset Management, LLC
By:________________________________________
Name:
Title:
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.
By: Xxxxx Xxxxxxx Capital, LLC
its general partner
By:________________________________________
Name:
Title:
SCHEDULE I
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Company
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Boston Life Sciences, Inc.
000 Xxxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, CFO
Fax: 000-000-0000
Purchasers:
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Xxxxx Xxxxxxx Strategic Growth Fund, L.P.
152 West 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.
000 Xxxx 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
EXHIBIT A
PLAN OF DISTRIBUTION
Our company is registering the shares of common stock on behalf of the
selling stockholders. All costs, expenses and fees in connection with the
registration of the shares offered by this prospectus will be borne by the
Company, other than brokerage commissions and similar selling expenses, if any,
attributable to the sale of shares which will be borne by the selling
stockholders. Sales of shares may be effected by selling stockholders from time
to time in one or more types of transactions (which may include block
transactions) on the Nasdaq National Market, in the over-the-counter market, in
negotiated transactions, through put or call options transactions relating to
the shares, through short sales of shares, or a combination of such methods of
sale, at market prices prevailing at the time of sale, or at negotiated prices.
Such transactions may or may not involve brokers or dealers. The selling
stockholders have advised our company that they have not entered into any
agreements, understandings or arrangements with any underwriters or broker-
dealers regarding the sale of their securities, nor is there an underwriter or
coordinated broker acting in connection with the proposed sale of shares by the
selling stockholders.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with selling stockholders.
The selling stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealers or other financial institutions of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as amended or supplemented to reflect such
transaction).
The selling stockholders may make these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection
with the sale of shares are "underwriters" within the meaning of Section 2(11)
of the Securities Act, and any commissions received by such broker-dealers or
any profit on the resale of the shares sold by them while acting as principals
might be deemed to be underwriting discounts or commissions under the Securities
Act. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
Because selling stockholders are "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. Our company has
informed the selling stockholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales in the
market.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon our company being notified by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
. the name of each such selling stockholder and of the
participating broker-dealer(s);
. the number of shares involved;
. the initial price at which such shares were sold;
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
. other facts material to the transactions.
In addition, upon our company being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, a supplement to this
prospectus will be filed.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn.:
Re: Boston Life Sciences, Inc.
Ladies and Gentlemen:
We are counsel to Boston Life Sciences, Inc., a ____ corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement") entered into by and
among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders its 8% convertible
debentures (the "Securities") convertible into shares of the Company's common
stock, par value $____ per share (the "Common Stock"), and Warrants (the "the
Warrants") to acquire shares of Common Stock. Pursuant to the Purchase
Agreement, the Company also has entered into a Registration Rights Agreement
with the Holders (the "Registration Rights Agreement") pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including the shares of Common
Stock issuable upon conversion of the Securities and exercise of the Warrants,
under the Securities Act of 1933, as amended (the "1933 Act"). In connection
with the Company's obligations under the Registration Rights Agreement, on
_______________, 1999, the Company filed a Registration Statement on Form S-3
(File No. 333-_____________) (the "Registration Statement") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
