REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of_____________ ___, 2005 by
and between IntelliPharmaCeutics Ltd., a New York corporation (the "Company"),
and the person whose name appears on the signature page attached hereto
(individually a "Holder" and collectively, with the holders of other securities
issued in the offering, the "Holders").
WHEREAS, pursuant to a Confidential Private Placement Memorandum dated May
5,2004 ("Memorandum") and Subscription Agreement (the "Subscription Agreement"),
the Holder has offered to purchase shares of the Company's common stock, $.001
par value (the "Shares");
WHEREAS, in order to induce the Holders to enter into the Subscription
Agreement and to purchase the Shares, the Company and the Holders have agreed to
enter into this Agreement;
WHEREAS, it is intended by the Company and the Holders that this Agreement
shall become effective immediately upon the acquisition by the Holders of the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company hereby agrees as follows:
A. REGISTRATION RIGHTS
1. Registration Rights
(a) Registration Statement. The Company agrees to file a
registration statement to register all Shares and shares of common stock
underlying the Warrants (as defined in the Memorandum)(the Shares and shares
underlying the Warrants are collectively referred to herein as the "Shares") on
Form SB-2 or other comparable form, with the Securities and Exchange Commission
no later than 90 days from the completion of the offering (the "Registration
Statement"). The Company agrees to use its best efforts to have the Registration
Statement declared effective. The Holders agree to execute and/or deliver such
documents in connection with such registration as the Company may request. If
the Holders' Shares are so registered, the Company's obligations under Article 1
herein will be deemed satisfied in full.
(b) Cooperation with Company. The Holders will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Shares.
2. Registration Procedures. If and whenever the Company is required by any
of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), the Company shall (except as otherwise provided in this
Agreement), as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
and shall use its best efforts to cause such Registration Statement to become
effective and remain effective until
1.
all the Shares are sold or become capable of being publicly sold without
registration under the Securities Act;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such Registration Statement whenever
the Holder or Holders of such securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities or the exercise of the Shares from time to time in connection with
a Registration Statement pursuant to Rule 415 of the Commission); and
(c) notify each Holder of Shares covered by such Registration
Statement, at any time when a prospectus relating thereto covered by such
Registration Statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such Registration Statement, as then in effect, includes
any 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.
3. Expenses. All expenses incurred in any registration of the Holders'
Shares under this Agreement shall be paid by the Company, including, without
limitation, printing expenses, fees and disbursements of counsel for the Company
and each participating Holder, expenses of any audits to which the Company shall
agree or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for the
Holders' Shares under federal and state securities laws; provided, however, the
Company shall not be liable for (a) any discounts or commissions to any
underwriter or broker/dealer; (b) any stock transfer taxes incurred with respect
to Shares sold in the Offering; or (c) the fees and expenses of counsel for any
Holder, provided that the Company will pay the costs and expenses of Company
counsel when the Company's counsel is representing any or all selling Holders.
4. Indemnification. In the event any Shares are included in a Registration
Statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other indemnity
provided to any Holder, either in connection with the Offering or otherwise, to
the extent permitted by law, the Company shall indemnify and hold harmless each
Holder, the affiliates, officers, directors and partners of each Holder, any
underwriter (as defined in the Securities Act) for such Holder, and each person,
if any, who controls such Holder or underwriter (within the meaning of the
Securities Act or the Securities Exchange Act of 1934 ("Exchange Act"), against
any losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange 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 alleged untrue statement of a material fact contained in such Registration
Statements, 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, in light of the circumstances under
which they were made, not misleading, (iii) any violation or alleged violation
by the Company of the Securities Act or the Exchange Act, or
2.
(iv) any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law. The Company shall
reimburse each such Holder, affiliate, officer or director or partner,
underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
any Holder 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 or any
other officer, director or controlling person thereof.
(b) Holder Indemnity. Each Holder shall indemnify and hold harmless
the Company, its affiliates, its counsel, officers, directors, shareholders and
representatives, any underwriter (as defined in the Securities Act), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under any federal or state securities law, and the Holder shall
reimburse the Company, its affiliates, counsel, officers, directors,
shareholders, representatives, underwriters or controlling persons for any legal
or other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any statements or information provided by such Holder to the
Company in connection with the offer or sale of Shares.
(c) Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 4 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 4, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party agrees that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, and to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if the indemnified party
reasonably believes that representation of the indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such 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 shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission 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
Agreement.
(d) Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which
3.
resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relevant fault of the indemnifying party
and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, the amount any Holder
shall be obligated to contribute pursuant to the Agreement shall be limited to
an amount equal to the proceeds to such Holder of the Shares sold pursuant to
the Registration Statement which gives rise to such obligation to contribute
(less the aggregate amount of any damages which the Holder has otherwise been
required to pay in respect of such loss, claim, damage, liability or action or
any substantially similar loss, claim, damage, liability or action arising from
the sale of such Shares).
(e) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Shares by any person entitled to indemnification
hereunder and the expiration or termination of this Agreement.
5. Assignment of Registration Rights. The rights of the Holders under this
Agreement, including the rights to cause the Company to register Shares may not
be assigned without the written prior consent of the Company.
6. Remedies.
(a) Time is of Essence. The Company agrees that time is of the
essence for each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed in a manner
that will enable the Holders to sell their Shares as quickly as possible after
such Holders have indicated to the Company that they desire their Shares to be
registered. Any delay on the part of the Company not expressly permitted under
this Agreement, whether material or not, shall be deemed a material breach of
this Agreement.
(b) Remedies Upon Default or Delay. The Company acknowledges that
the breach of any part of this Agreement may cause irreparable harm to a Holder
and that monetary damages alone may be inadequate. The Company therefore agrees
that the Holder shall be entitled to injunctive relief or such other applicable
remedy as a court of competent jurisdiction may provide. Nothing contained
herein will be construed to limit a Holder's right to any remedies at law,
including recovery of damages for breach of any part of this Agreement.
7. Notices.
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight delivery
service,
4.
(i). If to the Company:
c/o IntelliPharmaCeutics Ltd.
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or at such other address as it may have furnished in writing to the Holders of
Shares at the time outstanding, or
(ii) if to any Holder of any Shares, to the address of such
Holder as it appears in the stock or warrant ledger of the Company.
(b) Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telegraphed or
telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
8. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the Company and each of the Holders.
9. Amendment and Waiver. This Agreement may be amended, and the observance
of any term of this Agreement may be waived, but only with the written consent
of the Company and the Holders of securities representing a majority of the
Shares; provided, however, that no such amendment or waiver shall take away any
registration right of any Holder of Shares or reduce the amount of reimbursable
costs to any Holder of Shares in connection with any registration hereunder
without the consent of such Holder; further provided, however, that without the
consent of any other Holder of Shares, any Holder may from time to time enter
into one or more agreements amending, modifying or waiving the provisions of
this Agreement if such action does not adversely affect the rights or interest
of any other Holder of Shares. No delay on the part of any party in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any party of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy.
10. Counterparts. One or more counterparts of this Agreement may be signed
by the parties, each of which shall be an original but all of which together
shall constitute one and same instrument.
11. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to conflicts of law principles.
12. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
5.
13. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
IN WITNESS WHEREOF, undersigned have executed this Agreement as of
the _________ day of __________________, 2005
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Signature of Holder
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Print Name of Holder
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Print Address of Holder
INTELLIPHARMACEUTICS LTD.
By: ____________________________
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President and CEO
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