EXHIBIT 10.6
Annex III
to
Stock Purchase
Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of , 1996 (this
"Agreement"), is made by and between ▇▇▇▇▇▇▇▇▇▇ LABORATORIES, INC., a Texas
corporation (the "Company"), and the person named on the signature page
hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Stock Purchase
Agreement, dated as of , 1996, between the Initial Investor and the
Company (the "Stock Purchase Agreement"), the Company has agreed to issue
and sell to the Initial Investor Series E Convertible Preferred Stock of the
Company (the "Preferred Stock") which will be convertible into shares of the
common stock, $.01 par value (the "Common Stock"), of the Company (the
"Conversion Shares") upon the terms and subject to the conditions of such
Preferred Stock; and
WHEREAS, to induce the Initial Investor to execute and deliver the Stock
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
(I) "Investor" means the Initial Investor and any permitted transferee or
assignee of the Preferred Stock or the Conversion Shares who agrees to
become bound by the provisions of this Agreement in accordance with Section
9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the
Securities Act or any successor rule providing for offering securities on
a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
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(iii) "Registrable Securities" means the Conversion Shares, any shares of
Common Stock issued in payment of dividends on the Preferred Stock, and any
shares of Common Stock issued pursuant to Section 2(d) of this Agreement.
(iv) "Registration Statement" means a registration statement of the Company
under the Securities Act.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Stock Purchase Agreement.
Registration.
Mandatory Registration. The Company shall, after the Closing Date (as that
term is defined in Section 7 of the Stock Purchase Agreement) prepare and
file with the SEC either a Registration Statement on Form S-3 covering at
least an aggregate of _________ shares of Common Stock for the Initial
Investors and any other purchasers of the Preferred Stock (pro rata) as
Registrable Securities (or such lesser number as may be required by the SEC,
but in no event less than the number of Conversion Shares into which the
Preferred Stock would be convertible at the time of filing of the Form S-3),
or an amendment to any pending Company Registration Statement on Form S-3,
and such Registration Statement or amended Registration Statement shall
state that, in accordance with Rule 416 under the Securities Act, it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Preferred Stock to prevent dilution
resulting from stock splits, or stock dividends. If at any time the number
of shares of Common Stock into which the Preferred Stock may be converted
exceeds _________ shares of Common Stock, the Company shall, within ten (10)
business days after receipt of a written notice from any Investor requesting
the Company to do so, either (i) amend the Registration Statement filed by
the Company pursuant to the preceding sentence, if such Registration
Statement has not been declared effective by the SEC at that time, to
register all shares of Common Stock into which the Preferred Stock may be
converted, or (ii) if such Registration Statement has been declared
effective by the SEC at that time, file with the SEC an additional
Registration Statement on Form S-3 to register the shares of Common Stock
into which the Preferred Stock may be converted that exceed the _________
shares of Common Stock already registered.
Underwritten Offering. If any offering pursuant to a Registration Statement
pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors who hold a majority in interest of the Registrable Securities
subject to such underwritten offering shall have the right to select one
legal counsel to represent their interests, and an investment banker or
bankers and manager or managers to administer the offering, which investment
banker or bankers or manager or managers shall be reasonably satisfactory
to the Company. The Investors who hold the Registrable Securities to be
included in such underwriting shall pay all underwriting discounts and
commissions and other fees and expenses of such investment banker or bankers
and manager or managers so selected in accordance with this Section 2(b)
(other than fees and expenses relating to registration of Registrable
Securities under federal or state securities laws, which are payable by the
Company pursuant to Section 5 hereof) with respect to their Registrable
Securities and the fees and expenses of such legal counsel so selected by
the Investors.
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(c) Limitation on Right to Sell. Notwithstanding anything to the contrary
in this Agreement, if at any time or from time to time during the
effectiveness of the Registration Statement, the Company is engaged in or
proposes to engage in a registered public offering of securities of the
Company or any other transaction or activity which, in the good faith
determination of the Board of Directors of the Company, would be adversely
affected by offers or sales of Registrable Securities pursuant to the
Registration Statement to the detriment of the Company, the Investors shall,
upon the written request of the Company, cease making offers and sales of
Registrable Securities pursuant to the Registration Statement and sales
pursuant to Rule 144 under the Securities Act for the period of time
specified by the Company, which period shall not (i) in the case of a
registered public offering, exceed the period beginning ten (10) days prior
to the effective date of the registration statement relating to such
offering and ending thirty (30) days after such effective date, and (ii) in
the case of any other transaction or activity, exceed the period beginning
ten (10) days prior to, and ending thirty (30) days after, the date of
commencement of such other activity or date of consummation of such other
transaction. The period of time during which the Company is obligated to
maintain the effectiveness of the Registration Statement hereunder shall be
tolled during the period Investors must cease making offers and sales of
Registrable Securities pursuant to the Company's request under this Section
2(c). Each Investor agrees to enter into such further agreements with the
Company or any underwriter of securities of the Company as are reasonably
deemed necessary by the Company or any such underwriter to carry out the
purpose of this Section 2(c).
(d) Payments by the Company. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective by the SEC on or before the
date that is eighty (80) days after the Closing Date (or, if such eightieth
day is a Saturday, Sunday or an SEC holiday, then on or before the date that
is the next business day following such eightieth day) (the "Initial Date"),
the Company will make payments to the Initial Investor in such amounts and
at such times as shall be determined pursuant to this Section 2(d). The
amount to be paid by the Company to the Initial Investor (the "Periodic
Amount") shall be equal to one percent (1%) of the purchase price paid by
the Initial Investor for the Preferred Stock pursuant to the Stock Purchase
Agreement for the first Computation Period (as hereinafter defined) and two
percent (2%) of such purchase price for each Computation Period, if any,
thereafter; provided, however, that if a Computation Period is fewer than
thirty (30) days, the Periodic Amount for such Computation Period shall be
prorated accordingly. The Periodic Amount shall be paid in cash or shares
of Common Stock or a combination of both, whichever the Company elects. If
the Company elects to pay all or any part of the Periodic Amount in shares
of Common Stock, the number of shares of Common Stock to be issued shall
have an Aggregate Market Value (as hereinafter defined) equal to the
Periodic Amount or the portion thereof that the Company has elected to pay
in shares of Common Stock. The full Periodic Amount shall be paid by the
Company within five (5) business days after the end of each Computation
Period.
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As used in this Section 2(d), the following terms shall have the following
meanings:
"Aggregate Market Value" of any shares of Common Stock for any Computation
Period means the product obtained by multiplying (a) such number of shares
of Common Stock times (b) the mean average of the closing bid prices per
share of Common Stock (or of the mean average of the high and low bid prices
per share of Common Stock on any trading day for which no sales are
reported) for the ten (10) consecutive trading days ending on the last day
of such Computation Period (or, if the last day of such Computation Period
is not a trading day, on the last trading day preceding the last day of such
Computation Period) on the principal trading market for the Common Stock,
as reported by such market.
"Computation Date" means:
(I) in the case of the first Computation Date, the date that is thirty (30)
days after the Initial Date; and
(ii) if the Registration Statement is not declared effective by the SEC on
or before the first Computation Date, each date that is thirty (30) days
after the last preceding Computation Date.
"Computation Period" means the period between one Computation Date and the
earlier of (i) the next succeeding Computation Date, or (ii) the date on
which the Registration Statement is declared effective by the SEC.
(e) Eligibility for Form S-3. The Company represents and warrants that it
meets all the requirements for the use of Form S-3 for registration of the
sale of Registrable Securities by the Initial Investor or any Investor who
purchases the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as
to maintain such eligibility for the use of Form S-3.
Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
Prepare and file with the SEC as soon as reasonably possible after the
Closing Date, a Registration Statement with respect to not less than the
number of Registrable Securities as provided in Section 2(a), above, and
thereafter use its best efforts to cause each Registration Statement
relating to Registrable Securities to become effective as soon as possible
after such filing, and keep the Registration Statement effective pursuant
to Rule 415 at all times until the earliest (the "Registration Period") of
(i) the date that is two years after the Closing Date, (ii) the date when
the Investors may sell all Registrable Securities under Rule 144 or (iii)
the date when the Investors no longer own any of the Registrable Securities.
The Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, but the Company shall
not be responsible for any untrue statement or omission made in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of any Investor or any underwriter expressly for use in
connection with the preparation of the Registration Statement (including any
amendment or supplement thereto or prospectus contained therein);
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(b) Prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to
keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act applicable to the Company with respect to
the disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in the Registration Statement;
(c) Furnish to each Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel, (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one (1) copy of the Registration Statement, each preliminary
prospectus and prospectus, and each amendment or supplement thereto, and
(ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other
documents, as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(d) Use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities
or blue sky laws of such jurisdictions as the Investors who hold a majority
in interest of the Registrable Securities being offered reasonably request
and in which significant volumes of shares of Common Stock are traded
(except to the extent that exemptions from such registration or
qualification are available), (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period, (iii)
take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to (A) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d), (B) subject itself to general taxation in any such jurisdiction, (C)
file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause more than nominal expense or burden to
the Company or (E) make any change in its charter or by-laws, which in each
case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its stockholders;
(e) As promptly as practicable after becoming aware of such event, notify
each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and use its best efforts
promptly to prepare a supplement or amendment to the Registration Statement
or other appropriate filing with the SEC to correct such untrue statement
or omission, and deliver a number of copies of such supplement or amendment
to each Investor as such Investor may reasonably request;
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(f) As promptly as practicable after becoming aware of such event, notify
each Investor who holds Registrable Securities being sold (or, in the event
of an underwritten offering, the managing underwriters) of the issuance by
the SEC of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time;
(g) Use its best efforts, if eligible, either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed
on a national securities exchange and on each additional national securities
exchange on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii)
secure designation of all the Registrable Securities covered by the
Registration Statement as a National Association of Securities Dealers
Automated Quotations System ("NASDAQ") "national market system security"
within the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the NASDAQ/NMS; or if, despite the Company's best
efforts to satisfy the preceding clause (i) or (ii), the Company is
unsuccessful in doing so, to secure NASDAQ authorization and quotation for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities;
(h) Provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing Registrable Securities
sold pursuant to the Registration Statement, and enable such certificates
to be in such denominations or amounts, as the case may be, as the Investors
may reasonably request and registered in such names as the Investors may
request; and, within three (3) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) an appropriate instruction and opinion of such
counsel; and
(j) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement.
2. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following
obligations:
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(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request. At least five (5) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If at least
two (2) business days prior to the filing date the Company has not received
the Requested Information from an Investor (a "Non-Responsive Investor"),
then the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor, and the Company
shall thereafter have no obligation to include any Registrable Securities
of such Non-Responsive Investor in any Registration Statement for a period
of thirty (30) days after the date of filing of such Registration Statement,
and all expenses of such additional Registration Statement shall be borne
by such Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e) or 3(f),
above, such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(e) or 3(f) and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
(d) Each Investor agrees that it will not make any sale, transfer or other
disposition of any of the Registrable Securities that would constitute a
violation of the Securities Act, the Exchange Act, or any state securities
law or any rule or regulation under the Securities Act, the Exchange Act or
any state securities law.
(e) As promptly as possible after becoming aware of such fact, each
Investor shall notify the Company of any untrue statement of a material fact
regarding such Investor contained in the Registration Statement or the then
current prospectus related thereto, or any omission to state a material fact
regarding such Investor required to be stated therein, or necessary to make
the statements therein regarding such Investor, in light of the
circumstances in which they were made, not misleading; and such Investor
shall provide to the Company in writing all information necessary to correct
such untrue statement or omission.
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3. Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions and other fees and expenses of
investment bankers and other than brokerage commissions, incurred in
connection with registrations, filings or qualifications pursuant to Section
3, but including, without limitation, all registration, listing, and
qualifications fees, printers and accounting fees, and the fees and
disbursements of counsel for the Company, shall be borne by the Company.
4. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors,
if any, of such Investor, the officers, if any, of such Investor, each
person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against
any losses, claims, damages, liabilities or expenses (joint or several)
incurred (collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations in the Registration Statement, or any
post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment
thereof or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements
therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state securities law (provided such violation or alleged
violation was not attributable to a violation by any Investor of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state
securities law) (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). The Company shall reimburse the
Investors, promptly as such expenses are incurred and are due and payable,
for any reasonable legal fees or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (I) apply
to a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of any Indemnified Person expressly for use in connection
with the preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available
by the Company pursuant to Section 3(b) hereof; (II) with respect to any
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preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities
that are the subject thereof (or to the benefit of any person controlling
such person) if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected in the final prospectus, as then
amended or supplemented, if such final prospectus was timely made available
by the Company pursuant to Section 3(b) hereof; (III) be available to the
extent such Claim is based on a failure of the Investor to deliver or cause
to be delivered the prospectus made available by the Company; or (IV) apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not
be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) To the extent permitted by law, each Investor will indemnify and hold
harmless the Company, its directors, officers, agents, and persons who
control the Company within the meaning of the Securities Act or the Exchange
Act (each of the foregoing being hereinafter called an "Indemnified Party"),
against any losses, claims, damages, liabilities and expenses to which any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement (including any post-effective amendment
thereto), any preliminary prospectus used prior to the effective date of the
Registration Statement, or the final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the
SEC), or (ii) any 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 the statements therein
were made, not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company, by or on behalf of such
Investor, expressly for use in connection with the preparation of the
Registration Statement, or (iii) any violation or alleged violation by such
Investor of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation under the Securities Act, the Exchange Act, or any
state securities law (provided such violation or alleged violation was not
attributable to a Violation by the Company). Each Investor shall reimburse
the Company, promptly as such expenses are incurred and are due and payable,
for any reasonable legal fees or other expenses reasonably incurred by the
Company in connection with investigating or defending any claim for which
the Company is entitled to be indemnified under this Section 6(b).
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) shall not apply to
amounts paid by the Company in settlement of any claim if such settlement
is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. The indemnity provided for in
this Section 6(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
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(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including
any governmental action), such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to
assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party,
as the case may be; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel and
participate in the defense of such action, but the fees and expenses of such
Indemnified Person's or Indemnified Party's separate counsel shall not be
payable by the indemnifying party unless, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. In such event, the Company
shall pay for only one separate legal counsel for the Investors; such legal
counsel shall be selected by the Investors holding a majority in interest
of the Registrable Securities included in the Registration Statement to
which the Claim relates. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
5. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty
of such fraudulent misrepresentation; and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
6. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit
the Investors to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule
144 without registration.
7. Assignment of the Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of all or any
portion of such securities (or all or any portion of any Preferred Stock of
the Company which is convertible into such securities) of Registrable
Securities only if: (a) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished
to the Company within a reasonable time after such assignment, (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee
or assignee and (ii) the securities with respect to which such registration
rights are being transferred or assigned, (c) immediately following such
transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, and (d) at or before the time the Company received
the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein. In the event of any delay in filing the
Registration Statement as a result of such assignment, the Company shall not
be liable for any damages arising from such delay.
8. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Investors who hold a majority in
interest of the Registrable Securities. Any amendment or waiver effected
in accordance with this Section 10 shall be binding upon each Investor and
the Company.
9. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from
two or more persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
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(b) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered (by
hand, by courier, by telephone line facsimile transmission, receipt
confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, at ▇▇▇▇▇▇▇▇▇▇ Laboratories, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ Attention: President, with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ATT: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., (ii) if to the Initial Investor, at the address set forth under its
name in the Stock Purchase Agreement, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇ & Prager, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and
(iii) if to any other Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11(b), and
shall be effective, when personally delivered, upon receipt and, when so
sent by certified mail, four (4) calendar days after deposit with the United
States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which may
prove invalid or unenforceable under any law shall not effect the validity
or enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior agreements
and understandings among the parties hereto with respect to the subject
matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h)The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning thereof.
(i) The Company acknowledges that any failure by the Company to perform its
obligations under Section 3(i), or any delay in such performance could
result in direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused
by any such failure or delay, unless same is the result of force majeure.
Neither party shall be liable for consequential damages.
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(j) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by telephone line facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the
day and year first above written.
▇▇▇▇▇▇▇▇▇▇ LABORATORIES, INC.
By:
Name:
Title:
____________________________________________
By:
Name:
Title:
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