PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
VIRAGEN, INC./[BUYER]
December 31, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of Series C Convertible
Preferred Stock (hereinafter the "Preferred Shares"), convertible into shares of
common stock (hereinafter the "Common Shares") of Viragen, Inc. (VRGN), ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a corporation organized under the laws of
Delaware (hereinafter "SELLER") to [BUYER], located at [ADDRESS], a corporation
organized under the laws of [INCORP] (hereinafter "BUYER"). SELLER and BUYER
(hereinafter collectively the "parties") each hereby represents, warrants and
agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) SELLER and BUYER are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for Three Hundred (300) Preferred Shares, at
a purchase price of One Thousand Dollars ($1,000) U.S. per share, convertible
into Common Shares in accordance with the terms set forth in the Certificate of
Designation attached as Exhibit A to this Agreement, for an aggregate purchase
price of Three Hundred Thousand Dollars ($300,000) payable in United States
Dollars at the Closing, as defined in Paragraph 5 hereof.
(iii) BUYER shall pay the purchase price by delivering same day funds in
United States Dollars to an escrow agent or as otherwise agreed between the
parties, to be delivered to the order of SELLER upon delivery of the Shares.
(iv) BUYER shall receive from SELLER at Closing, for no additional
consideration, a number of three-year warrants ("Warrant" or "Warrants") to
purchase one Common Share for every four Common Shares that BUYER would have
received had BUYER converted the Preferred Shares at Closing (the "Warrant
Shares"; the Common Shares and the Warrant Shares are sometimes hereinafter
collectively referred to as the "Shares"). The Warrants shall have a strike
price of $2.00 per share, and shall be exercisable as set forth in the form of
Common Stock Purchase Warrant Certificate attached as Exhibit B to this
Agreement.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Preferred Shares, Warrants, Common Shares,
and the Warrant Shares have not been registered under the Securities Act, or any
other applicable securities law, and, accordingly, none of the Preferred Shares,
Warrants, Common Shares or Warrant Shares may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed of unless registered pursuant to, or
in a transaction exempt from registration under, the Securities Act and any
other applicable securities law;
(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
acquiring the Shares either for its own account or as a fiduciary or agent for
one or more institutional accounts as to which it exercises sole discretion,
each of which is an Accredited Investor. BUYER has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the Shares. BUYER has had a reasonable opportunity
to ask questions of and receive answers from SELLER concerning SELLER and the
offering of the Shares and Warrants. BUYER is not subscribing for the Shares and
Warrants as a result of or pursuant to any advertisement, article, notice, or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio. BUYER is aware that it (or such
institutional account) may be required to bear the economic risk of an
investment in the Shares for an indefinite period, and it (or such institutional
account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Preferred Shares, Warrants and underlying
Shares for its own account or for one or more institutional accounts as
described in Paragraph 2(ii) hereof, in each case for investment purposes and
not with a view to, or for offer or sale in connection with, any distribution
thereof (subject to any requirement of law that the disposition of its property
or the property of such institutional account or accounts remain within its or
their control). BUYER agrees on its own behalf and on behalf of any such
institutional account for which it is acquiring the Preferred Shares and
Warrants to offer, sell or otherwise transfer any Preferred Shares and Warrants
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificates evidencing such securities. BUYER
acknowledges that each certificate evidencing such securities shall bear a
legend substantially to the effect of the foregoing paragraphs 2(i) and 2(ii)
and this paragraph 2(iii). Such legend shall be in substantially the following
form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET
FORTH IN A PRIVATE SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY
AND [BUYER] DATED [DATE]. A COPY OF THE PORTION OF THE AFORESAID
SUBSCRIPTION AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM
THE COMPANY'S EXECUTIVE OFFICES.
Upon conversion of the Preferred Shares, SELLER shall issue a common stock
certificate without such legend to the holder of such shares if (a) such Shares
are sold pursuant to an effective registration statement under the Securities
Act, or (b) such holder provides SELLER with an opinion of counsel reasonably
acceptable to SELLER to the effect that a public sale or a transfer of such
security may be made without registration under the Securities Act, or (c) such
holder provides SELLER with reasonable assurances that such security can be sold
free of any volume limitations pursuant to Rule 144 under the Securities Act (or
a successor thereto).
(iv) BUYER acknowledges that each Warrant shall bear a legend
substantially to the effect of the foregoing paragraphs 2(i) and 2(ii) and this
paragraph 2(iv). Such legend shall be in substantially the following form:
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER
(THE "SECURITIES ACT"). THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR
SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
Upon exercise of the Warrant, SELLER shall issue a common stock
certificate without such legend to the holder of such Warrant if (a) the Warrant
Shares are sold pursuant to an effective registration statement under the
Securities Act, or (b) such holder provides SELLER with an opinion of counsel
reasonably acceptable to SELLER to the effect that a public sale or a transfer
of such security may be made without registration under the Securities Act, or
(c) such holder provides SELLER with reasonable assurances
that such security can be sold free of any volume limitations pursuant to Rule
144 under the Securities Act (or a successor thereto).
(v) BUYER acknowledges that SELLER or any transfer agent of SELLER shall
register the transfer or exchange of any of the Preferred Shares or Warrants
only upon receipt of the respective (A) certificates evidencing such Preferred
Shares with the transfer notice set forth thereon appropriately completed, or
(B) the Warrants, and upon receipt in writing from the transferee or the
recipient of such Preferred Shares or Warrants in such transfer or exchange (as
the case may be) of a certificate setting forth the representations in Paragraph
2 hereof;
(vi) If BUYER is acquiring any Preferred Shares, Warrants or the
underlying Shares as fiduciary or agent for one or more institutional accounts,
BUYER represents that it has sole investment discretion with respect to each
such account and that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such institutional account;
(vii) BUYER acknowledges that SELLER and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations and agreements
and further agrees that if, prior to the closing, any of such acknowledgments,
representations and agreements made by BUYER are no longer accurate, BUYER will
promptly notify SELLER;
(viii) BUYER has received all information necessary to make an informed
business decision with respect to an investment in the Preferred Shares,
Warrants and underlying Shares, including but not limited to SELLER'S latest
Form 10-K, all Forms 10-Q and 8-K filed thereafter, and the Proxy Statement for
its latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER. Neither the Public Documents nor the
Private Placement Memorandum include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading;
(ix) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(x) BUYER has not engaged and agrees not to engage in any short sales or
other hedging transactions with respect to SELLER'S common stock; provided
however, that BUYER may enter into such transactions involving a number of
common shares not to exceed the number of Common Shares or Warrant Shares for
which a Notice of Conversion or Election to Purchase with regard to the
Preferred Shares or Warrants, respectively, has been submitted to SELLER.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its
securities;
(ii) The Preferred Shares, the Warrants, and the Shares, when issued and
delivered, will be duly and validly authorized and issued, fully-paid and
nonassessable, and will not subject the holders thereof to personal liability by
reason of being such holders. In addition, the Preferred Shares, Warrants, and
Shares, when issued and delivered, shall be free and clear of any liens,
encumbrances, charges, or adverse claims of any nature whatsoever. There are no
preemptive rights of any shareholder of SELLER with respect to the Preferred
Shares, Warrants, and the Shares;
(iii) This Agreement has been duly authorized, validly executed and
delivered on behalf of SELLER and is a valid and binding agreement in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally;
(iv) The execution and delivery of this Agreement and the consummation of
the issuance of the Preferred Shares, the Warrants, and the Shares, and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by SELLER of any of the terms or provisions of, or constitute
a default under, the articles of incorporation (or charter) or bylaws of SELLER,
or any indenture, mortgage, deed of trust or other material agreement or
instrument to which SELLER is a party or by which it or any of its properties or
assets are bound, or any existing applicable decree, judgment or order of any
court, federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over SELLER or any of its properties or
assets;
(v) No authorization, approval or consent of or filing with any federal,
state or local governmental body of the United States is legally required for
the issuance and sale of the Shares as contemplated by this Agreement;
(vi) The information provided by or on behalf of SELLER to BUYER and
referred to in Section 2(viii) of this Agreement does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are made, not misleading. Since June 30, 1996, there has been no
material adverse development in the business, properties, operations, financial
condition or results of operations of Seller, except as disclosed in the
documents referred to in Section 2(viii) hereof.
(vii) SELLER will issue one or more certificates representing the
Preferred Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. The Preferred Shares will bear the restrictive legend
specified in Section 2(iii) of this Agreement. SELLER further warrants that no
instructions other than these instructions and stop transfer instructions to
give effect to Section 2(i) hereof will be given to the transfer agent and also
warrants that the Shares shall otherwise be transferable on the books and
records of SELLER as and to the extent provided in this Agreement, subject to
compliance with Federal and State securities laws. Nothing in this Section shall
affect in any way BUYER'S obligations and agreement to comply with all
applicable securities laws upon resale of the Shares.
(viii) Prior to Closing, SELLER will issue a Common Stock Purchase Warrant
Certificate entitling BUYER to purchase one (1) common share for every four (4)
Common Shares that BUYER would have received had BUYER converted the Preferred
Shares at Closing. The Common Stock Preferred Warrant Certificate will bear the
restrictive legend specified in Section 2(iv) of this Agreement. SELLER further
warrants that no instructions other than these instructions and stop transfer
instructions to give effect to Section 2(i) hereof will be given to the transfer
agent and also warrants that the Shares shall otherwise be transferable on the
books and records of SELLER as and to the extent provided in this Agreement,
subject to compliance with Federal and State securities laws. Nothing in this
Section shall affect in any way BUYER'S obligations and agreement to comply with
all applicable securities laws upon resale of the Shares.
4. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that Shoreline
Pacific, the Institutional Division of Financial West Group ("Shoreline
Pacific"), shall be deemed a third party beneficiary of SELLER'S agreements and
representations set forth in this Agreement, entitled to enforce the terms
thereof, and to indemnification for any damages resulting to Shoreline Pacific
from any actual or threatened breach thereof by SELLER, both in Shoreline
Pacific's personal capacity and, should Shoreline Pacific so elect, on behalf of
BUYER.
5. CLOSING. Preferred Share certificates and Warrants shall be delivered
to BUYER and the funds therefor shall be delivered to SELLER on [DATE] (the
"Closing") or at such time to be mutually agreed by the parties.
6. CONDITIONS TO CLOSING
(i)...BUYER understands that SELLER'S obligation to sell the Preferred
Shares and to issue the Warrants is conditioned upon delivery into escrow, or
otherwise as agreed between BUYER and SELLER, by BUYER of the amount set forth
in Paragraph 1 hereof.
(ii)..SELLER understands that BUYER'S obligation to purchase the Preferred
Shares is conditioned upon delivery of certificates representing the Preferred
Shares as described in Paragraph 1(ii) and the Warrants as described in
Paragraph 1(iv), and upon provision of an opinion of counsel confirming the
matters set out in Section 3(ii), (iii), (iv) and (v) above. With respect to the
opinion of counsel concerning Section 3(iv), said opinion shall be qualified as
to the best of counsel's knowledge, except with respect to conflicts or defaults
under SELLER'S Articles of Incorporation and/or Bylaws.
(iii) SELLER understands that BUYER'S obligation to purchase the Preferred
Shares and Warrants is conditioned upon SELLER and BUYER entering into a
Registration Rights Agreement substantially in the form of Annex I hereto.
7. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to rules governing the conflict of laws. The parties jointly consent to
personal jurisdiction in any state or federal court located in the state of
California, waive any objection as to jurisdiction or venue, and agree not to
assert any defense based on lack of jurisdiction or venue. Facsimile signatures
of this Agreement shall be binding on all parties hereto.
8. CONVERSION. SELLER shall use its best efforts to issue and deliver to BUYER a
certificate or certificates for the number of Common Shares to which BUYER shall
be entitled within seven (7) business days after BUYER has fulfilled all
conditions required for conversion as set forth in this Agreement (the
"Deadline"). SELLER understands that a delay in the issuance of the Common
Shares beyond the Deadline could result in economic loss to BUYER. As
compensation to BUYER for such loss, and not as a penalty, SELLER agrees to pay
liquidated damages to BUYER for late issuance of Common Shares upon conversion,
or exercise, in the amount of one percent (1%) of the requested conversion
amount, per day, beginning on the eighth (8th) business day from the date of
receipt by SELLER of a duly executed notice of conversion or exercise, provided
that the original Preferred Shares to be converted, or Warrants to be exercised
have been delivered to SELLER within such time period, all in accordance with
this Agreement, the Preferred Shares or the Warrants, respectively, and the
requirements of SELLER'S transfer agent. Said liquidated damages shall accrue
each day through the date the Common
Shares are issued to BUYER upon conversion or exercise, and shall be paid by
wire transfer to an account designated by BUYER upon the earlier to occur of (i)
issuance of the Shares to BUYER, or (ii) each monthly anniversary of the receipt
by SELLER of such BUYER'S notice of conversion or exercise. In the event that
SELLER has taken all steps reasonably necessary to effect such conversion or
exercise, but due to circumstances completely and totally beyond the control of
SELLER, such conversion has not taken place by the Deadline, then the liquidated
damages referred to above shall not begin to accrue until the fifteenth business
day after receipt by SELLER of the duly executed Notice of Conversion. Nothing
herein shall waive SELLER'S obligations to deliver Common Shares upon conversion
of the Preferred Shares or limit BUYER'S right to pursue actual damages for
SELLER'S failure to issue and deliver Common Shares to BUYER in accordance with
the terms of this Agreement and the Preferred Shares.
SELLER agrees that, in addition to any other remedies which may be available to
BUYER, in the event SELLER fails for any reason to effect delivery to Buyer of
certificates representing Common Shares within seven (7) business days following
receipt by SELLER of a notice of conversion, BUYER may revoke the notice of
conversion by delivering a notice of such effect to SELLER, whereupon SELLER and
BUYER shall each be restored to their respective positions immediately prior to
delivery of such notice of conversion.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first written
above.
Official Signatory of BUYER:
[BUYER]
BY:___________________________
[NAME]
[TITLE]
Official Signatory of SELLER:
VIRAGEN, INC.
BY:___________________________
▇▇▇▇▇▇ ▇▇▇▇▇
President
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of [DATE] (this "Agreement"),
is made by and among Viragen, Inc. a Delaware corporation (the "Company"), and
the person named on the signature page hereto (referred to herein as "Initial
Investor" or "Buyer").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of [DATE], between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the
terms and subject to the conditions of the Subscription Agreement, to
issue and sell to the Initial Investor Warrants to purchase Common Stock
("Warrants") and shares of Preferred Stock (the "Preferred Shares"),
convertible into shares of Common Stock, $.01 par value (the "Common
Stock"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription 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 Preferred 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.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any transferee or
assignee 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 on such appropriate
registration form promulgated by the Commission as shall be selected by
the Company, and, when requested by the Initial Investor or any Investor
pursuant to Section 2 hereof, shall (A) be reasonably acceptable to the
holders of a majority of the Registrable Securities to which such
registration relates, and (B) shall permit the disposition of Registrable
Securities in accordance with the intended method or methods specified in
the Investor's request for such registration, and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission ("SEC").
(iii) "Registrable Securities" means the Common Stock underlying
the Preferred Shares and Warrants.
(iv) "Registration Statement" means a registration statement under
the Securities Act registering securities of the Company.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted
transferee or assignee of the Registrable Securities pursuant to Section 9
of this Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription
Agreement.
2. REGISTRATION.
(A) PAYMENTS BY THE COMPANY. The Company must file a Registration
Statement with the SEC within 20 business days of the last Closing
registering the Common Stock underlying the Preferred Shares and Warrants
for resale. The Company shall use its best efforts to have the
Registration Statement declared effective as soon as possible after
filing. If the Registration Statement covering the Registrable Securities
is not effective within 110 days after the last Closing, then the Company
will make payments to Buyer in such amounts and at such times as shall be
determined pursuant to this Section 2(a). The amount to be paid by the
Company to the Buyer shall be a use of funds fee equal to 1/2% of the
subscription price for the first and second months following said 110-day
period, which use of funds fee shall be prorated on a daily basis.
Thereafter, the Company shall pay a penalty to Buyer equal to 2% of the
subscription price for each month, prorated on a daily basis, until the
Registration Statement is declared effective by the SEC. Said penalty
shall not exceed the maximum amount allowed by law. The amounts referred
to in this section shall be paid by the Company within five business days
after the end of the applicable month beginning with the 30 day period
beginning on the first day following the 110-day period referred to above
and shall be payable in cash; provided, however, that the Company may
elect in lieu of payment of any such amount in cash to deliver to the
Initial Investor shares of Common Stock having an Aggregate Market Value
equal to the amount of the Periodic Amount if, but only if, (1) such
shares are freely tradable by the Initial Investor without any restriction
under the Securities Act or any state securities or "blue sky" law and (2)
after the issuance of such shares to the Holder, the aggregate number of
shares of Common Stock beneficially owned by the Holder (determined in
accordance with Section 13(d) of, and Regulations 13 D-G under, the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) would
not exceed 4.9% of the outstanding shares of Common Stock.
(B) PIGGY-BACK REGISTRATIONS. If at any time the Company shall
determine to prepare and file with the SEC a Registration Statement
relating to an offering for its own account or the account of others under
the Securities Act any of its equity securities, other than on Form S-4 or
Form S-8 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 Investor, who is
entitled to registration rights under this Section 2(b) written notice of
such determination and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering for the account of the
Company the managing underwriter(s) thereof shall impose a limitation on
the number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment, such
limitation is necessary to effect an orderly public distribution, then the
Company shall be obligated to include in such Registration Statement only
such limited portion, if any, of the Registrable Securities with respect
to which such Investor has requested inclusion hereunder. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking
to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities the
holders of which are not entitled by right to inclusion of securities in
such Registration Statement; and provided, further, however, that, after
giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement to the extent such pro rata allotment is permitted under the
Company's currently existing agreements with such holders of the Company's
securities. No right to registration of Registrable Securities under this
Section 2(b) shall be construed to limit any registration required under
Section 2(c) hereof. The obligations of the Company under this Section
2(b) may be waived by Investors holding a majority in interest of the
Registrable Securities and shall expire (i) after the Company has afforded
the opportunity for the Investors to exercise registration rights under
this Section 2(b) for two registrations; provided, however, that any
Investor who shall have had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2(b) shall be
entitled to include in an additional Registration Statement filed by the
Company the Registrable Securities so excluded or (ii) when all of the
Registrable Securities held by any Investor may be sold by such Investor
under Rule 144 under the Securities Act ("Rule 144") within any
three-month period.
(C) DEMAND REGISTRATION. If, at any time after the date which is 30
days after the closing under the Subscription Agreement, any Investor
holding a majority of the Registrable Securities shall notify the Company
in writing that it intends to offer or cause to be offered for public sale
Registrable Securities held by such Investor, the Company shall cause such
of the Registrable Securities as may be requested by any Investor to be
registered, on one occasion only, under the Securities Act and applicable
state laws as expeditiously as possible. Once the right for registration
of any Registrable Securities under this Section 2(c) has been exercised
by any Investor, the Company shall prepare and file a Registration
Statement covering such Registrable Securities with the SEC within twenty
(20) days of the exercise of such registration right.
(D) If any offering pursuant to a Registration Statement pursuant to
Section 2(c) hereof involves (at the Company's election) 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 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(d) (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 selected by the Investors.
As used in this Section 2(a), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number
of shares of Common Stock times (b) the Average Market Price of the Common
Stock for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be
computed as the average closing price of the shares over the five
trading-day period ending on the relevant Computation Date, as reported by
Bloomberg, L.P.
"Measurement Period" means the period of ten consecutive trading
days for the Common Stock ending on (or on the last trading day preceding)
each Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no event
later than 20 days) after a request in accordance with Section 2(b) hereof
a Registration Statement or Statements with respect to all Registrable
Securities to be included therein, and thereafter use its best efforts to
cause the Registration Statement to become effective as soon as reasonably
possible after such filing. If such Registration Statement is filed
pursuant to Rule 415, the Company shall keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is three
years after the date such Registration Statement is first ordered
effective by the SEC. In any case, the Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein)
filed by the Company 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; provided, however, that, subject to
the conditions set forth in Section 4(a) below, each Investor may notify
the Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement; provided further,
however, that if at any time the Investors shall be entitled to sell all
Registrable Securities held by them pursuant to 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 and without imposing restrictions arising
under the federal securities laws on the purchases thereof in a period of
three consecutive months, then the Company shall, so long as it meets the
current public information requirements of Rule 144, thereafter no longer
be required to maintain the registration of Registrable Securities
pursuant to this Agreement;
(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
until such date as is three years after the date such Registration
Statement is first ordered effective by the SEC, and, during such period,
comply with the provisions of the Securities Act 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, 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, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times until such date as
is the earlier of three years after the date such Registration Statement
is first ordered effective by the SEC or is three years after the Initial
Investor acquired the Shares 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 (I) qualify
to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to
general taxation in any such jurisdiction, (III) file a general consent to
service of process in any such jurisdiction, (IV) provide any undertakings
that cause more than nominal expense or burden to the Company or (V) 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) in the event Investors who hold a majority in interest of the
Registrable Securities being offered in the offering select underwriters
for the offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with
the managing underwriter of such offering;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant
to such registration 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 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;
(g) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant
to such registration (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 effectiveness of the Registration Statement at the
earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest of
the Registrable Securities being sold pursuant to such registration to
review the Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing with the SEC,
and shall not file any document in a form to which such counsel reasonably
objects;
(i) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering the fiscal year
period beginning not later than the first day of the Company's fiscal
quarter next following the date of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest
of the Registrable Securities being sold pursuant to such registration,
furnish on the date that Registrable Securities are delivered to an
underwriter for sale in connection with the Registration Statement (i) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters; and (ii) an opinion, dated such
date, from counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily given in
an underwritten public offering, addressed to the underwriters and
Investors;
(k) make available for inspection by any Investor whose Registrable
Securities are being sold pursuant to such registration, any underwriter
participating in any disposition pursuant to the Registration Statement,
and any attorney, accountant or other agent retained by any such Investor
or underwriter (collectively, the "Inspectors"), all pertinent financial
and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and
cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of
such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith
to be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court or government body of competent jurisdiction or (iii)
the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such
Inspector shall have entered into confidentiality agreements (in form and
substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(k). Each Investor
agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. The Company shall hold in confidence and shall not make any
disclosure of information concerning an Investor provided to the Company
pursuant to Section 4(e) hereof 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 an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
(l) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a
national securities exchange, which shall include the Nasdaq Small-Cap
Market, and on each additional national securities exchange on which
similar securities 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
National Market System or, if, despite the Company's best efforts to
satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
satisfying the preceding clause (i) or (ii), to secure listing on a
national securities exchange or 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;
(m) 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;
(n) cooperate with the Investors who hold Registrable Securities
being sold and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the
denominations or amounts as the case may be, and registered in such names
as the managing underwriter or underwriters, if any, or the Investors may
reasonably request; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have
the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
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 the Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least fifteen (15)
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 within five (5) 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;
(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;
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services
of an underwriter, each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification
and contribution obligations, with the managing underwriter of such
offering and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of the Registrable Securities,
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;
(d) 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(f) or 3(g), 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(f) or
3(g) 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; and
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting
arrangements approved by the Investors entitled hereunder to approve such
arrangements, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions and other fees and expenses of investment bankers and any
manager or managers of such underwriting and legal expenses of the
underwriter applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of
this Agreement.
5. EXPENSES OF REGISTRATION. All 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, 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; provided, however, that the
Investors shall bear the fees and out-of-pocket expenses of the one legal
counsel selected by the Investors pursuant to Section 3(h) hereof.
6. 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, any underwriter (as
defined in the Securities Act) for the Investors, the directors, if any,
of such underwriter and the officers, if any, of such underwriter, and
each person, if any, who controls any such underwriter within the meaning
of the Securities Act or the Exchange Act (each, an "Indemnified Person"),
against any losses, claims, damages, expenses or liabilities (joint or
several) (collectively "Claims") to which any of them 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 or any state securities law or any rule
or regulation (the matters in the foregoing clauses (i) through (iv)
being, collectively, "Violations"). Subject to the restrictions set forth
in Section 6 (d) with respect to the number of legal counsel, the Company
shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses 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) (I) shall not 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 any
Indemnified Person or underwriter for such 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(c) hereof;
(II) with respect to any preliminary prospectus shall not 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 prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
3(c) hereof; and (III) shall not 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 Persons and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section
6(a), the Company, each of its directors, each of its officers who signs
the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person
who controls such stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs (I) in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement or (II) the Investor's
violation of Rules 10-b-6 or 10-b-7 under the Exchange Act; and such
Investor will promptly reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid 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; provided,
further, however, that the Investor shall be liable under this Section
6(b) for only that amount of a Claim as does not exceed the net proceeds
to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf
of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to
any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing by such persons expressly for inclusion in the
Registration Statement.
(d) 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 made against
any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof and this 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 parties; provided, however, that
an Indemnified Person or Indemnified Party shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if, 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 other party represented by
such counsel in such proceeding. 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. 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.
7. CONTRIBUTION. To the extent any indemnification provided for
herein 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.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 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, until such
time as the Investors have sold all the Registrable Securities pursuant to
a Registration Statement or Rule 144, the Company agrees to:
(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.
9. 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 transferees or assignees of
all or any portion of such securities only if: (a) 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, (b) 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 (c) at or before the time the Company received the
written notice contemplated by clause (a) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained herein.
10. 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.
11. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement,
entitled to enforce the terms thereof, and to indemnification for any
damages resulting to Shoreline Pacific from any actual or threatened
breach thereof by the Company, both in Shoreline Pacific's personal
capacity and, should Shoreline Pacific so elect, on behalf of the
Investor.
12. 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.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally
delivered or when sent by registered mail, return receipt requested,
addressed (i) if to the Company, at Viragen, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President, (ii) if to the
Initial Investor, at the address set forth under its name in the
Subscription Agreement 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 12(b), and shall be effective, when personally
delivered, upon receipt, and when so sent by certified mail, four business
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 the
agreements made and to be performed entirely within such state, without
giving effect to rules governing the conflict of laws. 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
affect 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 the Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(i) 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
day and year first above written.
VIRAGEN, INC.
By_______________________
▇▇▇▇▇▇ ▇▇▇▇▇
President
[BUYER]
By_______________________
[NAME]
[TITLE]
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"). THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR SUCH OFFER, SALE OR TRANSFER IS EXEMPT
FROM SUCH REGISTRATION.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated: December 6, 1996
______________ Warrants
to Purchase ____________ Shares
of Common Stock, $.01 Par Value Per Share
VIRAGEN, INC., a Delaware corporation (the "Company"), hereby certifies
that _________________, its permissible transferees, designees, successors and
assigns (collectively, the "Holder"), for value received, is entitled to
purchase from the Company at any time commencing on December 6, 1996 up through
December 6, 1999, ______________ shares (the "Warrant Shares") of the Company's
common stock, par value $.01 per share (the "Common Stock"), at $2.00 per share
(the "Exercise Price").
1. Exercise of Warrants. Upon presentation and surrender of this Common
Stock Purchase Warrant Certificate ("Warrant Certificate" or "this
Certificate"), with the attached Purchase Form duly executed, at the principal
office of the Company at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, together
with a bank check, certified check or other form of payment acceptable to the
Company in the amount of the Exercise Price multiplied by the number of Warrant
Shares being purchased, the Company, or the Company's Transfer Agent as the case
may be, shall deliver to the holder hereof, certificates of Common Stock which
in the aggregate represent the number of Warrant Shares being purchased. This
Warrant Certificate may be exercised as to 25% of the underlying shares of
Common Stock on or after the tenth day following the date that a Registration
Statement covering the resale of the Common Stock underlying this Warrant
Certificate shall have been declared effective by the Securities and Exchange
Commission (the "First Conversion Date"), with an additional 25% of this Warrant
Certificate becoming exercisable 30, 60 and 90 days following the First
Conversion Date, respectively. To the extent that this Warrant Certificate shall
not have been exercised to the full extent permitted by the terms hereof as of
the respective dates provided above, the amount of Warrant Shares with respect
to which this Warrant Certificate shall be exercisable shall be cumulative.
All or less than all of the Warrants represented by this Certificate, as
provided above, may be exercised and, in case of the exercise of less than all,
the Company, upon surrender hereof, will deliver to the holder a new Warrant
Certificate or Certificates of like tenor and dated the date hereof entitling
said holder to purchase the number of Warrant Shares represented by this
Certificate which have not been exercised and to receive Registration Rights
with respect to such Warrant Shares.
2. Exchange and Transfer. This Certificate at any time prior to the
exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Certificates of like tenor registered in the name
of the same holder, for another Certificate or Certificates of like tenor in the
name of such holder exercisable for the aggregate number of Warrant Shares as
the Certificate or Certificates surrendered.
3. Rights and Obligations of Holder of this Certificate.
(a) The Holder of this Certificate shall not, by virtue hereof, by
entitled to any rights of a stockholder in the Company, either at law or in
equity; provided, however, that in the event any certificate representing shares
of Common Stock or other securities is issued to the holder hereof upon exercise
of some or all of the Warrants, such holder shall, for all purposes, be deemed
to have become the holder of record of such Common Stock on the date on which
this Certificate, together with a duly executed Purchase Form, was surrendered
and payment of the aggregate Exercise Price was made, irrespective of the date
of delivery of such share certificate.
(b) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common Stock
into a greater number of shares, or (iii) combine its outstanding Common Stock
into a smaller number of shares (including a recapitalization in connection with
a consolidation or merger in which the Company is the continuing corporation),
then (x) the Exercise Price on the record date of such division on the effective
date of such action shall be adjusted by multiplying such Exercise Price by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event, and
(y) the number of shares of Common Stock for which this Warrant Certificate may
be exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event as provided in subitem (x) hereinabove.
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(c) In case of any consolidation or merger of the Company with or
into another corporation (other than any consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock or the conversion of
such outstanding shares of Common Stock into shares or other stock or other
securities or property), or the sale or transfer of the property of the Company
as an entirety or substantially as an entirety, there shall be delivered upon
exercise of the Warrant Certificate the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
would have been entitled upon such action if this Warrant Certificate had been
exercised immediately prior to such action.
4. Common Stock.
(a) The Company covenants and agrees that all shares of Common Stock
issuable upon exercise of this Warrant Certificate will, upon delivery, be duly
and validly authorized and issued, fully-paid and non-assessable.
(b) The Company covenants and agrees that it will at all times
reserve and keep available an authorized number of shares of its Common Stock
and other applicable securities sufficient to permit the exercise in full of all
outstanding options, warrants and rights, including the Warrants.
5. Registration Rights. The Holder shall be entitled to registration
rights with respect to the Warrant Shares underlying this Warrant as provided in
that certain Registration Rights Agreement dated even date herewith.
6. Issuance of Certificates. As soon as possible after full or partial
exercise of this Warrant, but in any event not more than three (3) business days
of receipt of payment by the Company for such exercise, the Company, at its
expense, will cause to be issued in the name of and delivered to the holder of
this Warrant, a certificate or certificates for the number of fully paid and
non-assessable shares of Common Stock to which that holder shall be entitled on
such exercise. No fractional shares will be issued on exercise of this Warrant.
If on any exercise of this Warrant a fraction of a share results, the Company
will pay the cash value of that fractional share, calculated on the basis of the
Exercise Price. Prior to registration of the shares of Common Stock underlying
this Warrant Certificate, as provided in Section 5 hereof, all such certificates
shall bear a restrictive legend to the effect that the Shares represented by
such certificate have not been registered under the Securities Act of 1933, as
amended (the "Act"), and the Shares may not be sold or transferred in the
absence of such registration or an exemption therefrom, such legend to be
substantially in the form of the bold face language appearing on Page 1 of this
Warrant Certificate.
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7. Disposition of Warrants or Shares. The holder of this Warrant
Certificate, each transferee hereof and any holder and transferee of any Warrant
Shares, by his or its acceptance thereof, agrees that no public distribution of
Warrants or Warrant Shares will be made in violation of the provisions of the
Act. Furthermore, it shall be a condition to the transfer of the Warrants that
any transferee thereof deliver to the Company his, her or its written agreement
to accept and be bound by all of the terms and conditions contained in this
Warrant Certificate.
8. Notices. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing by certified or
registered mail, return receipt requested, postage prepaid, or by U.S. express
mail service or private overnight mail service (e.g. Federal Express). Any such
notice shall be deemed to have been given (a) on the business day immediately
subsequent to mailing, if sent by U.S. express mail service or private overnight
mail service, or (b) three (3) business days following the mailing thereof, if
mailed by certified or registered mail, postage prepaid, return receipt
requested, and all such notices shall be sent to the following addresses (or to
such other address or addresses as a party may have advised the other in the
manner provided in this Section 8):
If to the Company: VIRAGEN, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Holder: ▇▇▇▇▇▇ Hedgecap Limited
▇/▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇) Ltd.
Corporate Centre, West Bay Road
P.O. Box 31006 SMB, Grand Cayman
Cayman Islands
9. Governing Law. This Warrant Certificate and all rights and obligations
hereunder shall be deemed to be made under and governed by the laws of the State
of California without giving effect to the conflicts of laws provisions. The
Holder hereby irrevocably consents to the venue and jurisdiction of the State
and Federal Courts located in the State of California, County of Marin.
10. Successors and Assigns. This Warrant Certificate shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
11. Headings. The headings of various sections of this Warrant Certificate
have been inserted for reference only and shall not be a part of this
Certificate.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or by facsimile, by one of its officers thereunto duly
authorized.
VIRAGEN, INC.
Date: December 6, 1996 By:_________________________
▇▇▇▇▇▇ ▇▇▇▇▇, President
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ELECTION TO PURCHASE
To Be Executed by the Holder
in Order to Exercise the Common Stock
Purchase Warrant Certificate
The undersigned Holder hereby irrevocably elects to exercise _____ of the
Warrants represented by this Common Stock Warrant Certificate, and to purchase
the shares of Common Stock issuable upon the exercise of such Warrants and
requests that certificates for securities be issued in the name of:
------------------------------------
(Please type or print name and address)
------------------------------------
-------------------------------------
-------------------------------------
(Social Security or tax identification number)
and delivered to _______________________________________________
________________________________________________________________
(Please type or print name and address)
and, if such number of Warrants shall not be all the Warrants evidenced by this
Common Stock Warrant Certificate, that a new Common Stock Warrant Certificate
for the balance of such Warrants be registered in the name of, and delivered to,
the Holder at the address stated below.
In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$_____________ by check or money order payable in United States currency to the
order of [Company].
[HOLDER]
Dated:_________________ By:____________________________
Name:
Title:
_____________________________________
(Address)
_____________________________________
_____________________________________
(Social Security or tax identifica-
tion number
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