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EXHIBIT 10.22
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of
October 13, 2000 between ZymeTx, Inc., a Delaware corporation (the "COMPANY")
and each of the entities listed under "INVESTORS" on the signature page hereto
(each an "INVESTOR" and collectively the "INVESTORS"), each with offices at the
address listed under such Investor's name on Schedule I hereto.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase and Security Agreement by and
between the Company and the Investors (the "PURCHASE AGREEMENT"), the Company
has agreed to sell and issue to the Investors, and the Investors have agreed to
purchase from the Company, an aggregate of $2 million principal amount of the
Company's 5% Senior Convertible Debentures Due October 12, 2002 (the
"DEBENTURES") on the terms and conditions set forth therein;
WHEREAS, the Purchase Agreement contemplates that the Debentures will be
convertible into shares (the "COMMON SHARES") of common stock, par value $.001,
of the Company ("COMMON STOCK");
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to issue warrants (the "WARRANTS") exercisable for shares of Common Stock
(the "WARRANT SHARES") in connection with the issuance of the Debentures;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Common Shares, Warrant Shares and certain other rights and remedies with
respect to the Debentures as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Purchase Agreement and
this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement, the
Warrants or the Debentures. As used in this Agreement, the following terms shall
have the following respective meanings:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such terms
in the Purchase Agreement.
"CONVERSION PRICE" shall have meaning ascribed to such term in Section 7(c)
of the Debenture.
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"CONVERSION VALUE" shall mean the value that a Holder would be entitled to
receive upon (i) conversion of the Debenture at the Conversion Price then in
existence, without reference to Sections 14 or 7(a) thereof or to Section 3.14
of the Purchase Agreement, followed by (ii) the subsequent sale of the Common
Shares received thereby at the greater of the Market Price for Shares of Common
Stock in existence from (A) the time of the event triggering the right to
redemption until (B) the time of the closing of a redemption of a Debenture.
"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"CONVERSION PRICE REDUCTION" shall mean a 1% reduction in the otherwise
applicable Conversion Price for the first 30-day period (or portion thereof) of
an Interfering Event and a 1.5% reduction for each subsequent 30-day period (or
portion thereof) of an Interfering Event.
"DEBENTURE AMOUNT" shall mean the Outstanding Principal Amount of, the
accrued but unpaid interest on, and the accrued but unpaid delay or forbearance
payments on the Debentures.
"EFFECTIVENESS DEADLINE" shall have the meaning set forth in Section 2(a).
"HOLDER" and "HOLDERS" shall mean the Investor or the Investors,
respectively, and any transferee of the Debentures, Warrants, Warrant Shares,
Option Shares or Common Shares or Registrable Securities which have not been
sold to the public to whom the registration rights conferred by this Agreement
have been transferred in compliance with this Agreement.
"INTERFERING EVENTS" shall have the meaning set forth in Section 2(b).
"MARKET PRICE FOR SHARES OF COMMON STOCK" shall have the meaning ascribed
to such term in the Debentures.
"OUTSTANDING PRINCIPAL AMOUNT" shall have the meaning ascribed to such term
in the Debentures.
"PREMIUM REDEMPTION PRICE" shall mean the following:
(a) as to the Debentures, the greater of (i) 120% of the Debenture
Amount and (ii) the Conversion Value;
(b) as to the Warrant Shares and Common Shares, 120% of the
dollar amount which is the product of (i) the number of shares to be redeemed,
and (ii) the highest Market Price for Shares of Common Stock in existence from
(x) the time of the event triggering the right to redemption until (y) the time
of the closing of the redemption of the Warrant Shares or Common Shares as
applicable.
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(c) as to the Warrants, 120% of the dollar amount which is the product
of (i) the number of Warrant Shares to be issued to the Holder upon exercise of
Warrants multiplied by (ii) the highest Market Price for Shares of Common Stock
in existence from (x) the time of the event triggering the right to redemption
until (y) the time of the closing of the redemption of the Warrants.
"PUT NOTICE" shall have the meaning set forth in Section 2(b)(i)(C).
"REGISTRABLE SECURITIES" shall mean: (a) the Common Shares and Warrant
Shares issued or issuable to each Holder or its permitted transferee or designee
upon conversion of the Debentures or exercise of the Warrants, as applicable, or
upon any stock split, stock dividend, recapitalization or similar event with
respect to such Common Shares or Warrant Shares; (b) any securities issued or
issuable to each Holder upon the conversion, exercise or exchange of any
Debentures, Warrants, Warrant Shares or Common Shares; and (c) any other
security of the Company issued as a dividend or other distribution with respect
to, conversion or exchange of, or in replacement of, Registrable Securities.
Warrant Shares will only become exercisable if and when the underlying Warrants
are issued.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "BLUE SKY"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"REGISTRATION STATEMENT" shall have the meaning set forth in Section 2(a)
herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for Holders not included within "Registration Expenses"
and if the Holders engage a third party as an underwriter for the purpose of
distributing Registrable Securities on an underwritten basis, the fees and
expenses of such underwriting and any additional expenses of an accountant
incurred in order to obtain a "Comfort Letter."
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2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "Blue Sky" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by the
Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible after
the Closing Date:
(i) But in any event within 30 days thereafter, prepare and file
a registration statement with the Commission on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use
such form, such other form as the Company is eligible to use under the
Securities Act) covering the Registrable Securities (such registration
statement, including any amendments or supplements thereto and
prospectuses contained therein, is referred to herein as the
"REGISTRATION STATEMENT"), which Registration Statement, to the extent
allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), shall state that such Registration
Statement also covers such number of additional shares of Common Stock
as may become issuable to prevent dilution resulting from stock
splits, stock dividends or similar events. The number of shares of
Common Stock initially included in such Registration Statement shall
be no less than the sum of (A) two (2) times the sum of the number of
Common Shares that are as of the date of this Agreement issuable upon
conversion of the Debentures plus (B) the number of Warrant Shares
issuable upon exercise of the Warrants in each case without regard to
any limitation on the Investor's ability to convert the Debentures or
Warrants. Thereafter, the Company shall use its best efforts to cause
such Registration Statement to be declared effective as soon as
practicable, and in any event prior to the earlier of (i) ninety (90)
days following the Closing Date or (ii) five (5) days after SEC
clearance to request acceleration (the "EFFECTIVENESS DEADLINE"). The
Company shall provide Holders and their legal counsel reasonable
opportunity to review any such Registration Statement or amendment or
supplement thereto prior to filing.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement in accordance
with the intended methods of disposition by the seller thereof as set
forth in the Registration Statement and notify the Holders of the
filing and
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effectiveness of such Registration Statement and any amendments or
supplements.
(iii) After the registration, furnish to each Holder such numbers
of copies of a current prospectus conforming with the requirements of
the Act, copies of the Registration Statement, any amendment or
supplement thereto and any documents incorporated by reference therein
and such other documents as such Holder may reasonably require in
order to facilitate the disposition of Registrable Securities owned by
such Holder.
(iv) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or
"Blue Sky" laws of all U.S. jurisdictions; provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(v) Notify each Holder immediately of the happening of any event
as a result of which the prospectus (including any supplements thereto
or thereof and any information incorporated or deemed to be
incorporated by reference therein) included in such Registration
Statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances then existing, and, pursuant to Section 2(f), use
its best efforts to promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose. The Company shall
use its best efforts to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit a single firm of counsel, designated as Holders'
counsel by the Holders of a majority of the Registrable Securities
included in the Registration Statement, to review the Registration
Statement and all amendments and supplements thereto within a
reasonable period of time prior to each filing, and shall not file any
document in a form to which such counsel reasonably objects.
(viii) Use its best efforts to list the Registrable Securities
covered by such Registration Statement with all securities exchange(s)
and/or markets on which the Common Stock is then listed and prepare
and file any required filings with the National Association of
Securities Dealers, Inc. or any exchange or market where the Common
Stock is then traded.
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(ix) If applicable, take all steps necessary to enable Holders to
avail themselves of the prospectus delivery mechanism set forth in
Rule 153 (or successor thereto) under the Act.
(x) File additional Registration Statements if the number of
Registrable Securities at any time exceeds 80% of the number of shares
of Common Stock then registered in the existing Registration
Statements hereunder.
(b) Set forth below in this Section 2(b) are (I) events that may arise
that the Investors consider will interfere with the full enjoyment of their
rights under the Debentures, the Purchase Agreement and this Agreement (the
"INTERFERING EVENTS"), and (II) certain remedies applicable in each of these
events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an
Interfering Event occurs and provide that the Investors may require
that the Company redeem outstanding Debentures, Warrants, or
Registrable Securities at a specified price if certain Interfering
Events are not timely cured.
Paragraph (v) provides, inter alia, that each Holder shall have the
option as to whether it would like to receive any payment required as
a remedy in the case of certain of the Interfering Events in cash or
shares of Common Stock.
Paragraph (vi) provides, inter alia, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid
when due, the Company may be required by the Investors to redeem
outstanding Debentures, Warrants, or Registrable Securities at a
specified price.
Paragraph (viii) provides, inter alia, that the Investors have the
right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve only as an
introduction to this Section 2(b), are for convenience only, and are not to be
considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that the Registration Statement has not been
declared effective by the Effectiveness Deadline, then the Company
shall cause a Conversion Price Reduction for each thirty (30) day
period (or portion thereof) thereafter during which the Registration
Statement has not been declared effective.
(B) If the Registration Statement has not been declared
effective within thirty (30) days of the Effectiveness Deadline (the
"FORBEARANCE DEADLINE"), then the Company (at its election made within
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one (1) business day of the Forbearance Deadline) either (i) shall pay
a cash forbearance fee to each Holder equal to three percent (3%) of
the Debenture Amount of such Holder's Debentures for the first 30-day
period (or portion thereof) following the Forbearance Deadline and
five percent (5%) of the Debenture Amount of those Debentures for each
subsequent 30-day period (or portion thereof), or (ii) redeem all but
not less than all the Debentures, Warrants, Common Shares and Warrant
Shares held by all Holders at the Premium Redemption Price. If the
Company elects to pay in cash pursuant to (i) above, such cash amounts
shall be payable upon the Holder's demand. If the Company elects to
redeem at the Premium Redemption Price pursuant to (ii) above, the
Company shall deliver to each Holder a written notice thereof (the
"COMPANY PUT NOTICE"), which Company Put Notice shall state the
Premium Redemption Price shall be paid five (5) business day
thereafter (the "COMPANY REDEMPTION DATE"). Nothing herein shall be
construed as precluding the Holder from exercising its conversion
rights under the Debenture unless the Company redeems the Debenture
and pays the full Premium Redemption Price as set forth in this
Section 2(b)(i)(B). New Conversion Price Reductions will no longer be
made and forbearance fees shall no longer accrue on Debentures after
they have been redeemed by the Company.
(C) If the Registration Statement has not been declared
effective within 365 days of the Closing Date, then each Holder shall
have the right to require the Company to redeem the Debentures,
Warrants, Common Shares, and/or Warrant Shares in whole or in part at
the Premium Redemption Price. Each Holder shall exercise such right by
providing the Company with written notice thereof (the "PUT NOTICE"),
which such Put Notice shall include the type and amount of each
security that the Holder seeks to redeem and a date at least five (5)
business days from the date thereof on which the Holder seeks the
redemption to occur (the "REDEMPTION DATE"). Nothing herein shall be
construed as precluding the Holder from exercising its conversion
rights under the Debenture unless the Company redeems the Debenture
and pays the Premium Redemption Price set forth above in full pursuant
to Section 2(b)(i)(B). New Conversion Price Reductions will no longer
be made and forbearance fees shall no longer accrue on Debentures they
have been redeemed by the Company.
(ii) No Listing; Premium Price Redemption for Delisting of Class
of Shares.
(A) In the event that the Company fails, refuses or is
unable to cause the Registrable Securities covered by the Registration
Statement to be listed with the applicable Approved Markets and each
other securities exchange and market on which the Common Stock is then
traded at all times during the period ("LISTING PERIOD") commencing on
the Effectiveness Deadline, and continuing thereafter for so long as
the
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Debentures are outstanding, then the Company shall cause a Conversion
Price Reduction for each 30-day period (or portion thereof) during the
Listing Period from and after such failure, refusal or inability to so
list the Registrable Securities until the Registrable Securities are
so listed.
(B) In the event that shares of Common Stock of the Company
are delisted from the applicable Approved Markets at any time
following the Closing Date and remain delisted for either 5
consecutive days or an aggregate of ten (10) days in any twelve (12)
month period, then at the option of each Holder and to the extent such
Holder so elects, the Company shall, at the option of each Holder,
either (1) cause a Conversion Price Reduction for each 30-day period
(or portion thereof) that the shares are delisted or (2) redeem the
Debentures and/or Warrants and/or Common Shares and/or Warrant Shares
held by such Holder, in whole or in part, at the Premium Redemption
Price; provided, however, that such Holder may revoke such request at
any time prior to receipt of payment of such Premium Redemption Price
or realization of such Conversion Price Reduction, as the case may be.
(iii) Blackout Periods. In the event any Holder is unable to sell
Registrable Securities under the Registration Statement for more than
(A) five (5) consecutive days or (B) an aggregate of ten (10) days in
any 12 month period ("SUSPENSION GRACE PERIOD"), including without
limitation by reason of a suspension of trading of the Common Stock on
the Approved Market, any suspension or stop order with respect to the
Registration Statement or the fact that an event has occurred as a
result of which the prospectus (including any supplements thereto)
included in such Registration Statement then in effect includes an
untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, or
the number of shares of Common Stock covered by the Registration
Statement is insufficient at such time to make such sales (a
"BLACKOUT"), then the Company shall cause a Conversion Price Reduction
for each 30-day period (or portion thereof) from and after the
expiration of the Suspension Grace Period. In lieu of receiving the
Conversion Price Reduction as provided above, a Holder shall have the
right but not the obligation to elect to have the Company redeem its
Debentures, Warrants, Common Shares and Warrant Shares at the Premium
Redemption Price.
(iv) Conversion Deficiency; Premium Price Redemption for
Conversion Deficiency. In the event that the Company does not have a
sufficient number of Common Shares available to satisfy the Company's
obligations to any Holder upon receipt of a Conversion Notice (as
defined in the Debenture) or is otherwise unable or unwilling to issue
such Common Shares (including without limitation by reason of the
limit
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described in Section 10 below) in accordance with the terms of the
Debenture for any reason after receipt of a Conversion Notice, then:
(A) The Company shall cause a Conversion Price Reduction for
each 30-day period (or portion thereof) that the Company fails, is
unable or refuses to issue Common Shares in accordance with the
Debenture terms; provided, however, that if such failure is the result
of there being insufficient shares authorized to make such issuance,
there shall not be a Conversion Price Reduction if the Company
promptly (but in any event within ten (10) calendar days) authorizes
and issues such shares, and
(B) At any time five (5) days after the commencement of the
running of the first 30-day period described above in clause (A) of
this paragraph (iv), at the request of any Holder pursuant to a
redemption notice, the Company promptly (1) shall purchase from such
Holder, at the Premium Redemption Price, the Debenture Amount of
Debentures equal to such Holder's pro rata share of the Deficiency (as
such term is defined below), if the failure to issue Common Shares
results from the lack of a sufficient number thereof and (2) shall
purchase all (or such portion as such Holder may elect) of such
Holder's Debentures at such Premium Redemption Price if the failure to
issue Common Shares results from any other cause. The "DEFICIENCY"
shall be equal to the Debenture Amount of Debentures that would not be
able to be converted for Common Shares, due to an insufficient number
of Common Shares available, if all the outstanding Debentures were
submitted for conversion at the Conversion Price set forth in the
Debentures as of the date such Deficiency is determined. Any request
by a Holder pursuant to this paragraph (iv)(B) shall be revocable by
that Holder at any time prior to its receipt of the Premium Redemption
Price.
(v) Certain Terms. All Conversion Price Reductions shall be made,
and all forbearance fees required to be made in connection with the
above provisions shall be paid, at any time upon demand.
(vi) Premium Price Redemption for Conversion Price Reduction
Defaults and Forbearance Fee Defaults. In the event that the Company
fails or refuses to give effect to any Conversion Price Reduction
provided for in the foregoing paragraphs (i) through (iv) or pay any
forbearance fee when due, at any Holder's request and option, the
Company shall purchase all or a portion of the Debentures, Warrants,
Common Shares and/or Warrant Shares held by such Holder (with
forbearance fees accruing through the date of such purchase), within
five (5) days of such request, at the Premium Redemption Price;
provided that such Holder may revoke such request at any time prior to
receipt of such payment of the full Premium Redemption Price. Until
such time as the Company purchases such Debentures at the request of
such Holder
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pursuant to the preceding sentence, at any Holder's request and
option, the Company shall add the amount of any forbearance fees to
the Outstanding Principal Amount of a Holder's Debentures and increase
the 120% multiplier in each calculation of Premium Redemption Price by
the percentage of all Conversion Price Reductions.
(vii) Cumulative Remedies. Each Conversion Price Reduction
triggered by an Interfering Event provided for in the foregoing
paragraphs (ii) through (iv) shall be in addition to each other
Conversion Price Reduction triggered by another Interfering Event;
provided, however, that in no event shall the Company be obligated to
provide any Holder with -------- more than one (1) Conversion Price
Reduction for any 30-day period (or portion thereof). The Conversion
Price Reductions, forbearance fees and redemptions provided for above
are in addition to and not in lieu or limitation of any other rights
the Holders may have at law, in equity or under the terms of the
Debentures or the other Transaction Documents, including without
limitation the right to specific performance. Each Holder shall be
entitled to specific performance of any and all obligations of the
Company in connection with the registration rights of the Holders
hereunder.
(viii) Certain Acknowledgments. The Company acknowledges that any
failure, refusal or inability by the Company described in the
foregoing paragraphs (i) through (iv) and paragraph (vi) will cause
the Holders to suffer damages in an amount that will be difficult to
ascertain, including without limitation damages resulting from the
loss of liquidity in the Registrable Securities and the additional
investment risk in holding the Registrable Securities. Accordingly,
the parties agree that it is appropriate to include in this Agreement
the foregoing provisions for Conversion Price Reductions, forbearance
fees and redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the Conversion Price
Reductions, forbearance fees and redemptions set forth above represent
the parties' good faith effort to quantify such damages and, as such,
agree that the form and amount of such Conversion Price Reductions,
forbearance fees and mandatory redemptions are reasonable and will not
constitute a penalty.
(c) If the Holder(s) intend to distribute the Registrable Securities by
means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by investment bankers reasonably
satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities. In the event that
the offering in which the Registrable
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Securities are to be sold is deemed to be an underwritten offering or an
Investor selling Registrable Securities is deemed to be an underwriter, the
Company shall:
(i) make such representations and warranties to the Holders and
the underwriter or underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in secondary
offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of the effective
date (or in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end
of each fiscal year thereafter, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Holders
and the underwriter(s), if any, and their counsel and covering,
without limitation, such matters as the due authorization and issuance
of the securities being registered and compliance with securities laws
by the Company in connection with the authorization, issuance and
registration thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the Holders and
each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each fiscal
year following a year during which the Company's independent certified
public accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each underwriter, if
any, stating that such accountants are independent public accountants
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary offerings; such accountants
shall have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being
reviewed so that each such letter shall remain current, correct and
complete throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the Holders;
(iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings;
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(v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement, if any; and
(vi) deliver to the Holders on the effective date (or in the case
of an underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the Registration
Statement, and at the beginning of each fiscal quarter thereafter, a
certificate in form and substance as shall be reasonably satisfactory
to the Holders, executed by an executive officer of the Company and to
the effect that all the representations and warranties of the Company
contained in the Purchase Agreement are still true and correct except
as disclosed in such certificate; the Company shall, as to each such
certificate delivered at the beginning of each fiscal quarter, update
or cause to be updated each such certificate during such quarter so
that it shall remain current, complete and correct throughout such
quarter; and such updates received by the Holders during such quarter,
if any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection, upon reasonable
written notice and during regular business hours, by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential.
(f) The Company shall file a Registration Statement with respect to any
newly authorized and/or reserved shares, with respect to its obligation to
reserve or register Registrable Securities (including pursuant to Section
1.1(c)(iii) of the Purchase Agreement), within thirty (30) days of any corporate
action authorizing or reserving same and shall file a Registration Statement
with respect to additional Registrable Securities within thirty (30) days of the
occurrence of an event referred to in Section 2(a)(x) and shall use its best
efforts to cause, in either case, such Registration Statement to become
effective within sixty (60) days of such corporate action or such occurrence, as
the case may be. If the Holders become entitled, pursuant to an event described
in clause (iii) of the definition of Registrable Securities, to receive any
securities in respect of Registrable Securities that were already included in a
Registration Statement, subsequent to the date such Registration Statement is
declared effective, and the Company is unable under the securities laws to add
such securities to the then effective Registration Statement, the Company shall
promptly file, in accordance with the procedures set forth herein, an
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additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below. All of the registration rights
and remedies under this Agreement shall apply to the registration of such newly
reserved shares and such new Registrable Securities, including without
limitation the provisions providing for Conversion Price Reductions, forbearance
fees and redemptions contained herein.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3; Other Forms. The Company shall use its best
efforts to qualify and remain qualified for registration on Form S-3 or any
comparable or successor form or forms, or in the event that the Company is
ineligible to use such form, such form as the Company is eligible to use under
the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until the later to occur of (i) sales are
permitted of all Registrable Securities without registration under Rule 144(k)
or (ii) such time as there are no longer any Warrants outstanding.
6. Indemnification.
(a) The Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors and partners, and each person controlling each
Holder, within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each Holder, each of its officers, directors and partners, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided
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that the Company will not be liable in any such case to a Holder to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity agreement contained in
this Section 6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder(s), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company and such other Holder(s)
and their directors, officers and partners, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the
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extent that the Indemnifying Party is materially and adversely affected by such
failure to provide notice. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6 herein is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein (other than by reason of the exceptions
provided therein), then each such Indemnifying Party, in lieu of indemnifying
each of such Indemnified Parties, shall contribute to the amount paid or payable
by each such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to contribute
under this Section 7 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 6(a) or 6(b) hereof had been available under the
circumstances.
The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
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Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall reasonably promptly furnish to
the Company such information regarding such Holder and the distribution and/or
sale proposed by such Holder as the Company may reasonably request in writing
and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. The intended method
or methods of disposition and/or sale (Plan of Distribution) of such securities
as so provided by such Investor shall be included without alteration in the
Registration Statement covering the Registrable Securities and shall not be
changed without written consent of such Holder, except that such Holder may not
require an intended method of disposition which violates applicable securities
law.
10. NASDAQ Limit on Stock Issuances. Section 3.14 of the Purchase Agreement
shall govern limits imposed by NASDAQ National Market rules on the conversion of
Debentures.
11. Replacement Certificates. The certificate(s) representing the Common
Shares or Warrant Shares held by the Investor (or then Holder) may be exchanged
by the Investor (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares or Warrant Shares, as reasonably requested by the Investor (or
such Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Debentures or Warrants, and all other rights granted to the
Investors by the Company hereunder may be transferred or assigned to any
transferee or assignee of any Debentures or Warrants.
13. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or
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injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
(b) Jurisdiction. The Company and each of the Investors (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in New York County, New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and each of the Investors consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
(c) Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, mail or personal delivery
and shall be effective upon actual receipt of such notice. The addresses for
such communications shall be:
to the Company:
ZymeTx, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Twelfth Floor
One Leadership Square
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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to the Investors:
To each Investor at the address and/or fax number set
forth on Schedule I of this Agreement
with copies to:
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days' written notice of such changed address to the
other parties hereto.
(d) Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.
(f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of any Investor without its
express written approval, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement. The
Company agrees to deliver a copy of any public announcement regarding the
matters covered by this Agreement or any agreement or document executed herewith
to each Investor and any public announcement including the name of an Investor
to such Investor, prior to the publication of such announcements.
(h) No Piggyback on Registration. Neither the Company nor any of its
security holders may include securities of the Company in the Registration
Statement other than the Registrable Securities, and the Company shall not after
the date hereof enter into any agreement providing any such right to any of its
security holders.
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(i) Entire Agreement. This Agreement, together with the other
Transaction Documents and the agreements and documents contemplated hereby and
thereby, contains the entire understanding and agreement of the parties, and may
not be modified or terminated except by a written agreement signed by both
parties.
(j) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York applicable to contracts executed
and to be performed entirely in such State.
(k) Severability. The parties acknowledge and agree that the Investors
are not agents, affiliates or partners of each other, that all representations,
warranties, covenants and agreements of the Investors hereunder are several and
not joint, that no Investor shall have any responsibility or liability for the
representations, warrants, agreements, acts or omissions of any other Investor,
and that any rights granted to "INVESTORS" hereunder shall be enforceable by
each Investor hereunder.
(l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.
(m) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
(n) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of at least a majority of the then issued or issuable Registrable
Securities; provided, however, that, for the purposes of this sentence,
Registrable Securities that are owned, directly or indirectly, by the Company,
or an affiliate of the Company are not deemed outstanding.
Signature page follows
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ZYMETX, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
PALLADIN OPPORTUNITY FUND, LLC.
By: Palladin Asset Management, L.L.C.
Managing Member
By:
----------------------------------------------
Managing Member
HALIFAX FUND, L.P.
By: The Palladin Group, L.P.
Attorney-in-Fact
By: Palladin Capital Management, LLC
General Partner
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Member
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
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SCHEDULE I
INVESTOR
Palladin Opportunity Fund, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Halifax Fund, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇