Exhibit No. 10.32
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this
“Agreement”) is made and entered into as of
February 16, 2006 among Access Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), and each of the
purchasers executing this Agreement and listed on Schedule 1
attached hereto (collectively, the
“Purchasers”).
This Agreement is being entered into
pursuant to the Convertible Note and Warrant Purchase Agreement,
dated as of the date hereof, by and among the Company and the
Purchasers (the “Purchase Agreement”).
The Company and the Purchasers
hereby agree as follows:
1.
Definitions .
Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
“ Advice ” shall
have the meaning set forth in Section 3(m).
“ Affiliate ”
means, with respect to any Person, any other Person that directly
or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition,
“control,” when used with respect to any Person, means
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,”
“controlling” and “controlled” have
meanings correlative to the foregoing.
“ AMEX ” shall
mean the American Stock Exchange.
“ Blackout Period
” shall have the meaning set forth in
Section 3(n).
“ Board ” shall
have the meaning set forth in Section 3(n).
“ Business Day ”
means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State
of Texas generally are authorized or required by law or other
government actions to close.
“ Commission ”
means the Securities and Exchange Commission.
“ Common Stock ”
means the Company’s Common Stock, par value $0.01 per
share.
“ Conversion Shares
” means the shares of Common Stock issuable upon conversion
of the Notes purchased by the Purchasers pursuant to the Purchase
Agreement.
“ Effectiveness Period
” shall have the meaning set forth in
Section 2.
“ Event ” shall
have the meaning set forth in Section 7(e).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
“ Filing Date ”
means March 31, 2006.
“ Holder ” or
“ Holders ” means the holder or holders, as the
case may be, from time to time of Registrable Securities, including
without limitation the Purchasers and their assignees.
“ Indemnified Party
” shall have the meaning set forth in
Section 5(c).
“ Indemnifying Party
” shall have the meaning set forth in
Section 5(c).
“ Losses ” shall
have the meaning set forth in Section 5(a).
“ Notes ” means
the Secured Convertible Promissory Notes issued to the Purchasers
pursuant to the Purchase Agreement.
“ Person ” means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
“ Proceeding ”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“ Prospectus ”
means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by
such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference in such
Prospectus.
“ Registrable
Securities ” means (a) the Conversion Shares and the
Warrant Shares (without regard to any limitations on beneficial
ownership contained in the Note or the Warrants) or other
securities issued or issuable to each Purchaser or its transferee
or designee (i) upon conversion of the Notes and/or upon
exercise of the Warrants, or (ii) upon any dividend or
distribution with respect to, any exchange for or any replacement
of such Notes, Conversion Shares, Warrants or Warrant Shares or
(iii) upon any conversion, exercise or exchange of any
securities issued in connection with any such distribution,
exchange or replacement; (b) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar
event with respect to the foregoing; and (c) any other
security issued as a dividend or other distribution with respect
to, in exchange for, in replacement or redemption of, or in
reduction of the liquidation value of, any of the securities
referred to in the preceding clauses; provided, however, that such
securities shall cease to be Registrable
2
Securities when such securities have
been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction or when such
securities may be sold without any restriction pursuant to
Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the
Company’s transfer agent to such effect as described in
Section 2 of this Agreement.
“ Registration
Statement ” means the registration statements and any
additional registration statements contemplated by Section 2,
including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference in such registration
statement.
“ Rule 144 ”
means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such
Rule.
“ Rule 158 ”
means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such
Rule.
“ Rule 415 ”
means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such
Rule.
“ Securities Act
” means the Securities Act of 1933, as amended.
“ Special Counsel
” means Wiggin and Dana LLP.
“ Warrants ”
means the Common Stock purchase warrants issued pursuant to the
Purchase Agreement, including, without limitation the Placement
Agent Warrants.
“ Warrant Shares
” means the shares of Common Stock issuable upon the exercise
of the Warrants (including, without limitation, the Placement Agent
Warrants) issued or to be issued to the Purchasers or their
assignees or designees in connection with the offering consummated
under the Purchase Agreement.
2.
Registration . As soon as possible following the Closing
Date (but not later than the Filing Date), the Company shall
prepare and file with the Commission a “shelf”
Registration Statement covering all Registrable Securities for a
secondary or resale offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on
Form S-3 (or if such form is not available to the Company on
another form appropriate for such registration in accordance
herewith). The Company shall use its reasonable best efforts to
cause the Registration Statement to be declared effective under the
Securities Act not later than ninety (90) days after the Closing
Date (including filing with the Commission a request for
acceleration of effectiveness in accordance with Rule 461
promulgated under
3
the Securities Act within five
(5) Business Days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that
a Registration Statement will not be “reviewed,” or not
be subject to further review) and to keep such Registration
Statement continuously effective under the Securities Act until
such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have
been sold or (y) with respect to such Holder, such time as all
Registrable Securities held by such Holder may be sold without any
restriction pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter,
addressed to the Company’s transfer agent to such effect (the
“Effectiveness Period”). For purposes of the
obligations of the Company under this Agreement, no Registration
Statement shall be considered “effective” with respect
to any Registrable Securities unless such Registration Statement
lists the Holders of such Registrable Securities as “Selling
Stockholders” and includes such other information as is
required to be disclosed with respect to such Holders to permit
them to sell their Registrable Securities pursuant to such
Registration Statement, unless any such Holder is not included as a
“Selling Stockholder” pursuant to Section 3(m).
Such Registration Statement also shall cover, to the extent
allowable under the Securities Act and the Rules promulgated
thereunder (including Securities Act Rule 416), such
indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities.
3.
Registration Procedures .
In connection with the
Company’s registration obligations hereunder, the Company
shall:
(a)
Prepare and file with the Commission on or prior to the Filing
Date, a Registration Statement on Form S-3 (or if such form is
not available to the Company on another form appropriate for such
registration in accordance herewith) (which shall include a Plan of
Distribution substantially in the form of Exhibit A
attached hereto), and cause the Registration Statement to become
effective and remain effective as provided herein; provided,
however, that not less than three (3) Business Days prior to
the filing of the Registration Statement or any related Prospectus
or any amendment or supplement thereto, the Company shall
(i) furnish to the Special Counsel, copies of all such
documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such
Special Counsel, and (ii) at the request of any Holder cause
its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of counsel to such Holders, to
conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable
Securities or the Special Counsel shall reasonably object within
three (3) Business Days after their receipt thereof. In the
event of any such objection, the Holders shall provide the Company
with any requested revisions to such prospectus or supplement
within two (2) Business Days of such objection.
(b)
(i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement
as may be necessary to keep the
4
Registration Statement continuously
effective as to the applicable Registrable Securities for the
Effectiveness Period and to the extent any Registrable Securities
are not included in such Registration Statement for reasons other
than the failure of the Holder to comply with
Section 3(m) hereof, shall prepare and file with the
Commission such amendments to the Registration Statement or such
additional Registration Statements in order to register for resale
under the Securities Act all Registrable Securities;
(ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or
any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as reasonably
practicable, and in no event later than ten (10) Business Days
to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as
reasonably practicable provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the
Registration Statement, but not, without the prior written consent
of the Holders, any comments that would result in the disclosure to
the Holders of material and non-public information concerning the
Company; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Holders thereof set
forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c)
Notify Holders of Registrable Securities to be sold and the Special
Counsel as promptly as reasonably practicable (A) when a
Prospectus or any Prospectus supplement or post-effective amendment
to the Registration Statement is proposed to be filed (but in no
event in the case of this subparagraph (A), less than three
(3) Business Days prior to date of such filing); (B) when
the Commission notifies the Company whether there will be a
“review” of such Registration Statement and whenever
the Commission comments in writing on such Registration Statement;
and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, and
after the effectiveness thereof: (i) of any request by the
Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or
Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose;
(iii) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding
for such purpose; and (iv) if the financial statements
included in the Registration Statement become ineligible for
inclusion therein or of the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Without limitation to any remedies to which
the Holders may be entitled under this Agreement, if any of the
events described in Section 3(c)(C)(i), 3(c)(C)(ii),
3(c)(C)(iii)
5
or 3(c)(C)(iv) occur, the
Company shall use its reasonable best efforts to respond to and
correct the event.
(d)
Use its reasonable best efforts to avoid the issuance of, or, if
issued, use reasonable best efforts to obtain the withdrawal of,
(i) any order suspending the effectiveness of the Registration
Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities
for sale in any jurisdiction, at the earliest practicable
time.
(e)
If requested by any Holder of Registrable Securities,
(i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included
therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as reasonably
practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f)
Furnish to each Holder and the Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules,
and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission.
(g)
Promptly deliver to each Holder and the Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto
as such Persons may reasonably request; and the Company hereby
consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(h)
Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with
the selling Holders and the Special Counsel in connection with the
registration or qualification (or exemption from such registration
or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder requests in writing, to keep each
such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do business
in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in
any jurisdiction where it is not then so subject or subject the
Company to any material tax in any such jurisdiction where it is
not then so subject.
(i)
Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold pursuant to a Registration Statement, which certificates shall
be free, to the extent permitted by applicable law and
the
6
Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any Holder
may request at least two (2) Business Days prior to any sale
of Registrable Securities. In connection therewith, the Company
shall promptly after the effectiveness of the Registration
Statement cause an opinion of counsel to be delivered to and
maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the
transfer agent, which authorize and direct the transfer agent to
issue such Registrable Securities without legend upon sale by the
Holder of such shares of Registrable Securities under the
Registration Statement.
(j)
Following the occurrence of any event contemplated by
Section 3(c)(C)(iv), as promptly as possible, prepare a
supplement or amendment, including a post-effective amendment, to
the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration
Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(k)
Cause all Registrable Securities relating to such Registration
Statement to be listed on any United States securities exchange,
quotation system, market or over-the-counter bulletin board on
which similar securities issued by the Company are then
listed.
(l)
Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its
security holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 not
later than 45 days after the end of any 3-month period (or 90 days
after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of
the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of
Rule 158.
(m)
Request each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable
Securities as is required by law or the Commission to be disclosed
in the Registration Statement, and the Company may exclude from
such registration the Registrable Securities of any such Holder who
fails to furnish such information within a reasonable time prior to
the filing of each Registration Statement, supplemented Prospectus
and/or amended Registration Statement.
If the Registration Statement refers
to any Holder by name or otherwise as the holder of any securities
of the Company, then such Holder shall have the right to require
(if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then
in force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be
required.
Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of any event of the kind
described in
7
Section 3(c)(C)(i),
3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv), or 3(n), such Holder will
forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt
of the copies of the supplemented Prospectus and/or amended
Registration Statement contemplated by Section 3(j), or until
it is advised in writing (the “Advice”) by the Company
that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
(n)
If (i) there is material non-public information regarding the
Company which the Company’s Board of Directors (the
“Board”) reasonably determines not to be in the
Company’s best interest to disclose and which the Company is
not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to,
the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender
offer or other similar transaction) available to the Company which
the Board reasonably determines not to be in the Company’s
best interest to disclose and which the Company would be required
to disclose under the Registration Statement, then the Company may
(i) postpone or suspend filing or effectiveness of a
registration statement or (ii) notify the Holders that the
Registration Statement may not be used in connection with any sales
of the Company’s securities, in each case, for a period not
to exceed 30 consecutive days, provided that the Company may not
postpone or suspend its obligation under this
Section 3(n) for more than 60 days in the aggregate
during any 12 month period (each, a “Blackout
Period”).
4.
Registration Expenses .
All fees and expenses incident to
the performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not the Registration
Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees
and expenses (A) with respect to filings required to be made
with AMEX and each other securities exchange, quotation system,
market or over-the-counter bulletin board on which Registrable
Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and
(C) in compliance with state securities or Blue Sky laws
(including, without limitation, reasonable and documented fees and
disbursements of Special Counsel in connection with Blue Sky
qualifications of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under
the laws of such jurisdictions as the Holders of a majority of
Registrable Securities may designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates
for Registrable Securities and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery
expenses, (iv) Securities Act liability insurance, if the
Company so desires such insurance, (v) fees and expenses of
all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement,
including, without limitation, the Company’s independent
public
8
accountants (including, in the case
of an underwritten offering, the expenses of any comfort letters or
costs associated with the delivery by independent public
accountants of a comfort letter or comfort letters) and legal
counsel, and (vi) reasonable and documented fees and expenses
of the Special Counsel in connection with any Registration
Statement hereunder. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
5.
Indemnification .
(a)
Indemnification by the Company . The Company shall,
notwithstanding any termination of this Agreement, indemnify and
hold harmless each Holder, the officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors and employees of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a
material fact contained or incorporated by reference in the
Registration Statement, any Prospectus or any form of prospectus or
in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or amendment or supplement
thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely
upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, which information
was reasonably relied on by the Company for use therein or to the
extent that such information relates to (x) such Holder and
was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such
Prospec
