INVESTORS’ RIGHTS
AGREEMENT
This
Investors’ Rights Agreement (this “ Agreement
”) is made and entered into as of September 13, 2006,
among Tenby Pharma Inc., a Delaware corporation (the “
Company ”), and the investors signatory hereto (each
such investor is a “ Investor ” and all such
investors are, collectively, the “ Investors
”).
WHEREAS,
immediately prior to the execution of this Agreement, the Company,
Sirion Therapeutics, Inc., a North Carolina corporation (“
Sirion ”) and each of the shareholders of Sirion (the
“ Sirion Shareholders ”) entered into that
certain Contribution Agreement, pursuant to which each of the
Sirion Shareholders contributed all of its shares of capital stock
of Sirion in exchange for shares of capital stock of the Company
(the “ Contribution ”);
WHEREAS,
simultaneously with the execution and delivery of this Agreement,
the Company and certain of the Investors (the “ North
Sound Investors ”) are entering into that certain
Series A Preferred Stock Purchase Agreement (the “
Purchase Agreement ”), pursuant to which the North
Sound Investors are purchasing from the Company an aggregate of
3,125,000 shares of Series A Preferred Stock for an aggregate
purchase price of $25,000,000 (the “ Financing
”); and
WHEREAS, the
Company and the Investors have agreed to enter into this Agreement
in connection with the Contribution and as a condition to the
closing of the Financing.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the
Investors agree as follows:
1.
Definitions . In addition to the terms defined elsewhere in
this Agreement, (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the
Purchase Agreement, and (b) the following terms have the
meanings indicated:
“
Effective Date ” means the date that a Registration
Statement is declared effective by the Commission.
“
Effectiveness Period ” means the period commencing on
the Effective Date of a Registration Statement and ending on
(i) with respect to the initial Registration Statement
required to be filed pursuant to Section 2 , the first
to occur of (a) the fifth anniversary of the Effective Date
and (b) the date when all Registrable Securities covered by
such Registration Statement cease to be Registrable Securities,
and, (ii) with respect to any additional Registration
Statements that may be required pursuant to Section 3 ,
until the first to occur of (a) the later of (x) the
fifth anniversary of the Effective Date of the initial Registration
Statement filed pursuant to Section 2 , and
(y) the first anniversary of the Effective Date of such
Registration Statement, and (b) the date when all Registrable
Securities covered by such Registration Statement cease to be
Registrable Securities.
“ Filing
Date ” means, with respect to the initial Registration
Statement required to be filed pursuant to Section 2 ,
the 60 th
day following the Closing Date, and,
with respect to any additional Registration Statements that may be
required pursuant to Section 3 , the
30
th day following the date on which the Company
receives a valid request for registration pursuant to
Section 3 .
“
Holder ” means any holder, from time to time, of
Registrable Securities.
“
Investor Counsel ” means Proskauer Rose LLP, counsel
to the Investors for purposes of this Agreement; provided ,
however , that if none of the North Sound Investors are
listed as a “Selling Stockholder” in a Registration
Statement, the Holders of a majority of the Registrable Securities
to be sold pursuant to such Registration Statement shall be
entitled to select alternative counsel to act as “Investor
Counsel” with respect to such Registration
Statement.
“
Investor Request ” means a request from Investors that
in the aggregate possess a majority of the Registrable Securities
outstanding or deemed to be outstanding as of the date of such
request.
“ Nominal
Value ” means $8.00 per share, as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like
occurring with respect to the Common Stock following the date of
this Agreement.
“ Outside
Investor ” means each of the North Sound Investors,
Avalon Ventures VI GP Fund, LLC, Avalon Ventures VI, L.P., Avalon
Ventures VII, L.P. and PharmaBio Development Inc.
“
Prospectus ” means the prospectus included in a
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 a Registration Statement, and all other
amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such
Prospectus.
“
Registrable Securities ” means (i) any Common
Stock, including Underlying Shares and any other shares of Common
Stock issued or issuable upon conversion of any shares of Series A
Preferred Stock (without giving effect to any limitations on
conversion contained in the Certificate of Designations); and
(ii) any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event
with respect to the foregoing. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities
when such securities have been sold by a Person: (i) in a
transaction in which such Person’s rights under this
Agreement are not assigned in accordance with the provisions of
this Agreement; (ii) pursuant to an effective registration
statement under the Securities Act; or (iii) pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act.
“
Registration Statement ” means any registration
statement to be filed under the Securities Act, which covers any of
the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all
amendments and
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supplements to
such Registration Statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference
in such Registration Statement.
“
Required Effectiveness Date ” means, with respect to
the initial Registration Statement required to be filed pursuant to
Section 2 , the 150 th day following the Closing Date, and, with
respect to any additional Registration Statements that may be
required pursuant to Section 3 , the 60
th day following the date on which the Company
receives a valid request for registration pursuant to
Section 3 ; provided , that such 150 day or
60 day period, as applicable, shall be extended for so long as
the Company shall continue to comply with each of the applicable
requirements of Section 5 below and use its best
efforts to cause such Registration Statement to be declared
effective by the Commission as promptly as practicable, up to a
maximum of an additional 90 days.
“
Rule 415, ” “ Rule 416, ”
“ Rule 424 ” and “
Rule 461 ” means Rule 415, Rule 416,
Rule 424 and Rule 461, respectively, promulgated by the
Commission pursuant to the Securities Act, as such Rule(s) may be
amended from time to time, or any similar rule(s) or regulation(s)
hereafter adopted by the Commission having substantially the same
effect as such Rule(s).
“
Qualified Public Offering ” means a bona fide firm
commitment underwritten public offering pursuant to a registration
statement under the Securities Act which results in aggregate gross
proceeds to the Company of not less than $35,000,000.
2.
Mandatory Registration .
(a) 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
the resale of fifty percent (50%) of all Registrable Securities for
an offering to be made on a continuous basis pursuant to
Rule 415. Such Registration Statement shall be on Form SB-2
(except if the Company is not then eligible to register for resale
the Registrable Securities on Form SB-2, in which case such
registration shall be on another appropriate form in accordance
herewith to which the Holders consent, which consent may not be
unreasonably withheld), and shall contain (except if otherwise
directed by the Holders) the “Plan of Distribution”
attached hereto as Annex A . The Company shall use its best
efforts to cause such Registration Statement to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, and in any event prior to the Required
Effectiveness Date (including filing with the Commission a request
for acceleration of effectiveness in accordance with Rule 461
within three (3) 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
will not be subject to further review) and shall use its best
efforts to keep such Registration Statement continuously effective
during the Effectiveness Period. The Company shall notify each
Holder in writing promptly (and in any event within one business
day) after receiving notification from the Commission that a
Registration Statement has been declared effective. 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
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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. Such Registration Statement also shall
cover, to the extent allowable under the Securities Act and the
rules promulgated thereunder (including 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.
(b) Upon
the occurrence of any Event (as defined below) and on every monthly
anniversary thereof until the earlier of the date the applicable
Event is cured or the first anniversary of the occurrence of the
Event, as partial relief for the damages suffered therefrom by the
Holders (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 2.0% of the Nominal Value of the Registrable
Securities held by such Holder. The liquidated damages payable
pursuant to the terms hereof (i) shall not apply to the
extent, but only to the extent, that the shares of Common Stock
required to be included in the applicable Registration Statement
are not otherwise available to be sold as a result of the
restrictions contained in Section 8 hereof, and
(ii) shall apply on a pro-rata basis for any portion of a
month prior to the cure of an Event. For such purposes, each of the
following shall constitute an “Event”: (w) a
Registration Statement is not filed on or prior to the applicable
Filing Date or is not declared effective on or prior to the
applicable Required Effectiveness Date; (x) after the
Effective Date for a Registration Statement, if the Company is not
eligible to use Form S-3 under the Securities Act (or similar or
successor form) at such time, a Holder is not permitted to sell
Registrable Securities under such Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) for
any reason for five (5) or more consecutive Trading Days or an
aggregate of twenty (20) or more Trading Days in any 12- month
period; (y) after the Effective Date for a Registration
Statement, if the Company is eligible to use Form S-3 under the
Securities Act (or similar or successor form) at such time, a
Holder is not permitted to sell Registrable Securities under such
Registration Statement (or a subsequent Registration Statement
filed in replacement thereof) for any reason for five or more
Trading Days (whether or not consecutive); or (z) at any time
after the Common Stock is first listed or quoted on an Eligible
Market, the Common Stock is not listed or quoted, or is suspended
from trading, on an Eligible Market for a period of five Trading
Days (which need not be consecutive Trading Days).
(c) At
the election of any Holder, any amount required to be paid by the
Company to such Holder pursuant to Section 2(b) may
instead be added to the Stated Value of the outstanding Preferred
Stock then owned by such Holder. A Holder may make such election by
delivering written notice to the Company at any time before such
cash payment is received by such Holder.
(a) If
at any time after the earliest of (i) the first anniversary of
the Closing Date, (ii) the closing of a Qualified Public Offering,
or (iii) the average daily trading volume of the shares of
Common Stock exceeds 10,000 shares (as adjusted for stock splits,
stock combinations or similar events) for ten consecutive Trading
Days, the Company shall receive a written Investor Request that the
Company file a registration statement under the Securities Act,
then the
4
Company shall,
within ten (10) days of the receipt thereof, give written
notice of such request to all Holders and, subject to the
limitations of Section 3(b) below, shall file (as
expeditiously as practicable, and in any event prior to the
applicable Filing Date) and use its best efforts to cause to become
effective no later than the applicable Required Effectiveness Date,
a Registration Statement under the Securities Act with respect to
all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 13(g)
below.
(b) If
the Holders intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise
the Company as a part of their request made pursuant to this
Section 3 and the Company shall include such
information in the written notice referred to in
Section 3(a) . In such event, the right of any Holder
to include such Holder’s Registrable Securities in such
registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the
extent provided herein. A majority in interest of the Holders of
Registrable Securities participating in the underwriting, in
consultation with the Company, shall select the managing
underwriter or underwriters in such underwriting, which underwriter
shall be reasonably acceptable to the Company. All Holders
proposing to distribute their securities through such underwriting
shall (together with the Company as provided in Section 5(m))
enter into an underwriting agreement in customary form with the
underwriter or underwriters so selected for such underwriting by a
majority in interest of such Holders; provided ,
however , that no Holder (or any of their assignees) shall
be required to make any representations, warranties or indemnities
except as they relate to such Holder’s ownership of shares
and authority to enter into the underwriting agreement and to such
Holder’s intended method of distribution, and the liability
of such Holder shall be limited to an amount equal to the net
proceeds from the offering received by such Holder. Notwithstanding
any other provision of this Section 3, if the underwriter
advises a Holder that marketing factors require a limitation of the
number of shares to be underwritten, then the Holder shall so
advise the Company and the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities
that may be included in the underwriting shall be allocated as
follows: (i) first, among holders of Registrable Securities
that have elected to participate in such underwritten offering, in
proportion (as nearly as practicable) to the aggregate amount of
Registrable Securities held by all such holders, until such holders
have included in the underwriting all shares requested by such
holders to be included, and (ii) thereafter, among all other
holders of Common Stock, if any, that have the right and have
elected to participate in such underwritten offering, in proportion
(as nearly as practicable) to the amount of shares of Common Stock
owned by such holders. Without the consent of a majority in
interest of the Holders of Registrable Securities participating in
a registration referred to in Section 3(a) , no
securities other than Registrable Securities shall be covered by
such registration if the inclusion of such other securities would
result in a reduction of the number of Registrable Securities
covered by such registration or included in any underwriting or if,
in the opinion of the managing underwriter, the inclusion of such
other securities would adversely impact the marketing of such
offering.
(c) The
Company shall be obligated to effect only two
(2) registrations (and, in each case, only if such
registration would include Registrable Securities with an aggregate
value of at least five million dollars ($5,000,000), calculated
using the stated offering price disclosed
5
on the cover of
the final prospectus covering such Registrable Securities) pursuant
to an Investor Request under this Section 3 (an
offering which is not consummated shall not be counted for this
purpose unless such offering is withdrawn at the request of a
majority in interest of the Holders participating in such Investor
Request).
(d) Notwithstanding
the foregoing, if the Company shall furnish to the Holders
requesting a Registration Statement pursuant to this
Section 3 , a certificate signed by the chief executive
officer or chief financial officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company,
it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed by reason
of a material pending transaction and it is therefore essential to
defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than
ninety (90) days after receipt of the Investor Request;
provided , however , that the Company may not utilize
this right more than once in any twelve (12) month period.
Likewise, the Company shall not be obligated to effect any
registration pursuant to this Section 3 within one
hundred eighty (180) days after the Effective Date of a
previous Registration Statement filed pursuant to this
Section 3 .
4.
Piggy-Back Registrations .
(a) If
(but without any obligation to do so) the Company proposes to
register (including for this purpose a registration effected by the
Company for stockholders other than the Investors) any of its stock
or other securities under the Securities Act in connection with the
public offering of such securities solely for cash (other than a
registration on Form S-8 (or similar or successor form) relating
solely to the sale of securities to participants in a Company stock
plan or to other compensatory arrangements to the extent includable
on Form S-8 (or similar or successor form), or a registration on
Form S-4 (or similar or successor form)), the Company shall, at
such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within
twenty (20) days after mailing of such notice by the Company
in accordance with Section 13(g) , the Company shall
use its best efforts to cause to be registered under the Securities
Act all of the Registrable Securities that each such Holder has
requested to be registered. The Company shall have no obligation
under this Section 4 to make any offering of its
securities, or to complete an offering of its securities that it
proposes to make.
(b) If
the Company intends to distribute the stock or other securities
referenced in Section 4(a) by means of an underwriting
with an underwriter selected in the Company’s sole
discretion, it shall so advise the Holders as a part of the written
notice referred to in Section 4(a) . In such event, the
right of any Holder to include such Holder’s Registrable
Securities in such registration shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion
of such Holder’s Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the
Company as provided in Section 5(m) ) enter into an
underwriting agreement in customary form with the underwriter or
underwriters so selected for such underwriting.
(c) If
any registration undertaken pursuant to this Section 4
is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the
6
Company that
marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall include in such
registration: (i) first, the securities the Company proposes
to sell; and (ii) second, the Registrable Securities requested
to be included in such registration, pro rata among the Holders of
such Registrable Securities on the basis of the number of
Registrable Securities owned by each such Holder.
(d) If,
at any time after giving notice of its intention to register any of
its securities as set forth in Section 4(a) and before
the Effective Date of the Registration Statement filed in
connection with such registration, the Company shall determine, for
any reason, not to register such securities, the Company may, in
its sole discretion, give written notice of such determination to
each Holder that requested to have its Registrable Securities
included in such registration and thereupon shall be relieved of
its obligation pursuant to Section 4 to register any
Registrable Securities in connection with such
registration.
5.
Registration Procedures . In connection with the
Company’s registration obligations hereunder, the Company
shall:
(a) Not
less than three Trading Days prior to the filing of each
Registration Statement or any related Prospectus or any amendment
or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference),
the Company shall (i) furnish to the Holders and Investor
Counsel copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Holders and Investor Counsel, and (ii) 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 respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file such a Registration Statement or any such Prospectus
or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities and Investor Counsel shall
reasonably object.
(b)
(i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary
to keep such Registration Statement continuously effective as to
the applicable Registrable Securities for the Effectiveness Period;
(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; and
(iii) respond as promptly as reasonably possible, and in any
event within ten (10) Trading Days, to any comments received
from the Commission with respect to any Registration Statement or
any amendment thereto and as promptly as reasonably possible
provide the Holders and Investor Counsel true and complete copies
of all correspondence from and to the Commission relating to a
Registration Statement.
(c) Notify
the Holders of Registrable Securities to be sold and Investor
Counsel as promptly as reasonably possible, and (if requested by
any such Person) confirm such notice in writing no later than one
Trading Day thereafter, of any of the following events:
(i) the Commission notifies the Company whether there will be
a “review” of any Registration Statement; (ii) the
Commission comments in writing on any Registration Statement (in
which case the Company shall deliver to each Holder a copy of such
comments and of all written
7
responses
thereto); (iii) any Registration Statement or any
post-effective amendment is declared effective; (iv) the
Commission or any other Federal or state governmental authority
requests any amendment or supplement to a Registration Statement or
Prospectus or requests additional information related thereto;
(v) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any
Proceedings for that purpose; (vi) the Company receives notice
of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for
such purpose; or (vii) the financial statements included in
any Registration Statement become ineligible for inclusion therein
or any statement made in any Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein
by reference is untrue in any material respect or any revision to a
Registration Statement, Prospectus or other document is required so
that 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 light of the
circumstances under which they were made, not
misleading.
(d) Use
its best efforts to avoid the issuance of or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of any
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 moment.
(e) Furnish
to each Holder and Investor Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by
reference, 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.
(f) Promptly
deliver to each Holder and Investor 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. Subject to the limitations set
forth in this Agreement, 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.
(g)
(i) In the time and manner required by each Trading Market, if
at all, prepare and file with such Trading Market an additional
shares listing application covering all of the Registrable
Securities included in any registration; (ii) take all steps
necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as reasonably practicable
thereafter; (iii) to the extent available to the Company,
provide to the Investors evidence of such listing; and
(iv) maintain the listing of such Registrable Securities on
each such Trading Market.
(h) If
the shares of Common Stock are then listed or quoted on an Eligible
Market, use its best efforts to list the Registrable Securities
covered by such Registration Statement with each Trading
Market;
8
(i) Prior
to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling
Holders and Investor 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 that the Company
shall not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this Section 5(i) , (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent
to general service of process in any such jurisdiction).
(j) Cooperate
with the Holders to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be delivered
to a transferee pursuant to an effective Registration Statement,
which certificates shall be free, to the extent permitted pursuant
to Section 12(a) , of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may
request.
(k) Upon
the occurrence of any event described in
Section 5(c)(vii) , as promptly as reasonably possible,
prepare a supplement or amendment, including a post-effective
amendment, to such a 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 such
Registration Statement nor its related 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 light of the circumstances under which they
were made, not misleading.
(l) Subject
to the execution of appropriate confidentiality agreements,
cooperate with any due diligence investigation undertaken by the
Holders in connection with the sale of Registrable Securities,
including without limitation by making available any documents and
information; provided that the Company will not deliver or make
available to any Holder material, nonpublic information unless such
Holder specifically requests in advance to receive material,
nonpublic information.
(m) If
Holders of a majority of the Registrable Securities being offered
pursuant to a Registration Statement select underwriters for the
offering or if securities are otherwise being sold pursuant to any
underwritten public offering, the Company shall enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, by providing
customary legal opinions, comfort letters and indemnification and
contribution obligations.
(n) Comply
with all applicable rules and regulations of the
Commission.
6.
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 any Registrable
Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include,
without limitation, (a) all
9
registration
and filing fees (including, without limitation, fees and expenses
(i) with respect to filings required to be made with any
Trading Market, and (ii) in compliance with applicable state
securities or Blue Sky laws (including, without limitation, fees
and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities
and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as requested by
the Holders)), (b) printing expenses (including, without
limitation, expenses of printing certificates for Registrable
Securities and of printing prospectuses requested by the Holders),
(c) messenger, telephone and delivery expenses, (d) fees
and disbursements of counsel for the Company and Investor Counsel
for the Holders (which Investor Counsel’s fees shall not
exceed $30,000, and (e) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. Notwithstanding the
foregoing, all underwriting fees, brokerage discounts and selling
commissions applicable to a sale by a Holder incurred in connection
with any registration of Registrable Securities, together with any
legal fees and expenses in excess of the $30,000 limitation, shall
be borne pro rata by the Holders in accordance with
the number of Registrable Securities included in such registration
by each such Holder.
(a)
Indemnification by the Company . The Company shall,
notwithstanding any termination of this Agreement, indemnify and
hold harmless each Holder, the officers, directors, partners,
members, 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, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in a 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 supplement thereto, in 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, or to the extent that such information relates to such
Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in a Registration
Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an
occurrence of an event of the type specified in
Section 5(c)(v)-(vii) , the use by such Holder of an
outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated
in Section 13(f) . The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions
contemplated by this Agreement.
10
(b)
Indemnification by Holders . Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section&nbs
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