REGISTRATION RIGHTS AGREEMENT, dated as of                        (this “ Agreement ”), by and between Acusphere, Inc., a Delaware corporation (the “ Company ”), and Cephalon, Inc., a Delaware corporation (the “ Purchaser ”).

 

WHEREAS, pursuant to the Note Purchase Agreement, dated as of October 24, 2008 (the “ Purchase Agreement ”), by and between the Company and the Purchaser, upon the terms and subject to the conditions contained therein, the Company is issuing and selling to the Purchaser a $15,000,000 Senior Secured Convertible Note of the Company (the “ Convertible Note ”);

 

WHEREAS, to induce the Purchaser to execute and deliver the Purchase Agreement and as a condition to the Purchaser consummating the transactions contemplated thereby, the Company has agreed to provide the Purchaser with the rights set forth in this Agreement.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1.  Definitions .  As used herein, unless the context otherwise requires, the following terms have the following respective meanings:

 

1.1.                             “ Affiliate ” means with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.

 

1.2.                             “ Agreement ” has the meaning set forth in the introduction.

 

1.3.                             “ Assignee ” has the meaning set forth in Section 4.2.

 

1.4.                             “ Board of Directors ” means the board of directors of the Company.

 

1.5.                             “ Common Stock ” means any shares of common stock, par value $0.01 per share, of the Company, now or hereafter authorized to be issued, and any and all securities of any kind whatsoever of the Company or any successor thereof which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stock pursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalization of the Company or otherwise.

 

1.6.                             “ Company ” has the meaning set forth in the introduction.

 

1.7.                             “ Convertible Note ” has the meaning set forth in the recitals.

 

1.8.                             “ Convertible Securities ” shall mean (i) any options or warrants to purchase or other rights to acquire Common Stock, (ii) any securities by their terms convertible into or exchangeable for Common Stock, and (iii) any options or warrants to purchase or other rights to acquire any such convertible or exchangeable securities.

 

1.9.                             “ Demand Exercise Notice ” has the meaning set forth in Section 2.1(a).

 

1.10.                      “ Demand Registration ” has the meaning set forth in Section 2.1(g).

 

 

1.11.                      “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.  Reference to a particular section of the Exchange Act, shall include a reference to the comparable section, if any, of any such similar federal statute.

 

1.12.                      “ Holder ” means the Purchaser and any Assignee.

 

1.13.                      “ Holder Demand ” has the meaning set forth in Section 2.1(a).

 

1.14.                      “ Indemnified Party ” means any Person seeking indemnification pursuant to Section 2.6.

 

1.15.                      “ Indemnifying Party ” means any Person from whom indemnification is sought pursuant to Section 2.6.

 

1.16.                      “ Indemnitees ” has the meaning set forth in Section 2.6(a).

 

1.17.                      “ Initiating Holder ” means the party or parties delivering a Holder Demand as provided for under Section 2.1(a).

 

1.18.                      “ Losses ” has the meaning set forth in Section 2.6(a).

 

1.19.                      “ Majority Participating Holders ” means, at any time, Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.

 

1.20.                      “ NASD ” means National Association of Securities Dealers, Inc.

 

1.21.                      “ Nasdaq ” means The Nasdaq Stock Market, Inc.

 

1.22.                      “ Participating Holders ” means any Holder participating in any offering of Registrable Securities pursuant to Section 2.1 or Section 2.2.

 

1.23.                      “ Person ” means an individual, a corporation, a partnership, a limited liability company, a business, an association, a trust, an individual, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

1.24.                      “ Postponement Period ” has the meaning set forth in Section 2.1(i).

 

1.25.                      “ Purchase Agreement ” has the meaning set forth in the recitals.

 

1.26.                      “ Purchaser ” has the meaning set forth in the introduction and includes any successor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise.

 

1.27.                      “ Qualified Independent Underwriter ” has the meaning set forth in NASD Rule 2720(b)(15).

 

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1.28.                      “ Registrable Securities ” means any of the following when held by a Holder: (i) any shares of Common Stock issued upon the conversion of the Convertible Note, and (ii) any shares of Common Stock acquired by the Holders from the Company after the date hereof, including shares of Common Stock acquired upon exercise or conversion of Convertible Securities that are acquired by the Holders from the Company after the date hereof.  For purposes of this Agreement, a Person will be deemed to a Holder of Registrable Securities whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion, exercise or exchange of the Convertible Note or any other Convertible Securities but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall not be required to convert, exercise or exchange such Convertible Security (or otherwise acquire such Registrable Security) to participate on any registered offering hereunder until the closing of such offering.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement or (b) when such securities shall have been sold pursuant to Rule 144 under the Securities Act or similar rule then in effect.

 

1.29.                      “ Registration Expenses ” means all fees and expenses incurred in connection with the Company’s performance of or compliance with Section 2 hereof, including, without limitation, (i) all registration, filing and applicable SEC fees, NASD fees, national securities exchange or inter-dealer quotation system fees, and fees and expenses of complying with state securities or “blue sky” laws (including fees and disbursements of counsel to the underwriters and the Participating Holders in connection with “blue sky” qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), (ii) all printing (including printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and printing preliminary and final prospectuses), word processing, duplicating, telephone and facsimile expenses, and messenger and delivery expenses, (iii) all fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of “cold comfort” letters or any special audits required by, or incident to, such registration, (iv) all reasonable fees and expenses of one law firm or other counsel selected by the Majority Participating Holders for the benefit of all of the Participating Holders, (v) all reasonable fees and expenses of any special experts or other Persons retained by the Company in connection with any registration, (vi) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practices, (vii) all applicable rating agency fees with respect to the Registrable Securities, (viii) reasonable fees and expenses of a Qualified Independent Underwriter and its counsel, (ix) all fees and disbursements of the underwriters (other than underwriting discounts and commissions but, including reasonable fees and disbursements of one counsel for such underwriters), (x) all transfer taxes, and (xi) all expenses incurred in connection with promotional efforts or “roadshows” (as negotiated by the Company with the underwriters); provided , however , that Registration Expenses shall exclude, and the Participating Holders shall pay ratably, underwriting discounts and commissions in respect of the Registrable Securities being registered for such Participating Holders.

 

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1.30.                      “ SEC ” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

1.31.                      “ Section 2.2 Sale Amount ” has the meaning set forth in Section 2.2(c).

 

1.32.                      “ Securities Act ” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.  References to a particular section of the Securities Act shall include a reference to the comparable section, if any, of any such similar federal statute.

 

SECTION 2.                       Registration Under the Securities Act .

 

2.1.                             Registration on Demand .

 

(a)                                   Demand .  At any time or from time to time, a Holder or Holders holding a majority of Registrable Securities then outstanding may require the Company to use its best efforts to effect the registration under the Securities Act of all or part of their respective Registrable Securities, by delivering a written request (a “ Holder Demand ”) therefor to the Company specifying the number of shares of Registrable Securities to be registered and the intended method of distribution thereof.  As promptly as practicable, but no later than 20 days after receipt of a Holder Demand, the Company shall give written notice (the “ Demand Exercise Notice ”) of the Holder Demand to all Holders of Registrable Securities.  Such Holders shall have the option, within 10 days after the receipt of the Demand Exercise Notice, to request, in writing, that the Company include in such registration any Registrable Securities held by such Holder (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder).  The Company shall as expeditiously as possible use its best efforts to effect the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by the Initiating Holder and any other Holders which have made such written request.  The Company shall use its best efforts (i) to effect as soon as practicable (but, in any event, within 30 days of the receipt of the Holder Demand or, in the event the SEC reviews and has written comments to the registration statement, within 90 days of the receipt of the Holder Demand) the registration of Registrable Securities for distribution in accordance with the intended method of distribution set forth in a written request delivered by the Majority Participating Holders and (ii) if requested by the Majority Participating Holders, obtain acceleration of the effective date of the registration statement relating to such registration.

 

(b)                                   Registration Statement Form .  Registrations under this Section 2.1 shall be on such appropriate form of the SEC  which the Company is then eligible to use for such purpose (i) as shall be selected by the Company and as shall be reasonably acceptable to the Majority Participating Holders and (ii) as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in such Participating Holders’ requests for such registration, including, without limitation, a continuous or delayed basis offering pursuant to Rule 415 under the Securities Act to the extent available to the Company.  The Company agrees to include in any such registration statement all information which, in the opinion of counsel to the Participating Holders and counsel to the Company, is necessary or desirable to be included therein.

 

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(c)                                   Expenses .  The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registration requested pursuant to this Section 2.1.

 

(d)                                   Effective Registration Statement .  A registration requested pursuant to this Section 2.1 shall not be deemed a Demand Registration (including for purposes of Section 2.1(g)) unless a registration statement with respect thereto has become effective and unless the Participating Holders are able to sell at least 80% of the Registrable Securities requested to be included in such registration; provided , that a registration which is withdrawn at the sole request of the Majority Participating Holders pursuant to Section 2.1(f) will count as a Demand Registration unless (i) the Demand Registration does not become effective because a material adverse change has occurred, or is reasonably likely to occur, in the condition (financial or otherwise), prospects, business, assets or results of operations of the Company and its subsidiaries taken as a whole subsequent to the date of the delivery of the Demand Exercise Notice, (ii) after the Demand Registration has become effective, such registration is interfered with by any stop order, injunction, or other order or requirement of the SEC or other governmental agency or court, (iii) the Demand Registration is withdrawn at the request of the Majority Participating Holders due to the advice of the managing underwriter(s) that the Registrable Securities covered by the registration statement could not be sold in such offering within a price range acceptable to the Majority Participating Holders, (iv) the Demand Registration is withdrawn for any reason at any time during a Postponement Period or within 10 days thereafter or (v) the Participating Holders reimburse the Company for any and all Registration Expenses incurred by the Company in connection with such request for a Demand Registration that was withdrawn or not pursued, in which case the Demand Registration shall not be deemed to have been effected and will not count as a Demand Registration.

 

(e)                                   Selection of Underwriters .  The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.1 shall be selected by the Majority Participating Holders, which underwriters shall be reasonably acceptable to the Company.

 

(f)                                     Right to Withdraw .  Any Participating Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.1 at any time prior to the effective date of such registration statement by giving written notice to the Company of its request to withdraw.  Upon receipt of notices from the Majority Participating Holders to such effect, the Company shall cease all efforts to obtain effectiveness of the applicable registration statement, and whether the Initiating Holder’s request for registration pursuant to this Section 2.1 shall be counted as a Demand Registration for purposes of Section 2.1(g) shall be determined in accordance with Section 2.1(d) above.

 

(g)                                  Limitations on Registration on Demand .  The Holders shall be entitled to require the Company to effect, and the Company shall be required to effect, four (4) registrations in the aggregate pursuant to this Section 2.1 (each, a “ Demand Registration ”): provided , however , that the Company shall not be required to have a registration statement declared effective pursuant to a Demand Registration until at least 90 days after the effective date of any other registration statement filed by the Company pursuant to a previous Demand Registration.

 

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(h)                                  Priority in Registrations on Demand .  Whenever the Company effects a registration pursuant to this Section 2.1 in connection with an underwritten offering by Holders, no securities other than Registrable Securities shall be included among the securities covered by such registration unless the Majority Participating Holders consent in writing to the inclusion therein of such other securities, which consent may be subject to terms and conditions determined by the Majority Participating Holders in their sole discretion.  If any registration pursuant to a Holder Demand involves an underwritten offering and the managing underwriter(s) of such offering shall inform the Company in writing of its belief that the number of Registrable Securities requested to be included in such registration pursuant to this Section 2.1, when added to the number of any other securities to be offered in such registration, would materially adversely affect such offering, then the Participating Holders shall be entitled to participate on a pro rata basis based on the number of shares of Registrable Securities requested to be included in the offering by each such Participating Holder prior to the inclusion of any securities other than Registrable Securities.

 

(i)                                     Postponement .  The Company shall be entitled once in any twelve month period to postpone for a reasonable period of time (but not exceeding 90 days) (the “ Postponement Period ”) the filing of any registration statement required to be prepared and filed by it pursuant to this Section 2.1 if the Company determines, in its reasonable judgment, upon advice of counsel, as authorized by a resolution of the Board of Directors, that such registration and offering would require premature disclosure of any material financing, material corporate reorganization or other material transaction involving the Company, and promptly gives the Participating Holders written notice of such determination, containing, to the extent each such Participating Holder agrees to keep such information confidential in accordance with Regulation FD, a specific statement of the reasons for such postponement and an approximation of the anticipated delay.

 

2.2.                             Incidental Registration .

 

(a)                                   Right to Include Registrable Securities .  If the Company at any time proposes to register any of its equity securities under the Securities Act by registration on Form S-l, S-2 or S-3, or any successor or similar form(s) (except registrations (i) pursuant to Section 2.1, (ii) solely for registration of equity securities in connection with an employee benefit plan (as defined in Rule 405 under the Securities Act) or dividend reinvestment plan on Form S-8 or any successor form thereto or (iii) in connection with any acquisition or merger on Form S-4 or any successor form thereto), whether or not for sale for its own account, it will at each such time give prompt written notice (but in no event less than 20 days prior to the initial filing of a registration statement with respect thereto) to each of the Holders of its intention to do so and such notice shall offer the Holders of such Registrable Securities the opportunity to register under such registration statement such number of Registrable Securities as each such Holder may request in writing.  Upon the written request of any of the Holders (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder), made as promptly as practicable and in any event within 10 days after the receipt of any such notice, the Company shall include in such registration under the Securities Act all Registrable Securities which the Company has been so requested to register by each Holder; provided , however , that if, at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with

 

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such registration, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company shall give written notice of such determination and its reasons therefor to the Holders and (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from any obligation of the Company to pay the Registration Expenses in connection therewith as provided for in Section 2.2(d)), without prejudice, however, to the rights of the Holders to request that such registration be effected as a registration under Section 2.1 and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities.  No registration effected under this Section 2.2 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1.

 

(b)                                   Right to Withdraw; Option to Participate in Shelf Takedowns .  Any Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.2 at any time prior to the effective date of such registration statement by giving written notice to the Company of its request to withdraw.  In the event that the Holder has requested inclusion of Registrable Securities in a shelf registration, the Holder shall have the right, but not the obligation, to participate in any offering of the Company’s equity securities under such shelf registration.

 

(c)                                   Priority in Incidental Registrations .  If any registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter(s) of such offering shall inform the Company in writing of its belief that the number of Registrable Securities requested to be included in such registration or offering, when added to the number of other equity securities to be offered in such registration or offering, would materially adversely affect such offering, then the Company shall include in such registration or offering, to the extent of the number and type which the Company is so advised can be sold in (or during the time of) such registration or offering without so materially adversely affecting such registration or offering (the “ Section 2.2 Sale Amount ”), (i) all of the securities proposed by the Company to be sold for its own account; (ii) thereafter, if the Participating Holders hold Registrable Securities that constitute, or upon conversion thereof would constitute, a Qualifying Ownership Interest (as defined in the Purchase Agreement), to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities requested by the Participating Holders (provided that if all of the Registrable Securities requested by the Participating Holders may not be included, the Participating Holders shall be entitled to participate on a pro rata basis based on the aggregate number of shares of Registrable Securities requested by the Participating Holders to be registered); and (iii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities required by the Participating Holders (if the Participating Holders did not have the right to include Registrable Securities in the registration pursuant to clause (ii) above) and any other securities of the Company requested to be included by Company stockholders holding other such registration rights on a pro rata basis based on the aggregate number of shares requested by the Participating Holders and the other Company stockholders to be registered.

 

(d)                                   Expenses .  The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registration requested pursuant to this Section 2.2.

 

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(e)                                   Selection of Underwriters .  The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.2 shall be selected by the Company provided that the Majority Participating Holders shall have the right to select a co-managing underwriter.

 

(f)                                     Right to Terminate Registration .  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration, whether or not any Holder has elected to include Registrable Securities in such registration.

 

2.3.                             Registration Procedures .

 

(a)                                   If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act pursuant to either Section 2.1 or Section 2.2 hereof, the Company shall as expeditiously as possible:

 

(i)                                     prepare and file with the SEC as soon as practicable (and in the case of a demand pursuant to Section 2.1, within 30 days after receipt by the Company of a Demand Exercise Notice) a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof which registration statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and thereafter use its best efforts to cause such registration statement to become and remain effective (A) with respect to an underwritten offering, for a period of at least 90 days or until all shares subject to such registration statement have been sold and (B) with respect to a shelf registration, until the earlier of (1) the sale of all Registrable Securities thereunder and (2) the third anniversary of the effective date of such shelf registration;

 

(ii)                                 use its best efforts to prepare and file with the SEC any amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the intended methods of disposition by the Participating Holders set forth in such registration statement for such period as provided for in Section 2.3(a)(i) above;

 

(iii)                             furnish, without charge, to each Participating Holder and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as the Majority Participating Holders and such underwriters may request (it being understood that the Company consents to the use of such prospectus or any amendment or supplement thereto by each Participating Holder and the underwriters in connection with the offering and sale of the Registrable Securities covered by such prospectus or any amendment or

 

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supplement thereto); provided , that the Company shall have no obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system;

 

(iv)                                use its best efforts (A) to register or qualify all Registrable Securities and other securities covered by such registration statement under such state securities or “blue sky” laws where an exemption is not available and as the Majority Participating Holders or any managing underwriter shall reasonably request, (B) to keep such registration or qualification in effect for so long as such registration statement remains in effect, and (C) to take any and all other actions which may be necessary or advisable to enable the Participating Holders or underwriters to consummate the disposition in such jurisdictions of the securities to be sold by the Participating Holders or underwriters, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not, but for the requirements of this Section 2.3(a)(iv), be obligated to be so qualified or file a general consent to service of process in any such jurisdiction;

 

(v)                                    cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary in the opinion of counsel to the Company and counsel to the Participating Holders to consummate the disposition of such Registrable Securities;

 

(vi)                                to the extent any Participating Holder could be deemed to be an “underwriter” for purposes of Section 11 of the Securities Act in connection with such registration of Registrable Securities, furnish to each Participating Holder and each underwriter a signed counterpart of (A) an opinion of counsel for the Company and (B) a “comfort” letter signed by the independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such registration statement, in each case, addressed to each Participating Holder and each underwriter covering matters with respect to such registration statement (and the prospectus included therein) as such Majority Participating Holders and managing underwriter(s) shall request;

 

(vii)                            promptly notify each Participating Holder and each managing underwriter (A) when such registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective; (B) of the receipt by the Company of any comments from the SEC or receipt of any request by the SEC for additional information with respect to any registration statement or the prospectus related thereto or any request by the SEC for amending or supplementing the registration statement and the prospectus used in connection therewith; (C) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation of any proceedings for that purpose; (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose; and (E) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any m