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EXHIBIT
10.2
REGISTRATION RIGHTS
AGREEMENT
This Registration Rights
Agreement (this “ Agreement ”) is made and
entered into as of September 24, 2007, by and among Avicena
Group, Inc., a Delaware corporation (the “ Company
”), and the purchasers listed on Schedule I hereto
(the “ Purchasers ”).
This Agreement is being
entered into pursuant to the Series C Convertible Preferred Stock
Purchase Agreement dated as of the date hereof 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 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.
“ Board ”
shall have 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 New York generally are authorized or required by law
or other government actions to close.
“ Closing Date
” means the date of the initial closing of the purchase and
sale of the Preferred Stock and the Warrants pursuant to the
Purchase Agreement.
“ Commission
” means the Securities and Exchange Commission.
“ Common Stock
” means the Company’s common stock, par value $0.001
per share.
“ Effectiveness
Date ” means, subject to Section 2(b) hereof, with
respect to the Registration Statement the earlier of (A) the
one hundred fiftieth (150 th ) day following the
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Closing Date (or in the event
the Registration Statement receives a “full review” by
the Commission, the one hundred eightieth (180 th ) day following the Closing Date)
or (B) the date which is within three (3) Business Days
after the date on which the Commission informs the Company
(i) that the Commission will not review the Registration
Statement or (ii) that the Company may request the
acceleration of the effectiveness of the Registration Statement;
provided that , if the Effectiveness Date falls on a
Saturday, Sunday or any other day which shall be a legal holiday or
a day on which the Commission is authorized or required by law or
other government actions to close, the Effectiveness Date shall be
the following Business Day.
“ Effectiveness
Period ” shall have the meaning set forth in
Section 2(a).
“ Event ”
shall have the meaning set forth in Section 7(e).
“ Event Date
” shall have the meaning set forth in
Section 7(e).
“ Exchange Act
” means the Securities Exchange Act of 1934, as
amended.
“ Filing Date
” means, subject to Section 2(b) hereof, the sixtieth
(60 th
) day following the
Closing Date; provided that , if the Filing Date falls on a
Saturday, Sunday or any other day which shall be a legal holiday or
a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the
following Business Day.
“ Holder ”
or “ Holders ” means the holder or holders, as
the case may be, from time to time of Registrable
Securities.
“ 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).
“ 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.
“ Preferred
Stock ” means shares of the Company’s Series C
Convertible Preferred Stock issued to the Purchasers pursuant to
the Purchase Agreement.
“ 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 the 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
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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 the 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 (i) the shares of Common Stock
issuable upon conversion of the Preferred Stock and any dividends
accrued thereon; (ii) the shares of Common Stock issuable upon
exercise of the Warrants; any additional shares issuable in
connection with any anti-dilution provisions associated with the
Preferred Stock and Warrants (in each case, without giving effect
to any limitations on conversion set forth in the Certificate of
Designation or limitations on exercise set forth in the Warrant);
and (iii) any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing.
“ 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.
“ Rule 424
” means Rule 424 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 Sadis & Goldberg LLP, for whose
services the Holders will be reimbursed by the Company pursuant to
Section 4.
“ Warrants
” means the warrants to purchase shares of Common Stock
issued to the Purchasers pursuant to the Purchase
Agreement.
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2. Resale
Registration.
(a) On or prior to the Filing
Date, the Company shall prepare and file with the Commission a
“resale” Registration Statement providing for the
resale of all Registrable Securities by means of an offering to be
made on a continuous basis pursuant to Rule 415. The 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 and the Securities Act and
the rules promulgated thereunder). Such Registration Statement
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. The Company shall
(i) not permit any securities other than the Registrable
Securities and the securities listed on Schedule II hereto
to be included in the Registration Statement and (ii) use its
best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to the Effectiveness
Date, 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) the date on which the Registrable 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 (the
“ Effectiveness Period ”). The Company shall
request that the effective time of the Registration Statement be
4:00 p.m. Eastern Time on the effective date. If at any time and
for any reason, an additional Registration Statement is required to
be filed because at such time the actual number of shares of Common
Stock into which the Preferred Stock is convertible and the
Warrants are exercisable plus the number of shares of Common Stock
previously issued upon such conversion and exercise exceeds the
number of shares of Registrable Securities remaining under the
Registration Statement, the Company shall have twenty
(20) Business Days to file such additional Registration
Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the
Commission as soon as possible, but in no event later than sixty
(60) days after filing.
(b) Notwithstanding anything
to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register all of the
Registrable Securities in the Registration Statement because of the
Commission’s application of Rule 415, the Company shall
register in the Registration Statement such number of Registrable
Securities as is permitted by the Commission, provided ,
however , that the number of Registrable Securities to be
included in such Registration Statement or any subsequent
registration statement shall be determined in the following order:
(i) first, the shares of Common Stock issuable upon conversion
of the Company’s Series B Preferred Stock or upon exercise of
the Warrants issued concurrently with such Series B Preferred Stock
shall be registered on a pro rata basis among the holders of the
Series B Preferred Stock; (ii) second, the shares of Common
Stock issuable upon conversion of the Preferred Stock shall be
registered on a pro rata basis among the holders of the Preferred
Stock; (iii) third, the shares of Common Stock issuable upon
exercise of the C-2 Warrants shall be registered on a pro rata
basis among the holders of the C-2 Warrants; (iv) fourth, the
shares of Common Stock issuable upon exercise of the C-1 Warrants
shall be registered on a pro rata basis among the holders of the
C-1 Warrants; and (v) fifth, the shares of
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Common Stock issuable upon
exercise of the C-3 Warrants shall be registered on a pro rata
basis among the holders of the C-3 Warrants. In the event the
Commission does not permit the Company to register all of the
Registrable Securities in the initial Registration Statement, the
Company shall use its best efforts to file subsequent Registration
Statements to register the Registrable Securities that were not
registered in the initial Registration Statement as promptly as
possible and in a manner permitted by the Commission. For purposes
of this Section 2(b), “ Filing Date ” means
with respect to each subsequent Registration Statement filed
pursuant hereto, the later of (i) sixty (60) days
following the sale of substantially all of the Registrable
Securities included in the initial Registration Statement or any
subsequent Registration Statement and (ii) six (6) months
following the effective date of the initial Registration Statement
or any subsequent Registration Statement, as applicable, or such
earlier date as permitted by the Commission. For purposes of this
Section 2(b), “ Effectiveness Date ” means
with respect to each subsequent Registration Statement filed
pursuant hereto, the earlier of (A) the ninetieth (90
th
) day following the
filing date of such Registration Statement (or in the event such
Registration Statement receives a “full review” by the
Commission, the one hundred twentieth (120 th ) day following such filing date)
or (B) the date which is within three (3) Business Days
after the date on which the Commission informs the Company
(i) that the Commission will not review such Registration
Statement or (ii) that the Company may request the
acceleration of the effectiveness of such Registration Statement;
provided that , if the Effectiveness Date falls on a
Saturday, Sunday or any other day which shall be a legal holiday or
a day on which the Commission is authorized or required by law or
other government actions to close, the Effectiveness Date shall be
the following Business Day.
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 SB-2 (or if the Company is not then eligible to
register for resale the Registrable Securities on Form SB-2 such
registration shall be on another appropriate form in accordance
herewith and the Securities Act and the rules promulgated
thereunder) in accordance with the plan of distribution as set
forth on Exhibit A hereto and in accordance with applicable
law, and cause the Registration Statement to become effective and
remain effective as provided herein; provided ,
however , that not less than five (5) 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 Holders and any Special Counsel,
copies of all such documents proposed to be filed, which documents
will be subject to the review of such Holders and such Special
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
Special Counsel, to conduct a reasonable review of such documents.
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 any Special
Counsel shall reasonably object in writing within three
(3) Business Days of their receipt thereof.
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(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 Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements as necessary in order to register for resale under the
Securities Act all of the 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 possible, but 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 possible provide the Holders
true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; (iv) file
the final prospectus pursuant to Rule 424 of the Securities Act no
later than 9:00 a.m. Eastern Time on the Business Day following the
date the Registration Statement is declared effective by the
Commission; and (v) 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 Effectiveness 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 the Holders of
Registrable Securities and any Special Counsel as promptly as
possible (and, in the case of (i)(A) below, not less than three
(3) Business Days prior to such filing, and in the case of
(iii) below, on the same day of receipt by the Company of such
notice from the Commission) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Business
Day following the day: (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration
Statement is filed; (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; (ii) 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; (iii) 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 or threatening of any
Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any
agreement contemplated hereby ceases to be true and correct in all
material respects; (v) 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 (vi) 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.
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(d) Use its best efforts to
avoid the issuance of, or, if issued, obtain the withdrawal of, as
promptly as possible, (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.
(e) If requested by the
Holders of a majority in interest of the 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 practicable
after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If requested by any
Holder, furnish to such Holder and any Special 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.
(g) Promptly deliver to each
Holder and any 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 subject to the provisions of Sections 3(m)
and 3(n), 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 best efforts to
register or qualify or cooperate with the selling Holders and any
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 such 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, to the
extent permitted by the Purchase Agreement and applicable federal
and state securities laws, shall be free of all restrictive
legends, and to enable such
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Registrable Securities to be
in such denominations and registered in such names as any Holder
may request in connection with any sale of Registrable
Securities.
(j) Upon the occurrence of
any event contemplated by Section 3(c)(vi), 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) Use its best efforts to
cause all Registrable Securities relating to the Registration
Statement to be listed or quoted on the OTC Bulletin Board or any
other securities exchange, quotation system or market, if any, on
which similar securities issued by the Company are then listed or
traded as and when required pursuant to the Purchase
Agreement.
(l) Comply in all material
respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all
documents filed or required to be filed with the Commission,
including, but not limited, to, earning 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 12-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) The Company may require
each selling Holder to furnish to the Company information regarding
such Holder and the distribution of such Registrable Securities as
is required by law to be disclosed in the Registration Statement,
Prospectus, or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of
any such Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
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 covenants and
agrees that it will not sell any Registrable Securities under the
Registration Statement until the Company has electronically filed
the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that the Registration
Statement and any post-effective amendments thereto have become
effective as contemplated by Section 3(c).
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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 Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v),
3(c)(vi) 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
”) determines not to be in the Company’s best interest
to disclose and which the Company is not otherwise required to
disclose, (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 determines not to be in
the Company’s best interest to disclose, or (iii) the
Company is required to file a post-effective amendment to the
Registration Statement to incorporate the Company’s quarterly
and annual reports and audited financial statements on Forms 10-QSB
and 10-KSB, then the Company may (x) postpone or suspend
filing of a registration statement for a period not to exceed
thirty (30) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to
exceed twenty (20) consecutive days; provided that the Company
may not postpone or suspend effectiveness of a registration
statement under this Section 3(n) for more than forty-five
(45) days in the aggregate during any three hundred sixty
(360) day period; provided , however , that no
such postponement or suspension shall be permitted for consecutive
twenty (20) day periods arising out of the same set of facts,
circumstances or transactions.
4. Registration
Expenses .
All fees and expenses
incident to the performance of or compliance with this Agreement by
the Company, except as and to the extent specified in this
Section 4, 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 the OTC Bulletin Board and each other securities exchange or
market on which Registrable Securities are required hereunder to be
listed, if
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