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Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "
Agreement "), dated as of December 18, 2006, is
by and between LIPID SCIENCES, INC, a Delaware corporation (the "
Company "), and each of the entities whose names
appear on the signature pages hereof. With the exception
Oppenheimer & Co. Inc. (" Placement Agent "),
such entities are each referred to herein as an "
Investor " and, collectively, as the "
Investors ."
The Company has agreed, on the terms and subject to the
conditions set forth in the Stock Purchase Agreement, dated as of
December 18, 2006 (the " Stock Purchase
Agreement "), to issue and sell to each Investor named
therein shares (" Shares ") of the Company’s
common stock, par value $0.001 per share (the " Common
Stock ").
The Company has agreed, on the terms and subject to the
conditions set forth in the placement agent letter agreement, dated
as of November 30, 2006 (the " Placement Agent
Agreement "), to issue to Placement Agent warrants
exercisable for shares of the Company’s Common Stock equal to
4% of the number of Shares sold to the Investors (the "
Warrants "). The shares of Common Stock into
which the Warrants are exercisable are referred to herein as the "
Warrant Shares ," and the Shares, the Warrants and
the Warrant Shares are collectively referred to herein as the "
Securities ."
In order to induce each Investor to enter into the Stock
Purchase Agreement and the Placement Agent, the Placement Agent
Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "
Securities Act "), and under applicable state
securities laws.
In consideration of each Investor entering into the Stock
Purchase Agreement, and the Placement Agent entering into the
Placement Agent Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
For purposes of this Agreement, the following terms shall have
the meanings specified:
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" Business Day " means any day other than a
Saturday, a Sunday or a day on which the Commission is closed or on
which banks in the City of New York are authorized by law to be
closed.
" Commission " means the Securities and Exchange
Commission.
" Effective Date " means the date on which the
Registration Statement is declared effective by the Commission.
" Filing Deadline " means the thirtieth (30th)
calendar day following the Closing Date.
" Holder " means any person owning or having the
right to acquire, through exercise of the Warrants or otherwise,
Registrable Securities, including initially the Placement Agent
each Investor and thereafter any permitted assignee thereof.
" Registrable Securities " means the Shares and
the Warrant Shares and any other shares of Common Stock issuable
pursuant to the terms of the Stock Purchase Agreement or the
Warrants, any shares of capital stock issued or
issuable from time to time (with any adjustments) in replacement
of, in exchange for or otherwise in respect of the Shares or the
Warrant Shares, together with any securities issued or issuable
upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the
foregoing.
" Registration Deadline " means the earlier to
occur of (i) the ninetieth (90th) calendar day following the
Closing Date and (ii) the fifth (5th) Business Day following
the day on which the Commission informs the Company that no review
of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further
comments on the Registration Statement.
" Registration Period " has the meaning set forth
in Section 2(c) of this Agreement.
" Registration Statement " means a registration
statement or statements, including amendments and supplements,
prepared in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act ("
Rule 415 ") or any successor rule providing for
the offering of securities on a continuous or delayed basis.
Capitalized terms used herein and not otherwise defined shall
have the respective meanings specified in the Stock Purchase
Agreement.
(a)
Filing of Registration Statement . On or before the
Filing Deadline, the Company shall prepare and file with the
Commission a Registration Statement on Form S-3 as a "shelf"
registration statement under Rule 415 covering the resale of
the Registrable Securities. Such Registration Statement shall
state, to the extent permitted by Rule 416 under the Securities
Act, that it also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon the exercise of
the Warrants in order to prevent dilution resulting from stock
splits, stock dividends, recapitalization, reorganization
reclassification or other event that subdivides all of the
outstanding shares of Common Stock.
(b)
Effectiveness . The Company shall use commercially
reasonable efforts to cause the Registration Statement to become
effective as soon as practicable following the filing thereof, but
in no event later than the Registration Deadline. The Company
shall respond promptly to any and all comments made by the staff of
the Commission with respect to the Registration Statement, and
shall submit to the Commission, within three (3) Business Days
after the Company learns that no review of the Registration
Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration
Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date not
later than two (2) Business Days after the submission of such
request. The Company will maintain the effectiveness of each
Registration Statement filed pursuant to this Agreement until the
earlier to occur of (i) the date on which all of the
Registrable Securities eligible for resale thereunder have been
publicly sold pursuant to either the Registration Statement or Rule
144, and (ii) the date on which all of the Registrable
Securities remaining to be sold under such Registration Statement
may be immediately sold to the public under Rule 144(k) under the
Securities Act (" Rule 144(k) ") or any successor
provision (the period beginning on the Closing Date and ending on
the earlier to occur of (i) or (ii) above being referred to herein
as the " Registration Period ").
(c)
For a total of no more than twenty (20) Business Days in any twelve
(12) month period, the Company may, due to the existence of
material non-public information concerning the
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Company, suspend the use of any Prospectus
included in any registration statement contemplated by this Section
if, in the good faith opinion of the Company following consultation
with legal counsel, such information would be required to be
disclosed in such Prospectus and the disclosure of such information
at such time would have a Material Adverse Effect upon the Company
(an " Allowed Delay "); provided that the
Company shall promptly (a) notify the Holders in writing of
the existence of (but in no event, without the prior written
consent of a Holder, shall the Company disclose to such Holder any
of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, (b) advise the
Holders in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay and (c) use
reasonable best efforts to terminate an Allowed Delay as promptly
as practicable.
(d)
Registration Default . If (i) the Registration
Statement is not filed on or before the Filing Deadline or declared
effective by the Commission on or before the Registration Deadline,
(ii) after the Registration Statement has been declared
effective by the Commission, other than during an Allowed Delay,
sales of Registrable Securities (other than such Registrable
Securities as are then freely saleable pursuant to Rule 144(k))
cannot be made by a Holder under a Registration Statement for any
reason not within the exclusive control of such Holder or
(iii) other than during an Allowed Delay, an amendment or
supplement to a Registration Statement, or a new registration
statement, required to be filed pursuant to the terms of this
Agreement is not filed as required hereunder (each of the events
described in the foregoing clauses (i), (ii) and (iii) being
referred to herein as a " Registration Default "),
the Company shall make cash payments to each Holder equal to one
and one half percent (1.5%) of the aggregate Purchase Price paid by
such Holder for such Holder’s Registrable Securities for each
thirty (30) day period (pro-rated for partial 30-day periods) in
which a Registration Default exists. Each such payment shall be
paid exclusively with respect to the Shares only, and for the
avoidance of doubt, not with respect to the Warrant Shares or any
shares of Common Stock issuable pursuant to the terms of the
Warrants. Each such payment shall be required to be made
under this Section 2(d) shall be made within five (5)
Business Days following the last day of each calendar month in
which a Registration Default exists. Any such payment shall
be in addition to any other remedies available to each Holder at
law or in equity, whether pursuant to the terms hereof, the Stock
Purchase Agreement or otherwise.
(e)
Allocation of Warrant Shares . The initial number of
Shares and Warrant Shares included in any Registration Statement
and each increase in the number thereof included therein shall be
allocated pro rata among the Holders based on the aggregate
number of Registrable Securities issued or issuable to each Holder
at the time the Registration Statement covering such initial number
of Registrable Securities or increase thereof is declared effective
by the Commission (such number to be determined using the Exercise
Price in effect at such time and without regard to any restriction
on the ability of a Holder to exercise such Holder’s Warrant
as of such date). In the event that a Holder sells or
otherwise transfers any of such Holder’s Registrable
Securities, each transferee shall be allocated the portion of the
then remaining number of Registrable Securities included in such
Registration Statement allocable to the transferor.
(f)
Registration of Other Securities . During the period
beginning on the date hereof and ending on the Effective Date, the
Company shall refrain from filing any registration statement (other
than (i) a Registration Statement filed hereunder or
(ii) a registration statement on Form S-8 with respect to
stock option plans and agreements and stock plans currently in
effect and disclosed in the Stock Purchase Agreement or the
schedules thereto. In no event shall the Company include any
securities other than Registrable Securities, and such
indeterminate number of additional shares of Common Stock as may
become issuable upon the exercise of the Warrants in order to
prevent dilution resulting from stock splits, stock dividends,
recapitalization, reorganization reclassification or other event
that subdivides all of the outstanding shares of Common Stock on
any Registration Statement filed by the Company on behalf of the
Holders pursuant to the terms hereof
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In addition to performing its obligations hereunder, including,
without limitation, those pursuant to Section 2 of this
Agreement, the Company shall, with respect to each Registration
Statement:
(a)
prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used
in connection with such Registration Statement as may be necessary
to comply with the provisions of the Securities Act or to maintain
the effectiveness of such Registration Statement during the
Registration Period, or as may be reasonably requested by a Holder
in order to incorporate information concerning such Holder or such
Holder’s intended method of distribution;
(b)
[Intentionally Omitted];
(c)
so long as a Registration Statement is effective covering the
resale of the applicable Registrable Securities owned by a Holder,
furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holder may reasonably request
in order to facilitate the disposition of such Holder’s
Registrable Securities;
(d)
use reasonable best efforts to register or qualify the Registrable
Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably
requested from time to time by a Holder, and do any and all other
acts or things which may reasonably be necessary or advisable to
enable such Holder to consummate the public sale or other
disposition of the Registrable Securities in such jurisdictions;
provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any
such jurisdiction;
(e)
notify each Holder promptly after becoming aware of the occurrence
of any event (but shall not, without the prior written consent of
such Holder, disclose to such Holder any facts or circumstances
constituting material non-public information) as a result of which
the prospectus included in such Registration Statement, as then in
effect, contains an untrue statement of material fact or omits to
state a material fact required to be stated therein or necessa
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