EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of February 24, 2004, by and among SCOLR, Inc., a Delaware
corporation (the "Company"), and the investors signatory hereto (each a
"Purchaser" and collectively, the "Purchasers").
This Agreement is made pursuant to the Securities 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 that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
"Effectiveness Date" means, with respect to the Registration
Statement required to be filed hereunder, the earlier of (a) the 60th
calendar day following the date of the Purchase Agreement (120th
calendar day following the Closing Date in the event of a "full review"
of the Registration Statement by the Commission), and (b) the fifth
Trading Day following the date on which the Company is notified by the
Commission that the Registration Statement will not be reviewed or is
no longer subject to further review and comments.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Filing Date" means, with respect to the Registration
Statement required to be filed hereunder, the 30th calendar day
following the Closing Date.
"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).
"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
promulgated under the Securities Act), as amended or supplemented by
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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 or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means all of the Shares and the
Warrant Shares, together with any shares of Common Stock 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
required to be filed hereunder, including (in each case) the
Prospectus, amendments and supplements to the 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 the registration statement.
"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.
2. Registration.
(a) On or prior to the Filing Date, the Company shall
prepare and file with the Commission the Registration Statement
covering the resale of all of the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement required hereunder shall be on Form S-3 (except
if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case the Registration
shall be on another appropriate form in accordance herewith). The
Registration Statement required hereunder shall contain (except if
otherwise directed by the Holders) the "Plan of Distribution" attached
hereto as Annex A. The Company shall use its commercially reasonable
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 not later than the Effectiveness Date, and
shall use its commercially reasonable efforts to keep the Registration
Statement continuously effective under the Securities Act until the
date when all Registrable Securities covered by the Registration
Statement (a) have been sold pursuant to the Registration Statement or
an exemption from the registration requirements of the Securities Act
or (b) may be sold without volume restrictions pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness
Period").
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(b) If: (i) a Registration Statement is not filed on or
prior to its Filing Date (if the Company files a Registration Statement
without affording the Holder the opportunity to review and comment on
the same as required by Section 3(a), the Company shall not be deemed
to have satisfied this clause (i)); or (ii) the Company fails to file
with the Commission a request for acceleration in accordance with Rule
461 promulgated under the Securities Act, within five Trading Days of
the date that the Company is notified (orally or in writing, whichever
is earlier) by the Commission that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) prior to the
date when such Registration Statement is first declared effective by
the Commission, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in
respect of such Registration Statement within ten Trading Days after
the receipt of comments by or notice from the Commission that such
amendment is required in order for a Registration Statement to be
declared effective, or (iv) a Registration Statement filed or required
to be filed hereunder is not declared effective by the Commission on or
before the Effectiveness Date, or (v) after a Registration Statement is
first declared effective by the Commission, it ceases for any reason to
remain continuously effective as to all Registrable Securities for
which it is required to be effective, or the Holders are not permitted
to utilize the Prospectus therein to resell such Registrable
Securities, for in any such cases ten Trading Days (which need not be
consecutive days) in the aggregate during any 12-month period (any such
failure or breach being referred to as an "Event," and for purposes of
clause (i) or (iv) the date on which such Event occurs, or for purposes
of clause (ii) the date on which such five Trading Day period is
exceeded, or for purposes of clauses (iii) the date which such ten
Trading Day period is exceeded, or for purposes of clause (v) the date
on which such ten Trading Day period is exceeded being referred to as
"Event Date"), then in addition to any other rights the Holders may
have hereunder or under applicable law: (x) on each such Event Date the
Company shall pay to each Holder an amount in cash, as partial
liquidated damages and not as a penalty, equal to 2.0% of the aggregate
purchase price paid by such Holder pursuant to the Purchase Agreement
for any Registrable Securities then held by such Holder; and (y) on
each monthly anniversary of each such Event Date (if the applicable
Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash,
as partial liquidated damages and not as a penalty, equal to 2.0% of
the aggregate purchase price paid by such Holder pursuant to the
Purchase Agreement for any Registrable Securities then held by such
Holder. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per
annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full.
(c) If during the Effectiveness Period, the number of
Registrable Securities at any time exceeds 100% of the number of shares
of Common Stock then registered in a Registration Statement, then the
Company shall file as soon as reasonably practicable but in any case
prior to the 30th day following the date such number is exceeded, an
additional Registration Statement covering the resale of by the Holders
of not less than all of such Registrable Securities and the Company
shall use commercially reasonable
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efforts to cause such Registration Statement to be declared effective
as soon as reasonably practicable thereafter.
3. 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 the Registration Statement or any related Prospectus or any
amendment or supplement thereto, the Company shall, (i) furnish to the
Holders copies of all such documents proposed to be filed (including
documents incorporated or deemed incorporated by reference to the
extent requested by such Person) which documents will be subject to the
review of such Holders, 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 the
Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably object in good faith on the
advice of counsel to a Holder.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration
Statement and the Prospectus used in connection therewith 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 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; (iii)
respond as promptly as reasonably possible, and in any event within ten
Trading Days, to any comments received from the Commission with respect
to the Registration Statement or any amendment thereto and, as promptly
as reasonably possible, upon request, provide the Holders true and
complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered
by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders
thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be
sold as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than two Trading Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing promptly
following the day (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there
will be a "review" of the Registration Statement and whenever the
Commission comments in writing on the
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Registration Statement (the Company shall upon request provide true and
complete copies thereof and all written responses thereto to each of
the Holders); 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 during the period of effectiveness of the
Registration Statement for amendments or supplements to the
Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv)
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 (v)
of the occurrence of any event or passage of time that makes the
financial statements included in the Registration Statement ineligible
for inclusion therein or 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 light of the circumstances under which they were made, not
misleading.
(d) Use its commercially reasonable efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of the Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one
conformed copy of the Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference to the
extent requested by such Person, 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, 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 in connection with resales by the Holder of
Registrable Securities. 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, except after the giving on any notice pursuant to
Section 3(c).
(g) Prior to any resale of Registrable Securities by a
Holder, use its commercially reasonable efforts to register or qualify
or cooperate with the selling
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Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable
Securities for the resale by the Holder under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep the Registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things
reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement;
provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where
it is not then so subject or file a general consent to service of
process in any such jurisdiction.
(h) If requested by the Holders, cooperate with the
Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to the Registration Statement, which certificates
shall be free, to the extent permitted by the Purchase Agreement, 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.
(i) Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as reasonably 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 light of the circumstances under which they were
made, not misleading. If the Company notifies the Holders in accordance
with clauses (ii) through (v) of Section 3(c) above to suspend the use
of any Prospectus until the requisite changes to such Prospectus have
been made, then the Holders shall suspend use of such Prospectus. The
Company will use its best efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The Company
shall be entitled to exercise its right under this Section 3(i) to
suspend the availability of a Registration Statement and Prospectus,
subject to the payment of liquidated damages pursuant to Section 2(b),
for a period not to exceed 60 days (which need not be consecutive days)
in any 12 month period.
(j) Comply with all applicable rules and regulations of
the Commission.
(k) The Company may require each selling Holder to
furnish to the Company a certified statement as to the number of shares
of Common Stock beneficially owned by such Holder and, if required by
the Commission, the person thereof that has voting and dispositive
control over the Shares. During any periods that the Company is unable
to meet its obligations hereunder with respect to the registration of
the Registrable Securities solely because any Holder fails to furnish
such information within three Trading Days of the Company's request,
any liquidated damages that are accruing at such time as to such Holder
only shall be tolled and any Event that may otherwise occur solely
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because of such delay shall be suspended as to such Holder only, until
such information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not 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 Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. The Company shall not be responsible
for any Holder's brokerage commissions or other underwriting discount paid by
any Holder in connection with the sale of any Registrable Securities.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents and employees of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable
law, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable attorneys' fees) and
expenses (collectively, "Losses"), as incurred, to the extent arising
out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus
or any form of prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (1) 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 the Registration Statement, such Prospectus
or such
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form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), 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 6(d). 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.
(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 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based upon: (x) such Holder's failure to
comply with the prospectus delivery requirements of the Securities Act
or (y) any untrue or alleged untrue statement of a material fact
contained in any 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 not misleading (i) to the
extent, but only to the extent, that such untrue statement or omission
is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in the Registration Statement
or such Prospectus or (ii) to the extent that (1) 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 the Registration Statement
(it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), 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 6(d). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party
shall promptly notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall have
the right to assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations
or liabilities
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pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses;
(2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of
the Indemnifying Party, the Indemnifying Party shall not have the right
to assume the defense thereof and the reasonable fees and expenses of
one separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding in
a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for
that portion of such fees and expenses applicable to such actions for
which such Indemnified Party is not entitled to indemnification
hereunder, determined based upon the relative faults of the parties.
(d) Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason
of public policy or otherwise), then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses,
in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or made
by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access
to information and
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opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section
5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such
party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission,
except in the case of fraud by such Holder. The indemnity and
contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be
adequate.
(b) No Piggyback on Registrations. Except as set forth
Schedule 6(b), neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include
securities of the Company in a Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its
security holders. Except as set forth in the SEC Reports and as set
forth in this subsection, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities
of the Company. The Company shall not file any other registration
statement until after the Effective Date.
(c) Compliance. Each Holder covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.
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(d) Discontinued Disposition. 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), 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 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. The Company will use its best efforts to ensure that the use
of the Prospectus may be resumed as promptly as it practicable. The
Company agrees and acknowledges that any periods during which the
Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section
2(b).
(e) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities, other
than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to
each Holder a written notice of such determination and, if within
fifteen days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Holder
requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.
(f) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the same
shall be in writing and signed by the Company and each Holder of the
then outstanding Registrable Securities.
(g) Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be
made in accordance with the provisions of the Purchase Agreement.
(h) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder.
Each Holder may assign their respective rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(i) Execution and Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall
11
create a valid binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(j) Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be determined with the provisions of the Purchase
Agreement.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(n) Independent Nature of Purchasers' Obligations and
Rights. The obligations of each Purchaser hereunder is several and not
joint with the obligations of any other Purchaser hereunder, and no
Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser hereunder. Nothing contained herein
or in any other agreement or document delivered at any closing, and no
action taken by any Purchaser pursuant hereto or thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that
the Purchasers are in any way acting in concert with respect to such
obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
*************************
12
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
SCOLR, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
[PURCHASERS' SIGNATURE PAGES TO FOLLOW]
13
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Alexandra Global Master Fund Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx Xxxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxx Xxxxxxxxxx for Alexandra Investment
Management, LLC
Title of Authorized Signatory: Principal
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Atlas Equity I, Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxx
-------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxx
Title of Authorized Signatory: Managing Member of Balyasny Asset Management,
L.P., Manager of Atlas Equity I, Ltd.
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Cranshire Capital, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxxx Xxxxx
------------------
Name of Authorized Signatory: Xxxxxxxx Xxxxx
Title of Authorized Signatory: President - Downsview Capital, The General
Partner
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Xxxxxxx Associates, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx, Vice President
Title of Authorized Signatory: By: Xxxxxxx Capital Advisors, L.P., as general
partner
By: Xxxxxxx Associates, Inc., as general partner
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Xxxxxxx International, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx, Vice President
Title of Authorized Signatory: By: Xxxxxxx International Capital Advisors Inc.
as attorney-in-fact
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Omicron Master Trust
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx Xxxxxxxxx
-------------------
Name of Authorized Signatory: Xxxxx Xxxxxxxxx
Title of Authorized Signatory: Managing Partner
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Portside Growth and Opportunity Fund
Signature of Authorized Signatory of Investing entity: /s/ Xxxx Xxxxx
--------------
Name of Authorized Signatory: Xxxx Xxxxx
Title of Authorized Signatory: Authorized Signatory
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: RHP Master Fund, Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx X. Xxxxxxx
--------------------
Name of Authorized Signatory: Xxxxx X. Xxxxxxx, Director
Title of Authorized Signatory: By: Rock Hill Investment Management, L.P.
By: RHP General Partner, LLC
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: SF Capital Partners Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx Xxxxxxxx
------------------
Name of Authorized Signatory: Xxxxx Xxxxxxxx
Title of Authorized Signatory: Authorized Signatory
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Xxxxx Xxxxxx
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx Xxxxxx
----------------
Name of Authorized Signatory: Xxxxx Xxxxxx
Title of Authorized Signatory: Individual
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Spectra Capital Management, LLC
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name of Authorized Signatory: Xxxxxxx X. Xxxxxx
Title of Authorized Signatory: Sole Member
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: SRG Capital, Inc.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxx
------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Topaz Partners
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx X. Xxxxx
--------------------
Name of Authorized Signatory: Xxxxxxx X. Xxxxx
Title of Authorized Signatory: Managing Director
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Dolphin Offshore Partners, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxx X. Xxxxx
------------------
Name of Authorized Signatory: Xxxxx X. Xxxxx
Title of Authorized Signatory: General Partner
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Interdynamic Fund Biomed Tech
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: J. Xxxxxxx Xxxxxxx, Inc.
Signature of Authorized Signatory of Investing entity: /s/ J. Xxxxxxx Xxxxxxx
----------------------
Name of Authorized Signatory: J. Xxxxxxx Xxxxxxx
Title of Authorized Signatory: President
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Meadowbrook Opportunity Fund LLC
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx Xxxxxx
------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxx
Title of Authorized Signatory: Manager
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Merlin Biomed II, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Merlin Biomed International, Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Merlin Biomed Longterm Appreciation Fund, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Merlin Biomed Offshore Master Fund, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Merlin Biomed, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
Title of Authorized Signatory: Chief Financial Officer
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Xxxxxxx Xxxxxxx
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx Xxxxxxx
-------------------
Name of Authorized Signatory:
-----------------------
Title of Authorized Signatory:
-----------------------
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Xxxxxx X. Xxxxxxx
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name of Authorized Signatory:
-----------------------
Title of Authorized Signatory:
-----------------------
[SIGNATURE PAGES CONTINUE]
[PURCHASER'S SIGNATURE PAGE TO DDD RRA]
Name of Investing Entity: Tag Kent Partners
Signature of Authorized Signatory of Investing entity: /s/ Xxxxxxx Xxxxxxx
-------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxxx
Title of Authorized Signatory: General Partner
[SIGNATURE PAGES CONTINUE]
ANNEX A
Plan of Distribution
The Selling Stockholders (the "Selling Stockholders") of the common
stock ("Common Stock") of SCOLR, Inc., a Delaware corporation (the "Company")
and any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of Common Stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling
Stockholders may use any one or more of the following methods when selling
shares:
- ordinary brokerage transactions and transactions in
which the broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt
to sell the shares as agent but may position and
resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale
by the broker-dealer for its account;
- an exchange distribution in accordance with the rules
of the applicable exchange;
- privately negotiated transactions;
- settlement of short sales;
- broker-dealers may agree with the Selling
Stockholders to sell a specified number of such
shares at a stipulated price per share;
- a combination of any such methods of sale;
- through the writing or settlement of options or other
hedging transactions, whether through an options
exchange or otherwise; or
- any other method permitted pursuant to applicable
law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each Selling Stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.
i
In connection with the sale of our common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to our common stock for a period
of two business days prior to the commencement
ii
of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of our common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
iii
