Exhibit 99.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
January 11, 2002, between Viragen, Inc., a Delaware corporation with offices at
000 XX 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the "Company") and
Xxxxxxx Associates, L.P., a Delaware limited partnership, and Xxxxxxx
International, L.P., a Cayman Islands limited partnership (individually and
collectively, the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated
on or about the date hereof, by and between the Company and the Purchaser (the
"Purchase Agreement"), the Company has agreed to sell and issue to the
Purchaser, and the Purchaser has agreed to purchase from the Company, an
aggregate of $2,500,000 in principal of the Company's 6% Convertible Debentures
(the "Debentures") and Warrants (the "Warrants") to purchase shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") subject
to the terms and conditions set forth therein; and
WHEREAS, the Purchase Agreement contemplates that the Debentures and
Warrants will be convertible and exercisable into shares (the "Common Shares")
of Common Stock pursuant to the terms and conditions set forth in the Debentures
and Warrants; and
WHEREAS, the Purchase Agreement provides the Purchaser an option (the
"Option") to purchase up to $1,500,000 of shares of Common Stock (the "Option
Shares"); and
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Purchasers agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement or the Debentures. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Holder" and "Holders" shall include the Purchaser and any transferee
or transferees of Registrable Securities, Debentures, Warrants and/or the Option
which have not been sold to the public to whom the registration rights conferred
by this Agreement have been transferred in compliance with this Agreement and
the Purchase Agreement.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares and Option
Shares (without regard to any limitations on beneficial ownership contained in
the Debentures, the Warrants or the Purchase Agreement) or other securities
issued or issuable to each Holder or its permitted transferee or designee (a)
upon conversion of the Debentures and/or upon exercise of the Warrants and/or
Option, or (b) upon any distribution with respect to, any exchange for or any
replacement of such Debentures, Warrants or Option or (c) upon any conversion,
exercise or exchange of any securities issued in connection with any such
distribution, exchange or replacement; (ii) securities issued or issuable upon
any stock split, stock dividend, recapitalization or similar event with respect
to the foregoing; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
review of the Registration Statement and related documents, and the expense of
any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
2. REGISTRATION REQUIREMENTS. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such best efforts by the Company
shall include, without limitation, the following:
(a) The Company shall, as expeditiously as possible after the
Closing Date:
(i) But in any event within 30 days of the Closing,
prepare and file a registration statement with the Commission
pursuant to Rule 415 under the Securities Act on Form S-3
under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act provided that such
other form shall be converted into an S-3 as soon as Form S-3
becomes available to the Company) covering resales by the
Holders as selling stockholders (not underwriters) of the
Registrable Securities and, to the extent practicable, no
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other securities ("Registration Statement"), which
Registration Statement, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including
Rule 416), shall state that such Registration Statement also
covers such indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the
Debentures and exercise of the Warrants and/or Option. The
number of shares of Common Stock initially included in such
Registration Statement shall be no less than the sum of two
times the sum of (x) the number of Common Shares that are then
issuable upon conversion of the Debentures and exercise of the
Warrants (assuming full conversion or exercise, respectively,
at the then applicable Market Price (as defined in the
Debentures) or Exercise Price (as defined in the Warrant) and
(y) the number of Option Shares then issuable (assuming full
exercise of the Option at such time). Nothing in the preceding
sentence will limit the Company's obligations to reserve
shares of Common Stock pursuant to Section 3.7 of the Purchase
Agreement. Thereafter the Company shall use its best efforts
to cause such Registration Statement and other filings to be
declared effective as soon as possible, and in any event prior
to 90 days following the Closing Date. Without limiting the
foregoing, the Company will promptly respond to all SEC
comments, inquiries and requests, and shall request
acceleration of effectiveness at the earliest possible date.
The Company shall provide the Holders reasonable opportunity
to review any such Registration Statement or amendment or
supplement thereto prior to filing. Notwithstanding anything
to the contrary herein, if the Company reasonably decides that
it is necessary to register the Option Shares on Form S-1 and
it files such Form within 45 days of the Closing, then, and
only with respect to such Option Shares, the numbers "90" and
"120" in subparagraphs (i)(A) and (ii)(A) of Section 2(b)
shall be read as "120" and "150" respectively, each time such
numbers appear in such subparagraphs.
(ii) Prepare and file with the SEC 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 Act
with respect to the disposition of all securities covered by
such Registration Statement and notify the Holders of the
filing and effectiveness of such Registration Statement and
any amendments or supplements.
(iii) Furnish to each Holder such numbers of copies
of a current prospectus conforming with the requirements of
the Act, copies of the Registration Statement, any amendment
or supplement thereto and any documents incorporated by
reference therein and such other documents as such Holder may
reasonably require in order to facilitate the disposition of
Registrable Securities owned by such Holder.
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(iv) Register and qualify the securities covered by
such Registration Statement under the securities or "Blue Sky"
laws of all domestic 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 states or
jurisdictions.
(v) Notify each Holder immediately of the happening
of any event (but not the substance or details of any such
events unless specifically requested by a Holder) as a result
of which the prospectus (including any supplements thereto or
thereof) included in such Registration Statement, as then in
effect, includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its best
efforts to promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance
by the Commission or any state securities commission or agency
of any stop order suspending the effectiveness of the
Registration Statement or the threat or initiation of any
proceedings for that purpose. The Company shall use its best
efforts to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit counsel to the Holders to review the
Registration Statement and all amendments and supplements
thereto within a reasonable period of time (but not less than
5 full Trading Days (as defined in the Debentures)) prior to
each filing, and shall not file any document in a form to
which such counsel reasonably objects and will not request
acceleration of the Registration Statement without prior
notice to such counsel.
(viii) List the Registrable Securities covered by
such Registration Statement with all securities exchange(s)
and/or markets on which the Common Stock is then listed and
prepare and file any required filings with the American Stock
Exchange ("AMEX") or any other exchange or market where the
Common Shares are traded.
(ix) Take all steps necessary to enable Holders to
avail themselves of the prospectus delivery mechanism set
forth in Rule 153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the Purchasers consider will interfere with the full enjoyment of
their rights under this Agreement, the Purchase Agreement, the Debentures and
the Warrants (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Purchasers if an Interfering Event
occurs and provide that the Purchasers may require that the Company repurchase
outstanding Debentures and Warrants and the Option at a specified price if
certain Interfering Events are not timely cured.
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Paragraph (v) provides, inter alia, that if default adjustments
required as the remedy in the case of certain of the Interfering Events are not
provided when due, the Company may be required by the Purchasers to redeem
outstanding Debentures and Warrants and the unexercised portion of the Option at
a specified price.
Paragraph (vi) provides, inter alia, that the Purchasers have the right
to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT.
(A) In the event that such Registration Statement has
not been declared effective within 90 days from the Closing
Date, or the Company at any time fails to issue unlegended
Registrable Securities as required by Article VI of the
Purchase Agreement, then the Company shall pay each Holder a
Monthly Delay Payment (as defined below) for each 30-day
period (or portion thereof) that effectiveness of the
Registration Statement is delayed or failure to issue such
unlegended Registrable Securities persists. In addition to the
foregoing, if the Registration Statement has not been declared
effective within 120 days after the Closing Date, then each
Holder shall have the right to sell, at any time after the
120th day after the Closing Date, any or all of its
Debentures, the Warrants and the Option to the Company for
consideration (the "Mandatory Repurchase Price") equal to (I)
for the Debentures, the greater of (x) 125% of the outstanding
Principal Amount of all such Debentures being sold to the
Company, or (y) the Conversion Ratio (as defined in the
Debentures) multiplied by the greater of the last closing
price of the Common Stock on (i) the date a Holder exercises
its option pursuant to this Section 2(b) to require repurchase
of the Debentures or (ii) the date on which the event
triggering Holder's remedies under this Section 2(b) first
occurred, in each case payable in cash, (II) for the Warrants,
125% of the product of (a) the difference between the greater
of clauses (i) or (ii) above and the exercise price of the
Warrants, multiplied by (b) the number of Warrants being sold
to the Company, payable in cash; and (III) for the Option,
125% of the product of (a) the difference between the greater
of clauses (i) or (ii) above and the Fixed Price, multiplied
by (b) the number of Option Shares for which the Option is
then exercisable, payable in cash.
(B) As used in this Agreement, a "Monthly Delay
Payment" shall be a cash payment equal to 1% of the aggregate
Purchase Price paid by a Holder, payable on the date on which
the specified condition in this Section 2(b) has not been
fulfilled or the specified deficiency has not been remedied,
2% of the aggregate Purchase Price for the next 30-day period
(or portion thereof) that the specified condition in this
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Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied, and 3% of the aggregate
Purchase Price thereafter for each subsequent 30-day period
(or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied (prorated in each case as
appropriate). Payment of the Monthly Delay Payments and
Mandatory Repurchase Price shall be due and payable from the
Company to such Holder within 5 business days of demand
therefor. Without limiting the foregoing, if cash payment of
the Mandatory Repurchase Price is not made within such 5
business day period, the Holder may revoke and withdraw its
election to cause the Company to make such mandatory purchase
at any time prior to its receipt of such cash. At the option
of the Holder, Monthly Delay Payments may be added to the
outstanding Principal Amount of the Debentures held by it.
(C) Notwithstanding the foregoing, there shall be
excluded from the calculation of the number of days that the
Registration Statement has not been declared effective the
delays which are solely attributable to delays in the
Purchaser providing information required for the Registration
Statement.
(ii) NO LISTING; PREMIUM PRICE REDEMPTION FOR DELISTING OF
CLASS OF SHARES.
(A) In the event that the Company fails, refuses or
for any other reason is unable to cause the Registrable
Securities covered by the Registration Statement to be listed
with the AMEX or one of the other Approved Markets (as defined
in the Purchase Agreement) at all times during the period
("Listing Period") from the date ("Effectiveness Commencement
Date") which is the earlier of the effectiveness of the
Registration Statement and the 90th day following the Closing
Date until such time as the registration period specified in
Section 5 terminates, then the Company shall provide to each
Holder a Monthly Delay Payment, for each 30 day period or
portion thereof during which such listing is not in effect. In
addition to the foregoing, following the 10th day that such
listing is not in effect, each Holder shall have the right to
sell to the Company any or all of its Debentures and/or
Warrants and the unexercised portion of the Option at the
Mandatory Repurchase Price. The provisions of Section
2(b)(i)(B) shall apply to this Section 2(b)(ii)(A).
(B) In the event that shares of Common Stock of the
Company are not listed on any of the Approved Markets at all
times following the Closing Date, or are otherwise suspended
from trading and remain unlisted or suspended for 3 consecutive
days, then the Company shall provide to each Holder a Monthly
Delay Payment for each 30-day period or portion thereof
(appropriately prorated) during which such listing is not in
effect. In addition to the foregoing, following the 5th day
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that the shares are not so listed or are otherwise suspended,
at the option of each Holder and to the extent such Holder so
elects, each Holder shall have the right to sell to the Company
the Debentures, the Warrants and the unexercised portion of the
Option held by such Holder, in whole or in part, for the
Mandatory Repurchase Price on the terms set forth in Section
2(b)(i)(B) above.
(iii) BLACKOUT PERIODS. In the event any Holder's ability to
sell Registrable Securities under the Registration Statement is suspended for
more than (i) five (5) consecutive days or (ii) twenty (20) days in any calendar
year ("Suspension Grace Period"), including without limitation by reason of any
suspension or stop order with respect to the Registration Statement or the fact
that an event has occurred as a result of which the prospectus (including any
supplements thereto) included in such Registration Statement then in effect
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing (a "Blackout"), then the
Company shall provide to each Holder a Monthly Delay Payment for each 30-day
period or portion thereof (appropriately prorated) from and after the expiration
of the Suspension Grace Period, on the terms set forth in Section 2(b)(i)(B)
above. In addition, at any time following the expiration of the Suspension Grace
Period if the Blackout continues for more than five (5) additional consecutive
days, a Holder shall have the right to sell to the Company its Debentures, its
Warrants and its unexercised portion of the Option in whole or in part for the
Mandatory Repurchase Price on the terms set forth in Section 2(b)(i)(B) above.
(iv) REDEMPTION FOR CONVERSION DEFICIENCY. In the event that
the Company does not have a sufficient number of Common Shares or Option Shares
available to satisfy the Company's obligations to any Holder upon receipt of a
Conversion Notice (as defined in the Debentures) or exercise of the Warrants or
exercise of the Option or upon a Repayment Date (as defined in the Debentures)
or is otherwise unable or unwilling for any reason to issue such Common Shares
(other than failure of the Holder to comply with the conversion notice and
delivery requirements of Section 3 of the Debentures) (each, a
"Conversion/Exercise Deficiency") in accordance with the terms of the
Debentures, the Purchase Agreement and the Warrants for any reason after receipt
of a Conversion Notice or exercise notice from any Holder or upon a Repayment
Date, then:
(A) The Company shall provide to each Holder a
Monthly Delay Payment for each 30-day period or portion
thereof (appropriately prorated) following the
Conversion/Exercise Deficiency on all outstanding Debentures,
the Warrants and the unexercised portion of the Option, on the
terms set forth in Section 2(b)(i)(B) above.
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(B) At any time five days after the commencement of
the running of the first 30-day period described above in
clause (A) of this paragraph (iv), at the request of any
Holder, the Company promptly shall purchase from such Holder,
for the Mandatory Repurchase Price and on the terms set forth
in Section 2(b)(i)(B) above, any and all outstanding
Debentures and/or Warrants and/or the unexercised portion of
the Option, if the failure to issue Common Shares or Option
Shares results from the lack of a sufficient number thereof
and shall purchase all (or such portion requested by such
Holder) of such Holder's Debentures and/or Warrants and/or the
unexercised portion of the Option for such consideration and
on such terms if the failure to issue Common Shares results
from any other cause, or is without cause.
(C) The Holder shall have the right to withdraw any
request for redemption hereunder at any time prior to its
receipt of the Mandatory Repurchase Price.
(v) MANDATORY PURCHASE PRICE FOR DEFAULTS.
(A) The Company acknowledges that any failure,
refusal or inability by the Company to perform the obligations
described in the foregoing paragraphs (i) through (iv) will
cause the Holders to suffer damages in an amount that will be
difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the
Debentures, the Warrants, the Option and Registrable
Securities. Accordingly, the parties agree, after consulting
with counsel, that it is appropriate to include in this
Agreement the foregoing provisions for Monthly Delay Payments
and mandatory redemptions in order to compensate the Holders
for such damages. The parties acknowledge and agree that the
Monthly Delay Payments and mandatory redemptions set forth
above represent the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of
such payments and mandatory redemptions are reasonable and
will not constitute a penalty.
(B) In the event that the Company fails to pay any
Monthly Delay Payment within 5 business days of demand
therefor, each Holder shall have the right to sell to the
Company any or all of its Debentures, and/or Warrants and/or
the unexercised portion of the Option at the Mandatory
Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
(C) The Holder shall have the right to withdraw any
request for redemption hereunder at any time prior to its
receipt of the Mandatory Repurchase Price.
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(vi) CUMULATIVE REMEDIES. The Monthly Delay Payments and
mandatory purchases provided for above are in addition to and not in
lieu or limitation of any other rights the Holders may have at law, in
equity or under the terms of the Debentures, the Purchase Agreement,
the Warrants and this Agreement, including without limitation the right
to monetary contract damages and specific performance. Each Holder
shall be entitled to specific performance of any and all obligations of
the Company in connection with the registration rights of the Holders
hereunder.
(vii) REMEDIES FOR REGISTRABLE SECURITIES. In any case in
which a Holder of Debentures, Warrants and/or the Option has the right
to cause the purchase of its securities under this Section 2(b), it
shall also have the right to cause the purchase of the Registrable
Securities that it owns, in whole or in part at the Holder's option, as
follows: such shares shall be purchased at a price ("Common Purchase
Price") equal to the Mandatory Repurchase Price of the Debentures which
were converted into Common Shares, Warrants which were exercised for
Common Shares and Option Shares.
In the case in which a Holder of Debentures, Warrants or the Option
would have the right to receive Monthly Delay Payments with respect thereto
under Section 2(b), it shall also have the right to receive payments with
respect to Registrable Securities owned by it in an amount at the rate of the
Monthly Delay Payments that would have applied to the Debentures, Warrants or
Option converted into or exercised for Common Shares or Option Shares had such
Debentures, Warrants or Option not been converted or exercised.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by nationally or
regionally recognized investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if
any, opinions of independent counsel to the Company, on and
dated as of the effective day (or in the case of an
underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following
the end of each fiscal year thereafter, which counsel and
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opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s), if any,
and their counsel and covering, without limitation, such
matters as the due authorization and issuance of the
securities being registered and compliance with securities
laws by the Company in connection with the authorization,
issuance and registration thereof and other matters that are
customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
of an underwritten offering, at the time of delivery of any
Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which
the Company's independent certified public accountants shall
have reviewed any of the Company's books or records, a
"comfort" letter from the Company's independent certified
public accountants addressed to each underwriter, if any,
stating that such accountants are independent public
accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder, and
otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of
the independent certified public accountants delivered in
connection with secondary offerings; such accountants shall
have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being
reviewed so that each such letter shall remain current,
correct and complete throughout such fiscal year; and each
such letter and update thereof, if any, shall be reasonably
satisfactory to such underwriters;
(iv) if an underwriting agreement is entered into,
the same shall include customary indemnification and
contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable
Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
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(f) Subject to Section 2(b) above, the Company may suspend the
use of any prospectus used in connection with the Registration Statement only in
the event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved Registrable Securities
consisting of Common Shares or Option Shares described in clause (i) of the
definition of Registrable Securities within five (5) business days of any
stockholders meeting authorizing same and shall use its best efforts to cause
such Registration Statement to become effective within sixty (60) days of such
stockholders meeting. If the Holders become entitled, pursuant to an event
described in clause (ii) and (iii) of the definition of Registrable Securities,
to receive any securities in respect of Registrable Securities that were already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below and cause such Registration
Statement to become effective within 30 days of that date that the need to file
the Registration Statement arose. All of the registration rights and remedies
under this Agreement shall apply to the registration of such newly reserved
shares and such new Registrable Securities, including without limitation the
provisions providing for default payments and mandatory redemptions contained
herein.
3. EXPENSES OF REGISTRATION. All Registration Expenses in connection
with any registration, qualification or compliance with registration pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses of a
Holder shall be borne by such Holder.
4. REGISTRATION ON FORM S-3. The Company shall use its best efforts to
remain qualified for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act, provided
that if such other form is used, the Company shall convert such other form to a
Form S-3 as soon as the Company becomes so eligible.
5. REGISTRATION PERIOD. In the case of the registration effected by the
Company pursuant to this Agreement, the Company shall keep such registration
effective until the later of (a) the date on which all the Holders have
completed the sales or distribution described in the Registration Statement
relating thereto or, if earlier, until such Registrable Securities may be sold
by the Holders under Rule 144(k) (provided that the Company's transfer agent has
accepted an instruction from the Company to such effect), or (b) the second
(2nd) anniversary of the Closing Date.
6. INDEMNIFICATION.
(a) COMPANY INDEMNITY. The Company will indemnify each Holder,
each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, within the meaning of Section 15 of the
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Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, or any violation by the Company of the Securities Act or any
state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors, agents and
partners, and each person controlling each of the foregoing, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a Holder to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder or the underwriter (if any) therefor and stated to be
specifically for use therein. The indemnity agreement contained in this Section
6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent will not be unreasonably withheld).
(b) HOLDER INDEMNITY. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, agents and partners, and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling such other Holder(s) against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading in light of the circumstances under which
they were made, and will reimburse the Company and such other Holder(s) and
their directors, officers and partners, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
12
in conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein, and provided that the maximum
amount for which such Holder shall be liable under this indemnity shall not
exceed the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such settlement
is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(c) PROCEDURE. Each party entitled to indemnification under
this Section 6 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
7. CONTRIBUTION. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such 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, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
13
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. SURVIVAL. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. INFORMATION BY HOLDERS. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution and/or sale proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Purchaser shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. REPLACEMENT CERTIFICATES. The certificate(s) representing the
Registrable Securities held by any Purchaser (or then Holder) may be exchanged
by such Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares, as reasonably requested by such Purchaser (or such Holder)
upon surrendering the same. No service charge will be made for such registration
or transfer or exchange. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
Debentures or Warrants, or certificates for the underlying Common Shares of any
of the foregoing or Option Shares, and, in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, or upon surrender and
cancellation of such certificate if mutilated, the Company will make and deliver
a new Debenture, Warrant or certificate of like tenor and dated as of such
cancellation at no charge to the holder.
11. TRANSFER OR ASSIGNMENT. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchaser by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
14
or assignee of Debentures, Warrants, the Option or Registrable Securities, and
all other rights granted to the Purchaser by the Company hereunder may be
transferred or assigned to any transferee or assignee of any Debentures,
Warrants, the Option or Registrable Securities; provided in each case that the
Company must be given written notice by the Purchaser at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; and provided
further that the transferee or assignee of such rights agrees in writing to be
bound by the registration provisions of this Agreement.
12. MISCELLANEOUS.
(a) REMEDIES. The Company and the Purchaser acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) JURISDICTION. Each of the Company and the Purchaser (i)
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court, the New York State courts and other courts of the United States
sitting in the Borough of Manhattan, New York County, New York State for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. The Company and the Purchaser consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this paragraph shall affect or limit any right to serve
process in any other manner permitted by law.
(c) NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Viragen, Inc.
000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Chief Financial Officer
15
with a copy to:
Atlas Xxxxxxxx P.A.
Suite 1700
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
to the Purchaser:
Xxxxxxx Associates, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
and
Xxxxxxx International, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-986-8866
Attention: Xxxxxx X. Xxxxx
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) INDEMNITY. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
16
covenant or agreement in this Agreement, including, without limitation, any
enforcement of this indemnity.
(e) WAIVERS. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. The representations and warranties and
the agreements and covenants of the Company and each Purchaser contained herein
shall survive the Closing.
(f) EXECUTION IN COUNTERPART. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(g) SIGNATURES. Facsimile signatures shall be valid and
binding on each party submitting the same.
(h) ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the Purchase Agreement, the Debentures, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of 75% of the
outstanding Principal Amount of Debentures issued under the Purchase Agreement
to that date; provided that for the purposes of this Section 12(h) the Holders
of Common Shares still entitled to registration rights under this Agreement will
be deemed to still be Holders of that amount of Debentures which were converted
into such number of Common Shares issued upon conversion which are still held by
them.
(i) GOVERNING LAW. This Agreement and the validity and
performance of the terms hereof shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts executed and to
be performed entirely within such state, except to the extent that the law of
the State of Delaware regulates the Company's issuance of securities.
(j) JURY TRIAL. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY.
(k) TITLES. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(l) NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
VIRAGEN, INC.
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Chief Financial Officer
XXXXXXX INTERNATIONAL, L.P.
By: XXXXXXX INTERNATIONAL CAPITAL
ADVISORS INC., as attorney-in-fact
By:
--------------------------------
Name:
Title:
XXXXXXX ASSOCIATES, L.P.
By:
----------------------------------------
Name:
Title:
18
