Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of February 4, 2005 by and among (i) NEUROLOGIX, INC., a
Delaware corporation (the "Company"), (ii) MERLIN BIOMED LONG TERM
APPRECIATION FUND LP, a Delaware limited partnership, (iii) MERLIN BIOMED
OFFSHORE MASTER FUND LP , a Cayman Islands limited partnership ((ii) and
(iii), collectively, the "Lead Purchasers"), and (iv) each person who shall
join in and become party to this Agreement by executing and delivering to the
Company an Instrument of Accession in the form of Schedule 1 hereto
((ii)-(iv), each a "Purchaser" and collectively, the "Purchasers").
Capitalized terms used but not defined herein shall have the meanings set
forth in the Stock Purchase Agreement, dated as of the date hereof and as may
be amended pursuant to Section 9.1(b) thereof, by and among the Company and
the Purchasers (the "Stock Purchase Agreement").
W I T N E S S E T H:
WHEREAS, the Company has agreed to issue and sell to the Purchasers
the Shares and the Warrants in accordance with the terms of the Stock Purchase
Agreement;
WHEREAS, in connection with the sale of the Shares and the Warrants
to the Purchasers, the Company has agreed to provide the Purchasers with the
registration rights set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to
and on the terms and conditions herein set forth, the parties hereto hereby
agree as follows:
ARTICLE I
Certain Definitions
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As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
1.1 "Blackout Period" shall have the meaning set forth in Section
2.2(e).
1.2 "Commission" shall mean the Securities and Exchange Commission or
any federal agency at the time administering the Securities Act and the
Exchange Act.
1.3 "Common Stock" shall mean the common stock of the Company, par
value $0.001 per share.
1.4 "Demand" shall have the meaning set forth in Section 2.3(a).
1.5 "Demand Registration" shall have the meaning set forth in Section
2.3(a).
1.6 Demand Registration Statement" shall have the meaning set forth
in Section 2.3(a).
1.7 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any federal statute then in effect which has replaced such
statute.
1.8 "Holder" shall mean each Purchaser and each Additional Purchaser
for so long as it owns any Registrable Securities and any other Person who is
a Holder or beneficial owner of Registrable Securities for so long as such
Person holds or beneficially owns any Registrable Securities.
1.9 "Piggyback Registration" shall have the meaning set forth in
Section 2.1(a).
1.10 "Person" shall mean an individual, corporation, limited
liability company, joint venture, partnership, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity that may be treated as a person under applicable law.
1.11 "Registrable Securities" shall mean the Shares, the Warrants and
the Warrant Shares, provided that such securities shall cease to be
Registrable Securities when (i) a registration statement registering such
Registrable Securities under the Securities Act has been declared or becomes
effective and such Registrable Securities have been sold or otherwise
transferred by the Holder thereof pursuant to such effective registration
statement; (ii) such Registrable Securities are sold pursuant to Rule 144
under circumstances in which any legend borne by such Registrable Securities
relating to restrictions on the transferability thereof, under the Securities
Act or otherwise, is removed by the Company or such Registrable Securities are
eligible to be sold pursuant to paragraph (k) of Rule 144; or (iii) such
Registrable Securities shall cease to be outstanding.
1.12 "Rule 144" shall mean Rule 144 promulgated under the Securities
Act.
1.13 "Securities Act" shall mean Securities Act of 1933, as amended,
or any federal statute then in effect which has replaced such statute.
1.14 "Shelf Registration Statement" shall have the meaning set forth
in Section 2.2(b).
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ARTICLE II
Registration Rights
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2.1 Piggyback Registration.
(a) If the Company shall at any time determine to register any equity
securities of the Company for sale to the public for its own account or for
the account of other holders of equity securities of the Company on any
registration form (other than Form S-4 or S-8 or other successor forms) which
permits the inclusion of Registrable Securities held by any Holder (a
"Piggyback Registration"), then the Company will promptly give each Holder
written notice thereof and, subject to Section 2.1(c), shall include in such
registration all Registrable Securities requested to be included therein
pursuant to the written requests of Holders received within twenty (20) days
after delivery of the Company's notice. The Company will use its reasonable
best efforts to cause such Registrable Securities as to which registration
shall have been requested to be included in the securities to be covered by
the registration statement proposed to be filed by the Company, all to the
extent requisite to permit the sale or other disposition by the Holder
thereof.
(b) If the Piggyback Registration relates to an underwritten public
offering, the Company shall so advise the Holders in the written notice given
pursuant to Section 2.1(a). In such event, the right of any Holder to
participate in such registration shall be conditioned upon such Holder's
participation in such underwriting in accordance with the terms and conditions
thereof. The Board of Directors shall have the right to select the managing
underwriter(s) for any underwritten Piggyback Registration. All Holders
proposing to sell their Registrable Securities in such underwritten offering
shall (together with the Company) enter into an underwriting agreement in
customary form.
(c) If such proposed Piggyback Registration is an underwritten
offering and the managing underwriter for such offering advises the Company in
writing that in their good faith opinion the securities requested to be
included therein exceeds the amount of securities that can be sold in such
offering such that the inclusion of such Registrable Securities would
adversely affect marketing of the securities to be sold by the Company, any
securities to be sold by the Company shall have priority over any Registrable
Securities held by Holders, and the number of shares to be included by a
Holder and other holders of the Company's securities exercising similar
piggyback registration rights as the Holders shall be reduced pro rata on the
basis of the percentage of the then outstanding Registrable Securities held by
each such Holder and all such other holders exercising similar piggyback
registration rights.
Notwithstanding the provisions of this Section 2.1 and Section 2.5, the
Company shall have the right at any time after it shall have given written
notice to the Holders pursuant to Section 2.1 (irrespective of whether a
written request for inclusion of any such securities shall have been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after filing, but prior to effectiveness.
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2.2 Shelf Registration
(a) As soon as practicable after the Company becomes eligible to do
so, the Company shall use its reasonable best efforts to list the Common Stock
on The Nasdaq Smallcap Market or another nationally recognized exchange or
inter-dealer quotation system.
(b) As soon as practicable after the Company becomes eligible to file
a shelf registration statement on Form S-3 or any other appropriate form under
Rule 415 of the Securities Act or any similar rule that may be adopted by the
Commission relating to the offer and sale of the Registrable Securities by the
Holders from time to time in accordance with the methods of distribution
elected by such Holders and set forth in such shelf registration statement
(together with all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the prospectus
contained therein, all exhibits thereto and all material incorporated by
reference thereto, the "Shelf Registration Statement"), the Company shall
provide written notice thereof to the Holders. If at any time after receipt of
such notice a Holder of Registrable Securities delivers to the Company a
written notice requesting that the Company file a Shelf Registration
Statement, the Company shall use its reasonable best efforts to prepare and
file with the Commission, as soon as practicable, but in any event, no later
than the date that is thirty (30) days after receipt of such notice, a Shelf
Registration Statement; provided that the Company may also register for sale
on its own account or that of any other holder of equity securities of the
Company pursuant to the Shelf Registration Statement such additional shares of
the Company's stock as it shall desire; provided, further, that if the terms
of the underwriting agreement executed in connection with any Piggyback
Registration or Demand Registration prohibit the Company from filing any Shelf
Registration Statement, the Company shall have the right to delay such filing
for the required period, which period shall not exceed 90 days.
Notwithstanding the foregoing, no Holder shall be entitled to request the
Company to file a Shelf Registration Statement if during the period beginning
on the date of such request and ending on the first business day following the
six month anniversary thereof, such Holder is eligible to sell all of its
Registrable Securities pursuant to Rule 144 (notwithstanding the volume
limitations set forth in Rule 144(e), if applicable), provided, however, that
such Holder may participate in a Shelf Registration requested by another
Holder. For the purpose of determining whether a Holder is eligible to sell
all of its Registrable Securities subject to the volume limitations set forth
in Rule 144(e), the average weekly trading volume shall be deemed to be the
average weekly reported volume of trading of the Common Stock on all national
securities exchanges and/or automated quotation systems during the twenty-four
(24) calendar weeks preceding such determination.
(c) Each Holder of Registrable Securities that wishes to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
prospectus agrees to deliver a written notice to the Company at least three
(3) business days prior to the intended distribution of Registrable Securities
under the Shelf Registration Statement. Provided that the Shelf Registration
Statement has been declared effective, the Company shall, as promptly as is
practicable after a Holder has delivered such notice and such other
information as the Company may reasonably require, (i) if required by
applicable law, file with the Commission a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law,
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file a supplement to the related prospectus or amendment to any document
incorporated therein by reference or file any other required document so that
such Holder is named as a selling security holder in the Shelf Registration
Statement and the related prospectus in such a manner as to permit such Holder
to deliver such prospectus to the purchaser of the Registrable Securities in
accordance with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use its best efforts to cause
such post-effective amendment to be declared effective under the Act as
promptly as is practicable, (ii) provide such Holder with such number of
copies of any documents filed pursuant to the foregoing as the Holder shall
reasonably request and (iii) notify such Holder as promptly as practicable
after the effectiveness of any post-effective amendment filed hereunder;
provided, however, that if such notice is delivered during a Blackout Period,
the Company shall so inform the Holder delivering such notice and shall take
the actions set forth in clauses (i), (ii) and (iii) above upon expiration of
the Blackout Period in accordance with Section 2.1(e) hereof.
(d) The Company will use its reasonable best efforts to cause the
Shelf Registration Statement filed pursuant to Section 2.2(b) to be declared
effective and, subject to Section 2.2(e), to remain effective for a period
ending on the earlier of (i) the date two years after the effective date of
the Shelf Registration Statement and (ii) the date on which there cease to be
any Registrable Securities outstanding.
(e) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall have the right to delay the effectiveness of the
Shelf Registration Statement or to suspend, after the lapse of a period of
sixty (60) days after the effective date of such Shelf Registration Statement,
the right of a Holder to sell Registrable Securities under an effective Shelf
Registration Statement, during no more than (2) periods aggregating not more
than fifty (50) days in any twelve-month period (a "Blackout Period") in the
event that (i) (A) the Company would, in accordance with the reasonable advice
of its counsel, be required to disclose in the prospectus information not
otherwise required by law to be publicly disclosed, and (B) in the reasonable
judgment of the Board of Directors of the Company, there is a reasonable
likelihood that such disclosure, or any other action to be taken in connection
with the prospectus, would materially and adversely affect or interfere with
any material financing, acquisition, merger, joint venture, disposition of
assets (not in the ordinary course of business), corporate reorganization or
other similar material transaction involving the Company, or (ii) a change to
the Shelf Registration Statement is required so that, as of such date, the
Shelf Registration Statement and prospectus do not 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 not misleading, provided,
further, that during any such Blackout Period, the Company shall also delay
the filing or effectiveness of any registration statement with respect to any
securities of the Company or any other shareholder of the Company. The Company
shall promptly give the Holders written notice of such determination
containing a general statement of the reasons for such postponement and an
approximation of the anticipated delay; and provided further, however, that
the implementation of any Blackout Period shall be done in good faith, and not
for the purpose or intention of impeding such rights.
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(f) The Holders may elect to sell Registrable Securities in an
underwritten offering in accordance with the conditions set forth in this
Section 2.2(f). In any such underwritten offering, the investment banker or
bankers and manager or managers that will administer the offering will be
selected by, and the underwriting arrangements with respect thereto will be
approved, by the Holders holding a majority of the outstanding Registrable
Securities, subject, in each case, to the consent of the Company, which
consent will not be unreasonably withheld. The Company shall not be obligated
to arrange for more than two underwritten offerings pursuant to the Shelf
Registration Statement. No Holder may participate in any underwritten offering
hereunder unless such Holder (i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved
pursuant hereto and (ii) completes and executes all other customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
2.3 Registration upon Request.
(a) Subject to the terms and conditions hereof, if at any time
following the six month anniversary of the date hereof, there shall remain any
Registrable Securities upon the written request (a "Demand") of (i) the Lead
Purchasers or (ii) the Holders of a majority in interest of Registrable
Securities, that the Company effect the registration under the Securities Act
of all of the Registrable Securities held by the Lead Purchasers or such
Holders, as the case may be, the Company will use its reasonable best efforts,
taking into account developments in the Company's business, to effect the
registration under the Securities Act of such Registrable Securities (a
"Demand Registration"). Such registration statement (a "Demand Registration
Statement") shall be on Form S-1, Form SB-1 or such other appropriate
registration form of the Securities and Exchange Commission as shall be
selected by the Company. Subject to Section 2.3(c), the Company may also
register for sale for its own account or that of any other holder of equity
securities of the Company pursuant to the Demand Registration Statement such
additional shares of the Company's stock as it shall desire. Subject to
Sections 2.3(b) and (c), upon receipt of any Demand, the Company shall provide
written notice to all Holders not party to the Demand and shall include in
such registration all Registrable Securities requested to be included therein
pursuant to the written requests of Holders received within 20 days after
delivery of the Company's notice. Notwithstanding the foregoing if the terms
of the underwriting in connection with any Piggyback Registration or prior
Demand Registration prohibit the Company from filing any Demand Registration
Statement, the Company shall have the right to delay such filing for the
required period, which period shall not exceed 90 days.
(b) Notwithstanding Section 2.3(a):
(i) In no event shall the Company be required to effect more
than two Demand Registrations pursuant to Section 2.3.
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(ii) The Company shall not be required to effect any Demand
Registration following the date on which any Shelf Registration
Statement first becomes effective.
(iii) No Holder shall be entitled to make a Demand if during
the period beginning on the date of such Demand and ending on the
first business day following the six month anniversary thereof, such
Holder is eligible to sell all of its Registrable Securities pursuant
to Rule 144 (notwithstanding the volume limitations set forth in Rule
144(e), if applicable), provided, however, that such Holder shall be
entitled to participate in a Demand Registration requested by any
other Holder or Holders. For the purpose of determining whether a
Holder is eligible to sell all of its Registrable Securities subject
to the volume limitations set forth in Rule 144(e), the average
weekly trading volume shall be deemed to be the average weekly
reported volume of trading of the Common Stock on all national
securities exchanges and/or automated quotation systems during the
twenty-four (24) calendar weeks preceding such determination.
(iv) No Holder may request a second Demand Registration
until six months following the date on which the first Demand
Registration Statement becomes effective, provided, that no Holder
may participate in the second Demand Registration unless such Holder
(i) delivered a notice to the Company pursuant to Section 2.3(a)
requesting that all of such Holder's Registrable Securities be
included in the first Demand Registration and (ii) notwithstanding
the consummation of the offering made pursuant to the first Demand
Registration, not all of such Holder's Registrable Securities were
permitted by the Company to be sold in such offering. Notwithstanding
the foregoing, subject to clauses (i)-(iii) above, if the date on
which the first Demand Registration Statement becomes effective is
more than 90 days after the date on which the Demand was made which
resulted in the first effective Demand Registration Statement, the
Lead Purchasers may request a second Demand Registration at any time
following the 90th day after the date on which the first Demand
Registration Statement becomes effective.
(c) In connection with any registration pursuant to this Section 2.3,
the Holders may elect to sell Registrable Securities in an underwritten
offering in accordance with the conditions set forth in this Section 2.3(c).
In any such underwritten offering, the investment bank that will manage the
offering will be selected by, and the underwriting arrangements with respect
thereto will be approved, by the Holders holding a majority of the Registrable
Securities to be sold pursuant to such offering, subject, in each case, to the
consent of the Company, which consent will not be unreasonably withheld. No
Holder may participate in any underwritten offering hereunder unless such
Holder (i) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved pursuant hereto and (ii)
completes and executes all other customary questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
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terms of such underwriting arrangements. In the case of any such underwritten
offering, the managing underwriter for such offering advises the Company in
writing that in their good faith opinion the securities requested to be
included therein exceeds the amount of securities that can be sold in such
offering such that the inclusion of such Registrable Securities would
adversely affect marketing of the securities to be sold pursuant to the
offering, the Registrable Securities held by Holders who elect to participate
in such offering and other holders of the Company's securities exercising
similar demand registration rights shall have priority over any securities to
be sold by the Company or any additional holders of the Company's securities,
and the number of shares to be included by the Holders and such other holders
exercising similar demand registration rights shall be reduced pro rata on the
basis of the percentage of the then outstanding Registrable Securities held by
each such Holder and the registrable securities held by all other holders
exercising similar demand registration rights.
(d) If the majority of Holders participating in a Demand Registration
determine, prior to the effectiveness of the Demand Registration Statement,
not to sell Registrable Securities pursuant to such registration, such Holders
shall provide written notice to the Company and the Company shall cease all
efforts in connection with such Demand Registration; provided, however, that
if one or more Holders shall request a Demand Registration within six months
of such withdrawal, the Company shall bear the costs and expenses incurred
prior to such withdrawal and such requesting Holders shall pay in full to the
Company, within thirty (30) days after presentation of an invoice by the
Company therefor, all reasonable costs and expenses incurred by the Company in
connection with the completion of such Demand Registration following such new
request, provided however, to the extent that the Company includes any shares
of Common Stock in such Demand Registration Statement for sale of the account
of the Company, the Company shall pay its pro rata share of any such expenses.
2.4 Expenses of Registration. All expenses incurred in connection
with the registrations described herein shall be borne by the Company. The
expenses of the Company shall not include the expenses incurred by any Holder,
provided that the Company shall reimburse the Holders for no greater than an
aggregate of $20,000 for reasonable legal fees and expenses payable to a
single outside counsel for legal services in connection with the Piggyback
Registrations, Shelf Registrations and Demand Registrations pursuant to this
Agreement, provided, that if there shall be more than one such registration,
such reimbursement shall be made with respect to the registrations in order of
their occurrence, provided, further, that no such reimbursement shall be made
with respect to any Demand Registration withdrawn pursuant to Section 2.3(d).
All underwriting discounts, selling commissions and other similar fees
relating to Registrable Securities included in any registration statement of
the Company shall be borne by the Holders of such Registrable Securities pro
rata on the basis of the amount of Registrable Securities sold by them.
2.5 Registration Procedures. In the case of each registration
effected by the Company pursuant to this Article II involving the registration
of Registrable Securities, the Company will keep each Holder advised in
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writing as to the initiation of such registration and as to the completion
thereof. At its expense, the Company will use its reasonable best efforts to:
(a) cause such registration to be declared effective by the
Commission;
(b) as soon as reasonably possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus included therein (including post-effective amendments,
prospectus supplements and pricing supplements) as may be necessary, including
in the case of a Shelf Registration Statement such amendments and supplements
as are necessary to effect and maintain the effectiveness of such registration
statement for the period specified in Section 2.1(d);
(c) provide (i) the Holders of the Registrable Securities to be
included in such registration statement, (ii) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act) if any,
thereof, (iii) the sales or placement agent therefor, if any, (iv) counsel for
such underwriters or agent, and (v) not more than one counsel for all the
Holders of such Registrable Securities the opportunity to participate in the
preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment or supplement thereto;
(d) (i) register or qualify the Registrable Securities to be included
in such registration statement under such securities laws or blue sky laws of
such jurisdictions as any Holder of such Registrable Securities and each
placement or sales agent, if any, therefor and underwriter, if any, thereof
shall reasonably request, and (ii) take any and all other actions as may be
reasonably necessary or advisable to enable each such Holder, agent, if any,
and underwriter, if any, to consummate the disposition in such jurisdictions
of such Registrable Securities; provided, however, that the Company shall not
be required for any other purpose to (1) qualify as a foreign corporation in
any jurisdiction wherein it would not otherwise be required to qualify but for
the requirements of this Section 2.5(d) or (2) consent to general service of
process or taxation in any such jurisdiction;
(e) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus and any
documents incorporated by reference therein, as any Holder from time to time
may reasonably request;
(f) promptly notify the selling Holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter or
underwriters, if any, thereof and confirm such advice in writing, (i) when
such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been filed,
and with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any comments by the
Commission, the Blue Sky or securities commissioner or regulator of any state
with respect thereto or any request by the Commission for amendments or
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supplements to such registration statement or prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for the sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, or (v) at
any time when a prospectus is required to be delivered under the Securities
Act, that such registration statement, prospectus, prospectus amendment or
supplement or post-effective amendment, or any document incorporated by
reference in any of the foregoing, contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) obtain the withdrawal of any order suspending the effectiveness
of such registration statement or any post-effective amendment thereto at the
earliest practicable date;
(h) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Holder of Registrable Securities, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent or
such Holder specifies should be included therein relating to the terms of the
sale of such Registrable Securities, including, without limitation,
information with respect to the principal amount of Registrable Securities
being sold by such Holder or agent or to any underwriters, the name and
description of such Holder, agent or underwriter, the offering price of such
Registrable Securities and any discount, commission or other compensation
payable in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such Holder or agent or to such
underwriters;
(i) cause all Registrable Securities covered by such registration to
be listed on each securities exchange or inter-dealer quotation system on
which similar securities issued by the Company are then listed;
(j) otherwise comply with all applicable rules and regulations of the
Commission and make available to its security holders, as soon as reasonably
practicable but in no event later than eighteen months after the effective
date of such registration statement, an earnings statement covering the period
of at least twelve months, but not more than 18 months, beginning with the
first month after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and
(k) make available to any Holder of the Registrable Securities which
are being sold in an underwritten offering registered pursuant to this
Agreement, to any underwriter of such sale and to any counsel retained by such
Holder in connection therewith, at reasonable times and places, all records
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and documents of the Company that are material to the Company or otherwise
reasonably pertinent to the offering of Registrable Securities. The Company
shall cause its officers, directors and employees to supply all information
reasonably requested by such Holder, underwritten or counsel in connection
therewith.
2.6 Delivery of Prospectus Supplement. In the event that the Company
would be required, pursuant to Section 2.5 (f) above, to notify the selling
Holders of Registrable Securities, the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof, the Company shall as
soon as reasonably practicable prepare and furnish to each such Holder, to
each placement or sales agent, if any, and to each underwriter, if any, a
reasonable number of copies of a prospectus supplemented or amended so that,
as thereafter delivered to initial purchasers of Registrable Securities, such
prospectus shall not 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 not misleading in light of the circumstances then existing.
Each Holder of Registrable Securities agrees that upon receipt of any notice
from the Company pursuant to Section 2.5 (f) hereof, such Holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to
the registration statement applicable to such Registrable Securities until
such Holder shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company, such Holder shall deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
2.7 Furnishing Information by the Holders. The Company may require
each Holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding such Holder as
required under applicable law and such Holder's intended method of
distribution of such Registrable Securities as the Company may from time to
time request in writing. Each such Holder agrees to promptly notify the
Company of any inaccuracy or change in information previously furnished by
such Holder to the Company or of the occurrence of any event in either case as
a result of which any prospectus relating to such registration contains or
would contain an untrue statement of a material fact regarding such Holder or
such Holder's intended method of distribution of such Registrable Securities
or omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Registrable Securities required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly to furnish information
so required so that such prospectus shall not contain, with respect to such
Holder or the distribution of such Registrable Securities, 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 not misleading in light of
the circumstances then existing.
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2.8 Indemnification.
(a) The Company will indemnify each Holder whose Registrable
Securities are to be included in a registration pursuant to this Article II,
each of such Holder's officers, directors, partners, members, stockholders,
agents, employees and representatives and each Person who controls such Holder
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages and liabilities incurred thereby (or actions,
proceedings or settlements in respect thereof) (i) arising out of or based on
any untrue statement or alleged untrue statement of a material fact contained
in any registration statement, any amendment thereto, or other document
incorporated by reference therein, or 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, or (ii) arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus, or any amendment thereto, or 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 in
which they were made, and will reimburse each such indemnified person for any
reasonable legal and other expenses reasonably incurred as such expenses are
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability or action; provided, however, 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 alleged untrue statement or omission or alleged omission
in the registration statement or prospectus made in reliance on and in strict
conformity with written information furnished to the Company by such Holder
and provided specifically for use in such registration statement, or
prospectus or the Holder delivered a registration statement or prospectus in
violation of Section 2.6 hereof after written notice was provided by the
Company as provided in Section 2.6. It is agreed that the indemnity agreement
contained in this Section 2.8(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 shall not be
unreasonably withheld or delayed).
(b) Each Holder whose Registrable Securities are included in any
registration effected pursuant to this Article II shall severally and not
jointly indemnify the Company, each of its directors, each of its officers who
has signed the registration statement, agents, employees and representatives,
and each Person who controls the Company within the meaning of Section 15 of
the Securities Act, each other such Holder and each of their officers,
directors, partners, agents, employees and representatives and each person
controlling such Holder, and each underwriter, if any, of such Registrable
Securities and each Person who controls any such underwriter, against all
expenses, claims, losses, damages and liabilities (or actions, proceedings or
settlements in respect thereof) (i) arising out of or based on any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, any amendment thereto, or other document incorporated
by reference therein, or 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, (ii) arising out of any untrue statement or
alleged untrue statement of a material fact contained in any prospectus, or
any amendment thereto, or 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 in which they
12
were made, or (iii) if the Holder delivered a registration or prospectus in
violation of Section 2.6 hereof after written notice was provided by the
Company as provided in Section 2.6 and will reimburse such indemnified persons
for any reasonable legal or other expenses reasonably incurred in connection
with investigating or defending or settling any such claim, loss, damage,
liability or expense, in each case to the extent, but only to the extent, that
such untrue statement or omission is made in such registration statement or
prospectus, in reliance upon and in strict conformity with written information
furnished to the Company by such Holder and provided specifically for use
therein; provided, that (x) no Holder shall be liable hereunder for any
amounts, together with all previous payments under this Section 2.8, in excess
of the net proceeds received by such Holder pursuant to such registration, and
(y) the obligations of such Holder hereunder shall not apply to amounts paid
in settlement of any such claims, losses, damages or liabilities (or actions
in respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld).
(c) Each party entitled to indemnification under this Section 2.8
(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 or 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 unreasonably be withheld or delayed), and the
Indemnified Party may participate in such defense with one counsel reasonably
acceptable to and paid for by the Indemnifying Party but with respect to any
other counsel at the Indemnified Party's 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 2.8
to the extent such failure is not materially prejudicial. 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 an unconditional release of such
Indemnified Party from all liability in respect of such claim or litigation.
Each Indemnified Party shall furnish such 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.
(d) If the indemnification provided for in this Section 2.8 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
13
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or 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.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in an underwriting agreement
entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
2.9 Other Obligations. With a view to making available the benefits
of certain rules and regulations of the Commission which may effectuate the
registration of Registrable Securities or permit the sale of Registrable
Securities to the public without registration, the Company agrees to:
(a) at such time as any Registrable Securities are eligible for
transfer under Rule 144(k), upon the request of the Holder of such Registrable
Securities, remove any restrictive legend from the certificates evidencing
such Registrable Securities at no cost to such Holder;
(b) make and keep available public information as defined in Rule 144
under the Securities Act at all times;
(c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(d) furnish any Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 and
of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission (including Rule 144A) allowing a Holder of Registrable
Securities to sell any such Registrable Securities without registration.
2.10 Grant of Registration Rights. For so long as there shall remain
any Registrable Securities, the Company hereby covenants and agrees not to
grant to any Person other than the Purchasers registration rights or other
similar rights more favorable than or inconsistent with the rights granted
pursuant to this Agreement, provided that the Company may grant registration
rights or other similar rights as favorable as, or less favorable than, and
consistent with the rights granted pursuant to this Agreement.
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ARTICLE III
Termination
-----------
This Agreement shall terminate immediately following the moment at
which there exist no securities of the Company that constitute Registrable
Securities; provided, however, that Section 2.8 hereof shall survive
indefinitely.
ARTICLE IV
Miscellaneous
-------------
4.1 Recapitalization, Exchanges, etc. Affecting the Common Stock. The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (a) the Registrable Securities and (b) any and all shares of
capital stock of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution for the Registrable
Securities, by reason of any stock dividend, split, reverse split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. In the event of any change in the capitalization of the Company as
a result of any stock split, stock dividend or stock combination, the
provisions of this Agreement shall be appropriately adjusted.
4.2 Injunctive Relief. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if
the parties fail to comply with any of the obligations herein imposed on them
and that in the event of any such failure, an aggrieved Person will be
irreparably damaged and will not have an adequate remedy at law. Any such
Person shall, therefore, in addition to any other remedies available under
applicable law, be entitled to injunctive relief, including specific
performance, to enforce such obligations, without the posting of any bond, and
if any action should be brought in equity to enforce any of the provisions of
this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
4.3 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto. In
the event that any transferee of any Holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, upon execution
hereof, be deemed a party hereto for all purposes and such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such transferee shall be
entitled to receive the benefits of and be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this
Agreement.
4.4 Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statements as to the results thereto) made
15
by or on behalf of any Holder of Registrable Securities, any director,
officer, member or partner of such Holder, any agent or underwriter or any
director, officer or partner thereof, or any controlling person of any of the
foregoing, and shall survive the transfer of Registrable Securities by such
Holder.
4.5 Amendment; Waiver.
(a) This Agreement may be amended only by a written instrument signed
by the Company and the Lead Purchasers; provided, that if any amendment
affects one or more other Holders differently from the Lead Purchasers, such
amendment shall also require the consent of the holders of a majority in
interest of the Registrable Securities.
(b) No provision of this Agreement may be waived orally, but only by
a written instrument signed by the party against whom enforcement of such
waiver is sought. Holders shall be bound from and after the date of the
receipt of a written notice from the Company setting forth such amendment or
waiver, whether or not the Registrable Securities shall have been marked to
indicate such amendment or waiver.
16
4.6 Notices. Except as otherwise provided in this Agreement, notices
and other communications under this Agreement shall be in writing (including a
writing delivered by facsimile transmission) and shall be deemed to have been
duly given if delivered personally, or sent by either certified or registered
mail, return receipt requested, postage prepaid, or by overnight courier
guaranteeing next day delivery, or by telex or telecopier, at the following
addresses:
if to the Company:
Neurologix, Inc.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telecopier: (000) 000-0000
if to a Purchaser to the address set forth on Exhibit A,
or at such other address as the parties each may specify by written notice to
the others, and each such notice, request, consent and other communication
shall for all purposes of this Agreement treated as being effective or having
been given when delivered if delivered personally, upon receipt of facsimile
confirmation if transmitted by facsimile, or, if sent by mail, at the earlier
of its receipt or seventy-two (72) hours after the same has been deposited in
a regularly maintained receptacle for the deposit of United States mail,
addressed and postage prepaid as aforesaid.
4.7 Inspection. So long as this Agreement shall be in effect, this
Agreement and any amendments hereto shall be made available for inspection by
any Holder at the principal offices of the Company.
4.8 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
4.9 Headings. Article, section and paragraph headings are inserted
for convenience only and do not constitute a part of this Agreement.
4.10 Integration. This Agreement and the documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. There
17
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to this
subject matter.
4.11 Illegality. In case any provision in this Agreement shall be
declared or held invalid, illegal or unenforceable, in whole or in part,
whether generally or in any particular jurisdiction, such provision shall be
deemed amended to the extent, but only to the extent, necessary to cure such
invalidity, illegality or unenforceability, and the validity, legality and
enforceability of the remaining provisions, both generally and in every other
jurisdiction, shall not in any way be affected or impaired thereby.
4.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date set forth above.
NEUROLOGIX, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Secretary and Treasurer
MERLIN BIOMED LONG TERM
APPRECIATION FUND LP
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Member of General Partner
MERLIN BIOMED OFFSHORE MASTER
FUND LP
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Member of General Partner