Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
January 28, 2005, by and among APPLIED DNA SCIENCES, INC. (the "Company") and
VERTICAL CAPITAL PARTNERS, INC. (the "Investor Representative") on behalf of the
holders of Registrable Securities (as hereinafter defined) including but not
limited to the Note Holders listed or Schedule A herein (the "Note Holders").
The Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute as each may be in effect from time
to time (collectively, the "Securities Act"), and applicable state securities
laws for holders of Registrable Securities.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investor Representative agree as follows:
ARTICLE 1 - DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Agreement" has the meaning set forth in the preamble hereto.
(b) "Business Day" means any day other than a Saturday, Sunday or
holiday on which banking institutions in New York, New York are
closed.
(c) "Company" has the meaning set forth in the preamble hereto.
(d) "Common Stock" shall mean the common stock of the Company.
(e) "Exchange Act" means the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder, or
any similar successor statute, as each may be in effect from time to
time.
(f) "Investor Representative" has the meaning set forth in the
preamble hereto.
(g) "Investors" means, collectively, the persons represented by
the Investor Representative including, without limitation, the Note
Holders and any of their transferees or assignees who have
registration rights under this Agreement in accordance with the terms
hereof. "Investor" means any such persons, individually.
(h) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the Securities Act and the
declaration or ordering of effectiveness of such Registration
Statement or Statements by the SEC.
(i) "Registrable Securities" means (i) the Warrant Shares, (ii)
any Common Stock or other securities of the Company issued or issuable
in respect of any Convertible Note of the Company or other securities
issued or issuable in respect of such Common Stock upon any stock
split, stock dividend, recapitalization, or similar event; (iii) any
Warrant, Convertible Notes or Common Stock Issued under the conversion
of any notes or exercise of any Warrants, Bridge Notes or other notes
sold through the Investor Representative, (iv) any and all Common
Stock, Warrants or other Securities issued to the Investor
Representative, Affiliates of the Investor Representative or any
assignee or designee of the Investor Representative (v) any capital
stock or other securities otherwise issued or issuable with respect to
the Warrant Shares or such other securities; (vi) any Common Stock
acquired by a Note Holder by reason of conversion of a Note or
exercise of any Warrant; provided, however, that shares of Common
Stock or other securities shall only be treated as Registrable
Securities if and for so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution, or
(B) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(l)
thereof, in the case of either clause (A) or clause (B) in such a
manner that, upon the consummation of such sale, all transfer
restrictions and restrictive legends with respect to such shares are
removed upon the consummation of such sale. For the avoidance of
doubt, "Registrable Securities" does not include any unexercised
option(s) or warrant(s) for the purchase of any capital stock of the
Company.
(j) "Registration Statement" means any registration statement of
the Company under the Securities Act subject to or pursuant to Article
2 or another provision of this Agreement, as applicable.
(k) "SEC" means the United States Securities and Exchange
Commission.
(l) "Selling Securityholder" means any Investor participating in
any registration of Registrable Securities pursuant to this Agreement.
(m) "Convertible Note" has the meaning set forth in the first
recital hereof.
(n) "Warrant Shares" means the shares of Common Stock issued or
issuable upon exercise or conversion of the warrants issued by the
Company from time to time in connection with sales of Registrible
Securities.
1.2. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
agreements with respect to sale of Registirable Securities.
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ARTICLE 2 - REGISTRATION
2.1. "Registration". The Company has contractually committed to file
with the SEC an X-0, XX-0 or other registration statement on or before February
15, 2005 with respect to the Registratible Securities (as defined herein) in an
offering of up to $6,000,000 of Units in December 2004 and January 2005 shares
underlying the Notes and Warrants includes in Units and by the Company.
2.2 Penalty for Not Going Effective. If within 120 days of February
15, 2005, the Registration Statement referenced herein is not declared
effective, the Company will pay each investor a penalty equal to 3.5% per month
to the holders of the 2003 Bridge Note, the $1,000,000 Convertible Note
referenced herein and all the investors who subscribe to the December 2004
Convertible Note offering. Said penalty can be paid in cash or stock solely at
the discretion of the company.
ARTICLE 3 - OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1. Availability of Registration Statement. The Company shall prepare
promptly and file with the SEC any Registration Statement required by Article 2,
and use commercially reasonable efforts to cause such Registration Statement
relating to Registrable Securities to become effective within 120 days after
such filing, and keep the Registration Statement continuously effective and
available for use at all times, except as set forth herein, until such date as
all of the Registrable Securities have been sold pursuant to such Registration
Statement (the "Registration Period").
3.2. Amendments to Registration Statement. The Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective and such prospectus available for use at all times during
the Registration Period (including, without limitation, amendments and
supplements necessary in connection with a change in the "Plan of Distribution"
section in any Registration Statement or prospectus) and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by the Registration Statement until the
termination of the Registration Period. The Company shall cause any such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
3.3. Information. Upon written request, the Company shall furnish to
any Selling Securityholder and its legal counsel, promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment thereto, and
such number of copies of each prospectus, including each preliminary prospectus,
and all amendments and supplements thereto, and such other documents as such
Selling Securityholder may reasonably request in order to facilitate the
disposition of the Registrable Securities. The Company shall promptly notify all
Selling Securityholders of the effectiveness of any Registration Statement or
post-effective amendments thereto.
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3.4. Blue Sky. The Company shall (a) register and qualify the
Registrable Securities covered by any Registration Statement under the
securities laws of such jurisdictions in the United States as each Selling
Securityholder who holds any such Registrable Securities reasonably requests,
(b) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof and
availability for use during the Registration Period, (c) take such other actions
as may be reasonably necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (d) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, or (iii) file a general consent to service of process in any such
jurisdiction.
3.5. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities without the prior written consent of more
than 50% of the number of Registrable Securities then outstanding, unless such
new registration rights, including standoff obligations, are subordinate to the
rights of the Investors hereunder.
3.6. Correction of Statements or Omissions. As soon as practicable
after becoming aware of such event, the Company shall publicly announce or
notify all Selling Securityholders of the happening of any event, of which the
Company has actual knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or fails to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and use commercially
reasonable efforts as soon as possible to (but in any event it shall within five
Business Days or three Business Days of the receipt by the Company from its
accountants of financial information required to correct such untrue statement
or omission, as applicable) prepare a supplement or amendment to the
Registration Statement (and make all required filings with the SEC and all
applicable state securities or blue sky commissions) to correct such untrue
statement or omission if not otherwise satisfied through the filing of a report
to the SEC or otherwise pursuant to applicable securities laws (but such a
supplement or amendment or other filing shall not be required if,
notwithstanding the Company's commercially reasonable efforts to so prepare and
file such supplement, amendment or other filing, such a supplement, amendment or
other filing is no longer required by applicable law to correct such untrue
statement or omission because such untrue statement or omission no longer
exists) and the Company shall simultaneously (and thereafter as requested)
deliver such number of copies of such supplement or amendment to each Investor
(or other applicable document) as such Investor may request in writing.
3.7. Stop Orders. The Company shall use commercially reasonable
efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, and, if such an order is issued, to
obtain the withdrawal of such order at the earliest practicable time, and the
Company shall immediately notify all Selling Securityholders and, in the event
of an underwritten offering, the managing underwriter(s), of the issuance of
such order and the resolution thereof.
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3.8. Inspection of Records. The Company shall provide each Selling
Securityholder, and any underwriter who may participate in the distribution of
Registrable Securities, and their respective representatives, the opportunity to
conduct a reasonable inquiry of the Company's financial and other records during
normal business hours and make available its officers, directors and employees
for questions regarding information which the Selling Securityholders and any
such underwriter may reasonably request in connection with the Registration
Statement; provided, however, the Selling Securityholders and any such
underwriter shall hold in confidence and shall not make any disclosure of any
record or other information which the Company determines in good faith to be
confidential, and of which determination the inspectors are so notified in
writing, unless (a) the disclosure of such records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b) the
release of such records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, or is otherwise required by
applicable law or legal process, or (c) the information in such records has been
made generally available to the public other than by disclosure in violation of
this or any other agreement (to the knowledge of the relevant inspector).
3.9. Investor Information. The Company shall hold in confidence and
not make any disclosure of non-public information concerning any Investor
provided to the Company by such Investor unless (a) disclosure of such
information is necessary to comply with federal or state securities laws, rules,
statutes or regulations, (b) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement or
other public filing by the Company, (c) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction or is otherwise required by applicable law or legal
process, (d) such information has been made generally available to the public
other than by disclosure in violation of this or any other agreement, or (e)
such Investor consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of such information
concerning any Investor is sought in or by a court or governmental body of
competent jurisdiction in or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow such Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information. 3.10. Listing. The Company shall use
commercially reasonable efforts to cause the listing and the continuation of
listing of all the Registrable Securities covered by any Registration Statement
on each securities exchange or quotation system upon which any other securities
of the Company is then listed or quoted.
3.11. Transfer Agent. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement.
3.12. Delivery of Certificates; Opinions of Counsel. The Company shall
cooperate with any and all Selling Securityholders who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as such Selling
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Securityholders or the managing underwriter or underwriters, if any, may
reasonably request and registered in such names as such Selling Securityholders
or the managing underwriter or underwriters, if any, may request, and, upon the
written request of the transfer agent for the Company or the managing
underwriter or underwriters, as applicable, within two Business Days of such
request, the Company shall cause legal counsel selected by the Company to
deliver to the transfer agent or the managing underwriter or underwriters, as
applicable, and the Selling Securityholders an opinion (a "Transfer Opinion") of
such counsel in a form reasonably acceptable to the transfer agent or managing
underwriter or underwriters, as applicable, and the Selling Securityholders.
Such opinion shall include, without limitation, opinions to the effect that (i)
the Registration Statement has become effective under the Securities Act and no
order suspending the effectiveness of the Registration Statement, preventing or
suspending the use of the Registration Statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor has the SEC or any securities or blue sky authority of any jurisdiction
instituted or threatened to institute any proceedings with respect to such an
order, (ii) all of the Registrable Securities covered by such Registration
Statement may be sold or otherwise transferred pursuant to the Plan of
Distribution set forth in the prospectus forming a part of the Registration
Statement, and (iii) the Registration Statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, complies as to form with the Securities Act. Such Transfer
Opinion shall also state the jurisdictions in which the Registrable Securities
have been registered or qualified for sale.
3.13. Compliance with Laws. The Company shall comply with all
applicable laws related to a Registration Statement and offering and sale of
securities covered by the Registration Statement and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act).
ARTICLE 4 - OBLIGATIONS OF THE INVESTORS
4.1. Obligations of the Investors. Each Investor electing to
participate in any registration of Registrable Securities as a Selling
Securityholder generally agrees as follows:
(a) Information Concerning Investors; Cooperation. Each Selling
Securityholder agrees to cooperate with the Company in connection with
the preparation and filing of any Registration Statement hereunder,
and for so long as the Company is obligated to keep any such
Registration Statement effective, such Selling Securityholder will
provide to the Company, in writing, for use in the Registration
Statement, all information regarding such Selling Securityholder, the
Registrable Securities held by him, her or it, the intended method of
distribution of such Registrable Securities and such other information
as may be necessary to enable the Company to prepare the Registration
and prospectus covering the Registrable Securities and to maintain the
currency and effectiveness thereof. At least 30 days prior to the
first anticipated filing date of a Registration Statement, the Company
shall notify each Selling Securityholder of the information the
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Company so requires from each such Selling Securityholder and each
Selling Securityholder shall deliver to the Company such requested
information within 20 days of request therefor or shall be excluded
from such registration.
(b) SEC. Each Selling Securityholder agrees to use reasonable
efforts to cooperate with the Company (at the Company's expense) in
responding to comments of the staff of the SEC relating to such
Investor.
(c) Suspension of Offering or Distribution. On notice from the
Company of the happening of any of the events specified in Sections
3.6 or 3.7, the Company requires the suspension by such Selling
Securityholder of the distribution of any of the Registrable
Securities, then such Selling Securityholder shall cease offering or
distributing the Registrable Securities until such time as the Company
notifies such Selling Securityholder that offering and distribution of
the Registrable Securities may recommence.
ARTICLE 5 - EXPENSES OF REGISTRATION
5.1. Expenses. With respect to each registration of Registrable
Securities hereunder, all expenses (other than underwriting discounts and
commissions and transfer taxes), including, without limitation, the reasonable
fees and disbursements of one counsel to the Selling Securityholders, all
registration, listing and qualification fees, printers and accounting fees, and
the fees and disbursements of counsel for the Company, shall be borne by the
Company.
ARTICLE 6 - INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1. Indemnification by the Company. The Company will indemnify, hold
harmless and defend (a) each Selling Securityholder, (b) each underwriter of
Registrable Securities, and (c) the directors, officers, partners, members,
employees, agents and persons who control each such Selling Securityholder and
any such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, if any (each, a "Investor Indemnified Person"),
against any losses, claims, damages, liabilities or expenses (collectively,
together with actions, proceedings or inquiries whether or not in any court,
before any administrative body or by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
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to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall reimburse each such Investor Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees and
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the Company shall not be required to indemnify or hold harmless a
Investor Indemnified Person (A) with respect to a Claim arising out of or based
upon (1) any violation of federal or state securities laws, rules or regulations
committed by such Investor Indemnified Persons (or any person who controls any
of them or any agent, broker-dealer or underwriter engaged by them) or in the
case of a non-underwritten offering, any failure by such Investor Indemnified
Person to give any purchaser of Registrable Securities at or prior to the
written confirmation of such sale, a copy of the most recent prospectus, (2) an
untrue statement or omission contained in any Registration Statement or
prospectus which statement or omission was made in reliance upon and in
conformity with written information provided by or on behalf of such Investor
Indemnified Person specifically for use or inclusion in the Registration
Statement or any prospectus, (3) any prospectus used after such time as the
Company advised such Investor Indemnified Person that the filing of a post
effective amendment or supplement thereto was required, except the prospectus as
so amended or supplemented, or (4) any prospectus used after such time as the
Company's obligation to keep the Registration Statement effective and current
has expired or been suspended hereunder, provided, that the Company has so
advised such Investor Indemnified Person; (B) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and
(C) with respect to any preliminary prospectus, shall not inure to the benefit
of a Investor Indemnified Person if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented, if such corrected prospectus
was timely made available by the Company pursuant to Section 3.6 hereof, and
such Investor Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a Claim and such Investor
Indemnified Person, notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Investor Indemnified Person and shall survive the transfer of the
Registrable Securities by a Investor pursuant to Article 9.
6.2. Indemnification by Investors. An Investor shall indemnify, hold
harmless and defend, to the same extent and in the same manner set forth in
Section 6.1, the Company, each of its directors, each of its officers who signs
the Registration Statement, its employees, agents and persons, if any, who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and any other securityholder selling securities
pursuant to the Registration Statement and any underwriter of securities covered
by such Registration Statement, together with its directors, officers and
members, and any person who controls such securityholder or underwriter within
the meaning of the Securities Act or the Exchange Act (each, a "Company
Indemnified Person"), against any Claim to which any of them may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and such
Investor will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6.2 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
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written consent of such Investor, which consent shall not be unreasonably
withheld; and provided, further, however, that such Investor shall be liable
under this Agreement (including this Section 6.2 and Article 7) for only that
amount as does not exceed the net proceeds actually received by such Investor as
a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Company Indemnified Person and
shall survive the transfer of the Registrable Securities by such Investor
pursuant to Article 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.2 with respect
to any preliminary prospectus shall not inure to the benefit of any Company
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, and the Company Indemnified Person
failed to utilize such corrected prospectus.
6.3. Notices. Promptly after receipt by a Investor Indemnified Person
or Company Indemnified Person under this Article 6 of notice of the commencement
of any action (including any governmental action), such Investor Indemnified
Person or Company Indemnified Person shall, if a Claim in respect thereof is to
be made against any indemnifying party under this Article 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right (at its expense) to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume and continue control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Investor Indemnified Person or the Company Indemnified Person, as the case
may be; provided, however, that such indemnifying party shall diligently pursue
such defense and an indemnifying party shall not be entitled to assume (or
continue) such defense if the representation by such counsel of the Investor
Indemnified Person or Company Indemnified Person and the indemnifying party
would be inappropriate due to actual or potential conflicts of interest between
such Investor Indemnified Person or Company Indemnified Person and any other
party represented by such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the Investor
Indemnified Person or the Company Indemnified Person and the indemnifying party,
and any such Investor Indemnified Person or Company Indemnified Person
reasonably determines that there may be legal defenses available to such
Investor Indemnified Person or Company Indemnified Person which are different
from or in addition to those available to such indemnifying party.
Notwithstanding any assumption of such defense and without limiting any
indemnification obligation provided for in Section 6.1 or 6.2, the Company
Indemnified Person or Investor Indemnified Person, as the case may be, shall be
entitled to be represented by counsel (at its own expense if the indemnifying
party is permitted to assume and continue control of the defense and otherwise
at the expense of the indemnifying party) and such counsel shall be entitled to
participate in such defense. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Investor Indemnified Person or Company Indemnified Person under this Article VI,
except to the extent that the indemnifying party is actually materially
prejudiced in its ability to defend such action. The indemnification required by
this Article 6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
ARTICLE 7 - CONTRIBUTION
7.1. To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 6.1 or
6.2 (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, and any controlling person of the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act), as one entity, and the Selling Securityholders whose Registrable
Securities are included in such registration in the aggregate (including for
this purpose any contribution by or on behalf of an indemnified party), as a
second entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Selling Securityholders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Selling Securityholders, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement, alleged statement, omission, or alleged omission. Subject to the
following sentence, the Company and Investors agree that it would be unjust and
inequitable if the respective obligations of the Company and the Selling
Securityholders for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages, and expenses
(even if the Selling Securityholders and the other indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
7.1. In no case shall any Selling Securityholder be responsible for a portion of
the contribution obligation imposed on all Selling Securityholders in excess of
the net proceeds actually received by such Selling Securityholder as a result of
the sale of Registrable Securities pursuant to such Registration Statement. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section 7.1, each person, if any, who controls any Selling Securityholder within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and each officer, director, partner, employee, agent, and counsel of each
such Selling Securityholder or control person shall have the same rights to
contribution as such Selling Securityholder or control person and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who signs the Registration Statement, each director of the Company, and its or
their respective counsel shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 7.1. Anything in
this Section 7.1 to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 7.1 is intended to supersede any right
to contribution under the Securities Act, the Exchange Act or otherwise.
ARTICLE 8 - MARKET STAND-OFF
8.1. "Market Stand-Off". Each Investor hereby agrees that, during the
period specified by the Company and any underwriter of Common Stock or other
securities of the Company following the effective date of a Registration
Statement of the Company filed under the Securities Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, that (i) such market stand-off time period shall not
exceed 180 days following the effective date of such registration if such
registration relates to the Company's initial public offering of securities, and
shall not exceed 90 days following the effective date of such registration in
all other cases; (ii) the directors, officers and holders of more than 2% of the
Company's then outstanding capital stock (each such director, officer and
stockholder, a "Lockup Party") shall have agreed to be at least as restricted
with respect to the offer, sale or other transfer of such persons' securities in
the Company (a "lockup"); and (iii) the Company shall promptly provide notice to
each Investor of any discretionary waiver or early termination by the Company or
its underwriter of the lockup of any Lockup Party, and cause each Investor to
receive, on a proportionate basis, the benefit of any such waiver or
termination.
ARTICLE 9 - REPORTS UNDER THE EXCHANGE ACT
9.1. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at
all times after the date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;
(b) 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 (at any time after it has become subject to such
reporting requirements); and
(c) So long as any Investor owns any Registrable Securities, to
furnish to such Investor forthwith upon written request a written
statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the
effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), 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 of the Company and other information in the
possession of or reasonably obtainable by the Company as any such
Investor may reasonably request in availing itself of any rule or
regulation of the SEC allowing such Investor to sell any such
securities without registration.
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ARTICLE 10 - AMENDMENT AND ASSIGNMENT OF REGISTRATION RIGHTS
10.1. Assignment of Registration Rights. The rights of any Investor
hereunder as to Registrable Securities transferred by such Investor, including
the right to have the Company register Registrable Securities pursuant to this
Agreement, shall be automatically assigned by the Investor to any transferee of
all or any portion of the Registrable Securities, whether such transfer occurs
before or after the Registration Statement becomes effective, if: (a) the
transferring Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within 10 days after such assignment, (b) the Company is, within 10 days after
such transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c) following
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act or applicable
state securities laws, and (d) at or before the time the Company receives the
written notice contemplated by clause (b) of this sentence, the transferee or
assignee agrees in writing for the benefit of the Company to be bound by all of
the provisions contained herein. The rights of any Investor hereunder with
respect to any Registrable Securities retained by such Investor shall not be
assigned by virtue of the transfer of other Registrable Securities.
10.2. Amendment of Registration Rights. Except as expressly provided
in this Agreement, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought; provided, however, that holders of more than 50% of the
Registrable Securities may, with the written consent of the Company, waive,
modify or amend on behalf of all holders, any provisions hereof benefitting such
holders, so long as the effect thereof will be that all such holders will be
treated equally.
ARTICLE 11 - MISCELLANEOUS
11.1. Registered Holders. A person or entity is deemed to be a holder
(or a holder in interest) of Registrable Securities whenever such person or
entity owns of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.
11.2. Notices, etc. All notices and other communications required or
permitted under this Agreement shall be sent by registered or certified mail,
postage prepaid, overnight courier, confirmed facsimile or other electronic
transmission or otherwise delivered by hand or by messenger, addressed (a) if to
a Investor, at such Investor's address set forth on the signature page hereto or
at such other address as such Investor shall have furnished to the Company in
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writing, (b) if to the Company at its offices to the attention of the President
or at such other address as the Company shall have furnished to the Investors in
writing, or (c) if any transferee or assignee of a Investor pursuant to Section
10.1, at such address as such transferee or assignee shall have furnished to the
Company in writing. Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been received or
given, as applicable, (i) when delivered if delivered personally, (ii) if sent
by mail, at the earlier of its receipt or three Business Days after the
registration or certification thereof, (iii) if sent by overnight courier, one
Business Day after the same has been deposited with a nationally recognized
courier service, or (iv) when sent by confirmed facsimile or other electronic
transmission, on the day sent (if a Business Day) if sent during normal business
hours of the recipient, and if not, then on the next Business Day (provided,
that such facsimile or other electronic transmission is followed by delivery via
another method permitted by this Section 11.2).
11.3. Delays or Omissions. Except as expressly provided in this
Agreement, no delay or omission to exercise any right, power or remedy accruing
to any Investor upon any breach or default of the Company under this Agreement
shall impair any such right, power or remedy of such Investor nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Investor of any
breach or default under this Agreement, or any waiver on the part of any
Investor of any provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Investor shall be cumulative and not alternative.
11.4. Governing Law; Jurisdiction. This Agreement shall be governed in
all respects by the laws of the State of New York without giving effect to the
conflicts of laws principles thereof. All suits, actions or proceedings arising
out of, or in connection with, this Agreement or the transactions contemplated
by this Agreement shall be brought in any federal or state court of competent
subject matter jurisdiction sitting in New York, New York Each of the parties
hereto by execution and delivery of this Agreement, expressly and irrevocably
(i) consents and submits to the personal jurisdiction of any such courts in any
such action or proceeding; (ii) consents to the service of any complaint,
summons, notice or other process relating to any such action or proceeding by
delivery thereof to such party as set forth in Section 11.2 hereof; and (iii)
waives any claim or defense in any such action or proceeding based on any
alleged lack of personal jurisdiction, improper venue, forum non conveniens or
any similar basis.
11.5. Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant to this Agreement at the Closing constitute the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof and thereof and supersede all prior agreements and
merge all prior discussions, negotiations, proposals and offers (written or
oral) between them, and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants or agreements except as
specifically set forth herein or therein. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
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11.6. Successors and Assigns. Subject to Article 10 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the permitted successors, assigns, heirs, executors and administrators of the
parties to this Agreement, except that the Company may not assign this Agreement
without the written consent of the Holders of at least 50% of the then
outstanding Registrable Securities.
11.7. Titles and Subtitles. The headings in this Agreement are used
for convenience of reference only and shall not be considered in construing or
interpreting this Agreement.
11.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. This Agreement may be delivered by facsimile, and facsimile
signatures shall be treated as original signatures for all applicable purposes.
11.9. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.10. Consents. Unless otherwise provided herein, all consents and
other determinations to be made pursuant to this Agreement shall be made on the
basis of a majority in interest (determined by number of securities) with
respect to the Registrable Securities.
11.11. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
11.12. No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto, each
investor, their permitted successors and assigns and parties eligible for
indemnification under Article 6, and only in accordance with the express terms
of this Agreement.
11.13. Confidentiality of Agreement, Press Releases and Public
Announcements. Except as set forth below, the parties shall, and shall cause
their officers, employees and representatives to, treat and hold as confidential
the existence and terms of this Agreement at all times. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Company and the holders
of at least 50% of the number of Registrable Securities; provided, however, that
any party may make any public disclosure it believes in good faith is required
by applicable law (including applicable securities laws) or any listing or
trading agreement concerning its publicly-traded securities to make such
disclosure (in which case the disclosing party will use its reasonable efforts
to advise the other parties in writing prior to making the disclosure).
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11.14. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder and any applicable common law, unless the
context requires otherwise. The word "including" shall mean including without
limitation and is used in an illustrative sense rather than a limiting sense.
Terms used with initial capital letters will have the meanings specified,
applicable to singular and plural forms, for all purposes of this Agreement.
Reference to any gender will be deemed to include all genders and the neutral
form.
11.15. Incorporation of Exhibits, Annexes and Schedules. The Exhibits,
Annexes and Schedules identified in this Agreement, if any, are incorporated
herein by reference and made a part hereof.
[Remainder of page left intentionally blank. Signature page(s) to follow.]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first above written.
COMPANY: APPLIED DNA SCIENCES, INC.
By:/S/ Xxxxx Xxxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
INVESTOR REPRESENTATIVE: VERTICAL CAPITAL PARTNERS, INC.
By:/S/ Xxxxxx XxXxxx
Name:Xxxxxx XxXxxx
Title:Chairman
Address for Notice Purposes:
VERTICAL CAPITAL PARTNERS, INC.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
