EXHIBIT 4.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is entered into as of May
25, 2005 by and among Protalex, Inc., a Delaware corporation (the "COMPANY") and
vSpring SBIC, L.P. ("VSPRING") and certain of the investors set forth on
Schedule I hereto (collectively, with vSpring, the "INVESTORS") with reference
to the following facts:
WHEREAS, the Investors and the Company have entered into a Warrant and
Common Stock Purchase Agreement (the "PURCHASE AGREEMENT") of even date with
this Agreement; and
WHEREAS, to induce the Investors to enter into the Purchase Agreement, the
Company has agreed to grant certain rights to the Investors as reflected in this
Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings. All terms not otherwise defined in
this Agreement shall have the meaning set forth in the Purchase Agreement.
1.1 "AFFILIATE" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
1.2 "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
1.3 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.4 "HOLDER" shall mean the Investors holding Registrable Securities
or securities exercisable into Registrable Securities and any Person holding
such securities to whom rights under this Agreement have been transferred in
accordance with Section 3.10 hereof.
1.5 "LIQUIDITY DATE" shall mean the earlier to occur of (i) the
closing of a firmly underwritten public offering of not less than Twenty-Five
Million Dollars ($25,000,000) gross proceeds to the Company at a public offering
price per share of at least Six Dollars and Fifty Cents ($6.50) and with respect
to which the lead underwriters are nationally recognized leaders in the
investment banking industry for the biotechnology industry, or (ii) the date on
which (a) the Company's common stock is traded on the NASDAQ National Market,
the NASDAQ Stock Market,
or the American Stock Exchange, and (b) the average daily trading volume for the
common stock for the preceding six-month period shall be at least one hundred
fifty thousand (150,000) shares.
1.6 "PERSON" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
governmental authority or other legal entity.
1.7 "REGISTRABLE SECURITIES" means (1) the Shares and the Warrant
Shares and (2) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the Shares or Warrant Shares, excluding in all cases, however,
(i) any Registrable Securities sold by a Person in a transaction in which such
Person's rights under this Agreement are not assigned, or (ii) any Registrable
Securities sold through a broker or dealer or underwriter in a public
distribution or a public securities transaction pursuant to Rule 144(k).
1.8 The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.9 "REGISTRATION EXPENSES" shall mean all expenses, except Selling
Expenses as defined below, incurred by the Company in complying with Sections
3.1, 3.2 and 3.3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, the fees and disbursements of one
special counsel to the Holders, not to exceed Twenty Thousand Dollars ($20,000)
(which shall be in addition to the Company's obligation to reimburse vSpring in
connection with the negotiation of the Operative Agreements (as defined in the
Purchase Agreement) pursuant to Section 5.8 of this Agreement) blue sky fees and
expenses, the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
1.10 "RESTRICTED SECURITIES" shall mean the securities of the
Company required to bear the legend set forth in Section 2.2 hereof.
1.11 "REGISTRATION STATEMENT" shall mean a registration statement of
the Company, on Form S-3, or if the Company is ineligible to use Form S-3, on
Form SB-2 (or successor forms) filed by the Company with the Commission pursuant
to this Agreement permitting registration of the Registrable Securities for
resale by the respective Holders thereof.
1.12 "RULE 144" shall mean Rule 144 adopted by the Commission under
the Securities Act.
1.13 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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1.14 "SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes, if any, applicable to the
securities registered by the Holders.
1.15 "WARRANT SHARES" shall mean shares of the Company's Common
Stock issued or issuable upon exercise of the Warrants (as defined in the
Purchase Agreement).
2. Transferability.
2.1 Restrictions on Transferability. The Registrable Securities
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 2, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Investors will cause any proposed
purchaser, assignee, transferee, or pledgee of the Registrable Securities held
by the Investors to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 2.
2.2 Restrictive Legend. Each certificate representing (i) the
Registrable Securities and (ii) any other securities issued in respect of the
Registrable Securities upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise imprinted with the
legend set forth below.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY
THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID
ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO (1)
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND (2) VOTING RESTRICTIONS AS
SET FORTH IN A SHAREHOLDERS AGREEMENT AMONG THE COMPANY AND THE ORIGINAL
HOLDERS OF THESE SHARES A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE COMPANY."
The Investors and Holders consent to the Company making a notation on its
records and giving instructions to any transfer agent of the Registrable
Securities in order to implement the restrictions on transfer established in
this Section 2.
2.3 Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 2.3. Prior to any proposed
sale, assignment, transfer or pledge of any Restricted Securities (other than
(i) a transfer not involving a change in beneficial ownership, (ii) in
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transactions involving the distribution without consideration of Restricted
Securities by an Investor to any of its partners, or retired partners, or to the
estate of any of its partners or retired partners, or the transfer by gift, will
or intestate succession of any partner to his or her spouse or to the siblings,
lineal descendants or ancestors of such partner or his or her spouse, (iii) a
transfer to an affiliated fund, partnership or company, which is not a
competitor of the Company, subject to compliance with applicable securities
laws, or (iv) transfers in compliance with Rule 144, so long as the Company is
furnished with satisfactory evidence of compliance with such Rule), unless there
is in effect a registration statement under the Securities Act covering the
proposed transfer, the Holder thereof shall give written notice to the Company
of such Holder's intention to effect such transfer, sale, assignment or pledge.
Each such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and if reasonably
requested by the Company, such Holder shall have furnished at such Holder's
expense, either (i) a written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company, addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Securities Act, or (ii) a "no
action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
Holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the Holder to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend specified in Section
2.2 above, except that such certificate shall not bear such restrictive legend
if in the opinion of counsel for such Holder and in the reasonable opinion of
the Company such legend is not required in order to establish compliance with
any provision of the Securities Act.
3. Registration Rights.
3.1 Required Registration. The Company shall file with the
Commission and any applicable state securities authorities within fifteen (15)
business days following the Final Closing Date (the "FILING DATE"), and use its
best efforts to cause to be declared effective by the Commission within one
hundred twenty (120) business days following the Initial Closing Date (the
"EFFECTIVE DATE"), a Registration Statement in order to register the Registrable
Securities for resale and distribution under the Securities Act. The
Registration Statement shall contain substantially the Plan of Distribution
attached hereto as Exhibit A. The Registration Statement must be declared
effective by the Commission not later than the Effective Date. The Company shall
maintain the effectiveness of the Registration Statement until such time as all
remaining Registrable Securities held by the Holders may be sold without
restriction under Rule 144(k) (or successor rule) (the "EFFECTIVENESS PERIOD").
If the Registration Statement is not filed with the Commission
on or before the Filing Date (a "FILING DEFAULT"), the Company shall pay
liquidated damages to each Holder, from and including the day that the day
following such Filing Default until the date that the Registration Statement is
filed with the Commission, at a rate per month (or portion thereof) equal to
0.67% of
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the total purchase price of the Shares purchased by such Holder pursuant to the
Purchase Agreement (the "DEFAULT RATE").
If the Registration Statement is not declared effective by the
Commission on or before the Effective Date (a "REGISTRATION DEFAULT"), the
Company shall pay liquidated damages to each Holder, from and including the day
following such Registration Default until the earlier of (i) the time that the
Registration Statement is declared effective by the Commission, or (ii) the time
that the Effectiveness Period expires, at the Default Rate.
In the event that the Company exercises its right pursuant to
Section 3.6 to suspend the availability of the Registration Statement for a
period exceeding the maximum number of days specified therein for the applicable
Suspension Period (a "SUSPENSION DEFAULT"), the Company shall pay liquidated
damages to each Holder, from and including the day following such Suspension
Default until such time as the Company delivers the Advice (as defined in
Section 3.6) to the Holders described in Section 3.6, at the Default Rate.
In the event that the Registration Statement ceases to be
effective or available for use by the Holders for a period in excess of sixty
(60) days in any single instance or ninety (90) days in the aggregate during any
12-month period (an "EFFECTIVENESS DEFAULT"), the Company shall pay liquidated
damages to each Holder, from and including the day following such Effectiveness
Default until such time as the Registration Statement is again effective and
available for use by the Holders, at the Default Rate.
The Company's obligation to pay liquidated damages pursuant to this
Section 3.1 shall accrue and be discharged on a monthly basis.
In no event shall the Company be required to pay liquidated damages in
excess of the applicable maximum amount of 18.0% of the total purchase price of
the Shares purchased by such Holder pursuant to the Purchase Agreement
3.2 Requested Registration.
(a) If the Company shall receive at any time after the second
anniversary of the Closing Date, a written request from the Initiating Holders
that the Company effect any registration with respect to Registrable Securities
representing at least twenty-five percent (25%) of the Registrable Securities
(or any lesser percentage if the anticipated aggregate offering price to the
public, excluding underwriting discounts and commissions, is at least Ten
Million Dollars ($10,000,000)), the Company will:
(i) within thirty (30) days of the receipt by the
Company of such notice, give written notice of the proposed registration,
qualification or compliance to all other Holders (which notice shall (i) specify
the amount and intended method of distribution of such Registrable Securities
and (ii) invite such other Holders to join in such requested registration by
requiring that such other holders provide a written request to join in the
registration within twenty (20) days after the receipt of such written notice);
and
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(ii) as soon as practicable, use its commercially
reasonable efforts to effect such registration, qualification or compliance
(including, without limitation, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within twenty (20)
days after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 3.2:
(1) After the Company has effected three such
registrations pursuant to this Section 3.2(a), and such registrations have been
declared or ordered effective;
(2) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that the Company has
pending or in process a material transaction or event, the disclosure of which
in the good faith judgment of the Board of Directors, after consultation with
outside securities counsel, materially and adversely affect the Company, then
the Company may postpone the filing (but not the preparation) of a Registration
Statement required by this Section 3.2 for up to ninety (90) days; provided,
however, that the Company shall at all times in good faith use its best efforts
to cause any Registration Statement required by this Section 3.2 to be filed as
soon as possible thereafter; provided, however, that the Company shall not
exercise such right more than once in any twelve-month period.
(b) At the time the Registration Statement required pursuant
to this Section 3.2 is declared effective, the Holders shall be named as selling
securityholders in the Registration Statement and any related prospectus in such
a manner as to permit such Holders to deliver such prospectus to purchasers of
Registrable Securities in accordance with applicable law. None of the Company's
securityholders (other than the Holders) shall have the right to include any of
the Company's securities in the Registration Statement required pursuant to this
Section 3.2, if including such other securities in such Registration Statement
would delay or otherwise interfere with the filing or effectiveness of such
Registration Statement.
(c) If a requested registration pursuant to this Section 3.2
involves an underwritten offering, the investment banker(s), underwriter(s) and
manager(s) for such registration shall be selected by the Holders of a majority
of the Registrable Securities which the Company has been requested to register;
provided, however, that such investment banker(s), underwriter(s) and manager(s)
shall be reasonably satisfactory to the Company.
(d) In the event that a Registration Statement filed pursuant
to Section 3.2 is for a registered public offering involving an underwriting, as
requested by the Initiating Holders, the Company shall so advise the Holders as
part of the notice given pursuant to this Section 3.2. In such event, the right
of any Holder to registration pursuant to Section 3.2 shall be conditioned upon
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such Holder's participation in the underwriting arrangements required by this
Section 3.2, and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company and reasonably acceptable to a majority in interest of the Holders
proposing to distribute their securities through such underwriting.
Notwithstanding any other provision of this Section 3.2, if the requested
registration statement pursuant to this Section 3.2 involves an underwritten
public offering and the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement or in such other manner as shall be agreed to by the
Company and Holders of a majority in interest of the Registrable Securities
proposed to be included in such registration. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest one hundred (100)
shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration.
3.3 Company Registration.
(a) If at any time or from time to time the Company shall
determine to register any of its securities, either for its own account or the
account of any stockholder, other than (i) a registration relating solely to
employee benefit plans, (ii) a registration relating solely to a Commission Rule
145 transaction, or (iii) the registration pursuant to Section 3.1 hereof, the
Company will:
(i) promptly give to each Holder written notice thereof
and of each such Holder's rights under this Section 3.3; and
(ii) use its commercially reasonable efforts to include
in such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within ten (10) days
after receipt of such written notice from the Company, by any Holder, subject to
Section 3.3(b) hereof.
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(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
3.3(a)(i). In such event the right of any Holder to registration pursuant to
Section 3.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 3.3, if the Company registration pursuant to this Section 3.3
involves an underwritten offering and the managing underwriter advises the
Company in writing that marketing factors require a limitation of the number of
shares to be underwritten, the managing underwriter may limit the Registrable
Securities and other securities to be distributed through such underwriting,
provided, that the Company shall include in such registration (a) first, one
hundred percent (100%) of the securities the Company proposes to sell, and (b)
second, the amount of Registrable Securities which the Holders have requested to
be included in such registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative amount of Registrable Securities
then held by each such Holder together with other holders of rights similar to
those granted in this Section 3.3 on a pari passu basis; provided, further, in
no event shall the number of Registrable Securities to be included in such
offering be less than twenty percent (20%) of the total number of securities to
be included in such offering. The Company shall so advise all Holders
distributing their securities through such underwriting of such limitation, and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration statement
or in such other manner as shall be agreed to by the Company and Holders of a
majority in interest of the Registrable Securities proposed to be included in
such registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company may round the number of shares allocated to any
Holder or other selling stockholder to the nearest one hundred (100) shares. If
any Holder disapproves of the terms of any such underwriting, such Holder or
selling stockholder may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Further, any Holder requesting to be
included in such registration may elect, in writing prior to the effective date
of the registration statement filed in connection with such registration to
withdraw therefrom. In addition, the registrations provided for in this Section
3.3 are in addition to, and not in lieu of the registrations made on behalf of
the Holders as described elsewhere in this Section 3.
(c) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 3.3 prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration. The Registration Expenses of such
withdrawn registration shall be borne by the Company in accordance with Section
3.4 hereof.
(d) Notwithstanding the above, this Section 3.3 shall not
apply to registrations of the Company's securities which are not underwritten
public offerings when the Registrable Securities are covered by an effective
Registration Statement.
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3.4 Expenses of Registration. All Registration Expenses incurred in
connection with registrations pursuant to Sections 3.1, 3.2 and 3.3 shall be
borne by the Company. All Selling Expenses relating to securities registered
pursuant to Sections 3.1, 3.2 and 3.3 shall be borne by the Persons holding
securities included in such registration pro rata on the basis of the number of
shares so registered.
3.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 3,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. The Company will use its best efforts to:
(a) if the Company becomes eligible to file a Registration
Statement on Form S-3 (the date on which the Company becomes so eligible, the
"S-3 Eligibility Date"), then (A) cause each Registration Statement first filed
after the S-3 Eligibility Date to be on Form S-3 and (B) with respect to each
Registration Statement filed on Form SB-2 (or such other form as does not permit
incorporation by reference, if applicable) prior to the S-3 Eligibility Date
where the period of obligation to maintain the effectiveness of such
Registration Statement would in the reasonable judgment of the Company exceed
three (3) months, cause to be promptly (but in any event not more than 30 days
after such date) filed a Registration Statement on Form S-3 to replace each such
Registration Statement on Form SB-2 and cause such Registration Statement on
Form S-3 to be declared effective by the Commission as soon as possible after
filing, thereafter to cause to be filed a post-effective amendment to each
Registration Statement on Form SB-2 to de-register unsold shares under such
Registration Statement unless this provision 3.5(a) is waived in writing by
vSpring; provided, however, that no fewer than three (3) business days before
filing a Registration Statement or related prospectus or any amendment or
supplement thereto in accordance with Section 3 hereof, the Company shall
furnish to counsel for the Holders copies of all documents proposed to be filed,
which documents be subject to review by such counsel;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement (including any Exchange Act documents
incorporated by reference into such Registration Statement) and the prospectus
used in connection with such Registration Statement as may be necessary to keep
such Registration Statement continuously effective as required herein and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement, including, but not
limited to, with respect to each Registration Statement on Form SB-2 (or other
such form that does not permit incorporation by reference, if applicable), cause
a post-effective amendment (or prospectus supplement) to be filed with the
Commission within twenty (20) days after each date on which the Company files
its Annual Report on Form 10-KSB (or similar form), and in the case of a
post-effective amendment, cause such post-effective amendment to be declared
effective by the Commission as soon as possible after filing; provided, however,
that no fewer than three (3) business days before filing a Registration
Statement or related prospectus or any amendment or supplement thereto in
accordance with Section 3 hereof, the Company shall furnish to counsel for the
Holders copies of all documents proposed to be filed, which documents be subject
to review by such counsel;
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(c) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered, if any, such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus, in conformity with the requirements of the
Securities Act, and such other documents they may reasonably request in order to
facilitate the disposition of Registrable Securities by them;
(d) register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders and do any and all
other acts and things which may be reasonably necessary or advisable to enable
the Holders and each underwriter, if any, to consummate the disposition of the
Registrable Securities in such states;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;
(f) cause all Registrable Securities to be quoted on the
Nasdaq Stock Market Over-the-Counter Bulletin Board (the "OTCBB"), or such other
securities exchange on which similar securities issued by the Company are then
listed, and comply with all requirements of the OTCBB or such other securities
exchange, as applicable, with regards to the issuance of the shares and the
listing thereof;
(g) give notice to each Holder and counsel for the Holders,
(i) when any prospectus, prospectus supplement, Registration Statement or
post-effective amendment to the Registration Statement has been filed with the
Commission and, with respect to the Registration Statement or any post-effective
amendment, when the same has been declared effective, (ii) of the receipt of any
comments from the SEC, (iii) of any request by the Commission or any other
federal or state governmental authority to amend or supplement the Registration
Statement or amend or supplement the prospectus or for additional information;
(iv) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation or written threat of any proceedings
for that purpose, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or the written threat of any proceeding for such purpose or (vi) the
necessity of any changes in the Registration Statement or prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the prospectus, it will not contain any untrue statement
of a material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading which notice in the
case of (iii) through (vi) above (each a "REQUIRED NOTICE") may, at the
discretion of the Company, state that it constitutes a Suspension Notice (as
defined below) in which case the provisions of Section 3.6 shall apply;
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(h) if any Registration Statement required pursuant to this
Section 3 ceases to be effective for any reason at any time (other than because
all Registrable Securities registered thereunder shall have been resold pursuant
thereto or shall have otherwise ceased to be Registrable Securities), use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall as promptly as reasonably
practicable amend such Registration Statement in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof;
(i) supplement and amend any Registration Statement required
pursuant to this Section 3 if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Registration
Statement, if required by the Securities Act or as reasonably requested by a
Holder or counsel for the Holders;
(j) obtain the withdrawal of any order or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale and provide reasonably prompt notice to each Holder and
counsel for the Holders of the withdrawal of any such order;
(k) incorporate in a prospectus supplement to the Registration
Statement or post-effective amendment to the Registration Statement such
information as the Holders of the majority in interest of the Registrable
Securities and counsel for the Holders shall determine to be required to be
included therein by applicable law and make any required filings of such
prospectus supplement or post-effective amendment;
(l) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
(m) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold or to be sold pursuant to the Registration Statement, which certificates
shall not bear any restrictive legends, and use reasonable efforts to cause such
Registrable Securities to be in such denominations and registered in such names
as the applicable Holder or Holders may request in writing at least one (1)
trading day prior to any sale of such Registrable Securities;
(n) make reasonably available for inspection during normal
business hours by a representative for any Holder, and any broker-dealers,
counsel for the Holders, accountants or underwriter, all relevant financial and
other records and pertinent corporate documents and properties of the Company
and its subsidiaries, and cause the appropriate officers, directors and
employees of the Company and its subsidiaries to make reasonably available for
inspection during normal business hours on reasonable notice all relevant
information reasonably requested by such representative for a Holder, or any
such brokerdealers, counsel for a Holder, accountants or underwriter in
connection with such disposition, in each case as is customary for similar "due
diligence" examinations; provided, however, that each Holder (and its respective
agents and representatives) shall hold in confidence and shall not make any
disclosure (except to another
-11-
Holder) of any such information, unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) disclosure of
such information is necessary to avoid or to correct a misstatement or omission
in any Registration Statement, (iii) release of such information is ordered
pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, (iv) such information has been made generally available
to the public other than by disclosure in violation of this or any other
agreement, or (v) the Company consents to any such disclosure. Nothing herein
shall be deemed to limit the Holder's ability to sell Registrable Securities in
a manner which is otherwise consistent with applicable laws and regulations;
(o) notify each Holder covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and at the request of
any such Holder, prepare and furnish to such Holder a reasonable number copies
of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities such
prospectus shall not include 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;
(p) comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders earning
statements (which need not be audited) satisfying the provisions of Section
1l(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act); and
(q) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 3, on the
closing date of any such underwritten public offering, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, and to the Holders requesting registration of Registrable
Securities.
3.6 Deferral. The right of the Investors to use the Registration
Statement (and the prospectus relating thereto) shall be suspended for a period
or periods (the "SUSPENSION PERIOD") of not more than sixty (60) days in any
single instance and not more than ninety days in the aggregate during any twelve
(12) month period after delivery by the Company to the Investors of (i) a
Required Notice; or (ii) a certificate signed by the President or Chief
Executive Officer of the Company certifying that the Board has made the
good-faith determination (A) that continued use by the Investors of the
Registration Statement for purposes of effecting offers or sales of Registrable
Shares pursuant thereto would require, under the Securities Act, premature
disclosure in the
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Registration Statement or prospectus of material, nonpublic information
concerning the Company, its business or prospects or any proposed material
transaction involving the Company, (B) that such premature disclosure would be
materially adverse to the Company, its business or prospects or any such
proposed material transaction or would make the successful consummation by the
Company of any such material transaction significantly less likely and (C) that
it is therefore essential to suspend the use by the Investors of such
Registration Statement and prospectus for purposes of effecting offers or sales
of Registrable Shares pursuant thereto. A Required Notice and the certificate
described in subsection (ii) above are each referred to herein as a "SUSPENSION
NOTICE." Upon receipt of a Suspension Notice, each Holder agrees not to sell any
Registrable Securities pursuant to the Registration Statement until such Holder
is advised in writing by the Company that the Registration Statement and related
prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Registration Statement and related prospectus (the "ADVICE"). Each
Investor shall keep the fact of any Suspension Notice delivered by the Company
and its contents confidential.
3.7 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors, partners and legal counsel, and each Person controlling
such Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant to
this Section 3, and each underwriter, if any, and each Person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions, proceedings or
settlements in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or other applicable securities laws or any rule or regulation
promulgated under the Securities Act or such other securities laws applicable to
the Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder, each of its
officers, directors, partners, and legal counsel and each Person controlling
such Holder, each such underwriter and each Person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing, defending or settling any such claim,
loss, damage, liability or action, provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by such Holder, controlling Person
or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected,
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severally (but not jointly) indemnify the Company, each of its directors,
officers, and legal counsel, each underwriter, if any, of the Company's
securities covered by such a registration statement, each Person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other Holder, each of its officers, directors, partners
and legal counsel and each Person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, such directors,
officers, Persons, underwriters or control Persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that 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); and provided that in
no event shall any indemnity under this Section 3.7(b) exceed the net proceeds
from the offering received by such Holder. A Holder will not be required to
enter into any agreement or undertaking in connection with any registration
under this Section 3 providing for any indemnification or contribution on the
part of such Holder greater than the Holder's obligations under this Section
3.7(b).
(c) Each party entitled to indemnification under this Section
3.7 (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 litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
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 3 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses but shall bear the expense of such defense nevertheless. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
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(d) If the indemnification provided for in this Section 3.7 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
herein, 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 that 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,
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.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 3.7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 3, and otherwise.
3.8 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them, and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 3.
3.9 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted 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 use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the Effective Date
that the Company is subject to the reporting requirements of the Securities Act
or the Securities Exchange Act of 1934, as amended;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (at any time after it has become
subject to such reporting requirements); and
(c) So long as a Holder owns any Restricted Securities to
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the
-15-
reporting requirements of Rule 144 (at any time after ninety (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 Securities Exchange Act of 1934 (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 a Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Purchaser to sell any such securities
without registration.
3.10 Transfer of Registration Rights. None of the rights to cause
the Company to register securities granted to Holders under Sections 3.1, 3.2
and 3.3 may be transferred or assigned by a Holder unless (i) the transferee is
a Holder or (ii) such person is a Qualifying Holder (as defined below), and such
person agrees to become a party to, and bound by, all of the terms and
conditions of, this Agreement. For purposes of this Section 3.10, the term
"Qualifying Holder" shall mean, with respect to any Investor who has purchased
no less than $250,000 of Shares under the Purchase Agreement on, or before, the
Final Closing Date, (i) any partner or member thereof, (ii) any corporation,
partnership or limited liability company controlling, controlled by, or under
common control with, such Investor or any partner or member thereof, or (iii)
any other direct transferee from such Investor of at least 15% of those
Registrable Shares held by such Investor.
3.11 No Inconsistent Agreements. The Company represents and warrants
that it is not a party to, nor will it enter into any agreements that
(individually or in the aggregate) conflict with or limit or prohibit the
exercise of the rights granted to the Holders in this Agreement.
3.12 Termination of Registration Rights. The rights granted under
Section 3.2 shall terminate on the Liquidity Date.
4. Covenants of the Company.
4.1 Protective Provisions. Until the earlier of (i) the Liquidity
Date or (ii) the first date on which vSpring does not hold at least fifty
percent (50%) of the Shares which it acquires on the Initial Closing Date, the
prior written consent of vSpring shall be required before the Company, directly
or indirectly, takes or agrees to take any of the following actions:
(a) offer, sell, create, authorize, designate or issue any
security with rights, preferences, or privileges senior to the Common Stock;
(b) amend the Company's Certificate of Incorporation or
Bylaws;
(c) repurchase or redeem any outstanding securities of the
Company (except from an employee at cost upon termination of his employment
relationship with the Company and pursuant to an agreement pursuant to which
such securities were issued) in excess of an aggregate of Five Hundred Thousand
Dollars ($500,000) at a price or above Twenty Cents ($.20) per share;
-16-
(d) engage in any merger, reorganization, or sale of all or
substantially all of the Company's assets;
(e) make, authorize, or declare the payment of any dividend on
any outstanding securities of the Company;
(f) issue any debt instrument in excess of Five Hundred
Thousand Dollars ($500,000), excluding instruments issued in connection with
customary commercial bank financings and equipment leases;
(g) authorize in excess of one million five hundred thousand
(1,500,000) shares of Common Stock to be issued pursuant to the Company's stock
option or purchase plans; or
(h) engage in any acquisition transaction with another company
involving a purchase price in excess of Five Hundred Thousand Dollars
($500,000).
4.2 Repurchase of Shares Upon Change of Control.
(a) In the event that (i) a Change in Control (as hereinafter
defined) shall occur and (ii) vSpring, together with its Affiliates, holds at
least 538,461 Shares (as appropriately adjusted for stock splits, combinations,
recapitalizations and similar transactions), then each of the Investors shall
have the right, at such Investor's option, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all Shares
purchased by such electing Investor, or any portion of thereof as so requested
by such Investor, on the date (the "REPURCHASE DATE") that is within five (5)
business days after the date on which such Investor gives notice of its exercise
of its repurchase right, setting forth the name of the Investor, the aggregate
purchase price of the Shares held by such Investor to be repurchased at the
Repurchase Price (as hereinafter defined). The Company shall give each Investor
notice, in the manner provided in Section 5.5, of any Change in Control, within
twenty (20) business days of the occurrence thereof.
(b) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the Investor the Repurchase Price in cash on the Repurchase Date.
(c) For purposes of this Section 4.2:
(i) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission
pursuant to the Exchange Act;
(ii) a "CHANGE IN CONTROL" shall be deemed to have
occurred at the time, after the date hereof, of:
(1) the acquisition by any Person of beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of
-17-
transactions, of shares of capital stock of the Company entitling such Person to
exercise fifty percent (50%) or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the elections of
directors (any shares of voting stock of which such Person is the beneficial
owner that are not then outstanding being deemed outstanding for purposes of
calculating such percentage);
(2) any consolidation or merger of the Company
with or into, any other Person, any merger of another Person with or into the
company (other than any such transaction pursuant to which holders of Common
Stock immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, fifty percent (50%) or more of the total voting power of
all shares of capital stock entitled to vote generally in the election of
directors of the continuing or surviving Person immediately after such
transaction or the occupation of a majority of the seats (other than vacant
seats) on the Board of Directors of the Company by persons who were neither (i)
nominated by the Board of Directors of the Company nor (ii) appointed by
directors so nominated;
(3) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in one or a
series of related transactions; or
(4) any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary.
(iii) "REPURCHASE PRICE" means one hundred twenty
percent (120%) of the aggregate purchase price of the Shares purchased by such
Investor in the Purchase Agreement as adjusted for stock splits, combinations,
stock dividends or other recapitalizations.
(iv) None of the rights to cause the Company to
repurchase securities granted to Investors under this Section 4.2 may be
transferred or assigned by a Holder unless (i) the transferee is a Holder or
(ii) such person is a Qualifying Holder (as defined in Section 3.10) and such
person agrees to become a party to, and bound by, all of the terms and
conditions of, this Agreement.
(v) The right of repurchase under this Section 4.2 shall
terminate on the Liquidity Date.
4.3 Directors' and Officers' Liability Insurance. For so long as the
Investor Designee is a member of the Board of Directors, the Company shall
maintain directors' and officers' liability insurance on terms reasonably
satisfactory to vSpring.
4.4 Form D. The Company shall file a Form D with respect to the
Securities as required under Regulation D and shall provide a copy thereof to
each Buyer promptly after such filing. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable state securities laws.
-18-
4.5 Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than one hundred percent (100%) of the number of shares of
Common Stock issuable upon exercise of the Warrants.
4.6 Disclosure of Transaction. Within four (4) business days of the
date hereof the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Operative Agreements in the form
required by the Securities Exchange Act of 1934, as amended, and attaching the
Purchase Agreement and each ancillary agreement thereto as exhibits to such.
4.7 Further Assurances. At the request of vSpring, the Company shall
execute and deliver such instruments or documents to evidence or further
effectuate the respective rights of vSpring under this Agreement and shall
provide all reasonable assistance to vSpring in making any necessary filing,
including but not limited to filings with the SEC and other federal and state
agencies.
4.8 Amended and Restated Shareholder Agreement. Each Investor by
his, her or its execution of this Agreement, hereby acknowledges and agrees that
such execution and signature to this Agreement shall also constitute such
Investor's signature to and execution of the Amended and Restated Shareholder
Agreement attached hereto as Exhibit B and incorporated herein by reference and
that such Investor shall be legally bound thereto in accordance with the terms
set forth therein.
5. General Provisions.
5.1 Amendment and Waiver. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company, vSpring and a majority in interest of
the Investors. Any amendment or waiver effected in accordance with this Section
5.1 shall be binding upon each Holder of any Shares or Registrable Securities
purchased under the Purchase Agreement at the time outstanding, each future
Holder of all such securities and the Company.
5.2 Governing Law; Injunctive Relief.
(a) This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of Delaware and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction. Venue for all purposes hereunder
shall be in the applicable state or federal court located within the State of
Delaware.
(b) Each of the parties hereto acknowledges and agrees that
damages will not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an "IRREPARABLE BREACH"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be
-19-
entitled to seek, equitable relief of a kind appropriate in light of the nature
of the ongoing or threatened Irreparable Breach, which relief may include,
without limitation, specific performance or injunctive relief; provided,
however, that if the party bringing such action is unsuccessful in obtaining the
relief sought, the moving party shall pay the non-moving party's reasonable
costs, including attorney's fees, incurred in connection with defending such
action. Such remedies shall not be the parties' exclusive remedies, but shall be
in addition to all other remedies provided in this Agreement.
5.3 Successors and Assigns. Except as otherwise expressly provided,
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties.
5.4 Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
5.5 Notices. Any notices, reports or other correspondence
(hereinafter collectively referred to as "correspondence") required or permitted
to be given hereunder shall be in writing and shall be sent by postage prepaid
first class mail, courier or telecopy or delivered by hand to the party to whom
such correspondence is required or permitted to be given hereunder, and shall be
deemed sufficient upon receipt when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or three (3) business days
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below:
(a) All correspondence to the Company shall be addressed as
follows:
Protalex, Inc.
000 Xxxxx Xxxxxx Xxxxx,
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxx Xxxxx LLP
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000.0000
(b) All correspondence to any Holder shall be sent to such
Holder at the address set forth in Schedule A.
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5.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
5.7 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.8 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
5.9 Material Non-Public Information. Except in connection with any
Investor's designee's role as a representative of the Company's board of
directors, the Company will not provide to any Investor material non-public
information other than information related to the transactions contemplated by
the Operative Agreements without the prior written consent of such Investor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, this Investor Rights Agreement has been executed as of
the date first above written.
COMPANY:
PROTALEX, INC., a Delaware corporation
000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
By: /s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx,
President and Chief Executive Officer
INVESTORS:
[Individual investor signatures not
listed for purposes of this exhibit]
_______________________________________
[Signature]
_______________________________________
[Print Name]
_______________________________________
[Title (if shareholder not individual)]
-1-
