Exhibit 4.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of this 28 day of November, 2006, by and among Zila, Inc., a Delaware
corporation (the "Company"), and the "Investors" named in that certain Purchase
Agreement by and among the Company and the Investors (the "Purchase Agreement").
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any person, any other person which
directly or indirectly controls, is controlled by, or is under common control
with, such person.
"Business Day" means a day, other than a Saturday or Sunday, on which banks
in New York City are open for the general transaction of business.
"Common Stock" shall mean the Company's common stock, par value $0.001 per
share, and any securities into which such shares may hereinafter be
reclassified.
"Conversion Shares" means the shares of Common Stock issuable upon the due
conversion of the Notes.
"Investors" shall mean Xxxx, the Investors identified in the Purchase
Agreement and any Affiliate or permitted transferee of any Investor who is a
subsequent holder of any Warrants or Registrable Securities.
"Notes" means the 6% Senior Secured Convertible Notes issued by the Company
to the Investors pursuant to the Purchase Agreement, the form of which is
attached to the Purchase Agreement as Exhibit A.
"PIPEs Agreement" means the Purchase Agreement, dated as of November 28,
2006, among the Company and the investors party thereto relating to the issuance
and sale by the Company of shares of its Common Stock, its 12% Convertible Notes
and certain warrants relating thereto.
"PIPEs Securities" means the shares of Common Stock issued pursuant to the
terms of the PIPEs Agreement and issuable upon the conversion or exercise of the
securities issued pursuant to the terms of the PIPEs Agreement.
"Proposal Date" is as defined in the Purchase Agreement.
"Prospectus" shall mean (i) the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus, and (ii) any "free
writing prospectus" as defined in Rule 163 under the 1933 Act.
"Register," "registered" and "registration" refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such Registration Statement or document.
"Registrable Securities" shall mean (i) the Conversion Shares, (iii) the
Warrant Shares and (iv) any other securities issued or issuable with respect to
or in exchange for Registrable Securities; provided, that, a security shall
cease to be a Registrable Security upon (A) sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible
for sale by the Investors pursuant to Rule 144(k).
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
"Required Investors" means the Investors holding a majority of the
Registrable Securities.
"Xxxx" means Xxxx Capital Partners, Inc. together with its employees and
Affiliates.
"SEC" means the U.S. Securities and Exchange Commission.
"Shares" means the shares of Common Stock issued on the Closing Date
pursuant to the Purchase Agreement.
"Trading Day" means (i) if the relevant stock or security is listed or
admitted for trading on The New York Stock Exchange, Inc., the Nasdaq Global
Market, the Nasdaq Capital Market or any other national securities exchange, a
day on which such exchange is open for business; (ii) if the relevant stock or
security is quoted on a system of automated dissemination of quotations of
securities prices, a day on which trades may be effected through such system; or
(iii) if the relevant stock or security is not listed or admitted for trading on
any national securities exchange or quoted on any system of automated
dissemination of quotation of securities prices, a day on which the relevant
stock or security is traded in a regular way in the over-the-counter market and
for which a closing bid and a closing asked price for such stock or security are
available, shall mean a day, other than a Saturday or Sunday, on which The New
York Stock Exchange, Inc. is open for trading.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
"Warrants" means the warrants to purchase shares of Common Stock issuable
to the Investors on the Proposal Date pursuant to the Purchase Agreement, the
form of which is attached to the Purchase Agreement as Exhibit C.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
2. Registration.
(a) Registration Statements.
(i)
(A) Promptly following the Proposal Date, and in no event
later than thirty (30) days after the Proposal Date (the "Filing Deadline"), the
Company shall prepare and file with the SEC a Registration Statement on Form S-3
(or, if Form S-3 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for resale
of the Registrable Securities, subject to the Required Investors' consent),
covering the resale of the Conversion Shares and the Warrant Shares and any and
all other securities issued or issuable with respect to or in exchange for such
Registrable Securities. In connection with the second Registration Statement
referred to above, the Company may avail itself of Rule 429 under the 0000 Xxx.
(B) Subject to any SEC comments, each Registration Statement
filed pursuant to Section 2(a)(i) shall include the plan of distribution
attached hereto as Exhibit A. Each such Registration Statement also shall cover,
to the extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits,
2
stock dividends or similar transactions with respect to the Registrable
Securities to which such Registration Statement relates. Such Registration
Statement shall not include any shares of Common Stock or other securities for
the account of any other holder without the prior written consent of the
Required Investors; provided, however, that the Company shall have the right to
include (i) the PIPEs Securities and (ii) the shares of Common Stock issued to
Xxxx or which Xxxx may have the right to acquire as compensation for Xxxx'x
services to the Company in connection with the transactions contemplated by the
Purchase Agreement and the PIPEs Agreement. Each Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the
Investors and/or their counsel prior to its filing or other submission. If the
Registration Statement covering the Conversion Shares and the Warrant Shares and
any and all other securities issued or issuable with respect to or in exchange
for such Registrable Securities is not filed with the SEC on or prior to the
Filing Deadline for such Registrable Securities, the Company will make pro rata
payments to each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1.0% of the aggregate amount invested by such Investor for the
Registrable Securities included in the applicable Registration Statement for
each 30-day period or pro rata for any portion thereof following the Filing
Deadline for which the applicable Registration Statement is not filed with
respect to the applicable Registrable Securities. Such payments shall constitute
the Investors' exclusive monetary remedy for such events, but shall not affect
the right of the Investors to seek injunctive relief. Such payments shall be
made to each Investor in cash.
(ii) Additional Registrable Securities. Upon the written demand
of any Investor and upon any change in the Conversion Price (as defined in the
Notes) or in the Warrant Price (as defined in the Warrants) such that additional
shares of Common Stock become issuable upon the conversion of the Notes or the
exercise of the Warrants (the "Additional Shares"), the Company shall prepare
and file with the SEC one or more Registration Statements on Form S-3 or amend
the relevant Registration Statement filed pursuant to clause (i) above, if such
Registration Statement has not previously been declared effective (or, if Form
S-3 is not then available to the Company, on such form of registration statement
as is then available to effect a registration for resale of the Additional
Shares, subject to the Required Investors' consent) covering the resale of the
Additional Shares, but only to the extent the Additional Shares are not at the
time covered by an effective Registration Statement. Such Registration Statement
also shall cover, to the extent allowable under the 1933 Act and the rules
promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Additional Shares. Such Registration
Statement shall not include any shares of Common Stock or other securities for
the account of any other holder without the prior written consent of the
Required Investors; provided, however, that the Company shall have the right to
include (i) the PIPEs Securities and (ii) the shares of Common Stock issued to
Xxxx or which Xxxx may have the right to acquire as compensation for Xxxx'x
services to the Company in connection with the transactions contemplated by the
Purchase Agreement and the PIPEs Agreement. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the
Investors and/or their counsel prior to its filing or other submission. If a
Registration Statement covering the Additional Shares is required to be filed
under this Section 2(a)(ii) and is not filed with the SEC within thirty (30)
days of the request of any Investor or upon the occurrence of any of the events
specified in this Section 2(a)(ii), the Company will make pro rata payments to
each Investor, as liquidated damages and not as a penalty, in an amount equal to
1.0% of the aggregate amount invested by such Investor with respect to the
securities giving rise to the issuance of such Additional Shares for each 30-day
period or pro rata for any portion thereof following the date by which such
Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Additional Shares. Such payments shall
constitute the Investors' exclusive monetary remedy for such events, but shall
not affect the right of the Investors to seek injunctive relief. Such payments
shall be made to each Investor in cash.
(b) Expenses. The Company will pay all expenses associated with each
registration, including filing and printing fees, the Company's counsel and
accounting fees and expenses, costs associated with clearing the Registrable
Securities for sale under applicable state securities laws, listing fees, fees
and expenses of one counsel to the Investors and the Investors' reasonable
expenses in connection with the registration, but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.
(c) Effectiveness.
3
(i) The Company shall use best efforts to have any Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within twenty-four (24) hours, after (A) any Registration Statement is
declared effective and (B) the filing of any related Prospectus under Rule
424(b), at which time the Company shall also provide the Investors with copies
of such related Prospectus. If (A)(w) a Registration Statement covering the
resale of the Conversion Shares and the Warrant Shares and any and all other
securities issued or issuable with respect to or in exchange for such
Registrable Securities is not declared effective by the SEC prior to the earlier
of (i) five (5) Business Days after the SEC shall have informed the Company that
no review of the Registration Statement will be made or that the SEC has no
further comments on the Registration Statement or (ii) the 90th day after the
Proposal Date (the 120th day after the Proposal Date if the Registration
Statement is reviewed by the SEC) or (y) a Registration Statement covering
Additional Shares is not declared effective by the SEC within ninety (90) days
following the time such Registration Statement was required to be filed pursuant
to Section 2(a)(ii) (the 120th day after such date if the Registration Statement
is reviewed by the SEC), or (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company's failure to update the Registration Statement), but
excluding the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions and except as excused pursuant to
subparagraph (ii) below, then the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to (i)
1.0% of the aggregate amount invested by such Investor for the Registrable
Securities included in the applicable Registration Statement that has not been
declared effective (or, in the case of a Registration Statement relating to
Additional Shares, the securities giving rise to the issuance of such Additional
Shares) for each 30-day period or pro rata for any portion thereof following the
date by which such Registration Statement should have been effective (the
"Blackout Period") and (ii) 1.0% of the aggregate amount invested by such
Investor for the Registrable Securities included in the applicable Registration
Statement that is not available for resales (or, in the case of a Registration
Statement relating to Additional Shares, the securities giving rise to the
issuance of such Additional Shares) for each 30-day period or pro rata for any
portion thereof that sales could not be made thereunder as provided in clause
(B) above. Such payments shall constitute the Investors' exclusive monetary
remedy for such events, but shall not affect the right of the Investors to seek
injunctive relief. The amounts payable as liquidated damages pursuant to this
paragraph shall be paid monthly within three (3) Business Days of the last day
of each month following the commencement of the Blackout Period until the
termination of the Blackout Period.
(ii) For not more than twenty (20) consecutive days or for a
total of not more than forty-five (45) days in any twelve (12) month period, the
Company may delay the disclosure of material non-public information concerning
the Company, by suspending the use of any Prospectus included in any
registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "Allowed Delay"); provided,
that the Company shall promptly (a) notify the Investors in writing of the
existence of (but in no event, without the prior written consent of an Investor,
shall the Company disclose to such Investor any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay, (b)
advise the Investors in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay and (c) use commercially reasonable
efforts to terminate an Allowed Delay as promptly as practicable.
(d) Limitation on Liquidated Damages. Notwithstanding the other
provisions of this Section 2, in no event shall the Company be liable for
liquidated damages in excess of an aggregate of 24% of the aggregate purchase
price paid by the Investors pursuant to the Purchase Agreement.
3. Company Obligations. The Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously
as practicable:
(a) use commercially reasonable efforts to cause each such
Registration Statement to become effective after 4:00 p.m. E.S.T. (the date the
Registration Statement is declared effective shall be referred to as the
"Effective Date") and to remain continuously effective for a period that will
terminate upon the earlier of (i) the date on which all Registrable Securities
covered by such Registration Statement as amended from time to time, have been
sold, and (ii) the date on which all Registrable Securities covered by such
Registration Statement may be sold
4
pursuant to Rule 144(k) (the "Effectiveness Period") and advise the Investors in
writing when the Effectiveness Period has expired;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the Effectiveness Period and to
comply with the provisions of the 1933 Act and the 1934 Act with respect to the
distribution of all of the Registrable Securities covered thereby;
(c) provide copies to and permit counsel designated by the Investors,
if any, in the selling securityholder questionnaire attached hereto as Exhibit B
(the "Selling Securityholder Questionnaire") to review each Registration
Statement and all amendments and supplements thereto no fewer than seven (7)
days prior to their filing with the SEC and not file any document to which such
counsel reasonably objects;
(d) furnish to the Investors and their legal counsel designated by the
Investors, if any, in the Selling Securityholder Questionnaire (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be) one (1) copy of
any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as each Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor that are
covered by the related Registration Statement;
(e) use commercially reasonable efforts to (i) prevent the issuance of
any stop order or other suspension of effectiveness and, (ii) if such order is
issued, obtain the withdrawal of any such order at the earliest possible moment;
(f) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with the
Investors and their counsel designated by the Investors, if any, in the Selling
Securityholder Questionnaire in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions requested by the Investors and
do any and all other commercially reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the Registrable
Securities covered by the Registration Statement; 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(f), (ii) subject itself to general
taxation in any jurisdiction where it would not otherwise be so subject but for
this Section 3(f), or (iii) file a general consent to service of process in any
such jurisdiction;
(g) use commercially reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(h) immediately notify the Investors, at any time prior to the end of
the Effectiveness Period, upon discovery that, or upon the happening of any
event as a result of which, the Prospectus includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare, file with the SEC and furnish
to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that 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; and
(i) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act,
including, without limitation, Rule 172 under the 1933 Act, file any final
Prospectus, including any supplement or amendment thereof, with the SEC pursuant
to Rule 424
5
under the 1933 Act prior to 9:30 a.m. E.S.T. on the Trading Day immediately
following the Effective Date, promptly inform the Investors in writing if, at
any time during the Effectiveness Period, the Company does not satisfy the
conditions specified in Rule 172 and, as a result thereof, the Investors are
required to deliver a Prospectus in connection with any disposition of
Registrable Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve (12) months, beginning
after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act,
including Rule 158 promulgated thereunder (for the purpose of this subsection
3(i), "Availability Date" means the 45th day following the end of the fourth
fiscal quarter that includes the effective date of such Registration Statement,
except that, if such fourth fiscal quarter is the last quarter of the Company's
fiscal year, "Availability Date" means the 90th day after the end of such fourth
fiscal quarter).
(j) with a view to making available to the Investors the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell shares of Common Stock to the
public without registration, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be resold pursuant to Rule 144(k) or any other rule
of similar effect or (B) such date as all of the Registrable Securities shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act; and (iii) furnish to
each Investor upon request, as long as such Investor owns any Registrable
Securities, (A) a written statement by the Company that it has complied with the
reporting requirements of the 1934 Act, (B) a copy of the Company's most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail such Investor of
any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due Diligence Review; Information. The Company shall make available,
during normal business hours, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors and who are reasonably acceptable to the Company),
all financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review and any Investor wishing to obtain
such information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
5. Obligations of the Investors.
(a) Each Investor has furnished to the Company a Selling
Securityholder Questionnaire and shall furnish in writing to the Company such
additional information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such
Investor, to the extent not included in the Selling Securityholder
Questionnaire, if such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide
6
such information to the Company at least two (2) Business Days prior to the
first anticipated filing date of such Registration Statement if such Investor
elects to have any of the Registrable Securities included in the Registration
Statement.
(b) Each Investor, by its acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.
(c) Each Investor agrees that, upon receipt of any notice from the
Company of either (i) the commencement of an Allowed Delay pursuant to Section
2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities,
until the Investor is advised by the Company that such dispositions may again be
made.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless each Investor and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or omission or alleged untrue statement or omission of any material
fact in any Registration Statement, any preliminary Prospectus or final
Prospectus, or any amendment or supplement thereof required to be stated therein
or necessary to make the statements therein not misleading; (ii) any blue sky
application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document or
information herein called a "Blue Sky Application"); (iii) any violation by the
Company or its agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration; or (iv) any
failure to register or qualify the Registrable Securities included in any such
Registration in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such
registration or qualification on an Investor's behalf and will reimburse such
Investor, and each such officer, director or member and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
if and to the extent that any such loss, claim, damage or liability arises out
of or is based upon (i) such Investor's failure to comply with the prospectus
delivery requirements of the Securities Act at any time when the Company does
not meet the conditions for use of Rule 172, has advised the Investor in writing
that the Company does not meet such conditions and that therefore the Investor
is required to deliver a Prospectus in connection with any sale or other
disposition of Registrable Securities and has provided such Investor with a
current Prospectus for such use, (ii) an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by such Investor or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus or (iii) the
use by an Investor of an outdated or defective Prospectus after the Company has
notified the Investor that such Prospectus is outdated or defective and the use
of a corrected or updated Prospectus would have avoided such losses, claims,
damages, liabilities or expenses.
(b) Indemnification by the Investors. Each Investor agrees, severally
but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the 0000 Xxx) against any
losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from (i) such Investor's failure to comply with the prospectus
delivery requirements of the Securities Act at any time when the Company does
not meet the conditions for use of Rule 172, has advised the Investor in writing
that the Company does not meet such conditions and that therefore the Investor
is required to deliver a Prospectus in connection with any sale or other
disposition of Registrable Securities and has provided such Investor with a
current Prospectus for such use, (ii) the use by an Investor of an outdated or
defective Prospectus after the Company has notified the Investor that
7
such Prospectus is outdated or defective and the use of a corrected or updated
Prospectus would have avoided such losses, claims, damages, liabilities or
expenses, and (iii) any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary Prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto.
In no event shall the liability of an Investor be greater in amount than the
dollar amount of the proceeds (net of all expense paid by such Investor in
connection with any claim relating to this Section 6 and the amount of any
damages such Investor has otherwise been required to pay by reason of such
untrue statement or omission) received by such Investor upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); 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 hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that 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 of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this Section 6 and
the amount of any damages such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving rise
to such contribution obligation.
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended only by a
writing signed by the Company and the Required Investors. The Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
8
(c) Assignments and Transfers by Investors. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Investors and
their respective successors and assigns. An Investor may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by such Investor to
such person, provided that such Investor complies with all laws applicable
thereto and provides written notice of assignment to the Company promptly after
such assignment is effected.
(d) Assignments and Transfers by the Company. This Agreement may not
be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors, provided, however, that the
Company may assign its rights and delegate its duties hereunder to any surviving
or successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company's assets to another corporation, without
the prior written consent of the Required Investors, after notice duly given by
the Company to each Investor.
(e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(g) 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.
(h) Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(i) Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
9
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
10
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
The Company: ZILA, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President and Secretary
11
VISIUM BALANCED OFFSHORE FUND, LTD.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Authorized Signatory
VISIUM BALANCED FUND, LP
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Authorized Signatory
VISIUM LONG BIAS OFFSHORE FUND, LTD.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Authorized Signatory
VISIUM LONG BIAS FUND, LP
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Authorized Signatory
ATLAS MASTER FUND, LTD.
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
12
Exhibit A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any one or more of the following methods
when disposing of shares or interests therein:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales effected after the date the registration statement of
which this Prospectus is a part is declared effective by the SEC;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted by applicable law.
The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered
A-1
by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, to the extent applicable we will make copies of this prospectus (as
it may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
A-2
Exhibit B
Zila, Inc.
Selling Securityholder Questionnaire
The undersigned beneficial owner (the "Selling Securityholder") of common
stock (the "Common Stock"), of Zila, Inc. (the "Company") understands that the
Company has filed or intends to file with the Securities and Exchange Commission
(the "Commission") one or more Registration Statements for the registration and
resale of the Registrable Securities, in accordance with the terms of the
Registration Rights Agreement, dated as of November __, 2006 (the "Registration
Rights Agreement"), among the Company and the Investors named therein. A copy of
the Registration Rights Agreement is available from the Company upon request at
the address set forth below. All capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement.
The undersigned hereby provides the following information to the Company
and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. NAME.
(a) Full legal name of Selling Securityholder:
-----------------------------------------------------------------------
(b) Full legal name of registered Holder (if not the same as (a) above)
through which Registrable Securities listed in Item 3 below are held:
-----------------------------------------------------------------------
(c) Full legal name of Natural Control Person (which means a natural person
who directly or indirectly alone or with others has power to vote or dispose of
the securities covered by the questionnaire):
-----------------------------------------------------------------------
(d) State of organization or domicile of Selling Securityholder:
-----------------------------------------------------------------------
2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Telephone: ________________________
Fax: ________________________
Contact Person: ________________________
Email: ________________________
Note: By providing an email address, the undersigned hereby consents to receipt
of notices by email.
B-1
Any such notice shall also be sent to the following address (which shall not
constitute notice):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Telephone: ________________________
Fax: ________________________
Contact Person: ________________________
Email: ________________________
3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:
Type and principal amount of Registrable Securities beneficially owned:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
If applicable, provide the information required by Items 1 and 2 for each
beneficial owner.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
4. BROKER-DEALER STATUS:
(a) Are you a broker-dealer?
Yes [ ] No [ ]
Note: If yes, the Commission's staff has indicated that you should be identified
as an underwriter in any Registration Statement filed pursuant to the
Registration Rights Agreement.
(b) Are you an affiliate of a broker-dealer?
Yes [ ] No [ ]
(c) If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
Yes [ ] No [ ]
Note: If no, the Commission's staff has indicated that you should be identified
as an underwriter in any Registration Statement filed pursuant to the
Registration Rights Agreement.
If you checked "Yes" to either of the questions in Item 4(a) or Item 4(b)
above, please state (a) the name of any such broker-dealer, (b) the nature
of your affiliation or association with such broker-dealer, (c) information
as to such broker-dealer's participation in any capacity in the offering or
the original placement of the Securities, (d) the number of shares of
equity securities or face value of debt securities of the Company owned by
you, (e) the date such securities were acquired and (f) the price paid for
such securities.
B-2
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE
SELLING SECURITYHOLDER.
Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of the Company other than
the Registrable Securities listed above in Item 3.
Type and amount of other securities beneficially owned by the Selling
Securityholder:
----------------------------------------------------------------------
----------------------------------------------------------------------
6. RELATIONSHIPS WITH THE COMPANY:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners of 5%
of more of the equity securities of the undersigned) has held any position
or office or has had any other material relationship with the Company (or
its predecessors or affiliates) during the past three years.
State any exceptions here:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
7. PLAN OF DISTRIBUTION:
Except as set forth below, the undersigned intends to distribute the
Registrable Securities listed above in Item 3 only as set forth in Exhibit
A to the Registration Rights Agreement (if at all):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof and prior to the effective date of any applicable Registration
Statement filed pursuant to the Registration Rights Agreement.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 7 and the
inclusion of such information in each Registration Statement filed pursuant to
the Registration Rights Agreement and each related prospectus. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of any such Registration Statement
and the related prospectus.
By signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Exchange Act and the rules and regulations thereunder, particularly Regulation
M. The undersigned also acknowledges that it understands that the answers to
this Questionnaire are furnished for use in connection with Registration
Statements filed pursuant to the Registration Rights Agreement and any
amendments or supplements thereto filed with the Commission pursuant to the
Securities Act.
I confirm that, to the best of my knowledge and belief, the foregoing
statements (including without limitation the answers to this Questionnaire) are
correct.
B-3
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated: Beneficial Owner:
------------------------ ----------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED QUESTIONNAIRE, AND RETURN THE
ORIGINAL BY OVERNIGHT MAIL, TO:
Zila, Inc.
0000 X. 0xx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000 0000
Attn: Xxxx X. Xxxxxxxxxxx
with a copy to:
Xxxxx & Xxxxxx L.L.P.
000 Xxxx Xxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000 0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
B-4
