Registration Rights Agreement by and among Cyberkinetics Neurotechnology Systems, Inc. and NeuroMetrix, Inc. Dated as of November 13, 2007
Exhibit
4.2
by
and among
and
NeuroMetrix,
Inc.
Dated
as of November 13, 2007
THIS
REGISTRATION RIGHTS AGREEMENT ("Agreement")
dated
as of November 13, 2007 is made and entered into by and among CYBERKINETICS
NEUROTECHNOLOGY SYSTEMS, INC., a Delaware corporation (together with its
successors and assigns, the "Company")
and
NEUROMETRIX, INC., a Delaware corporation (the "Holder").
Preliminary
Statement
This
Agreement is made pursuant to that certain Joint Venture and Strategic
Investment Agreement, dated of even date herewith, by and between the Company
and the Holder (the "Investment
Agreement").
Agreement
In
consideration of the mutual covenants, promises and agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the Company and the Holder hereby agree as
follows:
ARTICLE
I.
Definitions
Except
as
otherwise specifically indicated, the following terms will have the following
meanings for all purposes of this Agreement:
"Agreement"
means
this Registration Rights Agreement, as the same shall be amended from time
to
time.
"Business
Day"
means a
day other than Saturday, Sunday or any other day on which banks located in
the
State of New York are authorized or obligated to close.
"Commission"
means
the United States Securities and Exchange Commission, or any successor
governmental agency or authority.
"Common
Stock"
means
shares of Common Stock, par value $0.001 per share, of the Company, as
constituted on the date hereof, and any stock into which such Common Stock
shall
have been changed or any stock resulting from any reclassification of such
Common Stock.
"Company"
has the
meaning ascribed to it in the preamble.
“Demand
Registration”
has
the
meaning set forth in Section
2.01.
"Excess
Amount"
means
the number of Registrable Securities requested by the Holder to be sold pursuant
to Section
2.01
which
the Managing Underwriter determines exceeds the largest number of Registrable
Securities which can successfully be sold in an orderly manner in such offering
within a price range reasonably acceptable to the Company.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2
"Form
S-4"
means
Form S-4 promulgated by the Commission under the Securities Act, or any
successor or similar registration statement.
"Form
S-8"
means
Form S-8 promulgated by the Commission under the Securities Act, or any
successor or similar registration statement.
"Holder"
has the
meaning ascribed to it in the preamble.
"Indemnified
Party"
means a
party entitled to indemnity in accordance with Section
4.03.
"Indemnifying
Party"
means a
party obligated to provide indemnity in accordance with Section
4.03.
"Inspectors"
has the
meaning ascribed to it in Section
3.01(h).
"Investment
Agreement"
has the
meaning ascribed to it in the Preliminary Statement.
"Managing
Underwriter"
means,
with respect to any Public Offering, the underwriter or underwriters managing
such Public Offering.
"Person"
means
any natural person, corporation, general partnership, limited partnership,
limited liability company, proprietorship, other business organization, trust,
union or association.
"Piggyback
Registration"
has the
meaning ascribed to it in Section
2.02.
"Public
Offering"
means
any offering of Common Stock to the public, either on behalf of the Company
or
any of its securityholders, pursuant to an effective registration statement
under the Securities Act.
"Records"
has the
meaning ascribed to it in Section
3.01(h).
"Registrable
Securities"
means
(a) the Shares acquired by the Holder pursuant to the Investment Agreement,
including any Shares acquired upon exercise of the warrant purchased thereunder,
and (b) any additional Shares issued or distributed to the Holder by way of
a
dividend, stock split, conversion, or other distribution in respect of Shares
described in the foregoing clause (a) or acquired by way of any rights offering
or similar offering made in respect of Shares described in the foregoing clause
(a). As to any particular Registrable Securities, such securities shall cease
to
be Registrable Securities when (i) a registration statement with respect to
the
sale of such securities shall have become effective under the Securities Act
and
such Registrable Securities shall have been disposed of in accordance with
such
registration statement, (ii) they shall have been sold pursuant to Rule 144,
or
(iii) they shall have ceased to be outstanding.
“Registration
Expenses”
has
the
meaning set forth in Section
3.02.
"Rule
144"
means
Rule 144 promulgated by the Commission under the Securities Act, and any
successor provision thereto.
"Securities
Act"
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
"Selling
Holder"
has the
meaning set forth in Section
3.01.
3
"Shares"
means
shares of Common Stock.
“Withdrawal
Election”
has
the
meaning set forth in Section
3.02(b).
ARTICLE
II.
REGISTRATION
RIGHTS
Section
2.01. Demand
Registration.
(a) Request
for Registration.
At any
time after December 31, 2008, the Holder may make a written request for
registration under the 1933 Act of all or part of their Registrable Securities
(a "Demand
Registration");
provided that the Company shall not be obligated to effect more than two
(2) Demand
Registrations. Such request will specify the number of shares of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof. The Company shall not include any Registrable Securities
which it wishes to offer for its own account in any Demand Registration without
the prior written consent of the Holder.
(b) Effective
Registration.
A
registration will not count as a Demand Registration until it has become
effective.
(c) Underwritten
Offering.
If the
Holder so elects, the offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten offering. The Holder
shall select one or more nationally recognized firms of investment bankers,
reasonably acceptable to the Company, to act as the Managing Underwriter in
connection with such offering and shall select any additional managers to be
used in connection with the offering.
Section
2.02. Piggy-Back
Registration.
If at
any time after December 31, 2008, the
Company proposes to file a registration statement under the 1933 Act with
respect to an offering by the Company for its own account or for the account
of
any holders of any Shares (other than a registration statement on Form S-4
or
S-8, or any substitute form that may be adopted by the Commission, a
registration filed upon the demand of any of the Company's other securityholders
(who have contractual demand registration rights prohibiting other shares from
being added to such registration statement), or a registration statement filed
in connection with an exchange offer or offering of securities solely to the
Company's existing securityholders), then the Company shall give written notice
of such proposed filing to the Holder as soon as practicable (but in no event
less than ten (10) days before the anticipated filing date), and such notice
shall offer the Holder the opportunity to register such number of shares of
Registrable Securities as the Holder may request in writing within five (5)
days
of receipt of such notice on behalf of itself (which request shall specify
the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back
Registration").
The
Company shall use reasonable best efforts to cause the Managing Underwriter
of a
proposed underwritten offering to permit the Registrable Securities requested
to
be included in a Piggy-Back Registration on the same terms and conditions as
any
similar securities of the Company or other securityholders of the Company are
included therein to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof.
Subject to Section
2.03(b),
the
Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Piggy-Back Registration by giving written notice
to the Company of its request to withdraw within twenty (20) days of its request
for inclusion.
4
To
the
extent the related registration statement was filed by the Company for its
own
account or filed for the account of any of the Company's securityholders (other
than the Holder), the Company may withdraw a Piggy-Back Registration at any
time
prior to the time it becomes effective.
Section
2.03. Reduction
of Offering.
(a) Notwithstanding
anything contained herein, if the Managing Underwriter of an offering described
in Sections
2.01
or
2.02
determines that the size of the offering that the Holder, the Company and/or
such other Persons intend to make is such that the success of the offering
would
be materially adversely affected by inclusion of the number of Registrable
Securities or other securities requested to be included, then (i) with respect
to a Demand Registration, the Company shall include in such registration all
of
the Registrable Securities requested to be included in such offering by the
Holder other than the Registrable Securities, if any, equal to the Excess Amount
and (ii) in the case of a Piggyback Registration, the securities the Company
seeks to include shall have priority over securities sought to be included
by
any other Person (including the Holder) and, if securities are being offered
for
the account of other Persons as well as the Company, with respect to the
Registrable Securities intended to be offered by the Holder, the proportion
by
which the amount of such class of securities intended to be offered by the
Holder is reduced shall not exceed the proportion by which the amount of such
class of securities intended to be offered by such other Persons is reduced
(it
being understood that with respect to the Holder and third parties such
reduction may be all of such class of securities).
(b) If,
as a
result of the proration provisions of Section
2.03(a),
the
Holder shall not be entitled to include all Registrable Securities in a Demand
Registration or Piggy-Back Registration that the Holder has requested to be
included, the Holder may elect to withdraw its request to include Registrable
Securities in such registration (a "Withdrawal
Election");
provided however, that a Withdrawal Election shall be irrevocable and, after
making a Withdrawal Election, the Holder shall no longer have any right to
include Registrable Securities in the registration as to which such Withdrawal
Election was made.
ARTICLE
III.
REGISTRATION
PROCEDURES
Section
3.01. Filings;
Information.
Whenever the Holder requests that any Registrable Securities be registered
pursuant to Section
2.01
hereof
(the "Selling
Holder"),
the
Company will use its reasonable best efforts to effect the registration and
the
sale of such Registrable Securities in accordance with the intended method
of
disposition thereof as quickly as practicable, but only to the extent that
registration is then available for the Holder on the applicable required form
for registration promulgated by the Commission for such intended method of
disposition, and in connection with any such request:
(a) The
Company will as expeditiously as possible prepare and file with the Commission
a
registration statement on any form for which the Company then qualifies or
which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to become
and
remain effective until the earlier of (i) 180 days from the date such
registration statement became effective or (ii) the date on which the sale
of
Registrable Securities has been completed; provided that, if the Company shall
furnish to the Selling Holder a certificate signed by either its Chairman or
Chief Executive Officer stating that in his good faith judgment it would be
significantly disadvantageous to the Company or its shareholders for such a
registration statement to be filed as expeditiously as possible, the Company
shall have a period of not more than 120 days within which to file such
registration statement measured from the date of receipt of the request in
accordance with Section
2.01.
5
(b) The
Company will, prior to filing a registration statement or prospectus or any
amendment or supplement thereto, furnish to the Selling Holder, one law firm
representing the Selling Holder, and the Managing Underwriter, if any, of the
Registrable Securities covered by such registration statement copies of such
registration statement as proposed to be filed, together with exhibits thereto,
which documents will be subject to prompt review and approval by the foregoing,
and thereafter furnish to the Selling Holder, counsel and the Managing
Underwriter, if any, such number of copies of such registration statement,
each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as the Selling Holder, such law firm or the Managing Underwriter
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Selling Holder.
(c) After
the
filing of the registration statement, the Company will promptly notify the
Selling Holder of Registrable Securities covered by such registration statement
of any stop order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered.
(d) The
Company will use reasonable best efforts to (i) register or qualify the
Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Selling Holder reasonably (in light
of
the Selling Holder's intended plan of distribution) requests and (ii) cause
such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary
by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Selling Holder to consummate the disposition of the Registrable Securities
owned
by the Selling Holder; provided that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject itself
to taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(e) The
Company will immediately notify the Selling Holder of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the 1933 Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein not misleading and promptly make available to the Selling
Holder any such supplement or amendment.
(f) The
Company will enter into customary agreements (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities, and the Selling Holder may, at its option, require
that
any or all of the representations, warranties and covenants of the Company
to or
for the benefit of the Managing Underwriters also be made to and for the benefit
of the Selling Holder.
(g) The
Chairman of the Board of Directors of the Company, the Chief Executive Officer
of the Company and other members of the management of the Company will cooperate
fully in any offering of Registrable Securities hereunder, including, without
limitation, participation in meetings with potential investors and preparation
of all materials for such investors.
6
(h) The
Company will deliver promptly to the Selling Holder of such Registrable
Securities and the Managing Underwriter, if any, subject to restrictions imposed
by the United States federal government or any agency or instrumentality thereof
copies of all correspondence between the Commission and the Company, its counsel
or auditors and all memoranda relating to discussions with the Commission or
its
staff with respect to the registration statement and make available for
inspection by the Selling Holder of such Registrable Securities, the Managing
Underwriter, if any, participating in any disposition pursuant to such
registration statement and any attorney, accountant or other professional
retained by the Selling Holder or the Managing Underwriter (collectively, the
"Inspectors"),
(it
being understood that the Company is responsible for payment of the reasonable
fees and expenses of only one law firm pursuant to clause (viii) of Section
3.02)
all
financial and other records, pertinent corporate documents and properties of
the
Company (collectively, the "Records"),
subject to restrictions imposed by any governmental authority governing access
to classified information, as shall be reasonably necessary to enable them
to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement. Records which the
Company determines, in good faith, to be confidential and which it notifies
the
Inspectors are confidential shall not be disclosed by the Inspectors unless
(i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the disclosure or release
of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors
shall
provide the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and provided, further,
that
if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the Inspectors may
disclose that portion of the Records which counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Selling Holder agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Selling Holder after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its Affiliates unless
and until such is made generally available to the public. The Selling Holder
of
such Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed
confidential.
(i) The
Company will use its reasonable best efforts to furnish to the Selling Holder
and to the Managing Underwriter, if any, a signed counterpart, addressed to
the
Selling Holder or the Managing Underwriter, of (i) an opinion or opinions of
counsel to the Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters,
as
the case may be, as the Selling Holder of Registrable Securities included in
such offering or the Managing Underwriter therefor reasonably requests.
(j) The
Company will otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act.
(k) The
Company will use its reasonable best efforts (a) to cause all such Registrable
Securities to be listed on each national securities exchange on which similar
securities issued by the Company are then listed (if any), if the listing of
such Registrable Securities is then permitted under the rules of such exchange
or (b) to secure designation of all such Registrable Securities covered by
such
registration statement as a NASDAQ "national market system security" within
the
meaning of Rule 11Aa2-1 of the Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the
NASD.
7
(l) The
Company may require the Selling Holder of Registrable Securities to promptly
furnish in writing to the Company such information regarding the distribution
of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection
with
such registration.
The
Selling Holder agrees that, upon receipt of any notice from the Company of
the
happening of any event of the kind described in Section
3.01(e)
hereof,
the Selling Holder will forthwith discontinue and cause its Affiliates to
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until the Selling Holder's
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section
3.01(e)
hereof
and, if so directed by the Company, the Selling Holder will deliver to the
Company all copies, other than permanent file copies then in the Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company
shall
give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in Section
3.01(a)
hereof)
by the number of days during the period from and including the date of the
giving of notice pursuant to Section
3.01(e)
hereof
to the date when the Company shall make available to the Selling Holder of
Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section
3.01(e)
hereof.
Section
3.02. Registration
Expenses.
In
connection with any Demand Registration pursuant to Section
2.01
hereof,
and any registration statement filed pursuant to Section
2.02
hereof,
the Company shall pay the following registration expenses incurred in connection
with the registration hereunder, whether or not such registration becomes
effective (collectively, the "Registration
Expenses"):
(i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with any listing of the Registrable Securities, (vi) fees and disbursements
of
counsel for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to
Section
3.01(i)
hereof),
(vii) the fees and expenses of any special experts retained by the Company
in
connection with such registration, and (viii) reasonable fees and expenses
of
one law firm (who shall be reasonably acceptable to the Company) for the Selling
Holder. The Company shall have no obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities,
or
any out-of- pocket expenses of the Holder.
ARTICLE
IV.
INDEMNIFICATION
Section
4.01. Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless the Selling Holder, its officers,
directors and agents, and each Person, if any, who controls the Selling Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act
from and against any loss, claim, damage or liability and any action in respect
thereof to which the Selling Holder, its officers, directors and agents, and
any
such controlling Person may become subject under the 1933 Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or
is
based upon, any untrue statement or alleged untrue statement of a material
fact
contained in any registration statement or prospectus relating to the
Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or arises out of, or is based upon, 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 shall reimburse the Selling Holder,
its
officers, directors and agents, and each such controlling Person for any legal
and other expenses reasonably incurred by the Selling Holder, its officers,
directors and agents, or any such controlling Person in investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action. The Company also agrees to indemnify the Managing Underwriter of
the
Registrable Securities, their officers and directors and each Person who
controls the Managing Underwriter on substantially the same basis as that of
the
indemnification of the Selling Holder provided in this Section
4.01;
provided, that the indemnity agreement contained in this Section
4.01
shall
not apply to amounts paid in settlement of any such loss, claim, damage or
liability and any action in respect thereof if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any loss, claim
damage, liability and any action in respect thereof to the extent that it arises
from or is based upon written information relating to a Person furnished
expressly for use in connection with such registration by such Person, nor
shall
the Company be liable to any Person for any such loss, claim, damage or
liability and any action in respect thereof to the extent it arises from or
is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or prospectus relating to the
Registrable Securities delivered by such Person after the Company had provided
written notice to such Person that such registration statement or prospectus
contained such untrue statement or alleged untrue statement of a material fact,
(ii) 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
after the Company had provided written notice to such Person that such
registration statement or prospectus contained such omission or alleged
omission, or (iii) the failure of such Person to deliver any preliminary or
final prospectus, or any amendments or supplements thereto, required under
applicable securities laws, including the 1933 Act, to be so delivered, provided
that a sufficient number of copies thereof had been provided by the Company
to
such Person.
8
Section
4.02. Indemnification
by the Holder of Registrable Securities.
The
Selling Holder agrees to indemnify and hold harmless the Company, its officers,
directors and agents and each Person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to
the
same extent as the foregoing indemnity from the Company to the Selling Holder,
but only with reference to information related to the Selling Holder furnished
in writing by the Selling Holder or on the Selling Holder's behalf expressly
for
use in any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus. The Selling Holder also agrees to indemnify and hold harmless the
Managing Underwriter of the Registrable Securities, their officers and directors
and each Person who controls the Managing Underwriter on substantially the
same
basis as that of the indemnification of the Company provided in this Section;
provided that in no event shall any indemnity obligation under this Section
exceed the net proceeds from the offering received by the Selling
Holder.
Section
4.03. Conduct
of Indemnification Proceedings.
Promptly after receipt by any person in respect of which indemnity may be sought
pursuant to Sections
4.01
or
4.02
(an
"Indemnified
Party")
of
notice of any claim or the commencement of any action, the Indemnified Party
shall, if a claim in respect thereof is to be made against the person against
whom such indemnity may be sought (an "Indemnifying
Party"),
notify the Indemnifying Party in writing of the claim or the commencement of
such action; provided that the failure to notify the Indemnifying Party shall
not relieve it from any liability which it may have to an Indemnified Party
otherwise than under Sections
4.01
or
4.02
and
except to the extent of any actual prejudice resulting therefrom. If any such
claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof
with
counsel reasonably satisfactory to the Indemnified Party. After notice from
the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable
to
the Indemnified Party for any legal or other expenses subsequently incurred
by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party
and
its controlling Persons who may be subject to liability arising out of any
claim
in respect of which indemnity may be sought by the Indemnified Party against
the
Indemnifying Party, but the fees and expenses of such counsel shall be for
the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or
(ii) based upon the written opinion of counsel of such Indemnified Party
representation of both parties by the same counsel would be inappropriate due
to
actual or potential differing interests between them. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is a party and indemnity could have been sought hereunder
by such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
9
Section
4.04. Contribution.
If the
indemnification provided for in this Article 4 is unavailable to the Indemnified
Parties in respect of any losses, claims, damages or liabilities referred to
herein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities
(i)
as between the (Company and the Selling Holder, on the one hand, and the
Managing Underwriter, on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling Holder,
on
the one hand, and the Managing Underwriter, on the other, from the offering
of
the Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and the Selling Holder,
on
the one hand, and of the Managing Underwriter, on the other, in connection
with
the statements or omissions which resulted in such losses, claims, damages
or
liabilities, as well as any other relevant equitable considerations and (ii)
as
between the Company, on the one hand, and the Selling Holder, on the other,
in
such proportion as is appropriate to reflect the relative fault of the Company
and of the Selling Holder in connection with such statements or omissions,
as
well as any other relevant equitable considerations. The relative benefits
received by the Company and, the Selling Holder, on the one hand, and the
Managing Underwriter, on the other, shall be deemed to be in the same proportion
as the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Holder bears to the total underwriting discounts and commissions
received by the Managing Underwriter, in each case as set forth in the table
on
the cover page of the prospectus. The relative fault of the Company and the
Selling Holder, on the one hand, and of the Managing Underwriter, on the other,
shall be determined by reference to, among other things, whether the untrue
or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and
the
Selling Holder or by the Managing Underwriter. The relative fault of the
Company, on the one hand, and of the Selling Holder, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access-to information and opportunity to correct
or
prevent such statement or omission.
The
Company and the Selling Holder agree that it would not be just and equitable
if
contribution pursuant to this Section were determined by pro rata allocation
or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages or liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal
or
other expenses reasonably incurred by such Indemnified Party in connection
with
investigating or defending any such action or claim. Notwithstanding the
provisions of this, the Managing Underwriter shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which the Managing
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and the Selling Holder
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Registrable Securities of the Selling Holder were
offered to the public (less underwriting discounts and commissions) exceeds
the
amount of any damages which the Selling Holder has otherwise been required
to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 1l(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
10
ARTICLE
V.
MISCELLANEOUS.
Section
5.01. Participation
in Underwritten Registrations.
No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in
any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers
of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this
Agreement.
Section
5.02. Rule
144.
The
Company covenants that it will use its reasonable best efforts to file any
reports required to be filed by it under the 1933 Act and the 1934 Act and
that
it will take such further action as the Holder may reasonably request, all
to
the extent reasonably required from time to time to enable the Holder to sell
Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 or Rule 144A under the
1933 Act, as such Rules may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the Commission. Upon the request of
the
Holder, the Company will deliver to the Holder a written statement as to whether
it has complied with such requirements.
Section
5.03. Notices.
All
notices, requests and other communications hereunder must be in writing and
will
be deemed to have been duly given only if delivered personally or by facsimile
transmission or mailed (registered or certified mail, postage prepaid) to the
parties at the following addresses or facsimile numbers:
If
to the
Holder, to:
NeuroMetrix,
Inc.
00
Xxxxxx
Xxxxxx
Xxxxxxx,
XX 00000
Attn:
Chief Financial Officer
Telephone
No.: (000)
000-0000
Facsimile
No.: (000)
000-0000
11
With
a
copy to:
Xxxxxxx
Procter LLP
Xxxxxxxx
Xxxxx
Xxxxxx,
XX 00000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Attn:
H.
Xxxxx Xxxxxx and Xxxxxx X. Xxxxx
If
to the
Company, to:
000
Xxxxxxxxxx Xxxx.
Xxxxxxxxxx,
XX 00000
Attn:
Chief Financial Officer
Telephone
No.: 000-000-0000 Ext. 21
Facsimile
No.: 000-000-0000
With
a
copy to:
Ice
Xxxxxx LLP
Xxx
Xxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxxxxxxx,
XX 00000-0000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Attn:
Xxxx X. Xxxxxxxxxx and Xxxxxxxx X. Xxxx
With
respect to any other holder of Registrable Securities, such notices, requests
and other communications shall be sent to the addresses set forth in the stock
transfer records regularly maintained by the Company. All such notices, requests
and other communications will (a) if delivered personally to the address as
provided in this Section 5.03, be deemed given upon delivery, (b) if delivered
by facsimile transmission to the facsimile number as provided in this Section,
be deemed given when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next Business Day, and (c) if
delivered by mail in the manner described above to the address as provided
in
this Section, be deemed given five days after deposit with the United States
Post Office (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice
is
to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
Section
5.04. Entire
Agreement.
This
Agreement supersedes all prior discussions and agreements between the parties
with respect to the subject matter hereof, and contains the sole and entire
agreement between the parties hereto with respect to the subject matter
hereof.
Section
5.05. Amendment.
This
Agreement may be amended, supplemented or modified only by a written instrument
(which may be executed in any number of counterparts) duly executed by or on
behalf of each of the Company and the Holder.
Section
5.06. Waiver.
Subject
to Section 5.07, any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by
or
on behalf of the party waiving such term or condition. No waiver by any party
of
any term or condition of this Agreement, in any one or more instances, shall
be
deemed to be or construed as a waiver of the same term or condition of this
Agreement on any future occasion.
12
Section
5.07. Consents
and Waivers by Holders of Registrable Securities.
Any
consent of the Holder pursuant to this Agreement, and any waiver by the Holder
of any provision of this Agreement, shall be in writing and may be given or
taken by the Holder.
Section
5.08. No
Third Party Beneficiary.
It is
not the intention of the parties to confer third-party beneficiary rights upon
any other Person other than any Person entitled to indemnity under Article
IV.
Section
5.09. Successors
and Assigns.
This
Agreement is binding upon, and inures to the benefit of the parties hereto
and
their respective successors and assigns (including any assignee or transferee
of
at least 25% of the Registrable Securities then owned by NURO). The Company
shall not assign its rights under this Agreement without the prior written
consent of the Holder, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, further, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms hereof, the Securities
Act
or any securities or blue sky laws of any jurisdiction.
Section
5.10. Headings.
The
headings used in this Agreement have been inserted for convenience of reference
only and do not define or limit the provisions hereof.
Section
5.11. Invalid
Provisions.
If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this Agreement will
be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof and (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the
illegal, invalid or unenforceable provision or by its severance
herefrom.
Section
5.12. Remedies.
Except
as otherwise expressly provided for herein, no remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or
in
equity or by statute or otherwise. The election of any one or more remedies
by
any party hereto shall not constitute a waiver by any such party of the right
to
pursue any other available remedies.
Damages
in the event of breach of this Agreement by a party hereto would be difficult,
if not impossible, to ascertain, and it is therefore agreed that each party,
in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and the Company and the Holder hereby waive
any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude the Company or Holder from pursuing
any other rights and remedies at law or in equity which such party may
have.
Section
5.13. Governing
Law.
THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE
COMMONWEALTH OF MASSACHUSETTS.
13
Section
5.14. Counterparts.
This
Agreement may be executed in counterparts, each of which will be deemed an
original, but both of which together will constitute one and the same
instrument.
[Signatures
on next page.]
14
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly
authorized officer of each party hereto as of the date first above
written.
| CYBERKINETICS NEUROTECHNOLOGY SYSTEMS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |
|
Xxxxxxx X. Xxxxxxxx, President and CEO |
||
| NEUROMETRIX, INC. | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxx | |
|
Xxxx X. Xxxxxx, President and CEO |
||
15
