Exhibit 10.24
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of______________, 2003, among Health Sciences Group, Inc., a
Colorado corporation (the "COMPANY"), and the purchasers signatory hereto (each
such purchaser is a "PURCHASER" and all such purchasers are, collectively, the
"PURCHASERS").
This Agreement is made pursuant to the Subscription Agreement(s),
dated as of the date hereof among the Company and each of the Purchasers (the
"SUBSCRIPTION AGREEMENT(S)").
The Company and the Purchasers hereby agree as follows
1. CERTAIN DEFINITIONS. Capitalized terms used and not otherwise defined herein
that are defined in the Subscription Agreements shall have the meanings given
such terms in the Subscription Agreements. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
"Holders" shall mean the Purchaser and any holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred.
"Registrable Securities" shall mean (i) Common Stock held by
the Holders or issued or issuable upon conversion of the Company's Series A
Convertible Preferred Stock (the "Series A Convertible Preferred Stock"), (ii)
the Warrant Shares, (iii) the Common Stock issuable upon conversion or exercise
of warrants held by Xxxxxxx Xxxxx Ventures, Inc. or its assigns or designees, or
(iv) any Common Stock issued as a dividend or other distribution with respect to
or in exchange for or in replacement of the stock referenced in (i), (ii) or
(iii) above.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company.
"Restricted Securities" shall mean the securities of the
Company required to bear or bearing the legend set forth in Section 3 hereof.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and expense allowances applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder.
2. RESTRICTIONS ON TRANSFERABILITY. The Securities and any other securities
issued in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall not be
transferred except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. Any transferee of such securities shall take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
3. RESTRICTIVE LEGEND. Each certificate representing the Securities, the shares
of Common Stock underlying the Securities and any other securities issued in
respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted or unless the securities evidenced by such certificate shall
have been registered under the Securities Act) be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.
Upon request of Purchaser, the Company shall remove the foregoing legend from
the certificate or issue to such holder a new certificate therefor free of any
transfer legend, if, with such request, the Company shall have received either
an opinion of counsel or the "no-action" letter referred to in Section 4 to the
effect that any transfer by such holder of the securities evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws, unless any such transfer legend may be removed pursuant to Rule 144(k) or
any successor rule, in which case no such opinion or "no-action" letter shall be
required.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Registrable Securities and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured Registrable
Securities to the pledgees or secured parties. If required by the Company's
transfer agent in order to effect a pledge, the Company shall cause its counsel,
at no cost to the Purchasers, to issue an opinion of counsel to the Company's
transfer agent. Further, no notice shall be required of such pledge. At the
appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Registrable
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.
Certificates evidencing shares of Common Stock underlying the Series A
Convertible Preferred Stock and Warrants shall not contain any legend (i) while
a registration statement covering the resale of such security is effective under
the Securities Act, or (ii) following any sale of such shares pursuant to Rule
144, or (iii) if such shares are eligible for sale under Rule 144(k), or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). If all or any portion of Series A Convertible Preferred Stock
or a Warrant is converted or exercised (as applicable) at a time when there is
an effective registration statement to cover the resale of the underlying
shares, or if such underlying shares of Common Stock may be sold under Rule
144(k) or if such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations thereof) then such
underlying shares shall be issued free of all legends. The Company agrees that
following the effective date of the registration statement required to be filed
hereunder or at such time as such legend is no longer required, it will, no
later than three Trading Days following the delivery by a Purchaser to the
Company or the Company's transfer agent of a certificate representing shares of
Common Stock issued with a restrictive legend, deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate representing
Restricted Securities by acceptance thereof agrees to comply in all respects
with the provisions of this Section 4. Prior to any proposed transfer of any
Restricted Securities, the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either (i) if required, a written
opinion of legal counsel to the holder who shall be reasonably satisfactory to
the Company, addressed to the Company, to the effect that the proposed transfer
of the Restricted Securities may be effected without registration under the
Securities Act or (ii) a "no-action" letter from the Commission to the effect
that the distribution of such securities without registration will not result in
a recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by such holder to the Company. The Company will not require
such a legal opinion or "no action" letter (x) in any transaction in compliance
with Rule 144 promulgated under the Securities Act, (y) in any transaction in
which the Purchaser distributes Restricted Securities solely to its stockholders
on a pro rata basis for no consideration, or (z) in any transaction in which a
holder which is a partnership or limited liability company distributes
Restricted Securities solely to its partners or members, as applicable, for no
consideration; provided that each transferee agrees in writing to be subject to
the terms of this Section 4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the restrictive legend set
forth in Section 3 above.
5. REGISTRATION.
(i) The Company shall file a registration statement on Form S-3 or other
appropriate registration document under the Securities Act for resale of the
Registrable Securities and shall use its best efforts to maintain the shelf
registration effective for a period of 24 months (or so long as a Holder is
subject to the volume limitations of Rule 144(e) under the Securities Act) (the
"Effectiveness Period"). The Company shall file such Registration Statement no
later than thirty (30) days after the last closing date of the Offering, and
shall cause such Registration Statement to become effective within ninety (90)
days after the date of filing.
(ii) Notwithstanding the foregoing, the Company shall not be obligated to take
any action pursuant to this Section 5 in any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Securities Act.
(iii) In the event that the Company fails to file the registration statement
pursuant to this Section 5 within forty-five (45) days after the last closing
date or if such registration statement has not been declared effective within
the earlier of (i) one hundred twenty days from the last closing date or (ii)
ninety (90) days following the date of filing, the Company shall pay to each
Purchaser, as liquidated damages and not as a penalty, an amount equal to two
percent (2%) of the aggregate purchase price paid by such Purchaser pursuant to
the Subscription Agreement(s) in respect of each 30-day period (or partial
period thereof) of noncompliance. The Company shall make such payments on the
first day of each month of noncompliance in respect of the number of days of
noncompliance in the immediately preceding month. Notwithstanding the foregoing
payments by the Company, each Purchaser may seek any other remedies available by
law. If the Company fails to pay any liquidated damages pursuant to this Section
in full within seven days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the
date such liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The liquidated damages pursuant to the terms hereof
shall apply on a pro-rata basis for any portion of a month prior to the cure of
any default.
6. EXPENSES OF REGISTRATION. The Company shall bear all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Agreement and all underwriting discounts, selling commissions
and expense allowances applicable to the sale of any securities by the Company
for its own account in any registration. All Selling Expenses shall be borne by
the Holders whose securities are included in such registration pro rata on the
basis of the number of their Registrable Securities so registered.
7. INDEMNIFICATION.
(i) The Company will indemnify each Holder, each of its officers, directors,
agents, employees and partners, and each person controlling such Holder, with
respect to each registration, qualification or compliance effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter, and their respective counsel against all claims, losses, damages
and liabilities (or actions, proceedings or settlements in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
prepared by the Company (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors, agents, employees and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises primarily and directly out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omissions) based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.
(ii) Each Holder whose Registrable Securities are included in any registration,
qualification or compliance effected pursuant to this Agreement will indemnify
the Company, each of its directors and officers and each underwriter, if any, of
the Company's securities covered by such a registration statement, each person
who controls the Company or such underwriter within the meaning of the
Securities Act and the rules and regulations thereunder, each other such Holder
and each of their officers, directors and partners, and each person controlling
such Holder, and their respective counsel against all claims, losses, damages
and liabilities (or actions in respect thereof) arising primarily and directly
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and such
Holders, directors, officers, partners, persons, underwriters or control persons
for any legal or any other expenses as they are reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; PROVIDED, HOWEVER, that the obligations of such Holders hereunder shall
be limited to an amount equal to the net proceeds to each such Holder sold under
such registration statement, prospectus, offering circular or other document as
contemplated herein.
(iii) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; and provided further that if any Indemnified
Party reasonably concludes that there may be one or more legal defenses
available to it that are not available to the Indemnifying Party, or that such
claim or litigation involves or could have an effect on matters beyond the scope
of this Agreement, then the Indemnified Party may retain its own counsel at the
expense of the Indemnifying Party; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless and only to
the extent that such failure to give notice results in material prejudice to the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 7 is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect to
any loss, liability, claim, damage or expense referred to herein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
8. TRANSFER OR ASSIGNMENT OF RIGHTS. The benefits to the Holder hereunder may be
transferred or assigned by a Holder to a transferee or assignee of any of the
Restricted Securities, provided that the Company is given written notice prior
to the time that such right is exercised, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned; provided further that the
transferee or assignee of such rights assumes in writing the obligations of the
Holder under this Agreement.
9. REGISTRATION PROCEDURES. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder who is
entitled to registration benefits hereunder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will:
(i) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement;
(ii) Respond as promptly as reasonably possible, and in any
event within ten days, to any comments received from the Commission with respect
to a registration statement or any amendment thereto.
(iv) Notify the Holders and their counsel as promptly as
reasonably possible and (if requested by any such person) confirm such notice in
writing no later than one trading day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a registration
statement is proposed to be filed and (B) with respect to a registration
statement or any post-effective amendment, when the same has become effective;
(v) Furnish such number of prospectuses and other documents
incident thereto, including supplements and amendments, as a Holder may
reasonably request; and
(vi) Furnish to each selling Holder, upon request, a copy of
all documents filed with and all correspondence from or to the Commission in
connection with any such registration statement other than nonsubstantive cover
letters and the like.
(vii) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
registration statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(viii) Comply with all applicable rules and regulations of the
Commission.
(ix) The Company may require each selling Holder to furnish to
the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if requested by the Commission, the
controlling person thereof.
10. RULE 144 REPORTING. With a view to making available the benefits of certain
rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act; and
(ii) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.
11. REPORTING UNDER THE EXCHANGE ACT. The Company agrees to take no action
designed to, or with the effect of, causing the Company to cease to be subject
to the reporting requirements of the Exchange Act for so long as a registration
statement under this Agreement is required to be filed or caused to be
effective, or shall be required to be or remain effective.
12. MISCELLANEOUS.
(i) Except as and to the extent specified in Schedule 12(i) hereto, neither the
Company nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in the registration
statement required to be filed hereunder other than the Registrable Securities,
and the Company shall not after the date hereof enter into any agreement
providing any such right to any of its existing security holders. The Company
shall not file any other registration statement until the initial registration
statement required hereunder is declared effective by the Commission.
(ii) COMPLIANCE. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the registration
statement required hereunder.
(iii) PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness Period
there is not an effective registration statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, that, the Company shall not be
required to register any Registrable Securities pursuant to this Section that
are eligible for resale pursuant to Rule 144(k) promulgated under the Securities
Act.
(iv) NOTICES. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set forth in the
Subscription Agreement(s).
(v) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign its rights
or obligations hereunder without the prior written consent of all of the Holders
of the then-outstanding Registrable Securities. Each Holder may assign their
respective rights hereunder in the manner and to the persons as permitted under
the Subscription Agreement(s).
(vi) COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(vii) GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
(viii) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(ix) HEADINGS. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(x) INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The obligations of
each Purchaser hereunder is several and not joint with the obligations of any
other Purchaser hereunder, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
********************
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
HEALTH SCIENCES GROUP, INC.
By: ____________________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO RRA]
[HOLDER]
By: _____________________________________
Name:
Title:
