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EXHIBIT 10.26
SONUS PHARMACEUTICALS, INC.
THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Third Amended and Restated Registration Rights Agreement is
entered into as of May 15, 1996, by and among SONUS Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), Steven C. Quay, M.D., Ph.D. (the
"Founder"), Daiichi Pharmaceutical Co., Ltd. ("Daiichi"), Mallinckrodt Medical,
Inc., a Delaware corporation ("Mallinckrodt"), Abbott Laboratories, an Illinois
corporation ("Abbott"), Guerbet, S.A. ("Guerbet"), certain holders of shares
of Common Stock of the Company set forth on Exhibit 1 hereto (such persons,
together with Guerbet, are herein collectively referred to as the "Common
Holders"), and those Purchasers (the "Series A Purchasers") of the Company's
Series A Preferred Stock pursuant to that certain Series A Preferred Stock
Purchase Agreement dated as of November 1, 1991 (the "Series A Purchase
Agreement"). The Founder, Daiichi, Mallinckrodt, Abbott and such Series A
Purchasers shall be referred to collectively hereinafter as the "Holders" and
each individually as a "Holder."
R E C I T A L S :
A. The Company, the Founder and the Series A Purchasers entered
into that certain Registration Rights Agreement dated as of November 1, 1991
(the "Registration Rights Agreement").
B. The Registration Rights Agreement was amended and restated
pursuant to that certain Amended and Restated Registration Rights Agreement
dated as of November 5, 1993 among the Series A Purchasers, the Founder and
Daiichi (the "First Restated Registration Rights Agreement").
C. The First Restated Registration Rights Agreement was amended
by an Amendment No. 1 dated February 11, 1994 (the "Amendment") to include the
shares of Common Stock held by certain of the Common Holders as "Registrable
Securities" for certain purposes of the First Restated Registration Rights
Agreement.
D. The First Registration Rights Agreement was amended and
restated pursuant to an Amended and Restated Registration Rights Agreement
dated November 23, 1994 to include certain additional securities as
"Registrable Securities" thereunder (the "Second Restated Registration Rights
Agreement").
E. The Second Registration Rights Agreement was amended by
Amendment No. 1 thereto dated February 11, 1994, an Amendment dated January 3,
1995, Amendment No. 2 dated March 20, 1995 and Amendment No. 3 dated October
17, 1995.
F. The Parties desire to amend and restate the Second Restated
Registration Rights Agreement to (i) include Abbott as a "Holder" hereunder and
up to 625,000 shares of Common Stock issuable upon exercise of Warrants issued
or which may be issued to Abbott (the "Abbott Warrants") as "Registrable
Securities" hereunder; (ii) include shares of Common Stock issuable upon
exercise of Warrants to purchase an aggregate of 69,471 shares of Common Stock
issued to the Series A Purchasers as of July 31, 1995 in connection with the
extension of the repayment of certain
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bridge financing loans issued in 1993 and 1994 as Registrable Securities
hereunder; and (iii) reflect the current facts and circumstances following the
completion of the Company's initial public offering completed on October 17,
1995.
G. NOW THEREFORE, in consideration of the mutual agreements,
covenants and conditions and releases contained herein, the Company, the Common
Holders and each of the Holders hereby agree as follows:
SECTION 1.
REGISTRATION RIGHTS
The Company hereby grants to each of the Holders and the Common
Holders the registration rights set forth in this Section 1, with respect to
the Registrable Securities and/or Piggyback Registrable Securities (as
hereinafter defined) owned by the Holders or the Common Holders, as applicable.
The Company, the Holders and the Common Holders agree that the registration
rights provided herein set forth the sole and entire agreement on the subject
matter between the Company, the Holders and the Common Holders.
1.1 DEFINITIONS. As used in this Section 1:
(a) The terms "register", "registered", and
"registration" refer to a registration effected by filing with the Securities
and Exchange Commission (the "SEC") a registration statement (the "Registration
Statement") in compliance with the Securities Act of 1933, as amended (the
"1933 Act") and the declaration or ordering by the SEC of the effectiveness of
such Registration Statement.
(b) The term "Registrable Securities" means (i) 1,410,295
shares of Common Stock held by the Founder, (ii) 2,375,854 shares of Common
Stock held by Series A Purchasers in the respective amounts on the date hereof
as set forth in Exhibit 2 attached hereto; (iii) 462,857 shares of Common Stock
held by Daiichi issued upon conversion of the Debenture, (iv) 35,145 shares of
Common Stock held by Mallinckrodt issued upon conversion of shares of Series C
Preferred Stock; (v) Common Stock issued or issuable upon exercise of the
Abbott Warrants initially exercisable into an aggregate of up to 625,000 shares
of Common Stock; (vi) Common Stock issued or issuable upon exercise of those
certain Warrants exercisable into an aggregate of 316,295 shares of Common
Stock held by the Founder and certain of the Holders in the respective amounts
set forth in Exhibit 3 attached hereto; and (vii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security that is issued as) a dividend or other distribution
with respect to, or in exchange or in replacement of, such Registrable
Securities (as defined in clauses (i), (ii), (iii), (iv), (v) and (vi). In the
event of any recapitalization by the Company, whether by stock split, reverse
stock split, stock dividend or the like, the number of shares of Registrable
Securities used throughout this Agreement for various purposes shall be
proportionately increased or decreased.
(c) The term "Piggyback Registrable Securities" means (i)
Registrable Securities; and (ii) 595,308 shares of Common Stock held by the
Common Holders as set forth on Exhibit 1. In the event of any recapitalization
by the Company, whether by stock split, reverse stock split, stock dividend or
the like, the number of shares of Piggyback Registrable Securities used
throughout this Agreement for various purposes shall be proportionately
increased or decreased.
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(d) The term "Initiating Holders" means any Holder or
Holders of not less than fifty percent (50%) of the Registrable Securities held
by all of the Holders then outstanding and not registered at the time of any
request for registration pursuant to paragraph 1.2 of this Agreement.
(e) The term "Piggyback Holders" means the holders of
Piggyback Registrable Securities.
1.2 DEMAND REGISTRATION.
(a) Demand for Registration. If the Company shall
receive from Initiating Holders a written demand (a "Demand Registration") that
the Company effect any registration under the 1933 Act of all or part of the
Registrable Securities (other than a registration on Form S-3 or any related
form of registration statement, such a request being provided for under
paragraph 1.9 hereof) the Company will:
(i) promptly (but in any event within 10 days)
give written notice of the proposed registration to all other Holders; and
(ii) use its best efforts to effect such
registration as soon as practicable as may be so demanded and as will permit or
facilitate the sale and distribution of all or such portion of such Initiating
Holders' Registrable Securities as are specified in such demand, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such demand as are specified in a written demand received by the
Company within 30 days after such written notice is given, provided that the
Company shall not be obligated to take any action to effect any such
registration, pursuant to this paragraph 1.2:
(A) Within 120 days immediately
following the effective date of any registration statement pertaining
to an underwritten public offering of securities of the Company for
its own account (other than a registration on Form S-4 relating solely
to an SEC Rule 145 transaction, or a registration relating solely to
employee benefit plans);
(B) After the Company has effected an
aggregate of two such registrations pursuant to this paragraph 1.2 and
the sales of the shares of Common Stock under such registrations have
closed;
(C) If the Company shall furnish to such
Holders a certificate signed by the President of the Company, stating
that in the good faith judgment of the board of directors of the
Company it would be seriously detrimental to the Company and its
shareholders for such Registration Statement to be filed at the date
filing would be required, in which case the Company shall have an
additional period of not more than 90 days within which to file such
Registration Statement; provided, however, that the Company shall not
use this right more than once in any twelve month period;
(D) If the Demand Registration covers
less than 30 percent of Registrable Securities held by all of the
Holders and the proposed aggregate offering price to the public of the
Registrable Securities to be included in the registration by all
Holders, is less than $5,000,000; or
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(E) Prior to October 17, 1996.
(b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their demand by means of an
underwriting, they shall so advise the Company as part of their demand made
pursuant to this paragraph 1.2; and the Company shall include such information
in the written notice referred to in subparagraph 1.2(a)(i). In such event,
the right of any Holder to registration pursuant to this paragraph 1.2 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting
agreement in customary form with the underwriter or underwriters selected by a
majority in interest of the Initiating Holders and reasonably satisfactory to
the Company. Notwithstanding any other provision of this paragraph 1.2, if the
underwriter shall advise the Company in writing that marketing factors
(including, without limitation, an adverse effect on the per share offering
price) require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated pro rata among such Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. For purposes of any underwriter cutback, all Registrable Securities
held by any Holder which is a partnership or corporation shall also include any
Registrable Securities held by the partners, retired partners, shareholders or
affiliated entities of such Holder, or the estates and family members of any
such partners and retired partners and any trusts for the benefit of any of the
foregoing persons, and such Holder and other persons shall be deemed to be a
single "selling Holder", and any pro rata reduction with respect to such
"selling Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling Holder", as defined in this sentence. No Registrable Securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration.
If any Holder disapproves of the terms of the underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so
withdrawn shall also be withdrawn from registration.
If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other shareholders) in such registration if the
underwriter so agrees and if the number of Registrable Securities that would
otherwise have been included in such registration and underwriting will not
thereby be limited.
1.3 COMPANY REGISTRATION.
(a) If at any time or from time to time the Company shall
determine to register any of its securities, either for its own account or the
account of security holders, other than a registration relating solely to
employee benefit plans, a registration on Form S-4 relating solely to an SEC
Rule 145 transaction, or a registration pursuant to paragraph 1.2 hereof, the
Company will:
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(i) promptly give to the Piggyback Holders
written notice thereof (which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Piggyback Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such written
notice from the Company, by the Piggyback Holders, except as set forth in
subparagraph 1.3(b) below.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Piggyback Holders as a part of
the written notice given pursuant to subparagraph 1.3(a)(i). In such event,
the right of the Piggyback Holders to registration of his or its Piggyback
Registrable Securities pursuant to this paragraph 1.3 shall be conditioned upon
the Piggyback Holder's participation in such underwriting and the inclusion of
the Piggyback Holder's Piggyback Registrable Securities in the underwriting to
the extent provided herein. The Piggyback Holders proposing to distribute
their securities through such underwriting shall, together with the Company and
the other parties distributing their securities through such underwriting,
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding
any other provision of this paragraph 1.3, if the underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of Piggyback Registrable
Securities to be included in the registration and underwriting, or may exclude
Piggyback Registrable Securities entirely from such registration and
underwriting subject to the terms of this paragraph; provided, however, for any
registration, the limitation shall not reduce the number of Piggyback
Registrable Securities to be included in the offering below thirty percent
(30%) of the total number of shares to be included in the offering unless the
holders of at least a majority of Piggyback Registrable Securities then
outstanding otherwise consent to or approve the limitation of the number of
shares to be underwritten. The Company shall so advise all holders of the
Company's securities that would otherwise be registered and underwritten
pursuant hereto, and the number of shares of such securities, including
Piggyback Registrable Securities, that may be included in the registration and
underwriting shall be allocated in the following manner: shares, other than
Piggyback Registrable Securities, requested to be included in such registration
by shareholders shall be excluded, and if a limitation on the number of shares
is still required, the number of Piggyback Registrable Securities that may be
included shall be allocated among the Piggyback Holders thereof in proportion,
as nearly as practicable, to the respective amounts of Piggyback Registrable
Securities held by the Piggyback Holders at the time of filing the Registration
Statement. For purposes of any underwriter cutback, all Piggyback Registrable
Securities held by any Piggyback Holder which is a partnership or corporation
shall also include any Piggyback Registrable Securities held by the partners,
retired partners, shareholders or affiliated entities of such Piggyback Holder
or the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing persons, and such Piggyback
Holder and other persons shall be deemed to be a single "selling Holder", and
any pro rata reduction with respect to such "selling Piggyback Holder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling Piggyback Holder," as
defined in this sentence. No securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. If any Piggyback Holder disapproves of the terms of the
underwriting, it may
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elect to withdraw therefrom by written notice to the Company and the
underwriter. The Piggyback Registrable Securities so withdrawn shall also be
withdrawn from registration.
(c) Termination of Registration Rights. No Piggyback
Holder shall be entitled to exercise any right provided for in this Section 1.3
after October 17, 1998.
1.4 EXPENSES OF REGISTRATION. All expenses incurred in connection
with the first two registrations effected pursuant to paragraph 1.2 and all
registrations effected pursuant to paragraphs 1.3 and 1.9, including without
limitation all registration, filing, and qualification fees (including blue sky
fees and expenses), printing expenses, escrow fees, fees and disbursements of
counsel for the Company and of one special counsel for the participating
Holders and the Common Holders, and expenses of any special audits incidental
to or required by such registration, shall be borne by the Company; provided,
however, that the Company shall not be required to pay stock transfer taxes or
underwriters' discounts, or commissions relating to Registrable Securities or
Piggyback Registrable Securities. Notwithstanding anything to the contrary
above, the Company shall not be required to pay for any expenses of any
registration proceeding under paragraph 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to have been registered, unless such Holders agree to
forfeit their right to a demand registration pursuant to paragraph 1.2 (in
which event such right shall be forfeited by all Holders). In the absence of
such an agreement to forfeit, the Holders of Registrable Securities to have
been registered shall bear all such expenses pro rata on the basis of the
Registrable Securities to have been registered. Notwithstanding the preceding
sentence, however, if at the time of the withdrawal, the Holders have learned
of a material adverse change in the condition, business, or prospects of the
Company from that known to the Holders at the time of their request, of which
the Company had knowledge at the time of the request, then the Holders shall
not be required to pay any of said expenses and shall retain their rights
pursuant to paragraph 1.2.
1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities or Piggyback
Registrable Securities the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities or Piggyback Registrable
Securities and use its diligent best efforts to cause such registration
statement to become effective, and keep such registration statement effective
for up to ninety (90) days or until the Holders and the Common Holders have
completed the distribution relating thereto.
(b) Prepare and file with the SEC 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 1933 Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders and the Common Holders such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of
Registrable Securities or Piggyback Registrable Securities owned by them.
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(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders and the Common Holders, provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
Holder and each Common Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement.
(f) Notify each holder of Registrable Securities or
Piggyback Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the
1933 Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
(g) Furnish, at the request of the Holder or any Common
Holder requesting registration of Registrable Securities or Piggyback
Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities or Piggyback Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, on the date
that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders and/or the Common Holders
requesting registration of Registrable Securities or Piggyback Registrable
Securities, and (ii) a letter dated such date from the independent accountants
of the Company, in form and substance as is customarily given by independent
accountants to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and, if permissible, to the Holders and/or the Common
Holders requesting registration of Registrable Securities or Piggyback
Registrable Securities.
1.6 INDEMNIFICATION.
(a) The Company will, and does hereby undertake to,
indemnify and hold harmless each Holder of Registrable Securities and each
Piggyback Holder of Piggyback Registrable Securities, each of such Holder's or
such Piggyback Holder's, officers, directors, partners and agents, and each
person controlling such Holder or such Piggyback Holders, with respect to any
registration, qualification, or compliance effected pursuant to this Section 1,
and each underwriter, if any, and each person who controls any underwriter, of
the Registrable Securities held by or issuable to such Holder or such Piggyback
Holder, against all claims, losses, damages, and liabilities (or actions in
respect thereto) to which they may become subject under the 1933 Act, the
Securities Exchange Act of 1934, as amended, (the "1934 Act"), or other federal
or state law arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular, or other similar document (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
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therein or necessary to make the statements therein not misleading, or (ii) any
violation or alleged violation by the Company of any federal, state or common
law rule or regulation applicable to the Company in connection with any such
registration, qualification, or compliance, and will reimburse, as incurred,
each such Holder, each such Piggyback Holder, each such underwriter, and each
such director, officer, partner, agent and controlling person, for any legal
and any other expenses reasonably incurred in connection with investigating or
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 out of or is based on any untrue
statement or omission based upon written information furnished to the Company
by an instrument duly executed by such Holder or such Piggyback Holder or
underwriter and stated to be specifically for use therein.
(b) Each Holder and each Piggyback Holder will, if
Registrable Securities or Piggyback Registrable Securities held by or issuable
to such Holder or such Piggyback Holder are included in such registration,
qualification, or compliance, severally and not jointly, indemnify the Company,
each of its directors, and each officer who signs a Registration Statement in
connection therewith, and each person controlling the Company, each
underwriter, if any, and, each person who controls any underwriter, of the
Company's securities covered by such a Registration Statement, and each other
Holder, each other Piggyback Holder, each of such other Holder's or Piggyback
Holder's officers, partners, directors and agents and each person controlling
such other Holder, or such other Piggyback Holder against all claims, losses,
damages, and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such Registration Statement, prospectus, offering circular, or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse, as incurred, the Company, each such
underwriter, each such other Holder, each such other Piggyback Holder, and each
such director, officer, partner, and controlling person, for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was 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 an instrument duly executed by such Holder or such Piggyback Holder
and stated to be specifically for use therein; provided, however, that the
liability of each Holder or each Piggyback Holder hereunder shall be limited to
the net proceeds received by such Holder or such Piggyback Holder from the sale
of securities under such Registration Statement. In no event will any Holder
or any Piggyback Holder be required to enter into any agreement or undertaking
in connection with any registration under this Section 1 providing for any
indemnification or contribution obligations on the part of such Holder or such
Piggyback Holder greater than such Holder's or such Piggyback Holder's
obligations under this paragraph 1.6.
(c) Each party entitled to indemnification under this
paragraph 1.6 (the "Indemnified Party") shall give notice to the party required
to provide such indemnification (the "Indemnifying Party") of any claim as to
which indemnification may be sought promptly after such Indemnified Party has
actual knowledge thereof, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom; provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld) and the Indemnified Party may
participate in such defense with its separate counsel at the Indemnifying
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Party's expense if representation of such Indemnified Party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding; and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 1, 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 any such litigation. 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 that does not include as an unconditional term thereof the giving by
the claimant or plaintiff therein, to such Indemnified Party, of a release from
all liability in respect to such claim or litigation.
1.7 INFORMATION BY THE HOLDERS OR THE PIGGYBACK HOLDERS. If the
Holder or any Piggyback Holder of Registrable Securities or Piggyback
Registrable Securities include Registrable Securities or Piggyback Registrable
Securities in any registration, such Holder or Piggyback Holder, shall furnish
to the Company such information regarding such Holder or Piggyback Holder
respectively, and the distribution proposed by such Holder or such Piggyback
Holder, respectively, as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification, or
compliance referred to in this Section 1.
1.8 TRANSFER OF REGISTRATION RIGHTS. The rights of the Holders
and the Piggyback Holders contained in paragraphs 1.2, 1.3 and 1.9 hereof, to
cause the Company to register the Registrable Securities or Piggyback
Registrable Securities, may be assigned or otherwise conveyed to a transferee
or assignee of Registrable Securities or Piggyback Registrable Securities, who
shall be considered a "Holder" or a "Piggyback Holder", as applicable, for
purposes of this Section 1; provided that such transferee or assignee, (a)
receives such securities as a partner in connection with partnership
distributions of a Series A Purchaser or a Piggyback Holder, or (b) acquires at
least 200,000 shares (as presently constituted), or 100% of the Registrable
Securities or Piggyback Registrable Securities held by the transferring Holder
or Piggyback Holder, whichever is less; and, provided further, that the Company
is given written notice by such Holder or Piggyback Holder at the time of or
within a reasonable time after said transfer stating the name and address of
said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
1.9 FORM S-3. The Company shall use its best efforts to qualify
for registration on Form S-3 and to that end the Company shall register
(whether or not required by law to do so) its Common Stock under the 1934 Act
within twelve (12) months following the effective date of the first
registration of any securities of the Company on Form S-1. After the Company
has qualified for the use of Form S-3, the Holders of Registrable Securities
shall have the right to request up to four (4) registrations on Form S-3 under
this paragraph 1.9. The Company shall give notice to all Holders of
Registrable Securities of the receipt of a request for registration pursuant to
this paragraph 1.9 and shall provide a reasonable opportunity for other Holders
to participate in the registration. Subject to the foregoing, the Company will
use its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3, as the case may be, to the extent requested
by the Holder or Holders thereof for purposes of disposition; provided,
however, that the Company shall not be obligated to effect any such
registration (i) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $1,000,000, or (ii) more than once
during any twelve (12) month period; or (iii) in the event that
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the conditions set forth in subparagraph 1.2(a)(ii)(C) obtain (but subject to
the limitations set forth therein).
1.10 DELAY OF REGISTRATION. No Holder, nor any Piggyback Holder
shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 1.
1.11 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the holders of more than a majority of the Piggyback Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder to (a) require the Company to effect a registration or (b) include any
securities in any registration filed under paragraph 1.2 or 1.3 hereof, unless,
under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such securities will not diminish the amount of Registrable
Securities or Piggyback Registrable Securities which are included in such
registration and includes the equivalent of Section 1.13 as a term.
1.12 RULE 144 REPORTING. With a view to making available to the
Holders and the Piggyback Holders the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities and the
Piggyback Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the 1933 Act, at all times commencing ninety (90) days
after the effective date of the first registration filed by the Company for an
offering of its securities to the general public;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the 1933 Act and 1934 Act;
(c) So long as any Holder or any Piggyback Holder owns
any Registrable Securities or Piggyback Registrable Securities, furnish to such
Holder or such Piggyback Holder forthwith upon request: a written statement by
the Company as to its compliance with the reporting requirements of said Rule
144 of the 1933 Act, and of the 1934 Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as any
Holder or any Piggyback Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing it to sell any such securities without
registration.
1.13 "MARKET STAND-OFF" AGREEMENT. Each Holder and each Piggyback
Holder hereby agrees that during the 120-day period following the effective
date of a registration statement of the Company filed under the 1933 Act, he or
it shall not, to the extent requested by the Company and any underwriter, sell
or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any Common Stock of the Company held by him or it at any time
during such period except Common Stock included in such registration; provided,
however, that:
10
11
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers Common Stock (or other
securities) to be sold on his or its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company and all
other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities and/or
Piggyback Registrable Securities of each Holder and each Piggyback Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
1.14 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Section 1 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the holders of
not less than a majority of the Piggyback Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each Holder, each Piggyback Holder, each future
holder of Registrable Securities or Piggyback Registrable Securities, and the
Company.
SECTION 2.
COMPANY COVENANTS
The Company hereby covenants and agrees as follows:
2.1 BASIC FINANCIAL INFORMATION.
(a) So long as any Holder or any subsidiary, affiliate or
partner of such Holder shall own at least 200,000 Registrable Securities, to
furnish the following reports:
(i) As soon as practicable after the end of each
fiscal year, and in any event within 120 days thereafter, audited consolidated
balance sheets of the Company and its subsidiaries, if any, as at the end of
such fiscal year, and audited consolidated statements of income and cash flows
of the Company and its subsidiaries, if any, for such fiscal year, prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report and opinion thereon, by
independent public accountants of national reputation selected by the Company's
board of directors and by a copy of such accountants' management letter
prepared in connection therewith.
(ii) As soon as practicable after the end of each
of the first three (3) quarters of the fiscal year, but in any event within
forty-five (45) days after the end of each such quarter, the Company's
unaudited consolidated balance sheet as of the end of such quarter, and its
unaudited consolidated statements of income and cash flows for such quarter,
all in reasonable detail and prepared in accordance with generally accepted
accounting principles and certified by the principal financial or accounting
officer of the Company.
11
12
(b) The rights granted pursuant to this paragraph 2.1 may
not be assigned or otherwise conveyed by any Holder or by any subsequent
transferee of any such rights without the written consent of the Company, which
consent shall not be unreasonably withheld; provided that the Company may
refuse such written consent if the proposed transferee is a competitor of the
Company; and provided further, that no such written consent shall be required
if the transfer is in connection with the transfer of Common Stock to any
partner or retired partner of any Holder that is a general or limited
partnership or to any such partner's estate.
SECTION 3.
MISCELLANEOUS
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Washington as applied to agreements
among Washington residents made and to be performed entirely with the State of
Washington.
3.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement shall supersede
and replace the Second Restated Registration Rights Agreement, as amended,
which shall be terminated concurrently upon the effectiveness of this
Agreement. This Agreement constitutes the full and entire understanding and
agreement between the parties with respect to the subject matter hereof.
Except as otherwise provided in paragraph 1.14 above, this Agreement may be
amended, waived, discharged or terminated only by written consent of the
Company and the holders of not less than a majority of the Piggyback
Registrable Securities.
3.3 NOTICES. Any notice, request or other communication required
or permitted hereunder shall be given in writing and shall be deemed to have
been duly given if personally delivered or if telegraphed, or mailed by
registered or certified mail, postage prepaid, if to the Company, SONUS
Pharmaceuticals, Inc., 22026 20th Avenue, S.E., Suite 102, Bothell, Washington
98021, and if to the other parties, at the respective addresses of the parties
as set forth on the Exhibits attached hereto and shall be deemed to have been
received when delivered. Any party hereto may by notice so given change its
address for future notices hereunder.
3.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.5 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
4.6 CAPTIONS. The captions and headings to Sections of this
Agreement have been inserted for identification and reference purposes only and
shall not be used to construe the meaning or the interpretation of this
Agreement.
12
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
SONUS PHARMACEUTICALS, INC.
By /s/ Steven C. Quay MD, Ph.D.
-----------------------------------------
Steven C. Quay, M.D., Ph.D, President
HOLDERS:
/s/ Steven C. Quay MD, Ph.D.
---------------------------------------------
STEVEN C. QUAY, M.D., PH.D.
DAIICHI PHARMACEUTICAL CO., LTD.
By
-----------------------------------------
ABBOTT LABORATORIES
BY
------------------------------------------
MALLINCKRODT MEDICAL, INC.
By
-------------------------------------------
CROSSPOINT VENTURE PARTNERS, III
By /s/ Donald B. Milder
-------------------------------------------
Donald B. Milder, General Partner
ENTERPRISE PARTNERS II, L.P.
By /s/ Andrew E. Senyei
-------------------------------------------
Andrew E. Senyei, M.D., General Partner
13
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
SONUS PHARMACEUTICALS, INC.
By
-----------------------------------------
Steven C. Quay, M.D., Ph.D, President
HOLDERS:
---------------------------------------------
STEVEN C. QUAY, M.D., PH.D.
DAIICHI PHARMACEUTICAL CO., LTD.
By /s/ Tadashi Suzuki
------------------------------------------
ABBOTT LABORATORIES
BY
------------------------------------------
MALLINCKRODT MEDICAL, INC.
By
-------------------------------------------
CROSSPOINT VENTURE PARTNERS, III
By
-------------------------------------------
Donald B. Milder, General Partner
ENTERPRISE PARTNERS II, L.P.
By
-------------------------------------------
Andrew E. Senyei, M.D., General Partner
13
15
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
SONUS PHARMACEUTICALS, INC.
By
-----------------------------------------
Steven C. Quay, M.D., Ph.D, President
HOLDERS:
---------------------------------------------
STEVEN C. QUAY, M.D., PH.D.
DAIICHI PHARMACEUTICAL CO., LTD.
By
-----------------------------------------
ABBOTT LABORATORIES
BY /s/ John G. Kringle
------------------------------------------
MALLINCKRODT MEDICAL, INC.
By
-------------------------------------------
CROSSPOINT VENTURE PARTNERS, III
By
-------------------------------------------
Donald B. Milder, General Partner
ENTERPRISE PARTNERS II, L.P.
By
-------------------------------------------
Andrew E. Senyei, M.D., General Partner
13
16
ENTERPRISE PARTNERS II ASSOCIATES, L.P.
By /s/ Andrew E. Senyei
----------------------------------------
Andrew E. Senyei, M.D., General Partner
APERTURE ASSOCIATES, L.P.
By: Horsley Keogh Associates, Inc.,
Its General Partner
By
------------------------------------
N. Dan Reeve, Managing Director
UTAH VENTURES
By: Utah Ventures Partners,
Its General Partner
By
------------------------------------
James C. Dreyfous, General Partner
14
17
ENTERPRISE PARTNERS II ASSOCIATES, L.P.
By
----------------------------------------
Andrew E. Senyei, M.D., General Partner
APERTURE ASSOCIATES, L.P.
By: Horsley Keogh Associates, Inc.,
Its General Partner
By /s/ N. Dan Reeve
------------------------------------
N. Dan Reeve, Managing Director
UTAH VENTURES
By: Utah Ventures Partners,
Its General Partner
By
------------------------------------
James C. Dreyfous, General Partner
14
18
ENTERPRISE PARTNERS II ASSOCIATES, L.P.
By
----------------------------------------
Andrew E. Senyei, M.D., General Partner
APERTURE ASSOCIATES, L.P.
By: Horsley Keogh Associates, Inc.,
Its General Partner
By
------------------------------------
N. Dan Reeve, Managing Director
UTAH VENTURES
By: Utah Ventures Partners,
Its General Partner
By /s/ James C. Dreyfous
------------------------------------
James C. Dreyfous, General Partner
14
19
COMMON HOLDERS:
GUERBET, S.A.
By /s/ Guy Tilly
-----------------------------------------
Guy Tilly, Directeur General
ABS EMPLOYEES VENTURE FUND
LIMITED PARTNERSHIP
By: Alex. Brown Investments Incorporated,
General Partner
By
-----------------------------------------
Mayo A. Shattuck, III, President
STRADLING, YOCCA, CARLSON & RAUTH
INVESTMENT PARTNERSHIP OF 1982
By
-----------------------------------------
C. Craig Carlson, Partner
STRADLING, YOCCA, CARLSON & RAUTH
PROFIT SHARING PLAN
By: California Central Trust Bank, Trustee
By
-------------------------------------
15
20
COMMON HOLDERS:
GUERBET, S.A.
By
-----------------------------------------
ABS EMPLOYEES VENTURE FUND
LIMITED PARTNERSHIP
By: Alex. Brown Investments Incorporated,
General Partner
By
-----------------------------------------
Mayo A. Shattuck, III, President
STRADLING, YOCCA, CARLSON & RAUTH
INVESTMENT PARTNERSHIP OF 1982
By /s/ C. Craig Carlson
-----------------------------------------
C. Craig Carlson, Partner
STRADLING, YOCCA, CARLSON & RAUTH
PROFIT SHARING PLAN
By: California Central Trust Bank, Trustee
By /s/ Victoria L. Brown
-------------------------------------
Trust Officer, 5/30/96
15
21
EXHIBIT 1
COMMON HOLDERS
Name and Address of No. of Shares of
Shareholder Common Stock
----------- -------------
Guerbet, S.A. 549,410
Boite Postale 50400
95943 Roissy CDG
Cedex - France
With a Copy to:
Olivier Lendowner - Manager, Legal Affairs
ABS Employees Venture Fund Limited Partnership 35,720
135 East Baltimore Street
Baltimore, Maryland 21202
Stradling, Yocca, Carlson & Rauth 2,595
Investment Partnership of 1982
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Stradling, Yocca, Carlson & Rauth 7,583
Profit Sharing Plan
c/o California Central Trust Bank, Trustee
3080 South Bristol Street, 2nd Floor
Costa Mesa, California 92626
TOTAL: 595,308
==============
Exhibit 1-i
22
EXHIBIT 2
HOLDERS
Name and Address No. of Shares of Common Stock
---------------- -----------------------------
Abbott Laboratories 625,000
Department 0322, AP6D (Abbott currently holds a warrant exercisable
100 Abbott Park Road into 500,000 shares of Common Stock. Pursuant
Abbott Park, Illinois 60064-3500 to the terms of that certain Agreement dated
With a copy to: May 14, 1996 between the Company and Abbott,
Thomas C. Freyman Abbott may be issued an additional warrant to
Vice President & Treasurer purchase 125,000 shares of Common Stock.)
Dept. B 312/AP 6D
&
Jose M. de Lasa, Esq.
Senior Vice President, Secretary & General Counsel
Dept. 364/AP 6D
Aperture Associates, L.P.* 395,976
505 Montgomery Street
San Francisco, California 94111
With a copy to:
Alfred J. Giuffrida, Partner
Nixon, Hargrave, Devans & Doyle
Clinton Square - P.O. Box 1051
Rochester, New York 14603
Crosspoint Venture Partners III* 841,448
18552 MacArthur Boulevard, Suite 400
Irvine, California 92715
Daiichi Pharmaceutical Co., Ltd. 462,857
14-10, Nihonbashi 3-Chome
Chuo-Ku, Tokyo 103 Japan
Enterprise Partners II, L.P.* 771,328
5000 Birch Street, Suite 6200
Newport Beach, California 92660
Enterprise Partners II Associates, L.P.* 70,120
5000 Birch Street, Suite 6200
Newport Beach, California 92660
Mallinckrodt Medical, Inc. 35,145
675 McDonnell Boulevard - P.O. Box 5840
St. Louis, Missouri 63134
Steven C. Quay, M.D., Ph.D. 1,410,295
c/o SONUS Pharmaceuticals, Inc.
22026 20th Avenue, S.E., Suite 102
Bothell, Washington 98021
Exhibit 2-i
23
Name and Address No. of Shares of Common Stock
---------------- -----------------------------
Utah Ventures* 296,982
419 Wakara Way, Suite 206
Salt Lake City, Utah 84108
With a Copy to:
Allan M. Wolfe, M.D.
VOXEL
26081 Merit Circle, Suite 117
Laguna Hills, California 92653
TOTAL SHARES OF
COMMON STOCK HELD
BY SERIES A PURCHASERS 2,375,854
=========
TOTAL SHARES OF
COMMON STOCK HELD
BY ALL HOLDERS 4,909,151
=========
- ----------------------
* Series A Purchasers
EXHIBIT 2-ii
24
EXHIBIT 3
WARRANT HOLDERS
No. of Warrants
to Purchase
Holder Common Stock
------ -------------
Crosspoint Venture Partners III 111,266
Enterprise Partners II, L.P. 101,996
Enterprise Partners II Associates, L.P. 9,268
Aperture Associates, L.P. 52,358
Utah Ventures 26,114
Steven C. Quay, M.D., Ph.D. 15,293
-------
TOTAL: 316,295
=======
Exhibit 3-i