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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
January 23, 1996
Advanced Polymer Systems, Inc., a Delaware corporation ("APS") and Dow
Corning Corporation, a Michigan corporation ("PURCHASER"), hereby agree as
follows:
RECITALS
A. APS is acquiring a polymer-based carrier system business from
PURCHASER, and in payment thereof is issuing 200,000 shares of its Common Stock
(the "Shares") to PURCHASER.
B. The parties wish to provide for the registration of the subsequent
resale of the Shares and for the orderly distribution thereof, all on the terms
and conditions hereof.
THE PARTIES AGREE AS FOLLOWS:
1. Registration Rights; Listing.
1.1 Certain Definitions. As used herein, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Convertible Securities" shall mean securities of APS
convertible into or exchangeable for Registrable Securities.
(c) "Holder" shall mean any holder of outstanding Registrable
Securities which have not been sold to the public, but only if such holder is
PURCHASER or an assignee or transferee of Registration rights as permitted by
Section 1.8.
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(d) The terms "Registrar", "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("Registration Statement"), and the
declaration or ordering of the effectiveness of such Registration Statement.
(e) "Registrable Securities" shall mean the Shares issued to PURCHASER
by APS, together with any Common Stock issued with respect to the Shares
pursuant to stock splits, stock dividends and similar distributions, so long as
such securities have not been sold to the public in a public distribution or a
public securities transaction or sold in a single transaction exempt from the
registration and prospectus delivery requirements of the Securities Act such
that all transfer restrictions and restrictive legends with respect to such
Shares shall have been removed in connection with such sale.
(f) "Registration Expenses" shall mean all expenses incurred by APS in
complying with this Agreement, including, without limitation, all federal and
state registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for APS, blue sky fees and expenses, the expense of
any special audits incident to or required by any such Registration and any
expenses related to the maintenance of such Registration and qualification
during the period specified in Section 1.4(a) hereof.
(g) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the
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rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
(h) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities pursuant
to this Agreement.
1.2 Registration.
1.2.1 Registration. Subject to the terms of this Agreement, APS
shall use its best efforts to effect Registration of the Registrable Securities
within 60 days of their issuance to PURCHASER by filing as soon as possible
after the date hereof a Form S-3 Registration Statement (or any successor to
Form S-3) with the Commission.
1.2.2 Registration of Other Securities. Any Registration
Statement filed under this Section 1 may include securities of APS other than
Registrable Securities; provided, however, that neither PURCHASER or any Holder
shall be required to utilize an underwriter in connection with the sale of
their Registrable Securities.
1.2.3 Blue Sky. In the event of any Registration pursuant to
Section 1, APS will exercise its best efforts to Register and qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that:
(a) APS shall not be required to qualify to do business or
to file a general consent to service of process in
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any such states or jurisdictions, unless APS is already subject to service in
such jurisdiction; and
(b) notwithstanding anything in this Agreement to the contrary,
in the event any jurisdiction in which the securities shall be qualified
imposes a non-waivable requirement that expenses incurred in connection with
the qualification of the securities be borne by selling shareholders, such
expenses shall be payable pro rata by selling shareholders.
1.3 Expenses of Registration. All Registration Expenses (but not
Selling Expenses) incurred in connection with the Registration pursuant to
Section 1 shall be borne by APS.
1.4 Registration Procedures. Whenever required under this Agreement to
effect the Registration of any securities of APS, subject to the other
provisions of this Agreement, APS shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the Commission a Registration
Statement with respect to such securities in accordance with Section 1.2.1 and
use its diligent best efforts to cause such Registration Statement to become
effective as promptly as possible thereafter and to remain effective for a
period equal to the shorter of: (i) three years from the date of such
effectiveness; or (ii) until the distribution described in the Registration
Statement has been completed.
(b) 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
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Act with respect to the disposition of all securities covered by such
Registration Statement.
(c) Furnish to the Holders participating in such
Registration and the underwriters, if any, of the securities being
Registered, such reasonable number of copies of the Registration Statement,
preliminary prospectus and final prospectus as they may request in order to
facilitate the public offering of such securities.
1.5 Additional Information Available. So long as the Registration
Statement is effective covering the resale of Shares owned by a Holder, APS
will furnish to the Holder(s):
(a) as soon as practicable after it becomes available (but
in the case of APS' Annual Report to Stockholders, within 120 days after the
end of each fiscal year of APS), one copy of: (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited
in accordance with generally accepted accounting principles by a national firm
of certified public accountants); (ii) if not included in substance in the
Annual Report to Stockholders, its Annual Report on Form 10-K; (iii) if not
included in substance in its Quarterly Reports to Stockholders, its
quarterly reports on Form 10-Q; and (iv) a full copy of the particular
Registration Statement covering the Shares (the foregoing, in each case,
excluding exhibits); and
(b) upon the reasonable request of a Holder, all exhibits
excluded by the parenthetical to subparagraph (a) (iv) of this Section 1.5;
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and APS, upon the reasonable request of a Holder, will meet with such Holder or
a representative thereof at APS' headquarters to discuss all information
relevant for disclosure in the Registration Statement covering the Shares and
will otherwise cooperate with any Holder conducting an investigation for the
purpose of reducing or eliminating such Holder's exposure to liability under
the Securities Act, including the reasonable production of information at APS'
headquarters.
1.6 Information Furnished by Holder. It shall be a condition
precedent of APS' obligations under this Agreement that each Holder of
Registrable Securities included in any Registration furnish to APS such
information regarding such Holder and the distribution proposed by such Holder
as APS may reasonably request.
1.7 Indemnification.
1.7.1 Company's Indemnification of Holder. APS will
indemnify and hold harmless each Holder, each of its officers, directors,
employees, agents, affiliates and constituent partners, and each person deemed
to be in control of such Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934 (the
"Exchange Act"), from and against all claims, losses, damages or liabilities
(or actions in respect thereof) to the extent such claims, losses, damages or
liabilities arise out of or are based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or other
document (including any related Registration Statement) incident to any
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such Registration, qualification or compliance, or are 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 APS of any rule or regulation promulgated under the Securities Act
applicable to APS and relating to action or inaction required of APS in
connection with any such Registration, qualification or compliance or arise out
of any failure by APS to fulfill an undertaking included in the Registration
Statement; and APS will reimburse each such Holder, each such underwriter and
each person who controls any such Holder or underwriter, for any legal and any
other expenses reasonably incurred in connection with defending any such claim,
loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 1.7.1 shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if settlement is effected
without the consent of APS (which consent shall not unreasonably be withheld)
and; provided, further, that APS 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 upon any untrue statement or omission based upon written information
furnished to APS by such Holder or controlling person and stated expressly to
be for use in connection with the offering of securities of APS.
1.7.2 Holder's Indemnification of Company. Each Holder will indemnify
and hold harmless APS, each of its directors, officers, employees, agents and
affiliates, each
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person deemed to be in control of APS within the meaning of Section 15 the
Securities Act or Section 20 of the Exchange Act, and each other such Holder,
each of its officers, directors, employees, agents, affiliates and constituent
partners, and each person deemed to be in control of such other Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based upon 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, or any
violation by such Holder of any rule or regulation promulgated under the
Securities Act applicable to such Holder and relating to action or inaction
required of such Holder in connection with any such Registration, qualification
or compliance; and will reimburse APS, such Holder, such directors, officers,
partners, persons or control persons for any legal and any other expenses
reasonably incurred in connection with 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 APS by such Holder and specifically approved in writing by such
Holder for
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use in connection with the offering of securities of APS; provided, however,
that the indemnity contained in this Section 1.7.2 shall not apply with respect
to a Holder to amounts paid in settlement of any claim, loss, damage, liability
or action if settlement is effected without the consent of such Holder (which
consent shall not be unreasonably delayed or withheld).
1.7.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 1.7 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 1.7, notify the
indemnifying party in writing of the commencement thereof and, to the extent
reasonably possible, generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense of such claim;
provided, however, that the indemnifying party shall be entitled to select
counsel for the defense of such claim with the approval of any parties entitled
to indemnification, which approval shall not be unreasonably withheld;
provided, further, that if either party reasonably determines that there may be
a conflict between the position of APS and a Holder in conducting the defense
of such action, suit or proceeding by reason of recognized claims for indemnity
under this Section 1.7, then counsel for such party shall be entitled to
conduct, or participate in, the defense to the extent reasonably determined by
such counsel to be necessary to protect the interest of such party and the
costs of such counsel shall be borne by the indemnifying party. The failure to
notify an
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indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 1.7, but the omission so
to notify the indemnifying party will not relieve such party of any liability
that such party may have to any indemnified party otherwise other than under
this Section 1.7.
1.8 Transfer of Rights. The right to cause APS to Register securities
granted by APS to PURCHASER under this Agreement may be assigned by any Holder
to a transferee or assignee of any Registrable Securities not sold to the
public acquiring at least 25,000 shares of such Holder's Registrable Securities
(equitably adjusted for any stock splits, subdivisions, stock dividends,
changes, combinations or the like); provided, however, that:
(a) APS must receive written notice prior to the time of said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such information and
Registration rights are being assigned; and
(b) the transferee or assignee of such rights must not be a
person deemed by the Board of Directors of APS, in its best judgment, to be a
competitor or potential competitor of APS. Notwithstanding the limitations set
forth in the foregoing sentence respecting the minimum number of shares which
must be transferred and permitted transferees and assignees: (i) any
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Holder which is a partnership may transfer such Holder's Registration rights to
such Holder's constituent partners without restriction as to the number or
percentage of shares acquired by any such constituent partner; and (ii) Section
1.8(b) shall not prohibit the transfer or assignment of such rights to an
affiliate of the PURCHASER.
1.9 Nasdaq Listing. Prior to the effective date of a Registration of
any of the Shares, APS shall file an application with NASDAQ to list such
Shares for quotation on the Nasdaq National Market.
1.10 Delay in Effectiveness. In the event a Registration Statement
covering the Shares is not declared effective within ninety (90) days after the
date hereof or in the event the effectiveness of such Registration Statement is
suspended or terminated at any time subsequent to the 90th day after the date
hereof and prior to the termination of the period specified in Section 1.4(a)
hereof, APS shall pay to the Holders an amount equal to $275 per day for each
day such Registration Statement is not effective; provided that nothing herein
is intended to limit a Holder's ability to seek to enforce its rights to
require that a Registration Statement covering Shares remains effective during
the period specified in Section 1.4 hereof; and provided further that APS shall
not be required to make any payments to a Holder if the failure to obtain or
maintain an effective Registration Statement is solely attributable to a
Holder's failure to provide APS with
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information required to be provided by such Holder for inclusion in the
Registration Statement.
2. Miscellaneous.
2.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of
California by California residents.
2.2 Successors and Assigns. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
2.3 Entire Agreement. This Agreement and the Asset Purchase
Agreement and the Exhibits and Schedules hereto and thereto constitute the
entire contract between APS and the PURCHASER relative to the subject matter
hereof. Any previous agreement between APS and the PURCHASER with respect to
the subject matter hereof is superseded by this Agreement.
2.4 Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any Holder of any one or more of the provisions
of this Agreement, or any part thereof, whether arising by reason of the law of
any PURCHASER's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of this Agreement with respect to other
Holders. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall to the extent practicable, be modified so as to make it
valid, legal
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and enforceable and to retain as nearly as practicable the intent of the
parties, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
2.5 Amendment of Agreement. Any provision of this Agreement may
be amended only by a written instrument signed by APS and by PURCHASER.
2.6 Notices. Any notice required or permitted hereunder shall be given
in writing and shall be conclusively deemed effectively given upon personal
delivery, or five days after deposit in the United States mail, by registered
or certified mail, postage prepaid, addressed:
(a) if to APS, Advanced Polymer Systems, Inc., 3696 Haven
Avenue, Redwood City, California 94063, ATTENTION: President; and
(b) if to PURCHASER, Dow Corning Corporation, 2200 W. Salzburg
Road, Midland, Michigan 48686-0994, ATTENTION: General Counsel.
2.7 Headings. The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
2.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IT WITNESS WHEREOF, the parties have executed this Agreement.
ADVANCED POLYMER SYSTEMS, INC.
By:/s/ Michael O'Connell
---------------------------------
Michael O'Connell
Senior Vice President and CFO
DOW CORNING CORPORATION
By:/s/ William P. Cavanaugh
---------------------------------
William P. Cavanaugh
Commercial Unit Manager
Personal Household and
Automotive Products
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