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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered
into as of June 16, 1998, by and among Techniclone Corporation, a corporation
duly incorporated and existing under the laws of the State of Delaware (the
"Company"), Swartz Investments, LLC, a Georgia limited liability company, d/b/a
Swartz Institutional Finance ("Swartz"), and the subscriber as named on the
signature page hereto (hereinafter referred to as "Subscriber").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Offering") of up to
Twenty Million Dollars ($20,000,000), excluding Warrants, of Common Stock of the
Company pursuant to that certain Regulation D Common Stock Equity Line
Subscription Agreement, of even date herewith (the "Subscription Agreement")
between the Company and the Subscriber and each of the other subscribers (the
"Other Subscribers"), the Company has agreed to sell and the Subscriber has
agreed to purchase, from time to time as provided in the Subscription Agreement,
shares of the Company's Common Stock for a maximum aggregate offering amount of
Twenty Million Dollars ($20,000,000);
WHEREAS, pursuant to the terms of the Subscription Agreement, the
Company has agreed to issue to the Subscriber, from time to time, warrants to
purchase a number of shares of Common Stock, exercisable through December 31,
2004 (the "Subscriber Warrants");
WHEREAS, pursuant to the terms of the Subscription Agreement, the
Company has agreed to provide the Subscriber with certain registration rights
with respect to the Common Stock to be issued in the Offering and the Common
Stock issuable upon exercise of the Subscriber Warrants as set forth in this
Registration Rights Agreement;
WHEREAS, pursuant to the terms of that certain placement agent
agreement, of even date herewith, by and between the Company and Swartz (the
"Placement Agent Agreement"), the Company has agreed to issue to Swartz, from
time to time, a number of shares of Common Stock and warrants to purchase a
number of shares of Common Stock, exercisable within through December 31, 2004
(the "Placement Agent Warrants"); and
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WHEREAS, pursuant to the terms of the Placement Agent Agreement,
the Company has agreed to provide Swartz with certain registration rights with
respect to the Common Stock and the Common Stock issuable upon exercise of the
Placement Agent Warrants as set forth in this Registration Rights Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
13. Certain Definitions. As used in this Agreement (including the
Recitals above), the following terms shall have the following meanings (such
meanings to be equally applicable to both singular and plural forms of the terms
defined):
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Accrual Principal Amount" shall mean $3,500,000 prior to the
initial Effective Date of the Registration Statement. On or after the Initial
Effective Date of the Registration Statement, the Accrual Principal Amount shall
mean the greater of (i) $2,500,000, or (ii) the sum of (a) $1,000,000 plus (b)
the aggregate Share Price of any Registrable Securities issued to Holder within
the sixty (60) day period preceding the date such accrual began (the "Initial
Accrual Principal Amount"), provided that if such accrual continues for more
than three (3) months, the Accrual Principal Amount shall thereafter be the
greater of (i) the Initial Accrual Principal Amount, or (ii) the Aggregate
Outstanding Share Price of all or any portion of Holder's Registrable Securities
which Holder, in its sole discretion, chooses to disclose that it holds.
"Accrual Rate" shall mean X% per month, accruing daily from the
date that the applicable payment, as specified herein, begins to accrue,
multiplied by the Accrual Principal Amount, where "X" equals one percent (1%)
for the first month following the date in question, and increases by an
additional one percent (1%) for each month that passes after the date in
question, up
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to a maximum of five percent (5%); provided, however, that if the payments
resulting from such accrual are not paid to the Holder within five (5) business
days of the date they are required to be paid, "X" shall be deemed to have
equaled five percent (5%) from the beginning of such unpaid accrual until such
payments are made.
"Aggregate Outstanding Share Price": The Aggregate Outstanding
Share Price at any given time shall be determined by aggregating the Share
Prices, as reset from time to time under the terms of the Subscription
Agreement, if applicable, of all shares of Registrable Securities then held by
Holder. For purposes of determining the Share Prices of Registrable Securities
held by Holder, "first in first out" accounting shall be used. For example, if
Holder has sold or otherwise disposed of any of its Registrable Securities, then
the first share sold or disposed of shall be deemed to be the first share that
was issued to Holder, and each subsequent share sold or disposed of shall be
deemed to be the corresponding subsequent share that was issued to Holder.
"Amended Registration Statement" shall have the meaning set forth
in Section 3(b).
"Black Out Period" shall have the meaning set forth in Section 4.
"Call for Proceeds" shall have the meaning as set forth in the
Subscription Agreement.
"Call Reset Date" shall mean the date that any Call Reset Shares
are required to be issued.
"Call Reset Shares" shall have the meaning as set forth in the
Subscription Agreement.
"Common Stock" shall mean the common stock, par value $0.001, of
the Company.
"Due Date" shall mean November 1, 1998.
"Effective Date" shall have the meaning set forth in Section 2.4.
"Filing Date" shall mean September 10, 1998.
"Holder" shall mean Subscriber, Other Subscribers, Swartz, and
any other person or entity owning or having the right to acquire Registrable
Securities or any permitted assignee thereof;
"Ineffective Registration Payment" shall have the meaning set
forth in Section 2.10.
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"Initial Tranche Closing Date" shall have the meaning as set
forth in Subscription Agreement.
"Market Price" shall have the meaning as set forth in the
Subscription Agreement.
"New Registration Statement" shall have the meaning set forth in
Section 3(b).
"Piggy Back Registration" shall have the meaning set forth in
Section 5.
"Piggy Back Registration Statement" shall have the meaning set
forth in Section 5.
"Placement Agent Agreement" shall have the meaning set forth in
the Recitals hereto.
"Placement Agent Warrants" shall have the meaning set forth in
the Recitals hereto.
"Register," "Registered," and "Registration" shall mean and refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and pursuant to Rule 415 under the Act or any successor rule, and the
declaration or ordering of effectiveness of such registration statement or
document;
"Registrable Securities" shall have the meaning set forth in
Section 2.1.
"Registration Statement" shall have the meaning set forth in
Section 2.2.
"Reset Price" shall mean the final Three Month Reset Price, with
respect to the Three Month Reset Shares, the final Six Month Reset Price, with
respect to the Six Month Reset Shares or the final Call Reset Price, with
respect to the Call Reset Shares, as the case may be.
"Reset Shares" shall mean Three Month Reset Shares, Six Month
Reset Shares, and Call Reset Shares, as the case may be.
"Rule 144" shall mean Rule 144, as amended, promulgated under the
Act.
"Share Price" shall have the meaning set forth in the
Subscription Agreement.
"Six Month Reset Price" shall have the meaning set forth in the
Subscription Agreement.
"Six Month Reset Shares" shall have the meaning set forth in the
Subscription Agreement.
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"Subscriber" shall have the meaning set forth in the preamble to
this Agreement.
"Subscriber Allocation" shall have the meaning set forth in the
Subscription Agreement.
"Subscriber Warrants" shall have the meaning set forth in the
Recitals.
"Subscription Agreement" shall have the meaning set forth in the
Recitals hereto.
"Supplemental Registration Statement" shall have the meaning for
Section 3(b).
"Three Month Reset Price" shall have the meaning set forth in the
Subscription Agreement.
"Three Month Reset Shares" shall have the meaning set forth in
the Subscription Agreement.
"Trading Day" shall have the meaning set forth in the
Subscription Agreement.
"Warrants" shall mean the Subscriber Warrants and the Placement
Agent Warrants collectively.
14. Required Registration.
14.1 Registrable Securities. "Registrable Securities" shall mean
only those shares of the Common Stock of the Company together with any capital
stock issued in replacement of, in exchange for or otherwise in respect of such
Common Stock, that are: (i) issuable or issued to the Subscriber pursuant to the
Subscription Agreement or in this Agreement, (ii) issuable or issued upon
exercise of the Subscriber Warrants, (iii) issuable or issued to Swartz pursuant
to the Placement Agent Agreement, and (iv) issuable or issued upon exercise of
the Placement Agent Warrants; provided, however, that notwithstanding the above,
the following shall not be considered Registrable Securities:
(a) any Common Stock which would otherwise be deemed to be
Registrable Securities, if and to the extent that those shares of Common Stock
may be resold in a public transaction without volume limitations or other
material restrictions without registration under the Act, including without
limitation, pursuant to Rule 144 under the Act;
(b) any Registrable Securities resold in a public
transaction; and
(c) any shares of Common Stock which have been sold in a
private transaction in which the transferor's rights under this Agreement are
not assigned.
14.2 Filing of Initial Registration Statement. The Company shall,
by the Filing Date, file a registration statement ("Registration Statement") on
Form S-1 (or other suitable form, at the Company's discretion, but subject to
the reasonable approval of Subscribers), covering the resale of a number of
shares of Common Stock as Registrable Securities equal to at least Ten Million
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(10,000,000) shares of Common Stock and shall cover, to the extent allowed by
applicable law, such indeterminate number of additional shares of Common Stock
that may be issued or become issuable as Registrable Securities by the Company
pursuant to the Subscription Agreement due to fluctuations in the Market Price
of the Common Stock.
14.3 Late Filing of Registration Statement. If the Registration
Statement is not filed by the Filing Date, Company shall pay the Holder at a
rate equal to the Accrual Rate, accruing daily until the Registration Statement
is filed, payable in cash or Common Stock, at the Holder's option, as set forth
in Section 2.6 below ("Late Filing Payment").
14.4 Registration Effective Date. The Company shall use its best
efforts to have the Registration Statement declared effective by the SEC (the
date of such effectiveness is referred to herein as the "Effective Date") as
soon as possible, but in no event shall the Effective Date be later than the Due
Date.
14.5 Registration Statement Not Effective by Due Date. If the
Registration Statement is not declared effective by the Due Date, the Company
shall pay the Holder at a rate equal to the Accrual Rate, accruing daily until
the Registration Statement or a registration statement filed pursuant to Section
3 of this Agreement is declared effective, payable in cash or Common Stock, at
the Holder's option, as set forth in Section 2.6 below (the "Late Registration
Payment").
14.6 Late Filing Payment; Late Registration Payment; Ineffective
Registration Payment. Any Late Filing Payment, Late Registration Payment or
Ineffective Registration Payment shall be payable in cash or Common Stock, at
the Holder's option, as follows: If Holder elects to be paid in cash, such Late
Filing Payment, Late Registration Payment or Ineffective Registration Payment
shall be paid to such Holder within five (5) business days following the end of
the month in which such payment was accrued. If Holder elects to be paid in
Common Stock, the Company shall issue to Holder, within five (5) business days
following the end of the month in which such Late Filing Payment, Late
Registration Payment or Ineffective Registration Payment was accrued, a number
of shares of Common Stock equal to the quotient of (i) the dollar amount of such
Late Filing Payment, Late Registration Payment or Ineffective Registration
Payment, divided by (ii) the Market Price, of the Common Stock on the last
Trading Day of the month in which such payment was accrued. Any such shares of
Common Stock issued to the Holder as a result of any Late Filing Payment, Late
Registration Payment or Ineffective Registration Payment shall also be deemed
"Registrable Securities" as defined herein.
14.7 Shelf Registration. The Registration Statement shall be
prepared as a "shelf" registration statement under Rule 415, and shall be
maintained effective until all Registrable Securities are resold pursuant to
such Registration Statement.
14.8 Eligibility for Form S-1. The Company represents that it is
presently eligible to effect the registration contemplated hereby on Form S-1
and will use its best efforts to continue to take such actions as are necessary
to maintain such eligibility. The Company covenants to use its best efforts to
use Form S-1 (or other suitable form, at the Company's discretion, but subject
to the reasonable approval of the Holders) for the registration required by this
Section during all applicable times contemplated by this Agreement.
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14.9 Supplemental Registration Statement for Three Month Reset
Shares, Six Month Reset Shares or Call Reset Shares. Anytime the Company is
required to issue Three Month Reset Shares, Six Month Reset Shares or Call Reset
Shares, as the case may be, and the Registration Statement does not cover a
sufficient number of shares of Common Stock to cover (i) all outstanding
Registrable Securities plus (ii) all Registrable Securities to be issued as
Three Month Reset Shares, Six Month Reset Shares or Call Reset Shares, as the
case may be, the Company shall prepare and file with the SEC such Supplemental
Registration Statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all such Registrable Securities and such
Supplemental Registration Statement shall be declared effective prior to the
issuance of such Three Month Reset Shares, such Six Month Reset Shares or Call
Reset Shares.
14.10 Failure to Obtain Effectiveness of Supplemental
Registration Statement; Failure to Maintain Effectiveness of Registration
Statement.
(i) Failure to Obtain Effectiveness of Supplemental
Registration Statement. In the event that the Company fails to have a
Supplemental Registration Statement declared effective within thirty (30)
business days of the original Three Month Reset Date (as specified in Section
2.2.2(a) of the Subscription Agreement), if required with respect to the Three
Month Reset Shares, within thirty (30) business days of the original Six Month
Reset Date (as specified in Section 2.2.2(b) of the Subscription Agreement), if
required with respect to the Six Month Reset Shares or within thirty (30)
business days of the Call Reset Date, if required with respect to the Call Reset
Shares, the Company shall pay the Holder at a rate equal to the Accrual Rate,
accruing daily until a Supplemental Registration Statement filed pursuant to
Section 2.9 of this Agreement and covering the resale of the Reset Shares is
declared effective, payable in cash or Common Stock, at the Holder's option, as
set forth in Section 2.6 above (the "Ineffective Registration Payment").
(ii) Failure to Maintain the Effectiveness of any
Registration Statement. In the event that the Company fails to maintain the
effectiveness of any Registration Statement (or fails to maintain a current and
deliverable prospectus) during any time period required hereunder (the
"Ineffective Period"), other than a Permissible Black Out Period as specified in
Section 4 below, the Company shall pay the Holder at a rate equal to the Accrual
Rate, accruing daily until a Registration Statement covering the resale of all
such Registrable Securities becomes effective, payable in cash or Common Stock,
at the Holder's option, as set forth in Section 2.6 above (the "Ineffective
Registration Payment"). For the purposes hereof, if a Registration Statement is
effective but does not cover a sufficient number of shares of Common Stock to
effect resales of all Registrable Securities, then a Holder shall be entitled to
an Ineffective Registration Payment for the Ineffective Period only as to the
number of shares of Registrable Securities held by such Holder that are not
covered under the Registration Statement, determined on a pro rata basis among
the Holders based upon the Subscriber Allocation.
14.11 Failure to Maintain Listing of Common Stock. In the event
that, at any time during the term of the Subscription Agreement, the Company's
Common Stock is not listed for and actively trading on either the Nasdaq Small
Cap Market, Nasdaq National Market, American Stock Exchange or New York Stock
Exchange or is suspended or delisted with respect to the trading of the shares
of Common Stock on such market or exchange (a "Delisting Event"), the Company
shall pay
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the Holder at a rate equal to the Accrual Rate, accruing daily until the
Holder's shares of Common Stock become listed for and actively trading on either
the Nasdaq Small Cap Market, Nasdaq National Market, American Stock Exchange or
New York Stock Exchange.
In the event that a Delisting Event occurs and the Closing Bid
Price of the Common Stock on the first Trading Day that the Company's Common
Stock is actively listed and trading on either the Nasdaq Small Cap Market,
Nasdaq National Market, American Stock Exchange or New York Stock Exchange (the"
Delisting Event Final Price") is less than the Closing Bid Price on the last
Trading Day preceding such Delisting Event (the "Delisting Event Initial
Price"), the Company shall issue to Holder, within five (5) business days
following the first Trading Day after the end of the Delisting Event, an
additional number of shares of Common Stock equal to the difference of (i) a
number of shares equal to the quotient of (x) the Aggregate Outstanding Share
Price divided by (y) the Delisting Event Final Price, minus (ii) a number of
shares equal to the quotient of (x) the Aggregate Outstanding Share Price
divided by (y) the Delisting Event Initial Price. Any such shares of Common
Stock issued to the Holder as a result of any Delisting Event shall also be
deemed "Registrable Securities" as defined herein.
15. Obligations of the Company. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously and reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a Registration Statement with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to become effective
and to remain effective until all Registrable Securities are resold pursuant to
such Registration Statement.
(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 ("Amended Registration Statement") or prepare and file
any new registration statement ("New Registration Statement," together with the
Amended Registration Statement, "Supplemental Registration Statements") as may
be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement or such
prior registration statement and to cover the resale of all Registrable
Securities.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of 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 of
the Registrable Securities covered by such Registration Statement, 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
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) As promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities of the happening of any
event of which the Company has knowledge, as a result of which the prospectus
included in the 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, in light of the
circumstances under which they were made, not misleading, and subject to Section
4, use its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and deliver
a number of copies of such supplement or amendment to each Holder as such Holder
may reasonably request.
(g) Provide Holders with notice of the date that a Registration
Statement registering the resale of the Registrable Securities is declared
effective by the SEC, and the date or dates when the Registration Statement is
no longer effective.
(h) Provide Holders and their representatives the opportunity and
a reasonable amount of time, based upon reasonable notice delivered by the
Company, to conduct a reasonable due diligence inquiry of Company's pertinent
financial and other records and make available its officers and directors for
questions regarding such information as it relates to information contained in
the Registration Statement.
(i) Provide Holders and their representatives the opportunity and
ten (10) business days, based on reasonable notice delivered by the Company, to
review the Registration Statement and all amendments thereto a reasonable period
of time prior to their filing with the SEC if so requested by Holder in writing;
provided that if the Holders or their representatives take more than ten (10)
business days for such review and as a direct result the Company cannot file the
Registration Statement by the Filing Date, any Late Filing Payment shall be
tolled for the amount of time that such review exceeded ten (10) business days.
(j) Provide each Holder with prompt notice of the issuance by the
SEC or any state securities commission or agency of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceeding for such purpose. The Company shall use its best efforts to prevent
the issuance of any stop order, and, if any is issued to obtain the removal
thereof at the earliest possible date.
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(k) Use its best efforts to list the Registrable Securities
covered by the Registration Statement with all securities exchanges or markets
on which the Common Stock is then listed and prepare and file any required
filing with the NASD and any other exchange or market on which the Common Stock
is listed.
16. Black Out. In the event that, during the time that the Registration
Statement is effective, the Company reasonably determines, based upon advice of
counsel, that due to the existence of material non-public information,
disclosure of such material non-public information would be required to make the
statements contained in the Registration Statement not misleading, and the
Company has a bona fide business purpose for preserving as confidential such
material non-public information, the Company shall have the right to suspend the
effectiveness of the Registration Statement, and no Holder shall be permitted to
sell any Registrable Securities pursuant thereto (the "Black Out Period"), until
such time as such suspension is no longer advisable; provided, however, that any
Black Out Period shall not exceed a period of thirty (30) days. If any Black Out
Period exceeds such thirty (30) day limit, the Ineffective Registration
Payments, as specified in Sections 2.10(ii), shall accrue beginning on the first
day that such Black Out Period exceeds the thirty (30) day limit. As soon as
such suspension is no longer advisable, the Company shall, if required,
promptly, but in no event later than the date the Company files any documents
with the Securities and Exchange Commission ("SEC") referencing such material
information, file with the SEC an amendment to the Registration Statement
disclosing such information and use its best efforts to have such amendment
declared effective as soon as possible.
In the event the effectiveness of the Registration Statement is
suspended by the Company pursuant hereto, the Company shall promptly notify all
Holders whose securities are covered by the Registration Statement of such
suspension, and shall promptly notify each such Holder as soon as the
effectiveness of the Registration Statement has been resumed. The Company shall
be entitled to effect no more than three Black Out Periods during any one (1)
year period not exceeding an aggregate of thirty (30) days during any twelve
month period ("Permissible Black Out Periods").
In the event that a Black Out Period, other than Permissible
Black Out Periods ("Impermissible Black Out Period"), occurs and the Closing Bid
Price of the Common Stock on the first Trading Day that the Registration
Statement becomes effective after the Impermissible Black Out Period (the "Final
Black Out Price") is less than the Closing Bid Price on the last Trading Day
preceding such Impermissible Black Out Period that the Registration Statement
was effective (the "Initial Black Out Price"), the Company shall issue to
Holder, within five (5) business days following the first Trading Day that the
Registration Statement becomes effective after the
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Impermissible Black Out Period, an additional number of shares of Common Stock
equal to the difference of (i) a number of shares equal to the quotient of (x)
the Aggregate Outstanding Share Price divided by (y) the Final Black Out Price,
minus (ii) a number of shares equal to the quotient of (x) the Aggregate
Outstanding Share Price divided by (y) the Initial Black Out Price. Any such
shares of Common Stock issued to the Holder as a result of any Impermissible
Black Out Period shall also be deemed "Registrable Securities" as defined
herein.
17. Piggyback Registration. If the Registration Statement described in
Section 2 is not effective by the Due Date, and if (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its Common Stock under the Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely for
the sale of securities to participants in a Company stock plan or a registration
on Form S-4 promulgated under the Act or any successor or similar form
registering stock issuable upon a reclassification, upon a business combination
involving an exchange of securities or upon an exchange offer for securities of
the issuer or another entity), the Company shall, at such time, promptly give
each Holder written notice of such registration (a "Piggyback Registration
Statement"). Upon the written request of each Holder given by fax within ten
(10) days after mailing of such notice by the Company, the Company shall cause
to be included in such registration statement under the Act all of the
Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") to the extent such inclusion does not violate the
registration rights of any other security holder of the company granted prior to
the date hereof; provided, however, that nothing herein shall prevent the
Company from withdrawing or abandoning such registration statement prior to its
effectiveness. The election of Holder to participate in a Piggyback Registration
Statement shall not impact the amount payable to Holder pursuant to Section 2.6
herein except that the Late Registration Payment shall cease to accrue as of the
date of effectiveness of the Piggyback Registration Statement.
18. Limitation on Obligations to Register.
18.1 Piggyback Registration. In the case of a Piggyback
Registration pursuant to an underwritten public offering by the Company, if the
managing underwriter determines and advises in writing that the inclusion in the
registration statement of all Registrable Securities proposed to be included
would interfere with the successful marketing of the securities proposed to be
registered by the Company, then the number of such Registrable Securities to be
included in the registration statement, to the extent such Registrable
Securities may be included in such Piggyback Registration Statement, shall be
allocated among all Holders who had requested Piggyback Registration pursuant to
the terms hereof, in the proportion that the number of Registrable Securities
which each such Holder, including Swartz, seeks to register bears to the total
number of Registrable Securities sought to be included by all Holders, including
Swartz. If required by the managing underwriter of such an underwritten public
offering, the Holders shall enter into a reasonable agreement limiting the
number of Registrable Securities to be included in such Piggyback Registration
Statement and the terms, if any, regarding the future sale of such Registrable
Securities.
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18.2 Dispute as to Registrable Securities. In the event the
Company believes that shares sought to be registered under Section 2 or Section
5 by Holders do not constitute "Registrable Securities" by virtue of Section 2.1
of this Agreement, and the status of those shares as Registrable Securities is
disputed, the Company shall provide, at its expense, an Opinion of Counsel,
reasonably acceptable to the Holders of the Securities at issue (and
satisfactory to the Company's transfer agent to permit the sale and transfer)
that those securities may be sold immediately, without volume limitation or
other material restrictions, without registration under the Act, by virtue of
Rule 144 or similar provisions.
19. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
regard to each Holder, that such Holder shall furnish to the Company such
information regarding Holder, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of its Registrable Securities or to determine that registration
is not required pursuant to Rule 144 or other applicable provision of the Act.
The Company shall include all information provided by such Holder pursuant
hereto in the Registration Statement, substantially in the form supplied, except
to the extent such information is not permitted by law.
20. Expenses. All expenses, other than underwriting discounts and
commissions and fees and expenses of counsel to the selling Holders, incurred in
connection with registrations, filings or qualifications pursuant hereto,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, shall be borne by the Company.
21. Indemnification. In the event any Registrable Securities are
included in a Registration Statement or a Piggyback Registration Statement under
this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers, directors, partners, legal counsel,
and accountants of each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of Section 15 of the Act or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements or omissions: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or (ii) the 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 the Company will reimburse each
such Holder, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a violation which
occurs in reliance upon and in conformity with written information furnished
expressly for
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use in connection with such registration by any such Holder, officer, director,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, officers, partners, legal counsel, accountants, each person, if
any, who controls the Company within the meaning of Section 15 of the Act, each
underwriter and each person who controls such underwriter within the meaning of
Section 15 of the Act and any other Holder selling securities in such
registration statement or any of its directors or officers or any person who
controls such Holder, against any losses, claims, damages, or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, or underwriter or controlling person, or other such Holder or director,
officer or controlling person may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
such registration statement or prospectus, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements not misleading, in each case to the extent (and only to the
extent) that such statement or omission is made in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration statement; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company and any
such director, officer, controlling person, underwriter or controlling person,
other Holder, officer, director, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld. Amounts due
under this subsection shall in no event exceed the net proceeds received by such
Holder from the sale of registrable Securities pursuant to the Registration
Statement in question.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 9.
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(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree to
contribute to the aggregate claims, losses, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and the Holders in connection with the statements
or omissions which resulted in such Losses. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by the Holders. The Company and the
Holders agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation that does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person who controls a Holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director, officer,
partner, employee and agent of a Holder shall have the same rights to
contribution as such holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each director and officer of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders under this Section
9 shall survive the resale, if any, of the Common Stock, the completion of any
offering of Registrable Securities in a Registration Statement under this
Agreement, and otherwise.
(f) If the Registration Statement or any Piggyback Registration
involves an underwritten offering, the Company shall enter into such customary
agreements for secondary offerings (including a customary underwriting agreement
with the underwriter or underwriters) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters in form, substance and scope as are
customarily made by issuers to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters opinions of independent counsel
to Company on and dated as of the date of delivery of any Registrable Securities
sold pursuant to the Registration Statement, which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the Holders and
the underwriter(s) and their counsel and covering, without limitation, such
matters as the due authorization and issuance of the securities being registered
and compliance with securities laws by Company in connection with the
authorization, issuance and registration thereof and other matters that are
customarily given to underwriters in underwritten offerings, addressed to the
Holders and each underwriter;
(iii) if required by the underwriters, cause to be
delivered, immediately prior to the effectiveness of the Registration Statement
and at the time of delivery of any Registrable
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Securities sold pursuant thereto, a "comfort" letter from Company's independent
certified public accountants addressed to each underwriter stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary offerings;
(iv) the underwriting agreement shall include customary
indemnification and contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters to evidence compliance with clause (i)
above and with any customary conditions contained in the underwriting agreement.
Notwithstanding the above, the Holders shall be entitled to demand delivery of
the certificates, opinions, representations and warranties, comfort letters,
documents and other items referred to in clauses (i) through (iii) of this
subsection, whether or not an underwriter is utilized in connection with the
disposition of Registrable Securities.
22. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and the
1934 Act; and
23. Amendment of Registration Rights. Any provision of this Agreement
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 written consent of each Holder effected
thereby. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder, each future Holder, and the Company.
24. Notices. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: Techniclone Corporation, 14282 Franklin
Avenue, Tustin, CA 92780, Telephone No. (714) 508-6000, Facsimile No. (714)
838-4094 and (ii) the Holders at their respective last address as the party as
shown on the records of the Company. Any notice, except as otherwise provided in
this Agreement, shall be made by fax and shall be deemed given at the time of
transmission of the fax.
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25. Termination. This Agreement shall terminate on the date all
Registrable Securities cease to exist (as that term is defined in Section 2.1
hereof); but without prejudice to (i) the parties' rights and obligations
arising from breaches of this Agreement occurring prior to such termination (ii)
other indemnification obligations under this Agreement.
26. Assignment. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Piggyback
Registration, a writing executed by such transferee agreeing to be bound as a
Holder by the terms of this Agreement), and the Company hereby agrees to file an
amended registration statement including such transferee or a selling security
holder thereunder; and provided further that the Company may transfer its rights
and obligations under this Agreement to a purchaser of all or a substantial
portion of its business if the obligations of the Company under this Agreement
are assumed in connection with such transfer, either by merger or other
operation of law (which may include without limitation a transaction whereby the
Registrable Securities are converted into securities of the successor in
interest) or by specific assumption executed by the transferee.
27. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Act or the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
28. Execution in Counterparts Permitted. This Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one (1) instrument.
29. Specific Performance. The Holder shall be entitled to the remedy of
specific performance in the event of the Company's breach of this Agreement, the
parties agreeing that a remedy at law would be inadequate.
30. Indemnity. Each party shall indemnify each other party against any
and all claims, damages (including reasonable attorney's fees), and expenses
arising out of the first party's breach of any of the terms of this Agreement.
31. Entire Agreement; Written Amendments Required. This Agreement,
including the Exhibits attached hereto, the Subscription Agreements, the Common
Stock certificates, the Escrow Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof, and no party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
Except as expressly provided herein, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
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[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of this 16th day of June, 1998.
TECHNICLONE CORPORATION
By:
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Elizabeth Gorbett-Frost, CFO
Address: Techniclone Corporation
14282 Franklin Avenue
Tustin, CA 92780
Telephone No. (714) 508-6000
Facsimile No. (714) 838-4094
SWARTZ INVESTMENTS, LLC. d/b/a
SWARTZ INSTITUTIONAL FINANCE
By:
-------------------------------
Eric S. Swartz, President
Address: 1080 Holcomb Bridge Road
Bldg. 200, Suite 285
Roswell, GA 30076
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Telephone: (770) 640-8130
Facsimile: (770) 640-7150
SUBSCRIBER(S)
Subscriber's Name
By:
-------------------------------
(Signature)
Address:
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