REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT, is made and entered into
as of February 11, 1999 between BENTLEY PHARMACEUTICALS, INC., a Florida
corporation (the "Company") and Yungtai Hsu ("Hsu").
WHEREAS, upon the terms and subject to the conditions of an
Asset Purchase Agreement, dated February 1, 1999, effective as of December 31,
1998 (the "Asset Purchase Agreement"), between the Company and Hsu, in which Hsu
agreed to sell certain of his assets to the Company, Hsu has agreed to accept
225,807 shares (the "Shares") of common stock, $0.02 par value per share (the
"Common Stock") of the Company as part of the Purchase Price (as defined in the
Asset Purchase Agreement);
WHEREAS, to induce Hsu to accept the Shares as part of the
Purchase Price, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Act"), with
respect to the Shares;
WHEREAS, as of the date hereof, Hsu and the Company entered
into a Subscription Agreement with respect to the Shares (the "Subscription
Agreement");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Hsu
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Act and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
(ii) "Registrable Securities" means the Shares.
(iii) "Registration Statement" means a registration statement
of the Company under the Act, including any amendments or supplements thereto
and prospectuses contained therein.
(iv) "Stockholder" means Hsu and any permitted transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(b) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Asset Purchase
Agreement.
2. Restrictions on Transfer.
(a) The Stockholder acknowledges and understands that prior to
the registration of the Shares as provided herein, the Shares are "restricted
securities" as defined in Rule 144 promulgated under the Act ("Rule 144"). The
Stockholder understands that the Shares may not be offered, transferred, resold,
pledged, hypothecated or otherwise disposed of in the absence of (i) an opinion
of Parker Chapin Flattau & Klimpl, LLP or other counsel reasonably acceptable to
the Company that such transfer may be made without registration under the Act or
(ii) an opinion of Parker Chapin Flattau & Klimpl, LLP or other counsel
reasonably acceptable to the Company that the Shares have been Registered.
(b) The Stockholder acknowledges that the Company has issued
the Shares to the Stockholder pursuant to an exemption from registration under
the Act. Stockholder represents that (i) he has acquired the Shares for
investment and without any view toward distribution of any of Registrable
Securities to any other person, (ii) he will not sell or otherwise dispose of
the Shares except in compliance with the registration requirements or exemption
provisions under the Act and (iii) before any sale or other disposition of any
of the Shares other than in a sale registered under the Act or pursuant to Rule
144 or 144A (or any similar provisions then in force) under the Act (unless the
Company shall have been advised by counsel that the sale does not meet the
requirements of Rule 144 or Rule 144A, as the case may be, for such sale), he
will deliver to the Company an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that such registration is
unnecessary.
(c) Each instrument or certificate evidencing or representing
the Shares, and any certificate issued in exchange therefor or transfer thereof,
shall bear legends substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
OFFERED FOR SALE, SOLD, HYPOTHECATED, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT COVERING THE SECURITIES UNDER THE ACT
OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT
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REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.
3. Registration.
(a) If at any time or from time to time following the date
hereof, the Company shall determine to register any distribution of its
securities with the SEC, either for its own account or the account of a security
holder or holders, in a registration statement covering the sale of shares of
Common Stock to the general public pursuant to a public offering in compliance
with the Act (except with respect to any registration filed on Form S-4 or such
other form which does not include substantially the same information as would be
included in a registration statement covering the sale of shares of Common Stock
to the general public), the Company will: (i) give to Stockholder written notice
thereof at least 30 days before the initial filing of such registration
statement; and (ii) include in such registration (and any related qualification
under blue sky laws) and in any underwriting involved therein, all the Shares,
specified in a written request, made within 30 days after receipt of such
written notice from the Company, by the Stockholder, except as set forth in
subparagraphs (b) or below. Notwithstanding the foregoing, the Stockholder shall
not have registration rights with respect to a particular registration statement
in the event that any investor or lender for whom the registration statement is
filed objects to the inclusion of other shares of Common Stock, including the
Shares, in such registration statement.
(b) If the distribution is to be underwritten, the right of
the Stockholder to registration pursuant to this Section shall be conditioned
upon Stockholder's participation in the underwriting and the inclusion of the
Shares and securities underlying the Shares, as the case may be, in the
underwriting to the extent provided herein. Notwithstanding any other provision
of this Section, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and such determination is
made by such underwriter in writing, then the underwriter may limit the number
of the Stockholder's Shares to be included in the registration and underwriting,
or may exclude the Shares from such underwriting.
4. Obligations of the Company. In connection with a
registration of the Registrable Securities under Section 3 hereof, the Company
shall do each of the following:
(a) Prepare and file with the SEC, a Registration Statement
with respect to the Registrable Securities, and thereafter use its best efforts
to cause each Registration Statement relating to the Registrable Securities to
become effective on or before 120 days from the filing of such Registration
Statement with the SEC, and keep the Registration Statement effective at all
times until the earliest (the "Registration Period") of (i) the date that is
three years after the Closing Date; (ii) the date when the Stockholder may sell
all Registrable Securities under Rule 144 or (iii) the date the Stockholder no
longer owns any of the Registrable Securities, which Registration Statement
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
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(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement;
(c) The Company shall permit a single firm of counsel
designated by the Stockholder to review the Registration Statement a reasonable
period of time prior to the Company's filing of the Registration Statement with
the SEC;
(d) Furnish to the Stockholder (i) promptly after the
Registration Statement is prepared and publicly distributed, filed with the SEC,
or received by the Company, one copy of the Registration Statement, each
prospectus, and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, and all amendments and supplements thereto and such
other documents, as the Stockholder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by the
Stockholder;
(e) As promptly as practicable after becoming aware of such
event, the Company shall notify the Stockholder of (i) the issuance by the SEC
of a stop order suspending the effectiveness of the Registration Statement, (ii)
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, or
(iii) the occurrence or existence of any pending corporate development that, in
the reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Registration Statement, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to the Stockholder as he may reasonably request;
provided that, for not more than twenty days (or a total of not more than forty
days in any twelve month period, the Company may delay the disclosure of
material non-public information concerning the Company (as well as prospectus or
Registration Statement updating) the disclosure of which at the time is not, in
the good faith opinion of the Company, the best interests of the Company and in
the opinion of counsel to the Company (an "Allowed Delay"); provided, further,
that the Company shall promptly (i) notify the Stockholder in writing of the
existence of material non-public information giving rise to an Allowed Delay and
(ii) advise the Stockholder in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay. Upon expiration of the Allowed
Delay, the Company shall again be bound by the first sentence of this Section
4(e) with respect to the information giving rise thereto;
(f) As promptly as practicable after becoming aware of such
event, notify the Stockholder who holds Registrable Securities being sold (or,
in the event of an underwritten offering,
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the managing underwriters) of the issuance by the SEC of any notice declaring
the effectiveness of the Registration Statement or any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time; and
(g) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Stockholder of the Registrable Securities
pursuant to the Registration Statement.
5. Obligations of the Stockholder. In connection with the
registration of the Registrable Securities, the Stockholder shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of the Stockholder that the Stockholder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify the Stockholder of the information the
Company requires from the Stockholder (the "Requested Information") if the
Stockholder elects to have any of the Stockholder's Registrable Securities
included in the Registration Statement. If at least three Business Days (as
defined below) prior to the filing date the Company has not received the
Requested Information from the Stockholder, then the Company may file the
Registration Statement without including Registrable Securities of the
Stockholder;
(b) The Stockholder by acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless the Stockholder has notified the Company in writing
of the Stockholder's election to exclude all of its Registrable Securities from
the Registration Statement; and
(c) The Stockholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(e) or 4(f), above, the Stockholder will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Stockholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(e) or 4(f) and, if
so directed by the Company, the Stockholder shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Stockholder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
6. Expenses of Registration.
(a) All reasonable expenses, other than as set forth in
Section 6(b) hereof, filings or qualifications pursuant to Section 4, including,
without limitation, all registration, listing, and
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qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, shall be borne by the Company.
(b) All underwriting discounts and commissions incurred in
connection with registrations shall be paid by the Stockholder.
7. Indemnification. Hsu shall indemnify and hold harmless the
Company and each officer, director or control person of any such entity, who is
or may be a party or is or may be threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of or arising from (i) any
actual or alleged misrepresentation or misstatement of facts or omission to
represent or state facts made or alleged to have been made by Hsu to the
Company, (or its officers, directors, employees, agents or representatives), or
omitted or alleged to have been omitted by Hsu, concerning Hsu, or Hsu's
authority to invest or financial position in connection with the offering or
sale of the Shares, or (ii) any breach of warranty or failure to comply with any
covenant contained in this Agreement, including, without limitation, any such
misrepresentation, misstatement or omission, or breach of any warranty or
covenant, contained herein or any other document submitted by Hsu, against
losses, liabilities and expenses for which the Company, or its officers,
directors or control persons has not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement in matters
settled in accordance with the provision of the following paragraph) incurred by
the Company, or such officer, director or control person in connection with such
action, suit or proceeding; provided, however, that Hsu will not be liable in
any such case for losses, claims, damages, liabilities or expenses that a court
of competent jurisdiction shall have found in a final judgment to have arisen
primarily from the gross negligence or willful misconduct of the Company or the
party claiming a right to indemnification.
In case any proceeding shall be instituted involving any
person with respect to whom indemnity may be sought, such person (the
"Indemnified Party") shall promptly notify Hsu, and Hsu, upon the request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others Hsu may
designate in such proceedings and shall pay as incurred the fees and expenses of
such counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel at its own expense, except
that Hsu shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Hsu and the Indemnified Party shall have
mutually agreed to the retention of such counsel or, (ii) the named parties to
any such proceeding (including any impleaded parties) include both Hsu and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Hsu shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
Hsu agrees to indemnify the Indemnified Party to the extent set forth in this
Agreement.
In the event a claim for indemnification as described herein
is determined to be unenforceable by a final judgment of a court of competent
jurisdiction, then Hsu shall contribute to
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the aggregate losses, claims, damages or liabilities to which the Company or its
officers, directors, agents, employees or controlling persons may be subject in
such amount as is appropriate to reflect the relative benefits received by each
of the undersigned and the party seeking contribution on the one hand and the
relative faults of Hsu and the party seeking contribution on the other, as well
as any relevant equitable considerations.
The provisions of this Agreement relating to indemnification
and contribution shall survive termination of this Agreement and shall be
binding upon any successors or assigns of Hsu.
8. Termination of Registration Rights. The rights granted
pursuant to this Agreement shall terminate as to the Stockholder upon the
occurrence of any of the following:
(a) all of the Registrable Securities have been registered; or
(b) all of the Registrable Securities may be sold without such
registration pursuant to Rule 144.
9. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day ("Business Day" means
a day other than Saturday, Sunday or any day on which banks located in the State
of New York are authorized or obligated to close), (c) one Business Day after
the date when sent to the recipient by reputable express courier service
(charges prepaid) or (d) seven Business Days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications will be sent to Hsu and
to the Company at the addresses indicated below.
If to Hsu, to:
Yungtai Hsu
Facsimile No.:
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With a copy (which shall not constitute notice) to:
Lagerlof, Senecal, Bradley, Gosney & Kruse, LLP
301 North Lake Avenue, 10th Floor
Pasadena, CA 91101
Attention: Timothy J. Gosney
Facsimile No.: (626) 793-5900
If to the Company, to:
Bentley Pharmaceuticals, Inc.
Two Urban Centre, Suite 400
4890 West Kennedy Blvd.
Tampa, Florida 33609
Attention: James R. Murphy
Facsimile No.: (813) 282-8941
With a copy (which shall not constitute notice) to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch
Jordan A. Horvath
Facsimile No.: (212) 704-6288
(c) Assignment; Benefit. This Agreement may not be assigned by
Hsu without the prior written consent of the Company and any assignment without
such consent shall be void. This Agreement may be assigned by the Company to any
person or entity which purchases all or substantially all of the stock or assets
of the Company or is the successor to the Company by merger or consolidation.
This Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Company and of Hsu.
(d) Severability. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
(e) Amendments. This Agreement may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
(f) 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.
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(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any
other jurisdiction to have the law of such other jurisdiction govern this
Agreement in order for this Agreement to be effective in any respect, then the
laws of such other jurisdiction shall govern this Agreement to such extent.
(h) Arbitration of Disputes
(i) If any controversy or dispute arises
under, out of or in relation to any of the provisions hereof, such controversy
or dispute shall be submitted for arbitration in New York, New York before a
panel of three arbitrators, one of which shall be selected by the party
initiating such arbitration, one of which shall be selected by the other party
and the third of which (the "Third Arbitrator") shall be selected by the two
arbitrators so selected; provided, however, that in the event that such other
arbitrators shall not agree on the selection of the Third Arbitrator, the Third
Arbitrator shall be selected by the American Arbitration Association located in
New York, New York. Any dispute or controversy submitted to arbitration in
accordance with the provisions of this Section shall be determined by such
arbitrators in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then existing.
(ii) The arbitrators may award any relief
which they shall deem proper in the circumstances, without regard to the relief
which would otherwise be available to any party in a court of law or equity
including, without limitation, an award of money damages, specific performance,
injunctive relief and/or declaratory relief, however, such an award may not
include punitive damages. The award and findings of the arbitrators shall be
conclusive and binding upon all of the parties hereto, whether or not all
parties hereto participate in the arbitration proceeding, and judgment upon the
award may be entered in any court of competent jurisdiction upon the application
of any party. The parties hereby agree that such courts of competent
jurisdiction shall include, but not be limited to, the courts located in any
jurisdiction in which the party against whom such judgment is being enforced
maintains any assets.
(iii) The prevailing party in the
arbitration proceeding shall be entitled to recover from the other party its
reasonable attorneys' fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the
arbitration proceeding.
(iv) Notwithstanding the foregoing, the
parties reserve the right to seek and obtain injunctive relief, whether in the
form of a temporary restraining order, preliminary injunction, injunction to
enforce an arbitration award, or other order of similar import, from the federal
and state courts located in New York, New York prior to, during, or after
commencement or prosecution or arbitration proceedings of the final decision and
award of the arbitrators; provided, however, that such preliminary injunctive
relief shall be subject to final arbitral decisions.
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(v) Each party hereby consents and agrees
that the federal and state courts located in New York, New York each shall have
exclusive personal jurisdiction and proper venue with respect to any such action
seeking injunctive or similar relief hereunder. In any dispute between the
parties, neither party will raise, and each party hereby expressly waives, any
objection or defense to any such court as an inconvenient forum. Each party
hereby waives personal service of any summons, complaint or other process, which
may be delivered by any of the means permitted for notices under Section 9(b)
hereof
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day and year first written above.
BENTLEY PHARMACEUTICALS, INC.
By: /s/ James R. Murphy
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James R. Murphy, Chairman, President
and Chief Executive Officer
/s/ Yungtai Hsu
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Yungtai Hsu, in his personal capacity
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