REPLACEMENT WARRANT HOLDERS
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December
14, 2005, by and among Elite Pharmaceuticals, Inc., a Delaware corporation (the
"Company") and the holders of Warrants to purchase Common Stock issued by the
Company pursuant to the Exercise Agreements (as each term is defined below)
listed on SCHEDULE 1 attached hereto (each, a "Warrant Holder");
WHEREAS, the Company and each of the Warrant Holders have entered into
a Warrant Exercise Agreement dated within thirty days of the date hereof (each
an "Exercise Agreement"); and
WHEREAS, to induce each Warrant Holder to execute and deliver the
Exercise Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder, or any similar successor statute, as well
as any applicable state securities laws.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, and the mutual covenants and agreements contained herein, and in the
Exercise Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company, the Placement
Agent and the Warrant Holders, intending to be legally bound, hereby agree as
follows:
1. CERTAIN DEFINITIONS.
Capitalized terms defined in the Exercise Agreements shall have the
same meanings herein as are ascribed to them therein. In addition, as used in
this Agreement, the following terms shall have the following meanings ascribed
to them below:
"Affiliate" means any Person that has a relationship with a designated
Person whereby either of such Persons directly or indirectly controls or is
controlled by or is under common control with the other. For this purpose
"control" means the power, direct or indirect, of one Person to direct or cause
direction of the management and policies of another, or any act with respect to
the securities of the Company, whether by contract, through voting securities or
otherwise.
"Closing Date" means December 14, 2005.
"Common Stock" shall be the Company's authorized common stock, as
constituted on the date of this Agreement, any stock into which such common
stock may thereafter be changed and any stock of the Company of any other class,
which is not preferred as to dividends or assets over any other class of stock
of the Company issued to the Warrant Holders of shares of such common stock upon
any re-classification thereof.
"Company Registration Expenses" shall mean bills or invoices (other
than Selling Expenses) incident to the Company's performance of or compliance
with this Agreement including, without limitation, all registration, filing and
NASDR fees, fees and expenses of compliance with securities or blue sky laws,
word processing, duplicating and printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company and all independent
public accountants including the expenses of any audit and/or "cold comfort"
letter, all fees and expenses in connection with the Company's obligations under
Section 3.1, if applicable, and other Persons retained by the Company.
"Controlling Person" shall have the meaning set forth under Section 15
of the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Form" means a Form S-4 or Form S-8, pursuant to the
Securities Act or any similar or successor form then in effect.
"NASDR" means the NASD Regulation, Inc.
"Offering" means the solicitation by the Placement Agent of Warrant
Holders to enter into Exercise Agreements.
"Person" means a corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business, an
entity, an individual, a government or political subdivision thereof or a
governmental body.
"Placement Agent" shall mean Indigo Securities, LLC.
"Placement Agent Agreement" shall mean the placement agent agreement,
dated as of November 9, 2005, between the Placement Agent and the Company.
"Placement Agent Warrants" shall mean the warrants to purchase shares
of Common Stock issued to the Placement Agent pursuant to the Placement Agent
Agreement.
"Register, registered and registration" means a registration effected
by preparing and filing a Registration Statement on a form approved by the SEC
other than an Excluded Form in compliance with the Securities Act and the
declaration of effectiveness ordering the effectiveness of such Registration
Statement.
"Registrable Securities" means Common Stock issued upon (i) exercise of
the Warrants and (ii) exercise of the Placement Agent Warrants. As to any
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement, (ii) they can be sold to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) they shall have been
otherwise transferred but new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the
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Securities Act or any similar state law then in force, or (iv) they shall have
ceased to be outstanding.
"Registration Statement" means one or more registration statements of
the Company on Form S-3 under the Securities Act registering all of the
Registrable Securities, including any amendments or supplements thereto.
"SEC" means the Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts, brokerage
fees and selling commissions applicable to the Registrable Securities registered
and all fees and disbursements of counsel for the Warrant Holder.
"Warrants" means the warrants to purchase Common Stock issued by the
Company pursuant to the Exercise Agreements and listed on SCHEDULE 1 attached
hereto.
"Warrant Holders" means the Warrant Holders and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 10 hereof. Warrant Holders also refers to the Placement
Agent and its assignees when referring to the offer and sale of Registrable
Securities and other rights arising under Sections 2 and 3.
2. REGISTRATION.
2.1 MANDATORY REGISTRATION.
2.1.1 The Company shall file with the SEC, on the date which
is on or before forty-five (45) days after the Closing Date (the "Filing
Deadline") a Registration Statement on Form S-3 (or, if Form S-3 is not
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities; provided, that the Company
shall convert such other form to Form S-3, or file a replacement registration
statement on Form S-3 promptly after the first date on which it meets such
requirement) pertaining to the resale of all of the Registrable Securities and,
to the extent allowable under the Securities Act and the rules promulgated
thereunder, to such indeterminate number of additional shares of Common Stock as
may become issuable pursuant to provisions to prevent dilution resulting from
stock splits, stock dividends or similar transactions (the "Mandatory
Registration Statement"). The Mandatory Registration Statement shall contain,
unless otherwise required by applicable law or the SEC, the "Selling
Shareholders" and "Plan of Distribution" section of the Prospectus in a form
reasonably satisfactory to the Warrant Holders based upon information provided
by the selling shareholder. The Registrable Securities included in the Mandatory
Registration Statement shall be registered on behalf of the Warrant Holders set
forth on Schedule 1 hereof. The Mandatory Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to the Warrant Holders and their
counsel at least five (5) business days prior to its filing or other submission;
such notice to specify the securities to be registered, the proposed numbers and
amounts thereof and the date thereafter by which the Company must receive the
Warrant Holders' written indication if any
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Warrant Holder does not wish to include their Registrable Securities in such
Registration Statement and advising the Warrant Holders of their rights under
this Section 2. The Company shall file the Mandatory Registration Statement and
use its best efforts to cause all of the Registrable Securities (unless an
Warrant Holder has indicated otherwise with respect to all or any portion of
such Warrant Holder's Registrable Securities pursuant to the preceding sentence)
to be registered under the Securities Act, in connection with the sale or other
disposition by the Warrant Holders of the Registrable Securities so registered.
The Company shall use its best efforts to cause the Mandatory Registration
Statement, as amended, to become effective as soon as practicable after the
filing thereof. The Mandatory Registration Statement shall only cover the
Registrable Securities and any stockholder of the Company that is entitled to
participate under, and exercises any existing, piggy-back registration rights.
2.1.2 If the Mandatory Registration Statement (i) has not been declared
or ordered effective within one-hundred and twenty (120) days after the Closing
Date (the "Four Month Period") or (ii) has been declared effective, but prior to
the second anniversary of the Closing Date ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required
to be effective or the Holders are not permitted to utilize the Prospectus
therein to resell such Registrable Securities, in each case for a period of 15
consecutive Trading Days or more than an aggregate of any 25 Trading Days, in
each case during which a Warrant Holder could exercise the Warrant and sell the
Warrant Shares at a profit, during a 12-month period (any such failure or breach
being referred to as an "Event", and for purposes of clause (i) the date on
which such Event occurs, or for purposes of clause (ii) the date on which such
15 or 25 Trading Day period, as applicable, is exceeded, being referred to as an
"Event Date"), then in addition to any other rights the Holders may have
hereunder or under applicable law, on each monthly anniversary of each such
Event Date (if the applicable Event shall not have been cured by such date)
until the date on which the applicable Event is cured, the Company shall pay to
each Holder an amount in cash, as damages and not as a penalty, equal to 0.5%
per month of the aggregate exercise price applicable under the terms of the
Warrants to the Registrable Securities then held by such Holder. If the Company
fails to pay any liquidated damages pursuant to this Section in full within
seven business days after the date payable, the Company will pay interest
thereon at a rate of 16% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the
date such liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The damages pursuant to the terms hereof shall apply
on a daily pro-rata basis for any portion of a month prior to the date on which
an Event is cured. The Company shall have the option to pay any damages in cash
or Common Stock.
2.2 DEMAND REGISTRATION
2.2.1 If the Mandatory Registration Statement shall not have
been declared or ordered effective and the Company shall receive a written
request no earlier than ninety (90) days following the Closing but no later than
22 months after the Closing from Warrant Holders holding more than $1,000,000 in
value of the Registrable Securities then outstanding (the "Initiating Warrant
Holder") that the Company file a registration statement under the Securities Act
covering the registration of the Registrable Securities, then the Company shall,
within thirty (30) days of the receipt thereof, give written notice of such
request to all Warrant Holders, and subject to the limitations set forth herein,
effect, as expeditiously as reasonably possible, the
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registration under the Securities Act of all Registrable Securities that the
Warrant Holders request to be registered.
2.2.2 The Company shall not be required to effect a
registration pursuant to this Section 2.2 if (i) the Mandatory Registration
Statement has been declared or ordered effective, whether or not one or more
holders of Registrable Securities elected not to register all of their
respective shares in the Mandatory Registration Statement (ii) the Company has
previously effected two registrations pursuant to this Section 2.2 and such
previous registrations has been declared or ordered effective or (iii) the
Registrable Securities covered by registrations pursuant to this Section 2.2 may
be sold pursuant to Rule 144(k) promulgated under the Securities Act or any
successor provision. Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered pursuant to this Section 2.2 as soon as
practicable after receipt of the request or requests of the Warrant Holders.
2.3 PIGGYBACK RIGHTS.
2.3.1 If the Company shall determine to prepare and file with
the SEC a registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities
(other than on an Excluded Form), then the Company shall send to each Warrant
Holder holding Registrable Securities that have not been covered by a
registration statement that has been declared or ordered effective (each, an
"Eligible Warrant Holder"), written notice of such determination and if, within
15 business days after receipt of such notice any such Eligible Warrant Holder
shall so request in writing, the Company shall include in such registration
statement the Registrable Securities requested by the Eligible Warrant Holders
to be so included. Such written notice shall state the intended method of
disposition of the Registrable Securities by such Eligible Warrant Holder. If an
Eligible Warrant Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Eligible
Warrant Holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein, to the extent
all Registrable Securities held by such Warrant Holder have not been covered by
a registration statement that has been declared or ordered effective by the time
of such subsequent registration.
2.3.2 If the registration statement under which the Company
gives notice under this Section 2.3 is for an underwritten offering, the Company
shall so advise the Eligible Warrant Holders of Registrable Securities. In such
event, the right of any such Eligible Warrant Holder to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Eligible Warrant Holder's participation in such underwriting and the inclusion
of such Eligible Warrant Holder's Registrable Securities in the underwriting to
the extent provided herein. All Eligible Warrant Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to any selling
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shareholders that shall have exercised a demand registration right; third, on a
PRO RATA basis, to the Eligible Warrant Holders and any other shareholders of
the Company exercising incidental registration rights based on the total number
of Registrable Securities sought to be registered in such registration by the
Eligible Warrant Holders and such other shareholder of the Company.
2.3.3 If any Eligible Warrant Holder disapproves of the terms
of any such underwriting, such Eligible Warrant Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at
least ten (10) business days prior to the effective date of the registration
statement. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration. For any
Eligible Warrant Holder which is a partnership, limited liability company, or
corporation, the partners, retired partners, members, retired members and
shareholders of such Eligible Warrant Holder, or the estates and family members
of any such partners and retired partners and any trusts for the benefit of any
of the foregoing person shall be deemed to be a single "Eligible Warrant
Holder," and any PRO RATA reduction with respect to such "Eligible Warrant
Holder" shall be based upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in such "Eligible Warrant
Holder," as defined in this sentence.
2.3.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.3 prior to the
effectiveness of such registration whether or not any Eligible Warrant Holder
has elected to include securities in such registration.
3. REGISTRATION PROCEDURES.
3.1 If and whenever the Company is required by the provisions hereof to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided herein, the Company shall, as expeditiously as
possible:
3.1.1 prepare and file with the SEC, on or before the Filing
Deadline the Mandatory Registration Statement required by Section 2.1 or a
demand Registration Statement pursuant to Section 2.2 with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become and remain effective (pursuant to Rule 415 of the Securities
Act) as soon as practicable after such filing (provided that, before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the Warrant Holders copies of all such documents
proposed to be filed);
3.1.2 prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective, true and correct during the Registration
Period. For purposes of this Agreement, "Registration Period" means the period
commencing with the effective date and ending on the earlier of (i) the sale of
all Registrable Securities covered thereby, (ii) the date upon which the Warrant
Holders may sell the Registrable Securities pursuant to Rule 144(k) promulgated
under the Securities Act, or (iii) the expiration of the 24 months after Closing
or such shorter period as shall be necessary to complete the distribution of the
securities covered thereby, and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable Securities
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covered by such Registration Statement during such period in accordance with the
intended methods of disposition by the Warrant Holders in such Registration
Statement;
3.1.3 permit the Warrant Holders and their counsel to review
and comment upon all Registration Statements at least five (5) business days
prior to its filing with the SEC and all amendments and supplements to all
Registration Statements (except for documents incorporated by reference therein)
within a reasonable number of days prior to their filing with the SEC;
3.1.4 submit to the SEC, within two (2) business days after
the Company learns that no review of the Registration Statement will be made by
the staff of the SEC (the "Staff") or that the Staff has no further comments on
the Registration Statement, as the case may be, a request for acceleration of
effectiveness of the Registration Statement to a time and date not later than 48
hours after the submission of such request;
3.1.5 furnish to each Warrant Holder whose Registrable
Securities are included in the Registration Statement, and to the Placement
Agent's counsel and each underwriter of the securities being sold by the Warrant
Holders such number of copies of such Registration Statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus), in conformity with the requirements of
the Securities Act, and such other documents, as such counsel and underwriter
may reasonably request, in substantially the form in which they are proposed to
be filed with the SEC, in order to facilitate the public sale or other
disposition of the Registrable Securities owned by the participating Warrant
Holders. In the case of all Registration Statements referred to in Section 2,
the Company shall furnish to each Warrant Holder which requests (i) a copy of
any request to accelerate the effectiveness of any Registration Statement or
amendment thereto, (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Warrant Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Warrant Holder. In responding to comments from the
staff of the SEC, the Company shall cooperate with any Warrant Holder that
notifies the Company that it desires to be consulted with respect to such
process. To the extent that issues raised by the staff of the SEC have an impact
primarily on any such Warrant Holder rather than the Company, the Company shall
give reasonable deference to such Warrant Holder's requests with respect to the
process and substance of responses with respect to such issues;
3.1.6 use its best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Warrant Holder who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be reasonably
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions
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reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.1.6;
3.17 subject to Section 3.1.6, use its best efforts to cause
such Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be reasonably necessary to enable the participating Warrant Holders to
consummate the disposition of its Registrable Securities;
3.1.8 notify the participating Warrant Holders at any time
when a prospectus relating to its Registrable Securities is required to be
delivered under the Securities Act, of the Company's becoming aware that the
prospectus included in the related Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and promptly prepare
and furnish to the participating Warrant Holders and each underwriter a
reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an 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 not misleading in the light of the circumstances then
existing;
3.1.9 otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC;
3.1.10 if the Common Stock is listed on the American Stock
Exchange, another national securities exchange, or on the Nasdaq Stock Market,
as the case may be, the Company shall use its best efforts to cause all such
Registrable Securities covered by such Registration Statement to be listed on
the American Stock Exchange, other national securities exchange, or on the
Nasdaq Stock Market, as the case may be (if such Registrable Securities are not
already so listed), if the listing of such Registrable Securities is then
permitted under the rules of such exchange or market;
3.1.11 provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
3.1.12 in the case of an underwritten offering, enable the
Registrable Securities to be in such denominations and registered in such names
as the underwriters may request at least two business days prior to the sale of
the Registrable Securities;
3.1.13 cooperate with the Warrant Holders who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Warrant Holders may reasonably request and registered in such names as the
Warrant Holders may request;
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3.1.14 notify the Warrant Holders of any stop order
threatened, to the knowledge of the Company, or issued by the SEC (and the
Company shall notify the Warrant Holders of the resolution of any issued stop
order) and take all actions reasonably necessary to prevent the entry of such
stop order or to remove it if entered;
3.1.15 instruct the Company's transfer agent to remove the
restrictive legend on the stock certificates after effectiveness of the
applicable Registration Statement and provide. with the cooperation of the
Warrant Holders, any required legal opinions at the Company's sole expense; and
3.1.16 the Company shall use its commercially reasonable
efforts to (subject to applicable law), as soon as practicable, (A) incorporate
in a prospectus supplement or post-effective amendment the information provided
by an Warrant Holder pursuant to Section 3.2 relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering, (B) make all
required filings of such prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment and (C) supplement or make amendments to any
Registration Statement if reasonably requested by an Warrant Holder holding any
Registrable Securities as it relates to the information provided by an Warrant
Holder pursuant to Section 3.2 relating to the sale and distribution of
Registrable Securities.
3.2 In connection with the registration of the Registrable Securities,
the Warrant Holders shall have the following obligations:
3.2.1 each participating Warrant Holder shall furnish to the
Company in writing such information and documents regarding it and the
distribution of its securities as may reasonably be required to be disclosed in
the Registration Statement in question by the rules and regulations under the
Securities Act or under any other applicable securities or blue sky laws of the
jurisdictions referred to in Section 3.1.4 above, or as may otherwise be
reasonably requested; and
3.2.2 if any such registration or comparable statement refers
to any participating Warrant Holder by name or otherwise as the Warrant Holder
of any securities of the Company, but such reference to such participating
Warrant Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, then such participating Warrant Holder
shall have the right to require the deletion of the reference to such
participating Warrant Holder.
3.3 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities in the Mandatory Registration Statement under
Section 2.1 hereof or any amendment or supplement thereto under Section 3.1.2
hereof without the consent of the Warrant Holders of a majority of the
Registrable Securities, except pursuant to outstanding registration rights set
forth on SCHEDULE 3.3 attached hereto.
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4. REGISTRATION EXPENSES.
In connection with any registration of Registrable Securities pursuant
to Section 2, the Company shall, whether or not any such registration shall
become effective, from time to time promptly pay all Company Registration
Expenses. Such expenses shall not include any Selling Expenses other than up to
$10,000 of reasonable fees and expenses of one counsel selected by a majority of
the Warrant Holders solely with respect to the Mandatory Registration Statement.
5. INDEMNIFICATION.
5.1 The Company shall, and hereby does, indemnify and hold harmless, to
the fullest extent permitted by law, each Warrant Holder and the Placement Agent
(and their respective officers, directors, managers, members, partners,
stockholders, employees, agents and advisors) and each Person who controls any
Warrant Holder or the Placement Agent within the meaning of the Securities Act
(each, an "Indemnified Party") from and against all losses, claims, damages,
liabilities and expenses, joint or several, to which any such Indemnified Party
may become subject under the Securities Act, the Exchange Act and all rules and
regulations under each such act, any other federal or state statute, law or
regulation at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any amendment or supplement thereto 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, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the SEC, any amendment thereof or supplement thereto), or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or (iii)
any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company and relating to action of or inaction by
the Company in connection with any such registration including the failure to
deliver any document required herein to be delivered, to an Warrant Holder and a
Placement Agent; and in each such case, the Company shall reimburse each such
Indemnified Party for any reasonable legal or other expenses as such reasonable
expenses are incurred by any of them in connection with investigating,
defending, settling, compromising, proving or defending any such loss, claim,
damage, liability, expense, action or proceeding; PROVIDED, HOWEVER, that the
Company shall not be liable to any such Indemnified Party insofar as such
losses, claims, damages, liabilities, expenses, actions or proceedings are
caused by any untrue statement or alleged untrue statement or material omission
to provide information pursuant to Section 5.2 made in reliance on and in
conformity with any written information furnished to the Company by or on behalf
of any Indemnified Party to be furnished under the Section 5.2 or as a result of
the failure of the Indemnified Party to furnish a prospectus to a purchaser.
5.2 In connection with any Registration Statement in which any Warrant
Holder and the Placement Agent is participating, such participating parties
shall furnish to the Company in writing such information as shall be reasonably
requested by the Company for use in any such
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Registration Statement or prospectus and shall indemnify and hold harmless,
severally and not jointly, to the extent permitted by law, the Company, its
officers, directors, employees, agents, advisors and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages, liabilities, expenses, actions or
proceedings resulting from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact with
respect to information furnished by the Warrant Holder to the Company and
required to be stated in the Registration Statement or prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, or necessary to make
the statements therein in the light of the circumstance under which they were
made (in the case of a prospectus) not misleading, in each case to the extent,
but only to the extent, that such untrue statement or omission with respect to
information expressly requested by the Company is made in reliance on and in
conformity with any information so furnished in writing or to be furnished under
this Section 5.2 by such participating Warrant Holder expressly for use therein.
Notwithstanding the provisions of this Section 5.2, each Investor shall not be
liable for any indemnification obligation under this Agreement in excess of the
aggregate amount of net proceeds received by such Investor from the sale of the
Registrable Securities pursuant to the applicable Registration Statement. In no
case shall the Placement Agent be liable for any indemnification obligation
under this Agreement in excess of the compensation received by it pursuant to
the Placement Agent Agreement.
5.3 Any Person entitled to indemnification under the provisions of this
Section 5 shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have pursuant to this Section 5 to the extent it is not materially
prejudiced as a result of such failure, and (ii) unless in the reasonable
judgment of counsel for such indemnified party a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
permit such indemnifying party to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified party; and if such defense is so
assumed, such indemnifying party shall not enter into any settlement without the
consent of the indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent. In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one law firm for all parties indemnified by such
indemnifying party hereunder in respect of such claim. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the transfer of such
securities by such indemnified party.
5.4 If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations in accordance with Section 6 below. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
11
5.5 An indemnifying party shall make payments of all amounts required
to be made pursuant to the foregoing provisions of this Section 5 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
6. CONTRIBUTION.
To provide for just and equitable contribution, if an Indemnified Party
makes a claim for indemnification pursuant to Section 5 but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides indemnification in such case, then the Company (including for
this purpose any contribution made by or on behalf of any officer, director,
employee or agent for the Company, or any Controlling Person of the Company), on
the one hand, and the indemnified party, on the other hand, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company, on the one hand, and the indemnified
party, on the other hand; PROVIDED, HOWEVER, that if applicable law does not
permit such allocation, then other relevant equitable considerations such as the
relative fault of the Company and the indemnified party in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. No Person liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is not liable for such
fraudulent misrepresentation. Anything in this Section 6 to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. The
Company, the Warrant Holders and the Placement Agent agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined
solely by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in this Section 6.
The Warrant Holders' and the Placement Agent's obligations to contribute
pursuant to this Section 6 are several and not joint.
7. RULE 144.
The Company covenants that it shall file the reports required to be
filed under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, in the event that the Company is
not required to file such reports, it shall make publicly available information
as set forth in Rule 144(c)(2) promulgated under the Securities Act), or to the
extent required from time to time to enable the Warrant Holders and the
Placement Agent to sell their Registrable Securities without registration under
the Securities Act within the limitation of the exemption provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the SEC (collectively,
"Rule 144").
8. REGISTRATION RIGHTS OF OTHERS.
If the Company shall at any time hereafter provide any Person any
rights with respect to the registration of any securities of the Company under
the Securities Act, such rights shall not permit any such securities to become
registered during the period between Closing and the date that is 180 days after
the Mandatory Registration Statement becomes effective or, in any other
12
manner, be superior to the rights provided herein to the Warrant Holders and the
Placement Agent. For the avoidance of doubt, this Section 8 excludes any
registration rights that exist on the date hereof.
9. REPORTING STATUS AND LISTING.
(a) Until the date on which the Warrant Holders shall have sold all of
their Registrable Securities, the Company shall file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
(b) The Company shall use its best efforts to maintain the eligibility
for quotation of the Common Stock on the American Stock Exchange. Subject to
applicable law, neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the American Stock Exchange. The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this section.
10. TRANSFER OF REGISTRATION RIGHTS.
If and to the extent that any Warrant Holder or the Placement Agent
sells or otherwise disposes of Registrable Securities or warrants exercisable
for Registrable Securities in any transaction that does not require registration
under the Securities Act (other than a transaction exempt under Rule 144), the
rights of the Warrant Holder or the Placement Agent hereunder with respect to
such Registrable Securities shall be assignable to any transferee of such
Registrable Securities; PROVIDED, HOWEVER, that such transferee agrees in
writing to be bound by all the terms and conditions of this Agreement.
11. MISCELLANEOUS.
11.1 The registration rights provided to the Warrant Holders of
Registrable Securities hereunder shall terminate on the date there shall no
longer be any outstanding Registrable Securities; PROVIDED, HOWEVER that the
provisions of Section 5 hereof shall survive any termination of this Agreement.
11.2 A Person is deemed to be an Warrant Holder of Registrable
Securities whenever such Person owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons 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.
11.3 All notices, offers, acceptance and any other acts under this
Agreement shall be in writing, and shall be sufficiently given if delivered to
the addressees in person, by Federal Express or similar receipted overnight
delivery, or by facsimile or e-mail delivery followed by a copy sent by Federal
Express or similar receipted overnight delivery, as follows:
13
If to the Company: Elite Pharmaceuticals, Inc.
165 Ludlow Avenue
Northvale, NJ 07647
Facsimile No.: (201) 750-2755
Attention: Mr. Bernard Berk
Chief Executive Officer
With a copy to: Reitler Brown & Rosenblatt LLC
800 Third Avenue, 21st Floor
New York, NY 10022
Facsimile No.: (212) 371-5500
Attention: Scott H. Rosenblatt, Esq.
If to an Warrant Holder, at such address as such Warrant Holder shall have
provided in writing to the Company or such other address as such Warrant Holder
furnishes by notice given in accordance with this Section 11.3, with a copy to:
Indigo Securities, LLC
780 Third Avenue, 23rd Floor
New York, NY 10017
Facsimile No.: (212) 298-9933
Attention: Eric Brachfeld
With a Copy to: Wollmuth Maher & Deutsch LLP
500 Fifth Avenue
New York, New York 10110
Facsimile No.: (212) 382-0050
Attention: Rory M. Deutsch, Esq.
11.4 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11.5 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York.
11.6 Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Manhattan, New
York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Manhattan, New York for the
adjudication of any dispute hereunder or in
14
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement hereof). Each party agrees not
to commence a claim or proceeding hereunder in a court other than a state court
or federal court sitting in Manhattan, New York, except (i) if required as a
mandatory counterclaim or cross-claim in a proceeding commenced by a Person in a
different jurisdiction or (ii) if such party has first brought such claim or
proceeding in such court sitting in Manhattan, New York and both the state
courts and the federal courts sitting in Manhattan, New York have denied
jurisdiction over such claim or proceeding. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
11.7 This Agreement (including all schedules and exhibits thereto)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and understandings
(whether oral or written) among the parties hereto and thereto with respect to
the subject matter hereof and thereof.
11.8 Subject to the requirements of Section 10 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
11.9 The headings in this Agreement are for convenience of reference
only and shall not form part of or effect the interpretation of this Agreement.
11.10 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. The execution of this Agreement may be by actual or
facsimile signature.
11.11 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.12 Except as otherwise set forth herein, all consents, approvals and
other determinations to be made by the Warrant Holders pursuant to this
Agreement shall be made by the Warrant Holders holding more than 66 2/3% of the
Registrable Securities then held by all Warrant Holders.
15
11.13 If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
11.14 This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by any other Person.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
16
IN WITNESS WHEREOF, the parties have set their hands and seals the date
and year first above written.
ELITE PHARMACEUTICALS, INC.
By:
----------------------------------------------
Bernard Berk, Chief Executive Officer
INVESTORS:
INDIGO SECURITIES, LLC
By:
----------------------------------------------
Eric Brachfeld, Managing Partner
[ADDITIONAL SIGNATURE PAGES ATTACHED]
17
INDIVIDUAL:
----------
Dated:
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Name of Individual:
Address:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Facsimile:
------------------
Dated: NON-INDIVIDUAL:
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-----------------------------
Name of Entity
By:
-------------------------
Name:
Title:
Address:
-----------------------------
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Facsimile:
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18
SCHEDULE 1
TO
REPLACEMENT WARRANT HOLDERS
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
ELITE PHARMACEUTICALS, INC.
AND THE FOLLOWING INVESTORS:
REPLACEMENT
NAME ADDRESS WARRANTS
---- ------- ------------
Marlin Fund II, LP
Marlin Fund Offshore, LDC
Marlin Fund Offshore, Ltd.
Marlin Fund LP
Jerry Treppel
Wheaten HealthCare Partners, LP
Valor Capital Management LP
S.A.C. Capital Associates, LLC
Bushido Capital
Myron Neugeboren
Charon Behl
Chris Dick
Shirley Rae Sullivan
Lewis Asset Management
Abbey E. Blatt 24 Saber Dr., Kings Park
Bill Mitsinikos 1645 Lands End Road, Manalapan
Norman Rothstein