Exhibit 10.3
REGISTRATION AGREEMENT
between
CYPRESS BIOSCIENCE, INC.,
and
FRESENIUS AKTIENGESELLSCHAFT,
Dated March 26, 1999
Table Of Contents
Page
1. INTRODUCTION.......................................................... 1
2. REGISTRATION UNDER SECURITIES ACT, ETC................................ 1
2.1 Registration on Request.......................................... 1
2.1.1 Requests................................................. 1
2.1.2 Registration Statement Form.............................. 2
2.1.3 Expenses................................................. 2
2.1.4 Effective Registration Statement......................... 2
2.1.5 Priority in Requested Registrations...................... 3
2.1.6 Other Securities......................................... 3
2.2 Incidental Registration.......................................... 4
2.2.1 Notices; Obligation to Register.......................... 4
2.2.2 Effect on Requested Registrations; Expenses.............. 4
2.3 Registration Procedures.......................................... 4
2.3.1 Procedures............................................... 4
2.3.2 Information Concerning Holders........................... 7
2.4 Underwritten Offerings........................................... 8
2.4.1 Selection of Underwriters in Requested Offerings......... 8
2.4.2 Incidental Underwritten Offerings........................ 8
2.4.3 Other Registration Rights................................ 8
2.4.4 Suspension of Effectiveness of Registration Statement.... 9
2.5 Indemnification and Contribution................................. 9
2.5.1 Indemnification by the Company........................... 9
2.5.2 Indemnification by the Sellers........................... 10
2.5.3 Notices of Claims, etc................................... 10
2.5.4 Contribution............................................. 11
2.5.5 Other Indemnification and Contribution................... 12
2.5.6 Payments................................................. 12
3. GENERAL............................................................... 12
3.1 Rule 144................................................. 12
3.2 Nominees for Beneficial Owners........................... 12
i.
Table of Contents
(continued)
Page
3.3 Amendments and Waivers................................... 12
3.4 Notices.................................................. 13
3.5 Certain Definitions...................................... 13
3.6 Determination of Percentages of Registrable Securities... 14
3.7 Consolidation, Merger, Etc............................... 14
3.8 Restrictive Legends...................................... 15
3.9 Company Cooperation...................................... 16
3.10 Miscellaneous............................................ 16
3.11 Arbitration.............................................. 16
3.12 Attorneys' Fees.......................................... 17
3.13 Official Language........................................ 17
ii.
REGISTRATION AGREEMENT
REGISTRATION AGREEMENT, dated as of March 26, 1999 (the "Agreement"),
between CYPRESS BIOSCIENCE, INC., a Delaware corporation (the "Company"), and
FRESENIUS AKTIENGESELLSCHAFT, a German corporation ("Fresenius").
1. INTRODUCTION. Fresenius and the Company have entered into a series of
related agreements providing for the purchase by Fresenius, on the date hereof
and from time to time hereafter, of shares of the Company common stock, par
value $0.02 per share (the "Common Stock"). Pursuant to a Securities Purchase
Agreement (the "Securities Purchase Agreement") dated as of the date hereof,
between Fresenius and the Company, Fresenius has purchased 297,530 shares of
Common Stock on the terms and conditions set forth therein. Pursuant to the
License and Distribution Agreement (the "License and Distribution Agreement")
dated as of the date hereof, Fresenius, Fresenius Hemotechnology, Inc. and the
Company have entered into certain arrangements whereby Fresenius agreed to make
certain payments to the Company which shall take the form of purchases of
additional Common Stock. In addition, on the date hereof, Fresenius has been
issued warrants (the "Warrants") to purchase 342,466 shares of Common Stock at a
purchase price of $7.50 per share, exercisable during the three-year period
commencing on the date hereof. The Company has agreed to grant to Fresenius the
right to require that such Common Stock be registered for sale under the
Securities Act under the terms and conditions set forth herein. Certain
capitalized terms used in this Agreement are defined in Section 3.5.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 Registration on Request.
2.1.1 Requests. Subject to the conditions of this Section 2.1 and
the other terms and conditions of this Agreement, at any time or from time to
time after the first anniversary of the date hereof, upon the written request of
one or more Qualified Holders requesting that the Company shall use its
reasonable efforts to effect the registration under the Securities Act of all or
any part of such Qualified Holders' Registrable Securities and specifying the
intended method of disposition thereof, the Company shall promptly give written
notice of such requested registration to all holders of record of Registrable
Securities, and thereupon the Company shall, as expeditiously as reasonably
possible, use all reasonable efforts to effect the registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Qualified Holder or Holders, for disposition
in accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration thereof
within 10 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition thereof);
and
2.
(iii) all shares of Common Stock which the Company may elect to
register (for itself or for any other Person) in connection with the
offering of Registrable Securities pursuant to this Section 2.1 by having
given notice of such election, specifying the number of shares to be so
included, to each holder of Registrable Securities within 10 days of its
receipt of the notice from such Qualified Holder or Holders;
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, so to be registered; provided,
however, that the Company shall not be required to effect more than one
registration pursuant to this Section 2.1. Subject to the other terms and
conditions hereof (including without limitation Section 2.1.4 hereof), the
holders of a majority of Registrable Securities included, or sought to be
included, in any registration pursuant to this Section 2.1 may at any time give
notice to the Company that they are withdrawing the request for such
registration; provided, however, that, subject to Section 2.1.4, such initial
request for inclusion will be counted as the one registration that the Company
is required to effect.
2.1.2 Registration Statement Form. The registration of the
Registrable Securities under this Section 2.1 shall be required to be effected
by the Company only if the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in the
request for registration is permitted to be made pursuant to a registration
statement on Form S-3 (or any successor form thereto), provided that the Company
shall not be required to maintain the effectiveness of the prospectus included
in such registration statement for more than 90 days.
2.1.3 Expenses. The Company will pay all Registration Expenses in
connection with the registration requested under this Section 2.1.
2.1.4 Effective Registration Statement. A registration requested
pursuant to this Section 2.1 will not be deemed to have been effected (i) (a)
unless such registration has become effective and (b) if the method of
disposition is a firm commitment underwritten public offering, a closing shall
have occurred hereunder (unless, in the case of clause (b), such closing has not
occurred as a result of any action or omission on the part of Fresenius), or
(ii) if, after such registration has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Securities and Exchange Commission or other governmental agency or of any
court; provided, however, that a registration which does not become effective
after the Company has filed a registration statement with respect thereto solely
by reason of the refusal to proceed of either the underwriter (if any) or
holders of a majority of the Registrable Securities which are proposed to be
included in such offering shall be deemed to have been effected by the Company
pursuant to this Section 2.1 unless (subject to the further provisions of this
sentence) such holders shall have elected to pay all Registration Expenses in
connection with such registration; and provided, further, that, notwithstanding
the immediately preceding proviso, if the Company, after receipt of the request
for such registration (the "First Registration"), files a registration statement
under the Act covering securities other than Registrable Securities, for its own
account or for the account of any other Person (the "Second Registration"), and
the holders of a majority of the Registrable Securities which are proposed to be
included in the First Registration give notice to the Company, within ten (10)
days of notice
2.
of such Second Registration being given to such holders, that they have
determined not to proceed with the First Registration due to the effects on the
market for the Company's securities of the Second Registration, then the First
Registration shall not be deemed to have been effected.
2.1.5 Priority in Requested Registrations. Subject to Section 2.1.7
below, if a requested registration pursuant to this Section 2.1 involves an
underwritten offering, and the managing underwriter shall advise the Company in
writing (with a copy to each holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to be
included in such registration (including securities of the Company or any other
Person which are not Registrable Securities) may adversely affect the offering
of Registrable Securities, the Company will include in such registration to the
extent of the number which the Company is so advised can be sold in such
offering without such adverse effect: (i) first, all Registrable Securities
requested to be included in such registration by the holder or holders of
Registrable Securities (or if the number of Registrable Securities requested to
be so included exceeds the number of shares of Common Stock specified by such
managing underwriter as being able to be sold in such offering without such
adverse effect, then pro rata among such holders on the basis of the number of
Registrable Securities requested to be included by such holders), and (ii)
second, to the extent of any remaining excess, securities the Company proposes
to sell and other securities of the Company included in such registration by the
holders thereof in such proportion as the Company may determine.
2.1.6 Other Securities. The Company shall be entitled to include in
any registration statement referred to in this Section 2.1, for sale in
accordance with the notice of the requesting holders of Registrable Securities,
shares of Common Stock to be sold by the Company for its own account, or for the
account of holders of shares of Common Stock that are not Registrable
Securities.
2.1.7 No Registration Statement Required. The Company shall not be
required to effect a registration pursuant to this Section 2.1:
(a) after the Company has effected one registration pursuant
to this Section 2.1, and such registration has been declared or ordered
effective;
(b) during the period starting with the date of filing of,
and ending on the date one hundred eighty (180) days following the effective
date of the registration statement pertaining to a primary public offering by
the Company; provided that the Company makes reasonable good faith efforts to
cause such registration statement to become effective;
(c) if within thirty (30) days of receipt of a written
request from initiating holders of Registrable Securities pursuant to Section
2.1, the Company gives notice to the holders of Registrable Securities, the
Company's intention to make a public offering within ninety (90) days; or
(d) if the Company shall furnish to holders of Registrable
Securities requesting a registration statement pursuant to this Section 2.1, a
certificate signed by the Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such
3.
registration statement to be effected at such time, in which event the Company
shall have the right to defer such filing for a period of not more than ninety
(90) days after receipt of the request of such holders; provided that such right
to delay a request shall be exercised by the Company not more than once in any
twelve (12) month period.
2.2 Incidental Registration.
2.2.1 Notices; Obligation to Register. If the Company at any time
proposes to register any shares of Common Stock under the Securities Act (other
than (i) a registration in connection with an acquisition in a manner which
would not permit registration of Registrable Securities for sale to the public,
(ii) a registration on Form S-8, or any successor form thereto, relating to a
stock option plan, stock purchase plan, managing directors' plan, savings or
similar plan or (iii) pursuant to Section 2.1 hereof), for its own account or
for the account of any holder of any shares of Common Stock, the Company will
each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2. Upon the written request of any such holder made within 10 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and shall state
the intended method of disposition thereof), and subject in the case of
underwritten offerings to Section 2.4.4 hereof, the Company will use reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders of
Registrable Securities, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the shares of Common Stock which the
Company proposes to register; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to register
or to delay registering such shares of Common Stock, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not to
register (and provided the Company acts in accordance with such determination),
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights of any holder or holders of Registrable Securities entitled to do so
to request that such registration be effected as a registration under Section
2.1 thereof, and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities for the same period
as the delay in registering such other shares of Common Stock.
2.2.2 Effect on Requested Registrations; Expenses. No registration
effected pursuant to a request or requests provided for in this Section 2.2
shall be deemed to have been effected pursuant to Section 2.1 hereof. The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 2.2.
2.3 Registration Procedures.
2.3.1 Procedures. If and whenever the Company is required by the
provisions of this Agreement to use all reasonable efforts to effect or cause
the registration of any
4.
Registrable Securities under the Securities Act as provided in this Agreement,
the Company shall, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission (in the case of a registration pursuant to Section 2.1 hereof, such
filing to be made within 60 days after the initial request of one or more
Qualified Holders of Registrable Securities) the requisite registration
statement with respect to such Registrable Securities (including or
incorporating by reference such audited financial statements as may be required
by the Securities Act or the rules and regulations promulgated thereunder) and
use its reasonable efforts to cause such registration statement to become and
remain effective, provided that before filing such registration statement or any
amendment or supplement thereto, the Company will furnish to the counsel
selected by the holders of Registrable Securities which are to be included in
such registration copies of all such documents proposed to be filed for review
and comment;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such registration statement and to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such registration statement until the earliest of: (i) in the case of a
registration pursuant to Section 2.1 hereof, the earlier to occur of the
completion of the offering pursuant to such prospectus and the expiration of 90
days after such registration statement becomes effective, or (ii) in the case of
a registration pursuant to Section 2.2 hereof, such date as the Company may
determine, provided that if such registration relates to an underwritten
offering and less than all the Registrable Securities are withdrawn from
registration after the expiration of the relevant period, the shares to be so
withdrawn shall be allocated pro rata among the holders thereof on the basis of
the respective numbers of Registrable Securities held by them included in such
registration (it being understood that the shares sold pursuant to such an
offering shall have been allocated among all Persons for whose account such
shares are being registered in accordance with the priorities specified in
Section 2.1.5 or 2.4.2 hereof, as applicable).
(c) furnish to each seller of Registrable Securities covered
by such registration statement and each underwriter, if any, of the securities
being sold by such seller 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 and supplements thereto
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such seller or underwriter, if any,
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such seller;
(d) use all reasonable efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
state securities laws or blue sky laws of such United States jurisdictions as
any seller or any underwriter, if any, of the securities being sold by such
seller shall reasonably request, to keep such registrations or qualifications in
effect for so long as the registration statement filed under the Securities Act
remains in effect and do any and all other acts and things which may be
reasonably necessary or
5.
advisable to enable such seller and underwriter, if any, to consummate the
disposition in such jurisdictions of such Registrable Securities owned by such
seller, provided, however, that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this clause (d) be
obligated to be qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the Company's becoming
aware that the prospectus included in such 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 the light of the circumstances then existing, and
promptly prepare and furnish to each seller and each underwriter, if any, 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;
(f) advise each seller of Registrable Securities covered by
such registration statement, promptly after it receives notice thereof, of the
time when such registration statement or any amendment thereto has become
effective or any related prospectus or any supplement to such prospectus or any
amendment to such prospectus has been filed, of the issuance by the Securities
and Exchange Commission of any stop order or of any order preventing or
suspending the use of any related preliminary prospectus or prospectus, of the
suspension of the qualification of such Registrable Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Securities and Exchange Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information; and in the event of the issuance of any stop
order or of any order preventing or suspending the use of any such preliminary
prospectus or prospectus or suspending any such qualification, to use promptly
all reasonable efforts to obtain withdrawal of such order;
(g) file promptly all documents required to be filed with the
Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Exchange Act subsequent to the time such registration statement becomes
effective and during any period when any related prospectus is required to be
delivered;
(h) otherwise use all reasonable efforts to comply with all
applicable provisions of the Securities Act and all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement which
shall satisfy the provisions of Section 11(a) of the Securities Act;
(i) provide a depositary or a transfer agent and registrar
for all such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
6.
(j) in connection with any offering pursuant to Section 2.1 hereof
or in connection with any underwritten offering of Registrable Securities,
furnish, at the request of any seller of Registrable Securities on the date such
securities are delivered to the underwriters for sale pursuant to such
registration or, if such securities are not being sold through underwriters, on
the date the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of counsel representing the Company
for purposes of such registration, addressed to the underwriters and to such
seller making such request, covering such legal matters with respect to such
registration as such seller of such Registrable Securities may reasonably
request and are customarily included in such an opinion, and (ii) letters, dated
the effective date of the registration statement and the date, if any, such
securities are delivered to the underwriters for sale pursuant to such
registration, from the independent certified public accountants of the Company,
addressed to the underwriters and to such seller making such request, covering
such financial, statistical and accounting matters with respect to such
registration as such seller of such Registrable Securities may reasonably
request and are customarily included in such letters; and
(k) use all reasonable efforts to list all Registrable Securities
covered by such registration statement on each securities exchange on which any
of the securities of the same class as the Registrable Securities are then
listed (which shall be deemed to include any automated quotation system on which
any of such securities are then quoted).
Each holder of Registrable Securities shall be deemed to have agreed by
acquisition of such Registrable Securities that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in clause (f)
of this Section 2.3.1, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (f) of this
Section 2.3.1 and, if so directed by the Company, will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in clause (b) of this Section 2.3.1
shall be extended by the length of the period from and including the date when
the Company shall have given such notice to and including the date when each
seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by clause (f) of this Section 2.3.1.
2.3.2 Information Concerning Holders. The Company may require each
seller of Registrable Securities as to which any registration is being effected
to furnish the Company such information regarding such seller and the
distribution of such securities as the Company may from time to time reasonably
request in writing for inclusion in the registration statement in accordance
with the rules and regulations of the Securities and Exchange Commission or in
connection with any registration, qualification, compliance or filing for an
exemption under state securities laws.
7.
2.4 Underwritten Offerings.
2.4.1 Selection of Underwriters in Requested Offerings. If a
requested registration pursuant to Section 2.1 hereof involves an underwritten
offering, the underwriter or underwriters thereof shall be selected by the
holders of more than 50 % of the Registrable Securities as to which registration
has been requested, shall be of recognized national standing (or, if the
offering is to be conducted on a multinational basis, recognized international
standing), and shall be acceptable to the Company, such acceptance to be not
unreasonably withheld.
2.4.2 Incidental Underwritten Offerings. If the registration
statement under which the Company gives notice under Section 2.2 is for an
underwritten offering, the Company shall so advise the holders of Registrable
Securities. In such event, the right of any such holder of Registrable
Securities to be included in a registration pursuant to this Section 2.2 shall
be conditioned upon such holder of Registrable Securities participation in such
underwriting and the inclusion of such holder of Registrable Securities in the
underwriting to the extent provided herein. All holders of Registrable
Securities 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 the
Qualified Holders and any other stockholders of the Company holding registration
rights pari passu with those granted hereunder on a pro rata basis based on the
total number of Registrable Securities held by the Qualified Holders and such
other holders; and third, to any other stockholder of the Company (other than a
Qualified Holder or a stockholder of the Company holding registration rights
pari passu with those granted hereunder) on a pro rata basis. No such reduction
shall reduce the securities being offered by the Company for its own account to
be included in the registration and underwriting. If any Qualified Holder
disapproves of the terms of any such underwriting, such Qualified 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 Qualified Holder which is a partnership or corporation,
the partners, retired partners and stockholders of such Qualified 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 "Qualified Holder", and any pro rata reduction with respect to such
"Qualified Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Qualified Holder," as defined in this sentence.
2.4.3 Other Registration Rights. The Company represents and warrants to
the holders of Registrable Securities that, as of the date of this Agreement, it
has not agreed to register any securities of the Company under the Securities
Act or the laws of any other jurisdiction pursuant to registration rights which
conflict with those granted pursuant to this Agreement. The Company agrees that,
except with the consent of the holders of a majority of the Registrable
Securities, it will not grant any registration rights with respect to its
securities that will be senior to the registration rights granted hereunder.
8.
2.4.4 Suspension of Effectiveness of Registration Statement.
Notwithstanding any other provision of this Agreement, following the
effectiveness of any registration statement hereunder, the Company may, at any
time, suspend the effectiveness of the registration statement for up to no
longer than 30 days, as appropriate (a "Suspension Period"), by giving notice to
the Qualified Holder(s), if the Company shall have determined that the Company
may be required to disclose any material corporate development. The Company will
use its best efforts to minimize the length of any Suspension Period.
Notwithstanding the foregoing, no more than two Suspension Periods may occur in
any twelve (12) month period. Each Qualified Holder agrees that, upon receipt of
any notice from the Company of a Suspension Period, such Qualified Holder will
not sell any Common Stock of the Company pursuant to the registration statement
until (i) such Qualified Holder is advised in writing by the Company that the
use of the applicable prospectus may be resumed, (ii) such Qualified Holder has
received copies of any additional supplemental or amended prospectus, if
applicable, and (iii) such Qualified Holder has received copies of any
additional or supplemental filings which are incorporated or deemed to be
incorporated by reference in such prospectus. Each Qualified Holder further
covenants to notify the Company promptly of the sale of all its Common Stock of
the Company.
2.5 Indemnification and Contribution.
2.5.1 Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act, to the extent
permitted by law, the Company will indemnify and hold harmless in the case of
any registration statement filed pursuant to Section 2.1 or 2.2 hereof, the
holder of any Registrable Securities which are covered by such registration
statement, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such Registrable Securities and each
other Person, if any, who controls such holder or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities (whether arising out of a claim of a party
hereto, a third party or otherwise), to which such holder or any such director
or officer or underwriter or controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus, summary
prospectus, notification or offering circular contained therein or otherwise
used or approved for use by the Company in the offering pursuant thereto, 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, and the Company will reimburse such holder
and each such director, officer, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or proceeding
or successfully enforcing the provisions hereof; provided, however, that (i) the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, notification,
offering circular, amendment or supplement in reliance upon and in conformity
with information
9.
furnished to the Company in writing by such holder or, if the Person seeking
indemnification is an underwriter, by such underwriters, in either case
expressly for use therein, and (ii) the provisions of this Section 2.5.1 shall
not inure to the benefit of any underwriter (or any Person controlling such
underwriter) on account of any losses, claims, damages, liabilities or actions
arising from the sale of securities to any Person if such underwriter failed to
send or give a copy of the related prospectus, as the same may be then amended
or supplemented, to such Person within the time required by the Securities Act.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
securities by such holder.
2.5.2 Indemnification by the Sellers. The Company may require, as
a condition to including any Registrable Securities in any registration
statement, that the Company shall have received an undertaking satisfactory to
it from the prospective seller of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
2.5.1 hereof) the Company, each director of the Company (or each person
performing a similar function), each officer of the Company (or each person
performing a similar function) and each other Person, if any, who controls the
Company within the meaning of the Securities Act, each Person who participates
as an underwriter in the offering or sale of such Registrable Securities and
each other Person, if any, who controls such underwriter within the meaning of
the Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus, summary prospectus, notification or offering
circular contained therein, or any amendment or supplement thereto, if and to
the extent such statement or alleged statement or omission or alleged omission
was made in reliance upon and in conformity with information furnished to the
Company in writing by such holder expressly for use therein; provided, however,
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, no such undertaking
shall apply to the extent that any loss, claim, damage, liability or expense
results from the fact that a current copy of the prospectus was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such Person if it is determined that it was the
responsibility of the Company to provide such Person with such current copy of
the prospectus and such current copy of the prospectus would have cured the
defect giving rise to such loss, claim, damage, liability or expense; and
provided, further, that the maximum obligation of each such seller of
Registrable Securities pursuant to any such undertaking shall be limited to an
amount equal to the aggregate sales price of the Registrable Securities of such
seller sold pursuant thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by such seller.
2.5.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.5.1 or 2.5.2 hereof, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give prompt written notice to the latter of the commencement of such
action; provided, however, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under Section 2.5.1 or 2.5.2 hereof except to the extent that the
indemnifying party is actually prejudiced by such
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failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof (unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the counsel chosen by such indemnifying party is not
reasonably satisfactory to such indemnified party or the indemnifying party does
not in fact assume such defense), the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation or enforcement. No indemnifying party shall consent to entry of
any judgment or enter into any settlement without the consent of the indemnified
party (which shall not be unreasonably withheld) if it does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and unconditional release from all liability in
respect of such claim or litigation without any payment or consideration
provided by such indemnified party other than a payment or consideration as to
which such indemnified party is concurrently indemnified by an equal payment to
such indemnified party. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action the defense of which
has been assumed by an indemnifying party without the consent of such
indemnifying party (which shall not be unreasonably withheld).
2.5.4 Contribution. If the indemnification provided for in Section
2.5.1 or 2.5.2 hereof is unavailable to a party that would have been an
indemnified party under such Section in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
party that would have been an indemnifying party thereunder shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and such
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof); provided, however, that the
liability of a seller of Registrable Securities shall be limited to an amount
equal to the aggregate sales price of the Registrable Securities of such seller
sold pursuant thereto. The relative fault shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue statement of
a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each holder of Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 2.5.4 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 2.5.4. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 2.5.4 shall include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim (which shall be limited as provided in Section 2.5.4
hereof if the
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indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof) and of successfully enforcing the provisions hereof. 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.
2.5.5 Other Indemnification and Contribution. Indemnification and
contribution similar to that specified in Sections 2.5.1, 2.5.2, 2.5.3 and 2.5.4
hereof (with appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required registration or
other qualification of such Registrable Securities under any federal or state
law or regulation of any governmental authority, other than the Securities Act.
2.5.6 Payments. The indemnification and contribution required by
this Section 2.5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3. GENERAL.
3.1 Rule 144. So long as the shares of Common Stock of the Company are
registered pursuant to the requirements of Section 12 of the Exchange Act, the
Company covenants that it will timely file the reports required to be filed by
it under the Securities Act or the Exchange Act (including but not limited to
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act) and the rules and regulations adopted by
the Securities and Exchange Commission thereunder, and will take such further
action as any holder of Registrable Securities may reasonably request, from time
to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
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 Securities and Exchange Commission. Upon the request of any holder of
Registrable Securities, the Company will inform such holder whether it has
complied with such requirements.
3.2 Nominees for Beneficial Owners. In the event that Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its option, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement (or any
determination of any number or percentage of shares constituting Registrable
Securities held by any holder or holders of Registrable Securities contemplated
by this Agreement).
3.3 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company, Fresenius and the holders of more than 50%
of the Registrable Securities at the time outstanding. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 3.3, whether or not Registrable
Securities shall have been marked to indicate such consent.
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3.4 Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telex or telecopy) addressed as hereinafter provided and if either (x) actually
delivered at said address (evidenced in the case of a telex or telecopy by
receipt of the correct answerback or other communication) or (y) in the case of
a letter, five business days shall have elapsed after the same shall have been
deposited in the mails, postage prepaid and registered or certified: (a) if to
Fresenius, at its registered address as set forth in the register kept by the
Company, (b) if to any holder of other Registrable Securities, to the registered
address of such holder as set forth in the Company's transfer records; and (c)
if to the Company, to the attention of the Chief Executive Officer at 4350
Executive Drive, Suite 325, San Diego, CA 92121, or at such other address as
the Company shall have furnished to each holder of Registrable Securities at the
time outstanding.
3.5 Certain Definitions. As used in this Agreement, the following terms
have the following respective meanings:
"Affiliate" as defined in Rule 405 under the Securities Act.
"Common Stock" as defined in Section 1 of this Agreement.
"Company" as defined in the Preamble to this Agreement.
"Demand Securities" as defined in Section 2.4.2 of this Agreement.
"Exchange Act" the Securities Exchange Act of 1934, or any similar federal
statute, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be amended from time to time.
"First Registration" as defined in Section 2.1.4 of this Agreement.
"Fresenius" as defined in the Preamble to this Agreement.
"License and Distribution Agreement" as defined in Section 1 of this
Agreement.
"NASD" the National Association of Securities Dealers, Inc.
"Person" a corporation, an association, a partnership, an organization, a
trust, a business, an individual, a government or political subdivision thereof,
a governmental agency or any other entity.
"Qualified Holders" any holder or holders of Registrable Securities making
a written request pursuant to Section 2.1 hereof for the registration of all or
part of the Registrable Securities held by such holder or holders if on the date
of such request such holder is Fresenius or an Affiliate of Fresenius.
"Registrable Securities" all shares of Common Stock (i) purchased by
Fresenius pursuant to the Securities Purchase Agreement, (ii) purchased by
Fresenius through the payment of certain amounts as milestone payments from "Net
Profits," as defined in and pursuant to the License and Distribution Agreement,
and (iii) issued or issuable upon exercise of the Warrants,
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including any securities issued or issuable with respect to such shares of
Common Stock or Warrants by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise, except for shares of Common Stock which
have been distributed to the public pursuant to a registration statement or Rule
144 (or any successor provision) under the Securities Act and except for shares
of Common Stock the certificates evidencing which have had the legend specified
in Section 3.8 hereof properly removed pursuant to Section 3.8(c) hereof.
"Registration Expenses" all expenses incident to the Company's performance
of or compliance with Section 2 hereof, including without limitation all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses and expenses of formatting
for electronic submission to the Securities and Exchange Commission, messenger
and delivery expenses, the fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such performance
and compliance, the reasonable fees and disbursements (not to exceed $15,000 per
registration hereunder) of a single counsel retained by the holders of the
Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include salaries or fringe benefits of Company
personnel or general overhead expenses of the Company, and shall not include
premiums or other expenses relating to liability insurance required by
underwriters or the Company, or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the ordinary course
of its business or which the Company would have incurred in any event.
"Second Registration" as defined in Section 2.1.4 of this Agreement.
"Securities Act" the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be amended from time to time.
"Securities and Exchange Commission" the U.S. Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the particular
purpose.
"Securities Purchase Agreement" as defined in Section 1 of this Agreement.
"Warrants" as defined in Section 1 of this Agreement.
3.6 Determination of Percentages of Registrable Securities. For purposes
of determining any percentage or specified group of holders of Registrable
Securities, holders of securities which are exercisable or exchangeable for, or
convertible into, Registrable Securities shall be deemed to be holders of the
Registrable Securities which are at the time issuable upon such exercise,
exchange or conversion.
3.7 Consolidation, Merger, Etc. The Company agrees not to effect any
consolidation, merger or any transfer of all or substantially all of its
properties or assets for
14.
consideration consisting of securities unless, prior to the consummation
thereof, the successor corporation or other Person (if other than the Company)
resulting from such consolidation or merger or the Person purchasing such
properties or assets shall assume, by written instrument executed and mailed or
delivered to each holder of Registrable Securities, the due and punctual
performance of the obligations of the Company hereunder. The provisions of this
Section 3.8 shall similarly apply to successive consolidations, mergers and
transfers.
3.8 Restrictive Legends.
3.8.1 Except as otherwise permitted by this Section 3.8, each
Registrable Security shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be offered for sale, transferred, sold,
assigned, pledged, hypothecated or otherwise disposed of in the
absence of such registration or an exemption therefrom under such Act
and any applicable state securities laws. Furthermore, such securities
may be offered for sale, transferred, sold, assigned, pledged,
hypothecated or otherwise disposed of only in compliance with Section
3.8 of the Registration Agreement dated as of March 26, 1999 between
the issuer hereof and Fresenius Aktiengesellschaft, a complete and
correct copy of which is available for inspection at the principal
office of the issuer of these securities and will be furnished without
charge to the holder hereof upon written request.
(a) No Registrable Security shall be sold, assigned,
encumbered, pledged, hypothecated, given away or in any other manner disposed of
or transferred, whether voluntarily, involuntarily, by operation of law,
pursuant to judicial process, the laws of descent and distribution or otherwise
(a "Transfer") except as permitted by this Section 3.8(b). Any attempted
Transfer of any Registrable Security not permitted by this Section 3.8(b) shall
be null and void, and the Company shall not in any way give effect to such
Transfer. In addition to taking any other actions required by this Section 3.8,
prior to any Transfer of any Registrable Securities which are not registered
under an effective registration statement under the Securities Act, the holder
thereof will give written notice to the Company of such holder's intention to
effect such sale or other transfer and to comply in all other respects with this
Section 3.8(b). Each such notice (x) shall describe the manner and circumstances
of the proposed sale or other transfer and (y) shall be accompanied by an
opinion of outside counsel, which counsel shall be reasonably satisfactory to
the Company, of the holder of such Registrable Securities as to the
applicability to the proposed transfer of the registration provisions of the
Securities Act. The following provisions shall then apply:
(i) If in the unqualified (except for such
qualifications as are reasonable and are customary in opinions rendered
with respect to similar transactions) opinion of such counsel the proposed
sale or other transfer may be effected without registration of such
Registrable Securities under the Securities Act, such holder shall
thereupon be entitled to transfer such Registrable Securities in accordance
with the terms of the notice delivered by such holder to the Company. Each
certificate representing such
15.
Registrable Securities issued upon or in connection with such sale or other
transfer shall bear the restrictive legends required by Section 3.8(a)
hereof, subject to Section 3.8(c) hereof.
(ii) If in the opinion of such counsel the proposed sale
or other transfer may not legally be effected without registration of such
Registrable Securities under the Securities Act, such holder shall not be
entitled to transfer such Registrable Securities until either (x) receipt
by the Company of a further notice from such holder pursuant to the
foregoing provisions of this Section 3.8(b) and fulfillment of the
provisions of clause (i) above or (y) such Registrable Securities have been
effectively registered under the Securities Act.
(b) The restrictions imposed by Section 3.8(b) hereof upon
the transferability of Registrable Securities shall cease and terminate as to
any particular Registrable Securities (a) when such Registrable Securities shall
have been effectively registered under the Securities Act, or (b) when, in the
opinion of either outside counsel, reasonably satisfactory to the Company, for
the holder thereof or counsel for the Company, such restrictions are no longer
required in order to ensure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Registrable Securities, the
holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new securities of like tenor not
bearing the legend required by Section 3.8(a) hereof.
3.9 Company Cooperation. From and after such time, if any, as the shares
of Common Stock shall cease to be registered under the Exchange Act, the Company
agrees to cooperate in such manner as may be reasonably requested by any holder
of Registrable Securities in connection with a proposed sale or other transfer
of all or any portion of such Registrable Securities in order to permit such
holder to utilize exemptions from registration under the Securities Act and
state securities laws which may be applicable to the proposed sale or other
transfer, including without limitation, if applicable, providing to prospective
purchasers the information specified in Rule 144A promulgated under the
Securities Act or any similar or successor rule.
3.10 Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the holders from time to time of Registrable
Securities, whether so expressed or not. This Agreement embodies the entire
agreement and understanding between the Company and Fresenius and supersedes all
prior agreements and understandings relating to the subject matter hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
domestic substantive laws of the State of New York, without reference to any
choice or conflict of laws principles which could cause the application of the
domestic substantive laws of any other jurisdiction. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.11 Arbitration. A party asserting the existence of any dispute or
controversy arising out of or in connection with this Agreement (a "Dispute"),
including any Dispute relating to the existence, materiality or cure of a
claimed material breach, shall notify to the other parties to this
16.
Agreement in writing of the existence and subject matter of the Dispute. For a
thirtyday period following such notification, the parties shall meet and
negotiate in good faith to attempt the resolve the Dispute and shall escalate
the Dispute to the respective Chief Executive Officers of the parties if
resolutions is not made within the first fifteen days. If such efforts do not
resolve the Dispute within such thirty-day period, the Dispute shall be referred
to and finally resolved by arbitration under the rules of the American
Arbitration Association, and except for proceedings commenced to enforce an
arbitration award, each party hereby irrevocably waives its right to commence
any proceeding in any court with respect to any matter arising under this
Agreement. The tribunal shall consist of a sole arbitrator appointed jointly by
the parties. In the case of the parties failing to choose a sole arbitrator, the
tribunal shall consist of three arbitrators, two of whom shall be appointed by
the respective parties and the third arbitrator shall be appointed jointly by
the first two. The place of arbitration shall be New York, New York or such
other location as the parties shall agree. The language of the arbitration shall
be English. No arbitrator shall be an Affiliate, employee, officer or director
of either party or of their respective Affiliates, nor shall any Arbitrator have
any interest that would be affected in any material respect by the outcome of
the Dispute. The decision of the sole arbitrator or of a majority of the
arbitrators, where applicable, shall be final and binding on the parties and
their respective successors and assigns. The decision shall not be subject to
appeal or judicial review except in circumstances of fraud. The prevailing party
in any such arbitration shall be entitled to recover reasonable fees of
attorneys and other professionals in addition to all court costs and
arbitrator's fees which that party may incur as a result. Judgment upon the
award granted by the arbitrator(s) may be entered in any court having
jurisdiction over the relevant party or its assets.
3.12 Attorneys' Fees. In any action at law or in equity to enforce any of
the provisions or rights under this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
action, in addition to any other relief to which such party shall be entitled.
3.13 Official Language. The parties understand and agree that this
document has been prepared only in the English language and that the English
language is the official language of this Agreement. No party to this Agreement
will assert or allege that it did not understand each and every term of this
Agreement.
17.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first written above.
CYPRESS BIOSCIENCE, INC.,
a Delaware corporation
By: /s/ Jay Kranzler
---------------------------
Its: Chief Executive Officer
--------------------------
FRESENIUS AKTIENGESELLSCHAFT
a German corporation
By: /s/ Stefan Schulze
---------------------------
Its: Executive Vice President
--------------------------
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