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Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 29, 2000 among Alteon Inc., a Delaware corporation
(the "Company"), and each of the purchasers executing this Agreement and listed
on Exhibit A attached hereto (collectively, the "Purchasers")
This Agreement is being entered into pursuant to the Common Stock and
Warrant Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions Capitalized terms used and not otherwise defined herein
shall have the meanings given such terms in the Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of California generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$0.01 per share.
"Effectiveness Date" means with respect to the Registration
Statement the 120th day following the date of the First Tranche closing pursuant
to the Purchase Agreement (the "First Tranche Closing Date").
"Effectiveness Period" shall have the meaning set forth in
Section 2.
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"Event" shall mean any one or more of the following:
(i) the Registration Statement is not filed on or
prior to the Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date (or in the event an
additional Registration Statement is filed because the actual number of
Shares and Warrant Shares exceeds the number of shares of Common Stock
initially registered is not filed and declared effective within the
time periods set forth in Section 2) (such an Event called a
"Non-Registration Event"), or
(ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 12dl-2 promulgated
under the Exchange Act within five (5) Business Days of the date that
the Company is notified (orally or in writing, whichever is earlier) by
the Commission that a Registration Statement will not be "reviewed," or
not subject to further review, or
(iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be
effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded
immediately by a subsequent Registration Statement filed with and
declared effective by the Commission, or
(iv) trading in the Common Stock is suspended for any
reason for more than three (3) Business Days in the aggregate, or
(v) the rights of the Holders of the Warrants are
suspended for any reason, or
(vi) the Company has breached Section 3(n) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the 45th day following the First Tranche
Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including without
limitation the Purchasers and their assignees.
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
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"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning set forth in the preamble
of this Agreement.
"Registrable Securities" means (i) the Shares (as defined in
the Purchase Agreement), and upon any stock split, stock dividend,
recapitalization or similar event with respect to such Shares (ii) any other
dividend or other distribution with respect to, conversion or exchange of, or in
replacement of, Registrable Securities, and (iii) any Common Stock issued as
liquidated damages hereunder.
"Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre-and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.
2. Registration. On or prior to the Filing Date, the Company shall
prepare and file with the Commission a "shelf" Registration Statement covering
all Registrable Securities for an offering to be made by the Holders on a
continuous basis pursuant to Rule 415. The Registration Statement
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shall be on Form S-1 (or on another form appropriate for such registration in
accordance herewith). The Company shall (i) not permit any securities other than
the Registrable Securities to be included in the Registration Statement and (ii)
use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act (including filing with the Commission a
request for acceleration of effectiveness in accordance with Rule 12dl-2
promulgated under the Exchange Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or not be
subject to further review) prior to the Effectiveness Date and to keep such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (x) the date when all Registrable Securities
covered by such Registration Statement have been sold or (y) the date on which
all the Registrable Securities may be sold without any restriction pursuant to
Rule 144 as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect (the
"Effectiveness Period").
3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-1 (or on another form
appropriate for such registration in accordance herewith) in accordance with the
method or methods of distribution thereof as specified by the Holders (except if
otherwise directed by the Holders), and cause the Registration Statement to
become effective and remain effective as provided herein; provided, however,
that not less than five (5) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (i) furnish to the Holders and any Special
Counsel, copies of all such documents proposed to be filed, which documents
(other than those incorporated by reference) will be subject to the review of
such Holders and such Special Counsel, and (ii) at the request of any Holder
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto
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and as promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold
and any Special Counsel as promptly as possible but, in the event of any filing
by the Company, no less than five (5) Business Days prior to such filing, and
confirm such notice in writing no later than one (1) Business Day following such
filing:
(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to
be filed;
(B) when the Commission notifies the Company whether
there will be a "review" of such Registration Statement and whenever
the Commission comments in writing on such Registration Statement; and
(C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective:
(i) of any request by the Commission or any
other Federal or state governmental
authority for amendments or supplements to
the Registration Statement or Prospectus or
for additional information;
(ii) of the issuance by the Commission of
any stop order suspending the effectiveness
of the Registration Statement covering any
or all of the Registrable Securities or the
initiation of any Proceedings for that
purpose;
(iii) if at any time any of the
representations and warranties of the
Company contained in any agreement
contemplated hereby ceases to be true and
correct in all material respects;
(iv) of the receipt by the Company of any
notification with respect to the suspension
of the qualification or exemption from
qualification of any of the Registrable
Securities for sale in any jurisdiction, or
the initiation or threatening of any
Proceeding for such purpose; and
(v) of the occurrence of any event that
makes any statement made in the Registration
Statement or Prospectus or any document
incorporated or deemed to be incorporated
therein by reference untrue in
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any material respect or that requires any
revisions to the Registration Statement,
Prospectus or other documents so that, in
the case of the Registration Statement or
the Prospectus, as the case may be, it will
not contain any untrue statement of a
material fact or omit to state any material
fact required to be stated therein or
necessary to make the statements therein, in
the light of the circumstances under which
they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Holders shall reasonably request and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment.
(f) Furnish to each Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so
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qualified or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any Holder may request
(provided that issuance of certificates so registered would not violate the
Securities Act) at least two (2) Business Days prior to any sale of Registrable
Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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,
in the light of the circumstances under which they were made, not misleading.
(k) Use its reasonable best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on The American
Stock Exchange, NASDAQ (NML or Small Cap) or the New York Stock Exchange as and
when required pursuant to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) (i) Require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such
registration the Registrable Securities of any such Holder who fails to
furnish such information within a reasonable time prior to the filing
of each Registration Statement, supplemented Prospectus and/or amended
Registration Statement.
(ii) If the Registration Statement refers to any Holder by
name or otherwise as the holder of any securities of the Company, then
such Holder shall have the right to require (if such reference to such
Holder by name or otherwise is not required by the Securities Act or
any similar federal statute then in force) the deletion of the
reference to
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such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference
ceases to be required.
(iii) Each Holder covenants and agrees that:
(A) it will not sell any Registrable
Securities under the Registration Statement
until it has received copies of the
Prospectus as then amended or supplemented
as contemplated in Section 3(g) and notice
from the Company that such Registration
Statement and any post-effective amendments
thereto have become effective as
contemplated by Section 3(c); and
(B) it and its officers, directors or
Affiliates, if any, will comply with the
prospectus delivery requirements of the
Securities Act as applicable to them in
connection with sales of Registrable
Securities pursuant to the Registration
Statement.
(iv) Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v), such Holder will forthwith
discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional
or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
(n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would then be required to
disclose under the Registration Statement, then the Company may postpone or
suspend the filing or effectiveness of a registration statement, or require the
holders to refrain from making sales under the Registration Statement (if it is
then effective) for a period not to exceed 20 consecutive days (a "Blackout
Period"), provided that the Company may not postpone or suspend its obligation
under this Section 3(n) for more than 45 days in the aggregate during any 12
month period; and provided, further, that any one Blackout Period must be
separated from each prior and subsequent Blackout Period by a period of at least
15 days.
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Neither the Board nor the Company may impose any Blackout
Period on the Holders unless trading by officers and directors of the Company in
securities of the Company is suspended during such period in accordance with
standard Company policy and procedures. Notwithstanding the foregoing, the
Company is not authorized or obligated to impose any Blackout Period on the
Purchasers on account of any similar restraints or prohibitions which may be
applicable to its executive officers or directors.
4. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with The American Stock Exchange and each other securities exchange,
quotation system, market or over-the-counter bulletin board on which Registrable
Securities are required hereunder to be listed, (B) with respect to filings
required to be made with the Commission, (C) with respect to filings required to
be made with The American Stock Exchange and any other securities exchange,
quotation system, market or over-the-counter bulletin board and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection with
Blue Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) Securities Act liability insurance, if the
Company so desires such insurance, and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters) and legal counsel. In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
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5. Indemnification
(a) Generally. (i) The Company agrees to indemnify and hold harmless
each Purchaser (which term, for purposes of this Section 5, includes each
Purchaser and its respective directors, partners, members, managers, officers
and employees), from and against (A) any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Purchaser in any manner relating to or arising out of any
breach or default of any representation, warranty, covenant or other obligation
of the Company under this Agreement, the Purchase Agreement or the Warrants, or
(B) any claim asserted against a Purchaser in such Purchaser's capacity as a
holder of the Shares or Warrants by a third party (other than another Purchaser)
resulting from or arising out of any acts or omissions by the Company; and the
Company will reimburse the Purchaser for any legal or other expenses reasonably
incurred in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have arisen out of or to have been based
upon (A) the Purchaser's gross negligence, bad faith or willful misconduct in
its capacity as a holder of the Shares or Warrants, or (B) any untrue statements
or omissions made by the Purchaser to the Company in writing for inclusion in
the a registration statement of the Company.
(ii) Each Purchaser, severally and not jointly,
agrees to indemnify and hold harmless the Company from and against any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses and disbursements of any kind which may
be imposed upon, incurred by or asserted against the Company in any manner
relating to or arising out of any breach or default of any representation,
warranty, covenant or other obligation of such Purchaser under this Agreement
and the Purchase Agreement; and each Purchaser, severally and not jointly, will
reimburse the Company for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that no
Purchaser shall be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have arisen out of or to have been based
upon (i) the Company's gross negligence, bad faith or willful misconduct, or
(ii) any untrue statements or omissions made by the Company in the a
registration statement of the Company.
(b) Registration. (i) Upon the filing of the Registration Statement,
the Company agrees to indemnify and hold harmless the Purchaser, each
underwriter, broker or dealer, if any, and their respective directors, officers
and employees, and each other Person, if any, who controls the Purchasers (or an
assignee thereof), within the meaning of the Securities Act, from and against
any and all losses, claims, damages or liabilities (or actions in respect
thereof), joint or several, to which the Purchaser or such underwriter, broker
or dealer or controlling person may become subject under
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the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions 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 Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus relating to such
Shares, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation under the Securities
Act applicable to the Company or relating to any action or inaction required by
the Company in connection with any such registration and will reimburse the
Purchaser, each such underwriter, broker or dealer and controlling Person, and
their respective directors, officers or employees, for any legal or other
expenses reasonably incurred by any such Person in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability are found in a
final non appealable judgment by a court to have arisen out of or to have been
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such preliminary
prospectus, such final prospectus or such amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by the Purchaser or such underwriter, broker, dealer or controlling
Person for use in the preparation thereof.
(ii) Upon the filing of the Registration Statement,
each Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the Company from and against any and all losses, claims, damages or liabilities
(or actions in respect thereof) to which the Company may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (A)
any untrue statement or alleged untrue statement of any material fact which was
provided by such Purchaser to the Company and is contained in any registration
statement under which such Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus relating to such Shares, or any
amendment or supplement thereto, or (B) the omission or alleged omission to
state in any registration statement a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (C) any
violation by such Purchaser of any rule or regulation under the Securities Act
applicable to the Purchaser or relating to any action or inaction required by
the Purchaser in connection with any such registration, and such Purchaser will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that such Purchaser will not be liable in any such case to the extent that any
such loss, claim, damage or liability is found in a final non-appealable
judgment by a court not to have arisen out of or not to have been based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary prospectus, such final
prospectus or such amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by the Purchaser.
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(c) Procedure. (i) Any party entitled to indemnification under this
Section 5 (an "Indemnified Party") will give written notice to the party which
is required to indemnify it (the "Indemnifying Party") of any matters giving
rise to a claim for indemnification; provided, that the failure of any party
entitled to indemnification hereunder to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under this Section 5
except to the extent that the Indemnifying Party is actually prejudiced by such
failure to give notice.
(ii) In case any action, proceeding or claim is
brought against an Indemnified Party in respect of which indemnification is
sought hereunder, the Indemnifying Party shall be entitled to participate in
and, unless in the reasonable judgment of the Indemnified Party a conflict of
interest between it and the Indemnifying Party may exist with respect of such
action, proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party. In the event that the
Indemnifying Party advises an Indemnified Party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim.
(iii) In any event, unless and until the Indemnifying
Party elects in writing to assume and does so assume the defense of any such
claim, proceeding or action, the Indemnified Party's costs and expenses arising
out of the defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification hereunder. The Indemnified
Party shall cooperate fully with the Indemnifying Party in connection with any
negotiation or defense of any such action or claim by the Indemnifying Party and
shall furnish to the Indemnifying Party all information reasonably available to
the Indemnified Party which relates to such action or claim. The Indemnifying
Party shall keep the Indemnified Party fully apprized at all times as to the
status of the defense or any settlement negotiations with respect thereto.
(iv) If the Indemnifying Party elects to defend any
such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. Provided that the Indemnifying Party has timely assumed the defense of
any action, claim or proceeding, the Indemnifying Party shall not be liable for
any settlement of any action, claim or proceeding effected without its prior
written consent.
(v) Notwithstanding anything in this Section 5 to the
contrary, the Indemnifying Party shall not, without the Indemnified Party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
Indemnified Party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such claim. The indemnification
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
Indemnified Party
12
<PAGE> 13
irrevocably agrees to refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition
to (A) any cause of action or similar rights of the Indemnified Party against
the Indemnifying Party or others, and (B) any liabilities the indemnifying party
may be subject to pursuant to the law.
(d) Contribution. If the indemnification provided for in this Section 5
is unavailable to the Indemnified Party, in respect of any losses, claims,
damages or liabilities referred to herein, then the Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnifying Party as a result of such losses, claims, damages
or liabilities (A) as between the Indemnifying Party and the Indemnified Parties
in such proportion as is appropriate to reflect the relative benefits received
by the Indemnifying and Indemnified Parties from the offering of the Shares, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Indemnifying and Indemnified Parties in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (B) as
between the Indemnifying and Indemnified Parties in such proportion as is
appropriate to reflect the relative fault of such parties in connection with
such statements or omissions, as well as any other relevant equitable
considerations.
(e) Survival of Indemnification. The indemnity and contribution
agreements contained in this Section 5 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Indemnified or Indemnifying Party or the consummation of the sale or successive
resales of the Shares or the Warrants.
6. Rule 144. As long as any Holder owns Shares, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act.
7. Miscellaneous.
13
<PAGE> 14
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries is, as of the date hereof, a party to or bound by, nor shall
the Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement or other obligation, that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth in the Purchase Agreement, neither the
Company nor any of its subsidiaries is a party to or bound by any agreement or
other obligation granting any registration rights with respect to any of its
securities to any Person. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of the Holders set forth herein, and are not otherwise in
conflict with the provisions of this Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its security holders, unless the right so granted is
subject in all respects to the prior rights in full of the Holders set forth
herein, and is not otherwise in conflict with the provisions of this Agreement.
(d) Intentionally omitted.
(e) Failure to File Registration Statement and Other Events.
(i) The Company and the Holders agree that the
Holders will suffer damages if the Registration Statement is not filed
on or prior to the Filing Date and not declared effective by the
Commission on or prior to the Effectiveness Date and maintained in the
manner contemplated herein during the Effectiveness Period. The Company
and the Holders further agree that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if an
Event occurs on account of any material act or omission of the Company,
then the Company shall pay in cash or Common Stock as liquidated
damages for such failure and not as a penalty to each Holder an amount
equal to two percent (2%) of such Holder's pro rata share of the
purchase price paid at the First Tranche Closing by all Holders for
Shares then held by them pursuant to the Purchase Agreement for the
initial thirty (30)
14
<PAGE> 15
day period until the applicable Event has been cured, which shall be
pro rated for such periods less than thirty (30) days, and two percent
(2%) of such Holder's pro rata share of the purchase price paid at the
First Tranche Closing by all Holders for Shares then held by them
pursuant to the Purchase Agreement for each subsequent thirty (30) day
period until the applicable Event has been cured which shall be pro
rated for such periods less than thirty days (the "Periodic Amount").
Payments to be made pursuant to this Section 7(e) shall be due and
payable immediately upon demand in immediately available cash funds or,
at the election of the Company if the Company then has sufficient
authorized but unissued and unreserved shares of its Common Stock, in
Common Stock.
(ii) The parties agree that the Periodic Amount
represents a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of damages that may be incurred
by the Holders if the Registration Statement is not filed on or prior
to the Filing Date or has not been declared effective by the Commission
on or prior to the Effectiveness Date and maintained in the manner
contemplated herein during the Effectiveness Period or if any other
Event as described herein has occurred.
(iii) If a Non-Registration Event has occurred AND no
other Event has occurred, then liquidated damages shall not accrue on
such number of Shares as are eligible for sale under Rule 144 for such
period or periods of eligibility.
(iv) Notwithstanding anything to the contrary
contained herein or in the Purchase Agreement or the Warrants, if a
Non-registration Event has occurred as a result of any action or
omission by any Holder, then liquidated damages shall not accrue to any
Holder as a result of such Event.
(v) If an Event has occurred other than on account of
an act or omission by the Company or any Holder, then the liquidated
damages payable under Subparagraph (i) above shall be calculated based
upon one (1%) percent rather than two (2%).
(vi) If a Non-registration Event has occurred as a
result of questions, issues or comments by the Commission regarding the
two-tranche structure of the transactions contemplated by the Purchase
Agreement, then no liquidated damages shall be payable under
Subparagraph (i) above on account of such Event.
15
<PAGE> 16
(f) Governing Law, Specific Enforcement, Consent to
Jurisdiction.
(i) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law thereof.
(ii) The Company and the Holders acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Purchase Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement or
the Purchase Agreement and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(iii) Each of the Company and the Holders (A) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts located in New York City, New York for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement or the Purchase
Agreement, and (B) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holders consents to process being served
in any such suit, action or proceeding by mailing a copy thereof 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 in this Section 7(f) shall affect or limit any right to serve
process in any other manner permitted by law.
(g) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least a majority of the Registrable Securities to which
such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in writing signed
by the Company and each of the Holders.
(h) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., pacific
time, on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., pacific time, on any
date and earlier than 11:59 p.m., pacific time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service or (iv) actual receipt by the party to whom such notice is
required to be given. The addresses for such
16
<PAGE> 17
communications shall be with respect to each Holder at its address set forth
under its name on Exhibit A attached hereto, or with respect to the Company,
addressed to:
Alteon Inc.
170 Williams Drive
Ramsey, New Jersey 07446
Attn.: Kenneth I. Moch, President and Chief Executive Officer
Tel.: 201-934-5000
Fax: 201-934-8880
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Smith,
Stratton, Wise, Heher & Brennan, Att'n: Richard J. Pinto, Esq., Facsimile No.
609-987-6651. Copies of notices to any Holder shall be sent to the addresses
listed on Exhibit A attached hereto, if applicable. Copies of notices to the
Holder shall be sent to Kane Kessler, P.C., 1350 Avenue of the Americas, New
York, New York 10019, Attention: Robert L. Lawrence, Esq., Facsimile No.: (212)
245-3009.
(i) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Holder may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Registrable Securities or Warrants if: (i) the Holder agrees
in writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section 7(j), the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions of this Agreement, and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement. In
addition, each Holder shall have the right to assign its rights hereunder to any
other Person with the prior written consent of the Company, which consent shall
not be unreasonably withheld. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.
17
<PAGE> 18
(k) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(m) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
(o) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Notice of Effectiveness. Within two (2) business days
after the Registration Statement which includes the Registrable Securities is
ordered effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable Securities
are included in such Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit B.
[SIGNATURE PAGE FOLLOWS]
18
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
<TABLE>
<CAPTION>
PURCHASERS: THE COMPANY:
----------- ------------
<S> <C>
NARRAGANSETT I, LP ALTEON INC.
By: /S/ Joseph L. Dowling III By: /S/ Kenneth I. Moch
--------------------------------------- ---------------------------------------
Joseph L. Dowling III, Kenneth I. Moch,
Managing Member Chief Executive Officer
NARRAGANSETT OFFSHORE, LTD.
By: /S/ Joseph L. Dowling III
---------------------------------------
Joseph L. Dowling III,
Managing Member
EGM MEDICAL TECHNOLOGY FUND, L.P.
By: /S/ Guy R. Scott
---------------------------------------
Guy R. Scott, Chief Investment Officer
EGM MEDICAL TECHNOLOGY OFFSHORE FUND
By: /S/ Guy R. Scott
---------------------------------------
Guy R. Scott, Chief Investment Officer
S.A.C. CAPITAL ASSOCIATES, LLC,
By: S.A.C. Capital Advisors, LLC, its
investment advisor
By: /S/ Peter Nussbaum
---------------------------------------
Peter Nussbaum, General Counsel
SDS MERCHANT FUND, LP
By: /S/ Steven Derby
---------------------------------------
Steven Derby, Managing Member
HERRIOT TABUTEAU
By: /S/ Herriot Tabuteau
---------------------------------------
Herriot Tabuteau
</TABLE>
<PAGE> 20
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and Address of Transfer Agent]
RE: ALTEON INC.
Dear [______]:
We are counsel to Alteon Inc., a Delaware corporation (the "COMPANY"),
and have represented the Company in connection with that certain Common Stock
and Warrant Purchase Agreement (the "PURCHASE AGREEMENT") dated as of September
__, 2000 by and among the Company and the buyers named therein (collectively,
the "HOLDERS") pursuant to which the Company issued to the Holders shares of the
Company's common stock, par value $.0.01 per share (the "COMMON STOCK"), and
warrants to purchase shares of the Common Stock (the "WARRANTS"). Pursuant to
the Purchase Agreement, the Company has also entered into a Registration Rights
Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issued pursuant to the Purchase Agreement and issuable
upon exercise of the Warrants, under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 2000, the Company filed a Registration
Statement on Form S-1 (File No. 333-_____________) (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names each of the Holders as a selling
stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
By:
--------------------------------
cc: [LIST NAMES OF HOLDERS]
