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REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of October 25, 2012 between Synthetic Biologics, Inc., a Nevada corporation
(the “Company”) and each of the several purchasers signatory hereto (each such
purchaser, a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made pursuant to the Stock Purchase Agreement, dated as of the
date hereof, between the Company and each Purchaser (the “Purchase Agreement”).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each of the Holders
agree as follows:

 

1.           Definitions

 

Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

 

“415 Cutback Shares” has the meaning set forth in Section 2(a).

 

“Advice” has the meaning set forth in Section 6(d).

 

“Affiliate” means, with respect to any person, any other person which directly
or indirectly controls, is controlled by, or is under common control with, such
person.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

“Closing” has the meaning set forth in the Purchase Agreement.

 

“Closing Date” has the meaning set forth in the Purchase Agreement.

 

“Commission” means the Securities and Exchange Commission.

 

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“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any securities into which such common stock may hereinafter be reclassified.

 

“Company” has the meaning set forth in the Preamble.

 

“Effective Date” means each date that the Registration Statement filed pursuant
to Section 2(a) and any post-effective amendment thereto is declared effective
by the Commission.

 

“Effectiveness Deadline” means, with respect to the Initial Registration
Statement or the New Registration Statement, the 90th calendar day following the
Closing Date (or, in the event the Commission reviews and has written comments
to the Initial Registration Statement or the New Registration Statement, the
120th calendar day following the Closing Date); provided, however, that if the
Company is notified by the Commission that the Initial Registration Statement or
the New Registration Statement will not be reviewed or is no longer subject to
further review and comments, the Effectiveness Deadline as to such Registration
Statement shall be the 5th Trading Day following the date on which the Company
is so notified if such date precedes the dates otherwise required above;
provided, further, that if the Effectiveness Deadline falls on a Saturday,
Sunday or other day that the Commission is closed for business, the
Effectiveness Deadline shall be extended to the next Business Day on which the
Commission is open for business.

 

“Effectiveness Period” has the meaning set forth in Section 2(b).

 

“Event” has the meaning set forth in Section 2(c).

 

“Event Date” has the meaning set forth in Section 2(c).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Filing Deadline” means, with respect to the Initial Registration Statement
required to be filed pursuant to Section 2(a), the 45th calendar day following
the Closing Date and with respect to any Remainder Registration Statement
required pursuant to Section 2(a), the earliest practical date on which the
Company is permitted by SEC Guidance to file such Remainder Registration
Statement related to Registrable Securities; provided, however, that if the
Filing Deadline falls on a Saturday, Sunday or other day that the Commission is
closed for business, the Filing Deadline shall be extended to the next business
day on which the Commission is open for business.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

 

“Indemnified Party” has the meaning set forth in Section 5(c).

 

“Indemnifying Party” has the meaning set forth in Section 5(c).

 

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“Initial Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.

 

“Losses” has the meaning set forth in Section 5(a).

 

“Plan of Distribution” has the meaning set forth in Section 2(a).

 

“Prospectus” means the prospectus included in a 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 a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means (i) all Shares and (ii) any securities issued or
issuable upon any stock split, dividend or other distribution,  recapitalization
or similar event with respect to the foregoing, provided, that the Holder has
completed and delivered to the Company a Selling Shareholder Questionnaire.
Notwithstanding the foregoing, the Shares and the securities will cease to be
Registrable Securities of a particular Holder upon the earliest of (v) when they
have been effectively registered under the Securities Act and disposed of in
accordance with a Registration Statement covering them, (w) when they have been
sold to the public pursuant to Rule 144 (or by similar provision under the
Securities Act) (in which case, only such security sold by the Holder shall
cease to be a Registrable Security), , or (x) when they are otherwise
transferred and such securities may be resold without subsequent registration
under the Securities Act.

 

“Registration Statement” means any one or more registration statements of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including,
without limitation, the Initial Registration Statement, the New Registration
Statement and any Remainder Registration Statements), including (in each case)
the amendments and supplements to such Registration Statements, including pre-
and post-effective amendments thereto, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.

 

“Remainder Registration Statement” has the meaning set forth in Section 2(a).

 

“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 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

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“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Selling Shareholder Questionnaire” has the meaning set forth in Section 2(d).

 

“SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Staff and (ii) the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Staff” means the staff of the Commission.

 

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Market (other than the NYSE MKT), or (ii) if the Common
Stock is not listed on a Trading Market (other than the NYSE MKT), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the NYSE MKT, or (iii) if the Common Stock is not quoted on any Trading Market,
a day on which the Common Stock is quoted in the over-the-counter market as
reported in the “pink sheets” by Pink Sheets LLC (or any similar organization or
agency succeeding to its functions of reporting prices); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (i), (ii)
and (iii) hereof, then Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the NYSE, the NYSE MKT, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the
date in question.

 

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2.           Required Registration

 

(a)           On or prior to the Filing Deadline, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all of
the Registrable Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 or, if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Holders may reasonably specify (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-1 (or such
other form available to register for resale the Registrable Securities as a
secondary offering) and shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration
Statement) a “Plan of Distribution” section substantially in the form attached
hereto as Annex A (which may be modified to respond to comments, if any,
provided by the Commission). Notwithstanding the registration obligations set
forth in this Section 2, in the event the Commission informs the Company that
all of the Registrable Securities cannot, as a result of the application of Rule
415, be registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (i) inform each of the Holders thereof
and use its commercially reasonable efforts to file amendments to the Initial
Registration Statement as required by the Commission and/or (ii) withdraw the
Initial Registration Statement and file a new registration statement (a “New
Registration Statement”), in either case covering the maximum number of
Registrable Securities permitted to be registered by the Commission, on Form S-1
or such other form available to register for resale the Registrable Securities
as a secondary offering; provided, however, that prior to filing such amendment
or New Registration Statement, the Company shall be obligated to use its
commercially reasonable efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with SEC
Guidance, including without limitation, the Manual of Publicly Available
Telephone Interpretations D.29 and Compliance and Disclosure Interpretations.
Notwithstanding any other provision of this Agreement, if any SEC Guidance sets
forth a limitation of the number of Registrable Securities permitted to be
registered on a particular Registration Statement as a secondary offering (and
notwithstanding that the Company used commercially reasonable efforts to
advocate with the Commission for the registration of all or a greater number of
Registrable Securities), or in the event the Staff seeks to characterize any
offering pursuant to a Registration Statement filed pursuant to this Agreement
as constituting an offering of securities by or on behalf of the Company such
that Rule 415 is not available to the Company to register the resale of such
Registrable Securities and as a result the Staff or the SEC does not permit such
Registration Statement to become effective and used for resales in a manner that
permits the continuous resale at the market by the Holders participating therein
(or as otherwise may be acceptable to each Holder) without being named therein
as an “underwriter,” unless otherwise directed in writing by a Holder as to its
Registrable Securities, the number of Registrable Securities to be registered on
such Registration Statement will be reduced by the Shares (applied, in the case
that some Shares may be registered, to the Holders on a pro rata basis based on
the total number of unregistered Shares held by such Holders), subject to a
determination by the Commission that certain Holders must be reduced first based
on the number of Registrable Securities held by such Holders (such reduced
Registrable Securities, the “415 Cutback Shares”). In the event the Company
amends the Initial Registration Statement or files a New Registration Statement,
as the case may be, under clauses (i) or (ii) above, the Company will use its
commercially reasonable efforts to file with the Commission, as promptly as
allowed by Commission or SEC Guidance provided to the Company or to registrants
of securities in general, one or more registration statements on Form S-1 or
such other form available to register for resale those Registrable Securities
that were not registered for resale on the Initial Registration Statement, as
amended, or the New Registration Statement, including the 415 Cutback Shares
(the “Remainder Registration Statements”). No Holder shall be named as an
“underwriter” in any Registration Statement without such Holder’s prior written
consent. The Company may include in a Registration Statement any shares
underlying any warrants issued to the placement agents in the transactions
contemplated hereby, provided, that if any Registrable Securities are required
to be cut back, then such placement agent shares shall be cut back prior to any
Registrable Securities held by any Holder. The Company has entered into
registration rights agreements with Intrexon Corporation (“Intrexon”) which
require the Company to include shares issued to Intrexon in aregistration
statement to be subsequently filed with the SEC in accordance with the terms of
the First Amendment to Registration Rights Agreement (the “First Amendment”)
dated August 6, 2012 between Intrexon and the Company filed with the SEC as an
exhibit to the Company’s Current Report on Form 8-K on August 9, 2012. Certain
affiliates of the principal of Intrexon have agreed to waive their rights under
this Agreement and in lieu thereof have agreed to be included as parties to the
First Amendment. .

 

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(b)            The Company shall use its commercially reasonable efforts to
cause each Registration Statement or any post-effective amendment thereto to be
declared effective by the Commission as soon as practicable and, with respect to
the Initial Registration Statement or the New Registration Statement, as
applicable, no later than the Effectiveness Deadline (including, with respect to
the Initial Registration Statement or the New Registration Statement, as
applicable, filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under the Securities Act
within five (5) Business Days after the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed,” or not be subject to further
review and the effectiveness of such Registration Statement may be accelerated),
shall use its commercially reasonable efforts to keep each Registration
Statement continuously effective under the Securities Act until the earlier of
(i) such time as all of the Registrable Securities covered by such Registration
Statement have been publicly sold by the Holders or (ii) the date that is one
(1) year following the Closing Date (the “Effectiveness Period”). The Company
shall promptly notify the Holders via facsimile or electronic mail of the
effectiveness of a Registration Statement or any post-effective amendment
thereto on or before the first Trading Day after the date that the Company
telephonically confirms effectiveness with the Commission. The Company shall, by
9:30 a.m. New York City time on the first Trading Day after the Effective Date,
file a final Prospectus with the Commission, as required by Rule 424(b).

 

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(c)            If: (i) the Initial Registration Statement is not filed on or
prior to its Filing Deadline (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on
the same as required by Section 3(a) herein, the Company shall be deemed to have
not satisfied this clause (i)), (ii) the Company fails to have the a
Registration Statement declared effective under the Securities Act prior to the
applicable Effectiveness Deadline, or (iii) after the Effectiveness Deadline,
(A) such Registration Statement or a registration statement on Form S-3
registering the Registrable Securities ceases for any reason to remain
continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize
the Prospectus therein to resell such Registrable Securities, for more than 30
consecutive calendar days or more than an aggregate of 60 calendar days during
any 12-month period and such holders are not able to sell such Registrable
Securities under Rule 144 (which need not be consecutive calendar days) (other
than during an Allowable Grace Period (as defined below) (and other than as a
result of a Holder’s failure to return a Selling Stockholder Questionnaire
within the time period provided by Section 2(d) hereof), or (iv) a Grace Period
(as defined below) exceeds the Allowable Grace Period (any such failure or
breach being referred to as an “Event”, and for purposes of clause (i) and (ii),
the date on which such Event occurs, or for purposes of clause (iii) the date on
which such 30 or 60 calendar day period, as applicable, is exceeded, or for
purposes of clause (iv) the date on which the Allowable Grace Period is
exceeded, being referred to as “Event Date”), then, in addition to any other
rights the Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as
partial liquidated damages and not as a penalty, equal to 1.5% of the aggregate
purchase price paid by such Holder pursuant to the Purchase Agreement for the
number of shares of unregistered Registrable Securities then held by such Holder
other than 415 Cutback Shares. Notwithstanding the foregoing, (A) the maximum
aggregate liquidated damages payable to a Holder under this Agreement, including
any interest, shall be 10.0% of the aggregate Subscription Amount paid by such
Holder pursuant to the Purchase Agreement, (B) no liquidated damages shall
accrue after the Effectiveness Period, (C) no liquidated damages shall accrue
during any period during which the Company has advised the Holders of
Registrable Securities to suspend the use of any Prospectus pursuant to Section
3(d), (D) no liquidated damages shall accrue as the result of the occurrence of
any event or the passage of time described in Section 3(d)(v) that occurs prior
to the Effectiveness Date and (E) no liquidated damages shall accrue after the
date the shares then held by such Holder are no longer Registrable Securities.
If the Company fails to pay any liquidated damages pursuant to this Section in
full within seven calendar days after the date payable, the Company will pay
interest thereon at a rate of 1.5% per month (or such lesser maximum amount that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The liquidated damages pursuant to the terms
hereof shall apply on a daily pro rata basis for any portion of a month prior to
the cure of an Event. Notwithstanding the foregoing, an “Event” shall not
include (v) a failure of a Registration Statement to be declared effective as a
result of the Commission’s refusal to accept the Plan of Distribution contained
in such Registration Statement, (w)  a Registration Statement not being filed,
not being declared effective, or not remaining effective if a Purchaser has
failed to timely provide the Company with information requested by the Company
and necessary to complete the Registration Statement in accordance with the
requirements of the Securities Act (in which the Effectiveness Date would be
extended with respect to Registrable Securities held by such Purchaser), (x) a
Registration Statement not remaining effective if the Company has advised the
Holders of Registrable Securities to suspend the use of any Prospectus pursuant
to Section 3(d), (y) a Registration Statement not being filed, not being
declared effective, or not remaining effective due to the occurrence of any
event or the passage of time described in Section 3(d)(v) that occurs prior to
the Effectiveness Date, or (z) events or circumstances that are not in any way
attributable to the Company. The Company shall not be liable for liquidated
damages under this Agreement as to any Registrable Securities which are not
permitted by the Commission to be included in a Registration Statement due to
SEC Guidance from the time that it is determined that such Registrable
Securities are not permitted to be registered until such time as the provisions
of this Agreement as to the Remainder Registration Statements required to be
filed hereunder are triggered, in which case the provisions of this Section 2(c)
shall once again apply, if applicable. In such case, the liquidated damages
shall be calculated to only apply to the percentage of Registrable Securities
which are permitted in accordance with SEC Guidance to be included in such
Registration Statement. The Effectiveness Deadline for a Registration Statement
shall be extended without default or liquidated damages hereunder in the event
that the Company’s failure to obtain the effectiveness of the Registration
Statement on a timely basis results from the failure of a Holder to timely
provide the Company with information requested by the Company and necessary to
complete the Registration Statement in accordance with the requirements of the
Securities Act (in which the Effectiveness Deadline would be extended with
respect to Registrable Securities held by such Holder).

 

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(d)           Each Holder agrees to furnish to the Company a completed Selling
Shareholder Questionnaire in the form attached to this Agreement as Annex B or
in a form mutually agreeable between the Parties. At least ten (10) Trading Days
prior to the first anticipated filing date of a Registration Statement for any
registration under this Agreement, the Company will notify each Holder of the
information the Company requires from that Holder other than the information
contained in the Selling Shareholder Questionnaire, if any, which shall be
completed and delivered to the Company promptly upon request and, in any event,
within three (3) Trading Days prior to the applicable anticipated filing
date.  Each Holder further agrees that it shall not be entitled to be named as a
selling Shareholder in the Registration Statement or use the Prospectus for
offers and resales of Registrable Securities at any time, unless such Holder has
returned to the Company a completed and signed Selling Shareholder Questionnaire
and a response to any requests for further information as described in the
previous sentence. If a Holder of Registrable Securities returns a Selling
Shareholder Questionnaire or a request for further information, in either case,
after its respective deadline, the Company shall use its commercially reasonable
efforts at the expense of the Holder who failed to return the Selling
Shareholder Questionnaire or to respond for further information to take such
actions as are required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Shareholder
Questionnaire or request for further information. Each Holder acknowledges and
agrees that the information in the Selling Shareholder Questionnaire or request
for further information as described in this Section 2(d) will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration Statement.

 

(e)           Notwithstanding anything to the contrary herein, at any time after
any Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Company, in the best interests of the Company (a
“Grace Period”); provided, however, the Company shall promptly (i) notify the
Holders in writing (including via facsimile or other electronic transmission) of
the existence of material non-public information giving rise to a Grace Period
(provided that the Company shall not disclose the content of such material
non-public information to the Holders) or the need to file a supplement or
post-effective amendment, as applicable, and the date on which such Grace Period
will begin, and (ii) notify the Holders in writing (including via facsimile or
other electronic transmission) of the date on which the Grace Period ends;
provided, further, that no single Grace Period shall exceed thirty (30)
consecutive days, and during any three hundred sixty-five (365) day period, the
aggregate of all Grace Periods shall not exceed an aggregate of sixty (60) days
(each Grace Period complying with this provision being an “Allowable Grace
Period”). For purposes of determining the length of a Grace Period, the Grace
Period shall be deemed to begin on and include the date the Holders receive the
notice referred to in clause (i) above and shall end on and include the later of
the date the Holders receive the notice referred to in clause (ii) above and the
date referred to in such notice; provided, however, that no Grace Period shall
be longer than an Allowable Grace Period.

 

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3.           Registration Procedures.

 

In connection with the Company’s registration obligations hereunder, the Company
shall:

 

(a)           Not less than 5 Trading Days prior to the filing of each
Registration Statement and not less than one Trading Day prior to the filing of
any related Prospectus or any amendment or supplement thereto (not including any
document that would be incorporated or deemed to be incorporated therein by
reference, and not including a supplement or amendment filed solely for the
purpose of adding the contents of a Form 10-K, Form 10-Q or Form 8-K filed at
such as time as the Registration Statement is on a form that does not permit
“forward” incorporation by reference), the Company shall (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference, and other
than a supplement or amendment filed solely for the purpose of adding the
contents of a Form 10-K, Form 10-Q or Form 8-K filed at such as time as the
Registration Statement is on a form that does not permit “forward” incorporation
by reference) will be subject to the review of such Holder (it being
acknowledged and agreed that if a Holder does not object to or comment on the
aforementioned documents within such five Trading Day or one Trading Day period,
as the case may be, then the Holder shall be deemed to have consented to and
approved the use of such documents) and (ii) 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 respective counsel
to each Holder, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in good faith,
provided that the Company is notified of such objection in writing no later than
5 Trading Days after the Holders have been so furnished copies of a Registration
Statement or 1 Trading Day after the Holders have been so furnished copies of
any related Prospectus or amendments or supplements thereto.

 

(b)           (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a
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 (except during an Allowable
Grace Period); (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement),
and, as so supplemented or amended, to be filed pursuant to Rule 424 (except
during an Allowable Grace Period); (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect to a
Registration Statement or any amendment thereto and provide as promptly as
reasonably possible to the Holders true and complete copies of all
correspondence from and to the Commission relating to a Registration Statement
(provided that the Company may excise any information contained therein which
would constitute material non-public information concerning the Company); 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 a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented; provided, however, that
each Purchaser shall be responsible for the delivery of the Prospectus to the
Persons to whom such Purchaser sells any of the Shares (including in accordance
with Rule 172 under the Securities Act), and each Purchaser agrees to dispose of
Registrable Securities in compliance with the plan of distribution described in
the Registration Statement and otherwise in compliance with applicable federal
and state securities laws.

 

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(c)           If during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file as soon as
reasonably practicable, but in any case prior to the applicable Filing Deadline,
a Remainder Registration Statement covering the resale by the Holders of not
less than the number of such Registrable Securities, subject to any limitations
pursuant to SEC Guidance.

 

(d)           Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of
(i)(A) below, not less than one Trading Day prior to such filing) and (if
requested by any such Person) confirm such notice in writing (including via
facsimile or other electronic transmission) no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
and (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; (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (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 or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
Registration Statement, Prospectus or other documents so that, in the case of a
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 light of the circumstances under which they were made, not misleading; and
(vi) of the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided that any and all of such information shall be kept
confidential by each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
each such Holder makes no acknowledgement that any such information is material,
non-public information.

 

10

 

 

(e)           Use its commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order stopping or suspending the
effectiveness of a 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.

 

(f)           The Company may require each selling Holder to furnish to the
Company a certified statement as to (i) the number of shares of Common Stock
beneficially owned by such Holder and any Affiliate thereof, (ii) any Financial
Industry Regulatory Authority, Inc. (“FINRA”) affiliations, (iii) any natural
persons who have the power to vote or dispose of the common stock and (iv) any
other information as may be requested by the Commission, FINRA or any state
securities commission. During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of Registrable Securities
because any Holder fails to furnish such information within five Trading Days of
the Company’s request, any liquidated damages that are accruing at such time as
to such Holder only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Holder only, until
such information is delivered to the Company; provided, however, if the failure
of the Holder to furnish the required information results the occurrence of an
Event under 2(c), any liquidated damages that are accruing at such time shall be
tolled and any such Event that occurs as a result thereof shall be suspended
until such time as the Holder furnishes such information.

 

(g)           Subject to the terms of this Agreement, 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, except after the giving of any notice pursuant to
Section 3(d).

 

(h)           The Company shall cooperate with any registered broker through
which a Holder proposes to resell its Registrable Securities in effecting a
filing with FINRA pursuant to FINRA Rule 5110 as requested by any such Holder
and the Company shall pay the filing fee required for the first such filing
within two (2) Business Days of the request therefor.

 

(i)           Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, would subject the Company to
any material tax in any such jurisdiction where it is not then so subject or
file a general consent to service of process in any such jurisdiction.

 

11

 

 

(j)           If requested by a Holder, cooperate with such Holder to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by the Purchase
Agreement and applicable state and Federal laws, of all restrictive legends, and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holder may request.

 

(k)           Upon the occurrence of any event contemplated by Section 3(d), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its Shareholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a 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 a 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 light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of a Registration Statement
and Prospectus, for a period not to exceed 60 calendar days (which need not be
consecutive days) in any 12 month period.

 

(l)           Comply in all material respects with all applicable rules and
regulations of the Commission.

  

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 any Registrable Securities are sold pursuant to a
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 of the Company’s counsel and
auditors) (A) with respect to filings made with the Commission, (B) with respect
to filings required to be made with any Trading Market on which the Common Stock
is then listed for trading, (C) in compliance with applicable state securities
or Blue Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable
Securities) and (D) if not previously paid by the Company in connection with an
Issuer filing, with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable Securities
with the FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving
no more than a customary brokerage commission in connection with such sale,
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. 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 and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any underwriting, broker or similar commissions of any Holder
or, except to the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.

 

12

 

 

5.            Indemnification.

 

(a)           Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
members, shareholders, partners, agents and employees (and any other Persons
with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or alleged
untrue statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that
(i) such untrue statements or omissions are in reliance upon, and in conformity
with, information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement, such Prospectus or in
any amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice contemplated in Section 6(d). The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware.

 

13

 

 

(b)           Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities
Act or (y) any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such information relates to such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or in any amendment or supplement thereto or (iii) in the case
of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.

 

(c)           Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.

 

14

 

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within twenty Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
previously disbursed and that are applicable to such actions for which such
Indemnified Party is judicially determined to be not entitled to indemnification
hereunder.

 

(d)           Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. 
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.

 

15

 

 

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

 

6.           Miscellaneous.

 

(a)           Remedies. Subject to the limitations set forth in this Agreement,
in the event of a breach by the Company or by a Holder of any of their
respective 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, shall 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 not assert or shall
waive the defense that a remedy at law would be adequate.

 

(b)           Piggyback on Registrations. Except as set forth in this Agreement,
the Purchase Agreement or the SEC Documents, 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 a Registration Statement filed pursuant to
this Agreement, other than the Registrable Securities.

 

(c)           Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to a Registration
Statement.

 

(d)           Discontinued Disposition. By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(ii) through
(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it may
have been supplemented or amended) may be resumed. The Company will use its
commercially reasonable efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable.

 

16

 

 

(e)           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 a majority of the then outstanding Registrable Securities. If
a Registration Statement does not register all of the Registrable Securities
pursuant to a waiver or amendment done in compliance with the previous sentence,
then the number of Registrable Securities to be registered for each Holder shall
be reduced pro rata among all Holders and each Holder shall have the right to
designate which of its Registrable Securities shall be omitted from such
Registration Statement. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of some Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of all of
the Registrable Securities to which such waiver or consent relates; provided,
however, that in the event the Company shall deliver written notice to a Holder
with respect to a requested waiver or amendment, such Holder shall be deemed to
have consented and agreed to such amendment or waiver if such Holder does not
provide written notice to the Company indicating such Holder’s non-consent
within ten (10) calendar days of delivery by the Company of such written notice;
provided, further, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the first 
sentence of this Section 6(e).

 

(f)           Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.

 

(g)          Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Company may not assign its
rights (except by merger or in connection with another entity acquiring all or
substantially all of the Company’s assets) or obligations hereunder without the
prior written consent of all the Holders of the then outstanding Registrable
Securities. Each Holder may assign its respective rights with respect to any or
all of its Shares, hereunder in the manner and to the Persons as permitted under
the Purchase Agreement; provided in each case that (i) the Holder agrees in
writing with the transferee or assignee to assign such rights and related
obligations under this Agreement, and for the transferee or assignee to assume
such obligations, 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 the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being transferred or assigned,
(iii) at or before the time the Company received the written notice contemplated
by clause (ii) of this sentence, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein and
(iv) the transferee is an “accredited investor,” as that term is defined in
Rule 501 of Regulation D and completes any required documentation requested by
the Company to confirm the foregoing.

 

(h)          No Inconsistent Agreements. Except as set forth in the Purchase
Agreement or in the SEC Documents, neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that have not been
satisfied in full.

 

17

 

 

(i)          Execution and Counterparts. This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or other electronic transmission of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

(j)           Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.

 

(k)          Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.

 

(l)           Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, 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 commercially 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.

 

(m)         Headings. The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

 

(n)          Independent Nature of Holders’ Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser acknowledges that no
other Purchaser has acted as agent for such Purchaser in connection with making
its investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Shares or
enforcing its rights under the Purchase Agreement or any other agreement entered
into in connection with the Purchase Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose.

 

********************

 

[Signature pages follow]

 

18

 

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

  SYNTHETIC BIOLOGICS, INC.       By:          Name:     Title:

 

[SIGNATURE PAGE OF PURCHASERS FOLLOWS]

 

19

 

 

PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

Name of Purchaser:  

 

Signature of Authorized Signatory of Purchaser:   

 

Name of Authorized Signatory:   

 

Title of Authorized Signatory:   

 

Address for Notice of Purchaser:

 

20

 

 

Annex A

 

Plan of Distribution

 

We are registering the shares of Common Stock previously issued to the Selling
Shareholders previously issued to the Selling Shareholders to permit the resale
of these shares of Common Stock by the holders of the Common Stock from time to
time after the date of this prospectus. We will not receive any of the proceeds
from the sale by the Selling Shareholders of the shares of Common Stock. We will
bear all fees and expenses incident to our obligation to register the shares of
Common Stock.

 

The Selling Shareholders, or their pledges, donees, transferees, or any of their
successors in interest selling shares received from a Selling Shareholder as a
gift, partnership distribution or other non-sale related transfer after the date
of this prospectus, may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
Common Stock are sold through underwriters or broker-dealers, the Selling
Shareholders will be responsible for underwriting discounts or commissions or
agent's commissions. The shares of Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
The Selling Shareholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. These sales may be affected
in transactions, which may involve crosses or block transactions,

 

•on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;

 

•in the over-the-counter market;

 

•in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

•through the writing of options, whether such options are listed on an options
exchange or otherwise;

 

•ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

•block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

•purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

•an exchange distribution in accordance with the rules of the applicable
exchange;

 

A-1

 

 

•privately negotiated transactions;

 

•short sales;

 

•through the distribution of the Common Stock by any Selling Shareholders to its
partners, members or Shareholders;

 

•through one or more underwritten offerings on a firm commitment or best efforts
basis;

 

•sales pursuant to Rule 144;

 

•broker-dealers may agree with the Selling Shareholders to sell a specified
number of such shares at a stipulated price per share;

 

•a combination of any such methods of sale; and

 

•any other method permitted pursuant to applicable law.

 

The Selling Shareholders may also transfer the Common Shares by gift.

 

The Selling Shareholders may engage brokers and dealers, and any brokers or
dealers may arrange for other brokers or dealers to participate in effecting
sales of the Common Shares. These brokers, dealers or underwriters may act as
principals, or as an agent of a Selling Shareholder. Broker-dealers may agree
with a Selling Shareholder to sell a specified number of the Common Shares at a
stipulated price per security. If the broker-dealer is unable to sell the Common
Shares acting as agent for a Selling Shareholder, it may purchase as principal
any unsold Common Shares at the stipulated price. Broker-dealers who acquire
Common Shares as principals may thereafter resell the Common Shares from time to
time in transactions in any stock exchange or automated interdealer quotation
system on which the Common Shares are then listed, at prices and on terms then
prevailing at the time of sale, at prices related to the then-current market
price or in negotiated transactions. Broker-dealers may use block transactions
and sales to and through broker-dealers, including transactions of the nature
described above.

 

The Selling Shareholders may also sell the Common Shares in accordance with Rule
144 under the Securities Act of 1933, as amended, rather than pursuant to this
prospectus, regardless of whether the Common Shares are covered by this
prospectus

 

If the Selling Shareholders effect such transactions by selling shares of Common
Stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the Selling Shareholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the shares of Common Stock or otherwise, the Selling Shareholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of Common Stock in the course of hedging in positions they
assume. The Selling Shareholders may also sell shares of Common Stock short and
deliver shares of Common Stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales. The
Selling Shareholders may also loan or pledge shares of Common Stock to
broker-dealers that in turn may sell such shares.

 

A-2

 

 

The Selling Shareholders may pledge or grant a security interest in some or all
of the shares of Common Stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of Common Stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending, if necessary, the list of
Selling Shareholders to include the pledgee, transferee or other successors in
interest as Selling Shareholders under this prospectus. The Selling Shareholders
also may transfer and donate the shares of Common Stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

 

In addition, a Selling Shareholder may, from time to time, sell the Common
Shares short, and, in those instances, this prospectus may be delivered in
connection with the short sales and the Common Shares offered under this
prospectus may be used to cover short sales.

 

The Selling Shareholders and any broker-dealer participating in the distribution
of the shares of Common Stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the shares of Common Stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of Common Stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the Selling Shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers. The Selling Shareholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares of Common Stock
against certain liabilities, including liabilities arising under the Securities
Act.

 

Under the securities laws of some states, the shares of Common Stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of Common Stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

 

There can be no assurance that any Selling Shareholder will sell any or all of
the shares of Common Stock registered pursuant to the registration statement, of
which this prospectus forms a part.

 

A-3

 

 

The Selling Shareholders and any other person participating in such distribution
will be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M of the
Exchange Act, which may limit the timing of purchases and sales of any of the
shares of Common Stock by the Selling Shareholders and any other participating
person. Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of Common Stock to engage in market-making activities
with respect to the shares of Common Stock. All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
Common Stock.

 

We will pay all expenses of the registration of the shares of Common Stock
pursuant to the Registration Rights Agreement, estimated to be $[______] in
total, including, without limitation, SEC filing fees and expenses of compliance
with state securities or “Blue Sky” laws; provided, however, that a Selling
Shareholder will pay all underwriting discounts and selling commissions, if any.
We will indemnify the Selling Shareholders against liabilities, including some
liabilities under the Securities Act, in accordance with the Registration Rights
Agreement, or the Selling Shareholders will be entitled to contribution. We may
be indemnified by the Selling Shareholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling Shareholder specifically for use in
this prospectus, in accordance with Registration Rights Agreement, or we may be
entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a
part, the shares of Common Stock will be freely tradable in the hands of persons
other than our affiliates.

 

A-4

 

 

Annex B

 

synthetic biologics, inc.

 

Selling Shareholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”)
of Synthetic Biologics, Inc., a Nevada corporation (the “Company”), understands
that the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement (the
“Registration Rights Agreement”) to which this document is annexed. A copy of
the Registration Rights Agreement is available from the Company upon request at
the address set forth below. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling Shareholder in
the Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling Shareholder in the Registration Statement and the related
prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Shareholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it in
the Registration Statement.

 

B-1

 

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.Name.

 

(a)Full Legal Name of Selling Shareholder        

 

(b)Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are held:        

 

(c)Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):        

 

2. Broker-Dealer Status:

 

(a)Are you a broker-dealer?

 

Yes ¨             No ¨

 

(b)If “yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

 

Yes ¨             No ¨

 

Note:    If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

 

(c)Are you an affiliate of a broker-dealer?

 

Yes ¨             No ¨

 

(d)If you are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Securities in the ordinary course of business, and at the time
of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?

 

Yes ¨             No ¨

 

Note:    If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

 

B-2

 

 

4. Beneficial Ownership of Securities of the Company Owned by the Selling
Shareholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

 

(a)Type and Amount of other securities beneficially owned by the Selling
Shareholder:            

 

5. Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions here:

 

   

 

The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Dated:     Beneficial Owner:  

 

    By:         Name:       Title:

 

B-3