EXHIBIT 4.3


 


REGISTRATION
RIGHTS AGREEMENT


 


This Registration Rights Agreement (this “Agreement”)
is made and entered into as of June 7, 2004, by and among Valentis, Inc., a
Delaware corporation (the “Company”), and the investors signatory
hereto (each a “Purchaser” and collectively, the “Purchasers”).


 


This Agreement is made pursuant to the Securities
Purchase Agreement, dated as of the date hereof among the Company and the
Purchasers (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 the Purchasers 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 respective
meanings set forth in this Section 1:


 


“Effective Date” means the date that
the Registration Statement filed pursuant to Section 2(a) is first declared
effective by the Commission.


 


“Effectiveness Date”
means: (a) with respect to the initial Registration Statement required to be
filed to cover the resale by the Holders of the Registrable Securities, the
earlier of: (i) the 105th day following the Closing Date and (ii) the fifth
Trading Day following the date on which the Company is notified by the
Commission that the initial Registration Statement will not be reviewed or is
no longer subject to further review and comments, and (b) with respect to any
additional Registration Statements that may be required pursuant to Section
2(a) hereof, the earlier of: (i) the 105th day following the date on which the
Company first knows, or reasonably should have known, that such additional
Registration Statement is required under such Section and (ii) the fifth
Trading Day following the date on which the Company is notified by the
Commission that such additional Registration Statement will not be reviewed or
is no longer subject to further review and comments.  “Effectiveness Date”
shall also have the meaning specified in Section 2(b).


 


“Effectiveness Period” shall have the meaning set forth in
Section 2(a).


 


“Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


“Filing Date”
means: (a) with respect to the initial Registration Statement required to be
filed to cover the resale by the Holders of the Registrable Securities, the
45th day following the Closing Date, and (b) with respect to any additional
Registration Statements that may be required pursuant to Section 2(a) hereof,
the 45th day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required
under such Section.


 

















 


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


 


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


 


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


 


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


 


“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.


 


“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 the Shares issued pursuant to the Purchase Agreement and
the Warrant Shares, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event,
or any conversion price adjustment with respect thereto.


 


“Registration
Statement” means each of the following: 
(i) an initial registration statement which is required to register the
resale of the Registrable Securities, and (ii) each additional registration
statement, if any, contemplated by Section 2(d), and including, in each case,
the Prospectus, amendments and supplements to each such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
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 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.


 


“Rule 424” means
Rule 424 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.


 


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“Shares” shall
have the meaning set forth in the Purchase Agreement.


 


“Warrant Shares”
shall have the meaning set forth in the Purchase Agreement.


 


2.                                       Registration.


 


(a)                                  On
or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all 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.  The Registration Statement shall
be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form for such purpose) and shall
contain (except if otherwise required pursuant to written comments received
from the Commission upon a review of such Registration Statement) the “Plan of
Distribution” in substantially the form attached hereto as Annex A.  The Company shall cause the Registration
Statement to be declared effective under the Securities Act as soon as possible
but, in any event, no later than the Effectiveness Date, and shall use its best
efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is two years after the date that the
Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by the Registration Statement have
been sold or may be sold without volume restrictions pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Company’s transfer agent and
the affected Holders (the “Effectiveness
Period”). It is agreed and understood that the Company shall, from
time to time, be obligated to file an additional Registration Statement to
cover any Registrable Securities which are not registered for resale pursuant
to a pre-existing Registration Statement.


 


(b)                                 If
for any reason the Commission does not permit all of the Registrable Securities
to be included in the Registration Statement filed pursuant to Section 2(a),
then the Company shall prepare and file as soon as possible after the date on
which the Commission shall indicate as being the first date or time that such
filing may be made, but in any event by the 30th day following such
date, an additional Registration Statement covering the resale of all
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, on Form S-3 (except if the Company is not then eligible
to register for resale the Registrable Securities on Form S-3, in which
case such registration shall be on another appropriate form for such
purpose).  Each such Registration
Statement shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” in substantially the form attached hereto
as Annex A.  The Company shall
cause each such Registration Statement to be declared effective under the
Securities Act as soon as possible but, in any event, no later than the 90th
day following the date on which the Company becomes aware that such
Registration Statement is required to be filed under this Agreement (each such
90th day, the “Effectiveness Date” for such Registration Statement),
and shall use its best efforts to keep such Registration Statement continuously
effective under the Securities Act during the entire Effectiveness Period.


 


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(c)                                  If:
(i) a Registration Statement is not filed on or prior to its Filing Date (if
the Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a)
hereof, the Company shall not be deemed to have satisfied this clause (i)), or
(ii) a Registration Statement is not declared effective by the Commission on or
prior to its required Effectiveness Date, or (iii) after its Effective Date,
such Registration Statement ceases for any reason to be effective and available
to the Holders as to all Registrable Securities to which it is required to
cover at any time prior to the expiration of its Effectiveness Period for an
aggregate of more than 20 consecutive Trading Days or an aggregate of 40
Trading Days (which need not be consecutive), (any such failure or breach being
referred to as an “Event,” and for purposes of clauses (i) or
(ii) the date on which such Event occurs, or for purposes of clause (iii) the
date which such 20 consecutive or 40 Trading Day-period (as applicable) is
exceeded, being referred to as “Event Date”), then, in addition to any
other rights available to the Holders: (x) on such Event Date the Company shall
pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1% of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement; and (y) on each monthly anniversary of each
such Event Date thereof (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 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, provided, that all periods shall be tolled, with respect to a
Holder, by the number of Trading Days in excess of five (5) during which such
Holder fails to provide the Company with information regarding such Holder
which was requested by the Company in order to effect the registration of such
Holder’s Registrable Securities. It shall be a condition precedent to the
obligations of the Company to pay any liquidated damages pursuant to this
Section 2 with respect to the Registrable Securities of any Holder that such
Holder shall furnish to the Company such information regarding itself and the
Registrable Securities held by it. If the Company fails to pay any liquidated
damages pursuant to this Section in full within seven days after the date payable,
the Company will pay interest thereon at a rate of 12% per annum (or such
lesser maximum amount that is permitted to be paid by applicable law) to the
Holder, accruing daily from the date such liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full.  The liquidated damages pursuant to the terms
hereof shall apply on a pro rata basis for any portion of a month prior to the
cure of an Event.


 


3.                                       Registration
Procedures


 


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


 


(a)                                  Not
less than four Trading Days prior to the filing of a Registration Statement or
any related Prospectus or any amendment or supplement thereto, the Company
shall furnish to the Holders 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. 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.


 


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(b)                                 (i)  Prepare and file with the Commission such
amendments, including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep
such Registration Statement continuously effective as to the applicable
Registrable Securities for its 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;
(iii) respond as promptly as reasonably possible, and in any event within ten
Trading Days, to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement that
pertains to the Holders as Selling Stockholders but not any comments that would
result in the disclosure to the Holders of material and 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
Registration Statements and the disposition of all Registrable Securities
covered by each Registration Statement.


 


(c)                                  Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing) and (if requested
by any such Person) confirm such notice in writing 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;
(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 (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders that
pertain to the Holders as a Selling Stockholder or to the Plan of Distribution,
but not information which the Company believes would constitute material and
non-public information); and (C) with respect to each Registration Statement or
any post-effective amendment, when the same has become effective; (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 that pertains to the Holders as Selling Stockholders or
the Plan of Distribution; (iii) of the issuance by the Commission 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 such 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 such Registration Statement, Prospectus or
other documents so that, in the case of such 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.


 


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(d)                                 Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order 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.


 


(e)                                  Furnish
to each Holder, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto 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; provided, that the Company shall have no obligation to provide any
document pursuant to this clause that is available on the EDGAR system.


 


(f)                                    Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request.  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.


 


(g)                                 Prior
to any public offering of Registrable Securities, use its best efforts to
register or qualify or cooperate with the selling Holders 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 those jurisdictions within the United States set
forth on Schedule 3(g) hereto 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 the
Registration Statements; provided, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is
not then so qualified or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.


 


(h)                                 Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive legends, and
to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may request.


 


(i)                                     Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements 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, no Registration Statement nor any 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.


 


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(j)                                     The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and any Affiliate thereof.


 


(k)                                  The
Company has read and understands the exercise limitations contained in certain
of the Warrants and, except as may be required by applicable law or rules or
regulations of the Commission, will not take a position in any Registration
Statement or other filing with the Commission that a Holder whose Warrant
contains such exercise limitations is the beneficial owner of more than the
percentage of Common Stock permitted to be beneficially owned by such Holder
absent an affirmative written statement by such Holder to such
effect.  It is understood and agreed that current law, rules and
regulations of the Commission do not require the adoption of a position that a
Holder whose Warrant contains such exercise limitations is the beneficial owner
of more than the percentage of Common Stock permitted to be beneficially owned
by such Holder pursuant to the exercise limitations contained in the Warrants.


 


4.                                       Registration
Expenses.  All fees and expenses
incident to the Company’s performance of its obligation under this Agreement
(excluding any underwriting discounts and selling commissions and all legal
fees and expenses of legal counsel for any Holder) 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 (A) with respect to filings required to be made
with the Trading Market on which the Common Stock is then listed for trading,
and (B) in compliance with applicable state securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority
of the Registrable Securities included in the Registration Statement), (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.


 


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, agents, investment advisors, partners,
members, shareholders and employees 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, agents and employees 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


 


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limitation, reasonable costs of
preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for
this purpose) 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 form of prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent, but only to
the extent, that (1) such untrue statements or omissions are based solely upon
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 the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this purpose) or (2)
in the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), 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 an Advice or
an amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been
corrected.  The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.


 


(b)                                 Indemnification
by Holders. Each Holder shall, notwithstanding any termination of this
Agreement, 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, arising solely 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 statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of prospectus,
or in any amendment or supplement thereto, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but only
to the extent that, (1) such untrue statements or omissions are based solely
upon 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 the Registration Statement (it being
understood that the Holder has approved Annex A hereto for this purpose), such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (2) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(v), 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
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss


 


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would have been corrected.  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 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 proximately and
materially adversely prejudiced the Indemnifying Party.


 


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 such Indemnified Party shall have been
advised by counsel that a 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 such counsel shall be at the expense of the Indemnifying
Party), provided, that the Indemnifying Party shall not be liable for
the fees and expenses of more than one separate firm of attorneys at any time
for all Indemnified Parties.  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.  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.


 


All 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 ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).


 


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(d)                                 Contribution.  If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses, 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 Section 5(c), 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 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.


 


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.  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)                                 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
the Registration Statement.


 


10

















 


(c)                                  Discontinued
Disposition.  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), 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 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. 
The Company may provide appropriate stop orders to enforce the
provisions of this paragraph.


 


(d)                                 Amendments
and Waivers. No provision of this Agreement may be waived or amended except
in a written instrument signed by the Company and the Holder or Holders (as
applicable) of no less than two-thirds of the then outstanding Registrable
Securities.  The Company shall provide
prior notice to all Holders of any proposed waiver or amendment.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.


 


(e)                                  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 earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 5:00 p.m. (California
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 in this Agreement later than 5:00 p.m. (California
time) on any date and earlier than 11:59 p.m. (California time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. 
The address for such notices and communications shall be as follows:


 


	
   

  	
  If to the
  Company:

  	
   

  	
  Valentis,
  Inc.

  
	
   

  	
   

  	
   

  	
  863A Mitten
  Road

  
	
   

  	
   

  	
   

  	
  Burlingame,
  CA 94010

  
	
   

  	
   

  	
   

  	
  ATTN:  Benjamin F. McGraw III, Pharm. D.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy
  to:

  	
   

  	
  Patrick A.
  Pohlen

  
	
   

  	
   

  	
   

  	
  Latham &
  Watkins LLP

  
	
   

  	
   

  	
   

  	
  135
  Commonwealth Drive

  
	
   

  	
   

  	
   

  	
  Menlo Park,
  CA  94025

  
	
   

  
	
   

  	
  If to a
  Purchaser:

  	
   

  	
  To the
  address set forth under such Purchaser’s

  name on the signature pages hereto.

  
	
   

  	
   

  
	
   

  	
  If to any
  other Person who is then the registered Holder:

  
							



 


11

















 


	
   

  	
  To the
  address of such Holder as it appears in the stock transfer

  books of the Company

  



 


or such other address as may be designated in writing
hereafter, in the same manner, by such Person.


 


(f)                                    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.  The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.


 


(g)                                 Execution
and 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.


 


(h)                                 Governing
Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of California, without regard to the principles of conflicts of
law thereof.  Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party hereto
or its respective Affiliates, employees or agents) may be commenced in the
state and federal courts sitting in the City of San Francisco (the “California
Courts”).  Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of the California
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any California Court, or
that such Proceeding has been commenced in an improper or inconvenient
forum.  Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any Proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby.  If either party shall commence a Proceeding
to enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.


 


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


 


12

















 


(j)                                     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 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.


 


(k)                                  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


(l)                                     Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser hereunder is several and not
joint with the obligations of any other Purchaser hereunder, and no Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser hereunder.  The decision
of each Purchaser to purchase Securities pursuant to the Transaction Documents
has been made independently of any other Purchaser.  Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers 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 Securities or
enforcing its rights under the Transaction Documents.  Each Purchaser 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 Purchaser to be joined as an additional
party in any proceeding for such purpose.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]


 


13

















 


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


 


	
   

  	
  VALENTIS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/   Benjamin
  F. McGraw

  
	
   

  	
  Name:  Benjamin
  F. McGraw, III, Pharm.D.

  
	
   

  	
  Title:    President
  and Chief Executive Officer

  



 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF PURCHASER TO FOLLOW]


 

















 


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


 


	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  
	
   

  	
  Attn.:

  
	
   

  	
   

  
	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  
	
   

  	
  Attn:

  



 

















 


ANNEX A


 


PLAN OF DISTRIBUTION


 


The Selling Stockholders and any of their pledgees,
donees, assignees and successors-in-interest may, from time to time, sell any
or all of their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions.  These sales may be at fixed or negotiated
prices.  The Selling Stockholders may
use any one or more of the following methods when selling shares:


 


•                  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;


 


•                  privately
negotiated transactions;


 


•                  short sales;


 


•                  broker-dealers
may agree with the Selling Stockholders 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 Stockholders may also sell shares
under Rule 144 under the Securities Act, if available, rather than under this
prospectus.


 


Broker-dealers engaged by the Selling
Stockholders may arrange for other brokers-dealers to participate in
sales.  Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated.  The Selling
Stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.


 


The Selling Stockholders may from time to
time pledge or grant a security interest in some or all of the Shares owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell shares of Common Stock from time
to time under this prospectus, or under an amendment to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.


 

















 


Upon the Company being notified in writing by a
Selling Stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of Common Stock through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, a supplement to this prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of
each such Selling Stockholder and of the participating broker-dealer(s), (ii)
the number of shares involved, (iii) the price at which such the shares of
Common Stock were sold, (iv)the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information
set out or incorporated by reference in this prospectus, and (vi) other facts
material to the transaction.  In
addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledge intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.


 


The Selling Stockholders also may transfer the shares
of common stock in other circumstances, in which case the transferees, pledgees
or other successors in interest will be the selling beneficial owners for purposes
of this prospectus.


 


The Selling Stockholders and any broker-dealers or
agents that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such
sales.  In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. 
Each Selling Stockholders has represented and warranted to the Company
that it does not have any agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock.


 


The Company has advised the Selling Stockholders that
they are required to comply with Regulation M promulgated under the Securities
and Exchange Act during such time as they may be engaged in a distribution of
the shares.  The foregoing may affect
the marketability of the common stock.


 


The Company is required to pay all fees and expenses
incident to the registration of the shares. 
The Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the Securities Act.


 

















 


SCHEDULE 3(g)


 


BLUE SKY JURISDICTIONS


 


•                  New York