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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of July 27,
1999, by and among ENTREMED, INC., a corporation organized under the laws of
the State of Delaware (the "COMPANY"), and the undersigned (the "INITIAL
INVESTORS").
WHEREAS:
A. The Company and the Initial Investors have entered into a
Securities Purchase Agreement dated the date hereof (the "SECURITIES PURCHASE
AGREEMENT;" capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement). In connection with the Securities Purchase Agreement, the Company
has agreed, upon the terms and subject to the conditions contained therein, to
issue and sell to the Initial Investors (i) shares of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), (ii) the Series 1
Warrants and (iii) the Series 2 Warrants (together with the Series 1 Warrants,
the "WARRANTS"). The shares of Common Stock issued on the Closing Date under
the Securities Purchase Agreement are referred to herein as the "SHARES" and
the shares of Common Stock issuable upon exercise of or otherwise pursuant to
the Warrants are referred to herein as the "WARRANT SHARES."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(i) "INVESTORS" means the Initial Investors and
any transferees or assignees who agree to become bound by the provisions of
this Agreement in accordance with Section 9 hereof, provided that neither such
person nor any affiliate of such person is registered as a broker or dealer
under Section 15(a) of the Securities Exchange Act of 1934, as amended, or a
member of the National Association of Securities Dealers, Inc. ("NASD").
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(ii) "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (i) the
Shares, (ii) the Warrant Shares and (iii) and any shares of capital stock
issued or issuable, from time to time (with any adjustments), as a distribution
on or in exchange for or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT" means one or more
registration statements of the Company under the Securities Act registering all
of the Registrable Securities, including the Initial Registration Statement,
any Uncovered Shares Amendments and Uncovered Shares Registration Statements
(each, as defined below).
2. REGISTRATION.
a. Mandatory Registration. The Company shall file with
the United States Securities and Exchange Commission ("SEC"), on the date which
is fourteen (14) calendar days after the Closing Date (the "FILING DEADLINE") a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of
the Initial Investors as to the use of such form (as determined pursuant to
Section 11(j) hereof)) covering the resale of at least 2,956,236 shares of
Common Stock, which Registration Statement, to the extent allowable under the
Securities Act and the rules promulgated thereunder shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions (the "INITIAL REGISTRATION STATEMENT"). The Registrable
Securities included in the Initial Registration Statement shall be registered
on behalf of the Investors as set forth in Section 11(k) hereof. The Initial
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to (and
subject to the review by) the Initial Investors and their counsel at least five
(5) business days prior to its filing or other submission. If for any reason
(including, but not limited to, a determination by the staff of the SEC that
all or any portion of the Warrant Shares or any other Registrable Securities
cannot be included in the Initial Registration Statement (an "SEC
DETERMINATION")) the Initial Registration Statement declared effective by the
SEC does not include all of the Registrable Securities (any such shares that
are not included being the "UNCOVERED SHARES"), the Company shall prepare and
file with the SEC, as soon as practicable, but in any event prior to the
fourteenth (14th) calendar day after becoming
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aware of the existence of any Uncovered Shares (such date referred to herein as
the "UNCOVERED SHARE FILING DEADLINE"), either (a) an amendment (the "UNCOVERED
SHARES AMENDMENT") to the Initial Registration Statement effecting a
registration of the Uncovered Shares or (b) a registration statement which
registers the Uncovered Shares (the "UNCOVERED SHARES REGISTRATION STATEMENT").
The Uncovered Shares Amendment or the Uncovered Shares Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to the Initial Investors and their
counsel for review and comment at least three (3) business days prior to its
filing or other submission. The Company shall use all commercially reasonable
efforts to cause each of the Initial Registration Statement and the Uncovered
Shares Amendment or the Uncovered Shares Registration Statement to become
effective as soon as practicable after the filing thereof.
b. Underwritten Offering. The Investors may offer and
sell the Registrable Securities pursuant to a Registration Statement filed in
accordance with Section 2(a) in an underwritten offering. In any such
underwritten offering, the Investors who hold a majority in interest of the
Registrable Securities subject to such underwritten offering, shall have the
right to select one legal counsel to represent the Investors and an investment
banker or bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company. In the event that any Investors elect not to
participate in such underwritten offering, the Registration Statement covering
all of the Registrable Securities shall contain appropriate plans of
distribution reasonably satisfactory to the Investors participating in such
underwritten offering and the Investors electing not to participate in such
underwritten offering (including, without limitation, the ability of
nonparticipating Investors to sell from time to time and at any time during the
effectiveness of such Registration Statement).
c. Effectiveness of Registration Statement. The Company
shall use reasonable best efforts to cause each Registration Statement required
to be filed pursuant to Section 2(a) hereof to become effective as soon as
practicable, but, as to the Initial Registration Statement filed pursuant to
Section 2(a), in no event later than the ninetieth (90th) day after the Filing
Deadline (the "REGISTRATION DEADLINE"), and as to any Uncovered Shares
Amendment or Uncovered Shares Registration Statement, in no event later than
sixty (60) days after the Uncovered Share Filing Deadline (the "UNCOVERED SHARE
REGISTRATION DEADLINE").
d. Eligibility for Form S-3. The Company represents and
warrants that it is eligible to register the resale of Registrable Securities
on a registration statement on Form S-3 under the Securities Act, and that
there exist no facts or circumstances (including without limitation any
required approvals or waivers or any circumstances that may delay or prevent
the obtaining of accountant's consents) that would prohibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Registrable Securities. The Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to maintain or, if
applicable, regain its eligibility for the use of Form S-3.
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3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC, on
or before the Filing Deadline or the Uncovered Share Filing Deadline, as
applicable, the applicable Registration Statement required by Section 2(a) and
shall use reasonable best efforts to cause such Registration Statement to
become effective as soon as practicable after such filing (but in no event
later than the Registration Deadline or the Uncovered Share Registration
Deadline, as applicable). The Company shall keep such Registration Statement
effective pursuant to Rule 415 at all times until the date on which all of the
Registrable Securities may (in the reasonable opinion of one counsel identified
by the Initial Investors) be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) under the Securities Act
(the "REGISTRATION PERIOD"). In the event that the sale of Registrable
Securities by one or more Investors is determined by the SEC to constitute a
primary offering, upon the written request from time to time of any such
Investor, the Company shall as promptly as practicable: cause a Registration
Statement to be amended and/or one or more additional Registration Statements
(which may be requested on a sequential basis) to be filed (as specified by the
applicable Investors) and to be declared effective; and take all other actions
reasonably requested by such Investors to effectuate the offering of
Registrable Securities. If the Initial Registration Statement is not filed on
Form S-3, the Company shall, as soon as it is eligible to do so, file a
post-effective amendment on Form S-3 to the Initial Registration Statement to
the extent permitted by the SEC or, if not so permitted, file a new
Registration Statement on Form S-3 to permit sales of the Registrable
Securities pursuant to Rule 429 under the Securities Act; and the Company shall
use all commercially reasonable efforts to cause such post-effective amendment
or Registration Statement to become effective as soon as possible. Each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) filed pursuant to this Agreement (i) shall comply in all material
respects with the requirements of the Securities Act and the rules and
regulations of the SEC promulgated thereunder and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein not
misleading. The financial statements of the Company included in the
Registration Statement or incorporated by reference therein will comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC applicable with respect thereto.
Such financial statements shall be prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and shall fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of
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their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to immaterial year-end adjustments).
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statement.
Notwithstanding the foregoing, the Company's obligations hereunder to file a
Registration Statement and to keep a registration statement continuously in
effect under the Securities Act shall be suspended if the fulfillment of such
obligations would require the Company to make a disclosure that would, in the
reasonable judgment of the Company's Board of Directors, have a Material
Adverse Effect (as such term is defined in the Securities Purchase Agreement)
on the Company or a material adverse effect on the future prospects of the
Company or its stockholders; provided, that the Registration Statement shall be
suspended for a total of no more than ninety (90) days during any twelve (12)
month period.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement and its legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto. In the case of the Registration
Statement referred to in Section 2(a), the Company shall furnish to each
Investor a copy of each letter written by or on behalf of the Company to the
SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than any portion,
if any, thereof which contains information for which the Company has sought
confidential treatment), (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
d. The Company shall use all commercially reasonable
efforts to (i) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or "blue sky" laws of such
jurisdictions in the United States as each Investor who holds Registrable
Securities being offered reasonably requests, (ii) prepare and file in those
jurisdictions such
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amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (a) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction, (c) file a general consent to service of process in any
such jurisdiction, (d) provide any undertakings that cause the Company undue
expense or burden, or (e) make any change in its certificate of incorporation
or bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.
e. In the event the Investors who hold a majority in
interest of the Registrable Securities being offered in an offering select
underwriters for the offering, the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
f. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor by telephone or facsimile of
the happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and use reasonable best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission and deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request.
g. The Company shall use reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
a Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable date (including in each
case by amending or supplementing such Registration Statement) and to notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request).
h. The Company shall permit a single firm of counsel
designated by the Initial Investors to review the Registration Statement and
all amendments and supplements thereto a reasonable period of time prior to
their filing with the SEC.
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i. At the request of the Initial Investors whose
Registrable Securities are included in a Registration Statement, the Company
shall furnish, on the date of effectiveness of the Registration Statement, a
letter, dated as of such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the Initial Investors and the underwriters, if any. In
addition, at the request of the Initial Investors whose Registrable Securities
are included in the Registration Statement, the Company shall furnish on the
date of effectiveness of such registration statement an opinion, dated as of
such date, from counsel representing the Company to the Initial Investors to
the effect that such Registration Statement and the related prospectus comply
as to form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations thereunder (except that no opinion
need be expressed with respect to the financial statements, including the notes
and schedules thereto, or any other financial, statistical or accounting
information, or information relating to the Investors or any underwriters or
the method of distribution of the Registrable Securities by the Investors and
any underwriters included therein).
j. The Company shall make available for inspection by
(i) any Investor whose Registrable Securities are included in a Registration
Statement, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "INSPECTORS") all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "RECORDS"), as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor prior
to making such disclosure, and allow the Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
l. The Company shall use reasonable best efforts to
promptly either (i) secure
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the designation and quotation, of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market, or (ii) cause all the
Registrable Securities covered by the Registration Statement to be listed on
the NYSE or the AMEX or another national securities exchange and on each
additional national securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange.
m. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement.
n. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement) an opinion
of such counsel in a form customary for such transactions.
o. At the request of an Initial Investor or Investors
who holds a majority-in-interest of the Registrable Securities, the Company
shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.
p. The Company shall comply with applicable federal
securities laws and regulations related to a Registration Statement and
offering and sale of securities.
q. The Company shall take all such other actions as any
Investor or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities.
r. From and after the date of this Agreement, the
Company shall not, and shall not agree to, allow the holders of any securities
of the Company (except to the extent existing agreements may otherwise provide)
to include any of their securities in any Registration Statement under Section
2(a) hereof or any amendment or supplement thereto under Section 3(b) hereof
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without the consent of the holders of a majority in interest of the Registrable
Securities.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five (5) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of any
information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
c. In the event Investors holding a majority in interest
of the Registrable Securities being offered determine to engage the services of
an underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless such Investor
has notified the Company in writing of such Investor's election not to
participate in such underwritten distribution.
d. No Investor may participate in any underwritten
distribution hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
in usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Section 5 below. Notwithstanding anything
in this Section 4(d) to the contrary, this Section 4(d) is not intended to
limit an Investor's rights under Section 2(a) or 3(b) hereof.
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5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above (excluding brokers' fees, underwriting discounts and commissions,
and similar selling expenses), including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company, shall be borne by the Company. In
addition, the Company shall pay all of the Investors' costs and expenses
(including reasonable legal fees) incurred in connection with the enforcement
of the rights of the Investors hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds such
Registrable Securities, and (ii) the directors, officers, partners, members,
employees and agents of such Investor and each person who controls any Investor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any (each,
an "INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective
date of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Investors and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim
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arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto; (ii) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any prospectus, shall not inure to the
benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in such prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented, if such corrected prospectus
was timely made available by the Company pursuant to Section 3(c) hereof, and
the Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees severally and not
jointly to indemnify, hold harmless and defend, to the same extent and in the
same manner set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and subject to Section 6(c) such
Investor will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor; provided, further, however, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of
material fact by the Investor contained in the preliminary prospectus was
corrected on a timely basis in the
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prospectus, as then amended or supplemented, and the Indemnified Party failed
to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that such
indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for
only one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if any of them holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty
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of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation,
and (iii) contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("RULE 144"), the
Company agrees to:
a. file with the SEC in a timely manner and make and
keep available all reports and other documents required of the Company under
the Securities Act and the Exchange Act so long as the Company remains subject
to such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 5(c) of the Securities Purchase Agreement)
and the filing and availability of such reports and other documents as is
required for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144
without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable, with the consent of the Company (which consent shall not be
unreasonably withheld), by each Investor to any transferee of all or any
portion of the Registrable Securities if: (i) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company
is furnished with written notice of (a) the name and address of such transferee
or assignee and (b) the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (iv) the transferee or assignee
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agrees in writing with the Company to be bound by all of the provisions
contained herein, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Securities Purchase Agreement, and the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained therein. In addition, and notwithstanding anything to
the contrary contained in this Agreement, the Securities Purchase Agreement or
the Warrants, the Securities (as defined in the Securities Purchase Agreement)
may be pledged, and all rights of the Investors under this Agreement or any
other agreement or document related to the transaction contemplated hereby may
be assigned, without further consent of the Company, to a bona fide pledgee in
connection with an Investor's margin or brokerage accounts.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), and Investors (excluding Investors who are
affiliates of the Company) who hold a majority (51%) in interest of the
Registrable Securities (excluding Registrable Securities held by affiliates of
the Company) or, in the case of a waiver, with the written consent of the party
charged with the enforcement of any such provision. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
b. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five (5) days after being placed in
the mail, if mailed, or upon receipt or refusal of receipt, if delivered
personally or by courier or confirmed telecopy, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Ph.D.
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Chairman, President and Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esq.
If to an Investor, at such address as such Investor shall have
provided in writing to the Company or such other address as such Investor
furnishes by notice given in accordance with this Section 11(b), with a copy
to:
First Security Xxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Senior Vice President
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York. The Company irrevocably consents
to the jurisdiction of the United States federal courts and state courts
located in the State of New York in any suit or proceeding based on or arising
under this Agreement and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company further agrees that service of process upon the
Company mailed by first class mail to the address set forth in Section 11(b)
shall be deemed in every respect effective service of process upon the Company
in any such suit or proceeding. Nothing herein shall affect an Investor's
right to serve process in any other manner permitted by law. The Company
agrees that a final non-appealable judgment in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
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e. This Agreement, the Securities Purchase Agreement and
the Warrants (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein.
This Agreement, the Securities Purchase Agreement and the Warrants supersede
all prior agreements and understandings among the parties hereto and thereto
with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents, approvals and other determinations to
be made by the Investors pursuant to this Agreement shall be made by the
Investors holding a majority in interest of the Registrable Securities
(determined as if all Warrants then outstanding had been exercised by the
payment of cash) then held by all Investors.
k. The initial number of Registrable Securities included
on any Registration Statement and each increase to the number of Registrable
Securities included thereon shall be registered on behalf of each Investor pro
rata based on the number of Registrable Securities held by each Investor at the
time of such establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be deemed to have registered on its behalf a
pro rata portion of the number of Registrable Securities included on a
Registration Statement for such transferor. Any shares of Common Stock
included on a Registration Statement on behalf of any person or entity which
does not hold any Registrable Securities shall be deemed registered on behalf
of the remaining Investors, pro rata based on the number of shares of
Registrable Securities then held by such Investors. For the avoidance of
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doubt, (A) the number of Registrable Securities held by an Investor shall be
determined as if all Warrants then outstanding and held by an Investor were
exercised by the payment of cash and (B) no provision of this subsection shall
operate to reduce the number of Registrable Securities registered on behalf of
any Investor pursuant to the first sentence of this subsection.
l. For purposes of this Agreement, the term "business
day" means any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
ENTREMED, INC.
By:___________________________________
Name: Xxxx X. Xxxxxxx, Ph.D.
Title: Chairman of the Board and Chief Executive Officer
INITIAL INVESTORS:
[Name of Purchasers]
By:_________________________
Name:_______________________
Title:______________________
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