REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January
31, 1996 by and among ENZON, INC., a Delaware corporation, with
headquarters located at 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (the
"COMPANY"), and the undersigned (collectively, the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, (i) to issue and sell to the Buyer shares
(the "COMMON SHARES") of the Company's common stock (the "COMMON STOCK"),
(ii) to issue and sell to the Buyer shares of the Company's Series B
Convertible Preferred Stock (the "PREFERRED SHARES") which will be
convertible into shares of Common Stock (as converted, the "CONVERSION
SHARES"), and (iii) to issue to the Buyer warrants (the "WARRANTS") for the
purchase of shares of Common Stock (as exercised, the "WARRANT SHARES");
and
B. To induce the Buyer 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
"1933 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 Buyer hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have
the following meanings:
(i) "INVESTOR" means the Buyer and any transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under
the 1933 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 the Common Shares, the
Conversion Shares, the Warrant Shares, and the Damage Shares (as defined
below).
(iv) "REGISTRATION STATEMENT" means a registration statement
of the Company under the 0000 Xxx.
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall prepare, and, on
or prior to the date which is thirty (30) days after February 7, 1996, file
with the SEC a Registration Statement on Form S-3 covering the resale of
the Registrable Securities, which Registration Statement shall state that,
in accordance with Rule 416 promulgated under the 1933 Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the
Preferred Shares and exercise of the Warrants to prevent dilution resulting
from stock splits, stock dividends or similar transactions. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to and
approved by the Buyer and its counsel prior to its filing or other
submission.
b. UNDERWRITTEN OFFERING. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an
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 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.
c. PAYMENTS BY THE COMPANY. If the Registration Statement
covering the Registrable Securities required to be filed by the Company
pursuant to Section 2(a) hereof is not declared effective by the SEC by May
7, 1996 or if, after the Registration Statement has been declared effective
by the SEC, sales cannot be made pursuant to the Registration Statement (by
reason of stop order, the Company's failure to update the Registration
Statement or otherwise), or if the Common Stock is not listed or included
for quotation on the National Association of Securities Dealers Automated
Quotation (the "NASDAQ") National Market System (the "NASDAQ-NMS"), the New
York Stock Exchange (the "NYSE"), the American Stock Exchange (the "AMEX")
or the NASDAQ SmallCap Market ("NASDAQ SMALLCAP"), then the Company will
make payments to the Investors in such amounts and at such times as shall
be determined pursuant to this Section 2(c) as partial relief for the
damages to the Investors by reason of any such delay in or reduction of
their ability to sell the Registrable Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity, except that
such remedy shall be the exclusive remedy for delay in the effectiveness of
the Registration Statement provided that the Registration Statement is
declared effective by the SEC within 180 days after February 7, 1996). The
Company shall pay to each holder of Registerable Securities an amount equal
to the Average Market Price (as defined below) of the Common Shares during
the five (5) consecutive trading days ending one (1) trading day prior to
the Closing Date (the "CLOSING DATE AVERAGE MARKET PRICE") multiplied by
three-hundredths (.03) times the sum of: (i) the number of months (prorated
for partial months) after May 7, 1996 and prior to the date the
Registration Statement is declared effective by the SEC, provided, however,
that there shall be excluded from such period (and from any period under
clause (ii) immediately below) delays which are attributable to changes
required by the Investors in the Registration Statement, including, without
limitation, changes to the plan of distribution; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been declared
effective; and (iii) the number of months (prorated for partial months)
that the Common Stock is not listed or included for quotation on the
NASDAQ-NMS, NYSE, AMEX or NASDAQ SmallCap after the Registration Statement
has been declared effective; provided that the aggregate number of months
for which payments shall be made pursuant to clauses (i), (ii) and (iii)
above shall not exceed twelve (12). (For example, if the Registration
Statement becomes effective one and one-half (1 1/2 ) months after May 7,
1996, the Company would pay $45,000 for each $1,000,000 of Closing Date
Average Market Price until any subsequent adjustment; if thereafter, sales
could not be made pursuant to the Registration Statement for a period of
two (2) months, the Company would pay an additional $60,000 for each
$1,000,000 of Closing Date Average Market Price.) Such amounts may be paid
at the Company's option in cash or Common Stock (the "DAMAGE SHARES," which
term shall include shares of Common Stock that may be issued pursuant to
Section 2(b) of the Certificate of Designation) valued based on the Average
Market Price for the period (a "DAMAGE PRICING PERIOD") of five (5)
consecutive trading days ending on the trading day prior to the date that
the Registration Statement is declared effective or that sales can be
resumed under the Registration Statement, as applicable; any amounts due as
to any Damage Pricing Period during which the Registration Securities are
not listed or included for quotation on the NASDAQ-NMS, NYSE, AMEX or
NASDAQ SmallCap shall be paid in cash only; PROVIDED, HOWEVER, that in no
event shall Damage Shares be paid hereunder if, after giving effect to such
payment, the number of shares of Common Stock purchased pursuant to the
Securities Purchase Agreement or issued on exercise of the Warrants or
conversion of the Preferred Shares and beneficially owned by such holder
and all other holders whose holdings would be aggregated with such holder
for purposes of calculating beneficial ownership in accordance with
Sections 13(d) and 16 of the Securities Exchange Act of 1934, as amended,
and the regulations thereunder ("SECTIONS 13(D) AND 16"), including,
without limitation, any person serving as an adviser to any holder
(collectively, the "RELATED PERSONS"), would exceed four and nine-tenths
percent (4.9%) of outstanding shares of Common Stock (calculated in
accordance with Sections 13(d) and 16); cash shall be paid for any Damage
Shares which cannot be issued pursuant to this proviso. Common Stock
issuable upon conversion of the Preferred Shares or exercise of Warrants
held by such holder or the Related Persons shall not be deemed to be
beneficially owned by such holder or the Related Persons for this purpose.
Payments of cash or issuances of Damage Shares pursuant hereto shall be
made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than
thirty (30) days, interim payments shall be made for each such thirty (30)
day period with the interim payment (if paid in Damage Shares) based on the
last five (5) trading days of such thirty (30) day period. In addition to
the payments provided herein, the Company shall provide an adjustment to
the Conversion Percentage (as that term is defined in the Certificate of
Designation) and pay the amounts specified in Section 2(b) of the
Certificate of Designation. "AVERAGE MARKET PRICE" of any security for any
period shall be computed as the arithmetic average of the closing bid
prices for such security for each trading day in such period on the NASDAQ-
NMS, or, if the NASDAQ-NMS is not the principal trading market for such
security, on the principal trading market for such security, or, if market
value cannot be calculated for such period on any of the foregoing bases,
the Average Market Price shall be the average fair market value during such
period as reasonably determined in good faith by the Board of Directors of
the Company.
d. PIGGY-BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company
shall file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of
its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans)
the Company shall send to each Investor who is entitled to registration
rights under this Section 2(d) written notice of such determination and, if
within twenty (20) days after receipt of such notice, such Investor shall
so request in writing, the Company shall include in such Registration
Statement all or any part of the Registrable Securities such Investor
requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because,
in such underwriter(s)' judgment, marketing or other factors dictate that
such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only
such limited portion of the Registrable Securities with respect to which
such Investor has requested inclusion hereunder; PROVIDED that no portion
of the equity securities which the Company is offering for its own account
shall be excluded; PROVIDED, FURTHER that the Company shall be entitled to
exclude Registrable Securities to the extent necessary to avoid breaching
obligations existing prior to the date hereof to other securityholders of
the Company. Any exclusion of Registrable Securities shall be made pro
rata among the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by
such Investors; PROVIDED, HOWEVER, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion
of such securities in such Registration Statement or are not entitled to
pro rata inclusion with the Registrable Securities; and PROVIDED, FURTHER,
HOWEVER, that, after giving effect to the immediately preceding proviso,
any exclusion of Registrable Securities shall be made pro rata with holders
of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to
inclusion of their securities in such Registration Statement by reason of
demand registration rights. No right to registration of Registrable
Securities under this Section 2(d) shall be construed to limit any
registration required under Section 2(a) hereof. The obligations of the
Company under this Section 2(d) may be waived by Investors holding a
majority in interest of the Registrable Securities. If an offering in
connection with which any Investor is entitled to registration under this
Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
e. ELIGIBILITY FOR FORM S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Buyer and any other Investor of the
Registrable Securities and the Company shall file all reports required to
be filed by the Company with the SEC in a timely manner so as to maintain
such eligibility for the use of Form S-3. In the event that Form S-3 is
not available for the sale by the Investors of the Registrable Securities,
the Company shall register the sale on another appropriate form.
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 promptly, and file with the SEC
not later than thirty (30) days after February 7, 1996, a Registration
Statement with respect to the number of Registrable Securities provided in
Section 2(a), and thereafter to use its best efforts to cause each
Registration Statement relating to Registrable Securities to become
effective as soon as possible after such filing, and keep the Registration
Statement effective pursuant to Rule 415 at all times until such date as is
the earlier of (i) at least three (3) years after the date of the
expiration of all the Warrants, or (ii) the date on which (a) all of the
Warrants have been exercised or expired, (b) no Registrable Securities are
held by any Investor, and (c) none of the Preferred Shares is outstanding
(the "REGISTRATION PERIOD"), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) 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, in light of the circumstances in which they were made,
not misleading.
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 1933 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.
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, and, in the case of
the Registration Statement referred to in Section 2(a), each letter written
by or on behalf of the Company to the SEC or the staff of the SEC, 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 of any
thereof which contains information for which the Company has sought
confidential treatment), and (ii) 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 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 the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and
file in those jurisdictions such 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 more than
nominal expense or burden to the Company, or (e) make any change in its
charter 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 Investors who hold a majority in interest of
the Registrable Securities being offered in the 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. The incremental costs
incident to such an underwritten offering shall be paid by the
participating Investors pro rata based on the number of Registrable
Securities sold by them.
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor 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, in light of the circumstances under which they were
made, not misleading, and use its 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 its 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 possible moment 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.
h. The Company shall permit a single firm of counsel,
designated as selling stockholders' counsel by the Investors who hold a
majority in interest of the Registrable Securities being sold, to review
the Registration Statement and all amendments and supplements thereto a
reasonable period of time prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects.
i. The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the 0000 Xxx) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration
Statement.
j. At the request of the Investors who hold a majority in
interest of the Registrable Securities being sold, the Company shall
furnish, on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration Statement
(i) if required by an underwriter, a letter, dated 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
underwriters, and (ii) an opinion, dated as of such date, from counsel
representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the underwriters and the Investors.
k. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to
the Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Buyer, (iv) one firm of
attorneys and one firm of accountants or other agents retained by all other
Investors, and (v) 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; PROVIDED, HOWEVER, that each Inspector
shall hold in confidence and shall not make any disclosure (except to an
Investor) of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are so notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(b) the release of such Records is ordered pursuant to a subpoena or other
order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in
such Records to any Inspector until and unless such Inspector shall have
entered into confidentiality agreements (in form and substance satisfactory
to the Company) with the Company with respect thereto, substantially in the
form of this Section 3(k). Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
l. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company
hereof 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, or (iv) such information has been made
generally available to the public other than by disclosure in violation of
this or any other agreement. 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, and allow the
Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
m. The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by the Registration Statement to be
listed on a 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, or (ii)
secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the NASDAQ-NMS or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on the NASDAQ SmallCap for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities. The Investors' sole remedy for the
Company's failure to perform under this Section shall be as provided
Section 2(c) hereof and in Section 2(b) of the Certificate of Designation.
n. 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.
o. 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 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. No later than the effective date of any
Registration Statement registering the resale of Registrable Securities,
the Company shall deliver to its transfer agent instructions, accompanied
by any reasonably required opinion of counsel, that (i) permit sales of
legended securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market transactions; and
(ii) upon the exercise of Warrants or conversion of Preferred Shares and
the contemporaneous resale, pursuant to an effective Registration
Statement, of the applicable Warrant Shares and Conversion Shares, permit
the issuance of stock certificates without restrictive legends to the
transferees of such Warrant Shares and Conversion Shares.
p. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to the Registration Statement.
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) days prior to the first
anticipated filing date of the Registration Statement, the Company shall
notify each investor of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement.
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 registered 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 managing underwriter of such
offering 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 to exclude all of such Investor's Registrable Securities from the
Registration Statement. The incremental costs incident to such an
underwritten offering shall be paid by the Investor to the extent provided
in Section 3(e).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(f) or 3(g), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g)
and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's
possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting
arrangements approved by the Investors entitled hereunder to approve such
arrangements, (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.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting
fees, the fees and disbursements of counsel for the Company, and the fees
and disbursements of one (1) firm of counsel for the Investors, shall be
borne by the Company.
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, (ii) the directors, officers and each person who controls any
Investor within the meaning of the 1933 Act or the Securities Exchange Act
of 1934, as amended (the "1934 ACT"), if any, and (iii) any underwriter (as
defined in the 0000 Xxx) for the Investors; and the directors, officers and
each person who controls any such underwriter within the meaning of the
1933 Act or the 1934 Act, if any, (each, an "INDEMNIFIED PERSON"), against
any losses, claims, damages, liabilities or expenses (joint or several)
(collectively, "CLAIMS") to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) 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 relating to the offer or sale of the Registrable
Securities by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder (the matters in the foregoing clauses (i) through
(iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(d) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each such underwriter or
controlling 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, subject to the provisions of Section 6(d). Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(a): (i) shall not apply to a Claim 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 any Indemnified Person
or underwriter for such Indemnified Person expressly for use in connection
with the preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available
by the Company pursuant to Section 3(c) hereof; (ii) with respect to any
preliminary prospectus, shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any person
controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was timely
made available by the Company pursuant to Section 3(c) hereof; (iii) shall
not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made
available by the Company; and (iv) 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. 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 any
Investor is participating, each such Investor agrees 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, each person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act, any underwriter
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 1933 Act or the
1934 Act (collectively and together with an indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 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
or to the extent such Claim is based upon the failure of the Investor to
deliver or cause to be delivered the prospectus made available by the
Company; and such Investor will reimburse any legal or other expenses
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, which consent shall not be unreasonably withheld; PROVIDED,
FURTHER, HOWEVER, that the Investor shall be liable under this Section 6(b)
for only that amount of a Claim as does not exceed the net proceeds to 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 contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing by such persons expressly for inclusion in the
Registration Statement.
d. 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 participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, 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 an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the 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 differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding. The Company shall pay for only one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim
relates. 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 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
seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty
of such fraudulent misrepresentation, and (iii) contribution 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 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 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. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 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 4(c) of the Securities Purchase Agreement) and the filing of such
reports and other documents is required for the applicable provisions of
Rule 144; and
c. 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 1933 Act and the 1934 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 to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of 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 within a reasonable time after such assignment, (ii) the Company
is, within a reasonable time after such transfer or assignment, furnished
with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration
rights are being transferred or assigned, (iii) immediately following such
transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the 1933 Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained herein, (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, and (vi) such transferee shall be an "ACCREDITED INVESTOR" as
that term defined in Rule 501 of Regulation D promulgated under the 1933
Act.
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), only with written consent of the Company
and Investors who hold a majority in interest of the Registrable
Securities. 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. Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission or
other means) or sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid,
if to the Company:
Enzon, Inc.
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Corporate Secretary
with copy to:
Xxxx & Xxxxxxx
00 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
if to the Buyer, at the addresses listed on their respective signature
pages
with copy to:
Genesee Advisers
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxx
and:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
and if to any other Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11(b), and
shall be effective, when personally delivered, upon receipt and, when so
sent by certified mail, four days after deposit with the United States
Postal Service.
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 enforced, governed by and construed
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State. In the
event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision
hereof.
e. This Agreement and the Securities Purchase Agreement
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 and the Securities Purchase
Agreement supersede all prior agreements and understandings among the
parties hereto 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.
IN WITNESS WHEREOF, the parties have caused to be duly executed under
seal as of day and year first above written.
ENZON, INC.
By:/S/ XXXXX X. XXXXXXX
Name: XXXXX X. XXXXXXX
Its: PRESIDENT AND CEO
GFL ADVANTAGE FUND LTD.
By:/S/ X.X. XX XXXXX
Name: X.X. XX XXXXX
Its: PRESIDENT
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
GFL PERFORMANCE FUND LTD.
By:/S/ X.X. XX XXXXX
Name: X.X. XX XXXXX
Its: PRESIDENT
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
