EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
December 14, 2001, is entered into by and among EntreMed, Inc., a Delaware
corporation, with headquarters located at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 (the "COMPANY"), and the undersigned buyers (each, a "BUYER" and
collectively, the "BUYERS").
WHEREAS:
A. Pursuant to a Securities Purchase Agreement, dated the date
hereof (the "SECURITIES PURCHASE AGREEMENT"), among the Company
and the Buyers, the Company has agreed to sell and the Buyers
have agreed to purchase units of securities of the Company (the
"UNITS") consisting of (i) the Company's Common Stock, par value
$.01 per share (the "COMMON SHARES"), and (ii) Warrants (the
"WARRANTS") to purchase shares of Common Stock (the "WARRANT
SHARES"); and
B. To induce the Buyers 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").
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
Buyers hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means a Buyer, any transferee or
assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to
become bound by the provisions of this Agreement
in accordance with Section 10 and any transferee
or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement
and who agrees to become bound by the provisions
of this Agreement in accordance with Section 10.
b. "MATERIALLY DETRIMENTAL" means, in the good
faith judgment of the Board of Directors of the
Company as set forth in a certificate signed by
the Chief Executive Officer, Vice
President-Finance or General Counsel of the
Company, the filing in question would be
materially
detrimental to the Company by reason of (i) any
proceeding before, or material event involving,
the Food and Drug Administration, or (ii) any
proposal or plan of the Company or any of its
Subsidiaries to engage in any sale, acquisition,
merger, consolidation, reorganization, tender
offer or similar transaction.
c. "PERSON" means a corporation, a limited
liability company, an association, a
partnership, an organization, a business, an
individual, a governmental or political
subdivision thereof or a governmental agency or
any other entity.
d. "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing
and filing one or more Registration Statements
(defined below) 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(s) by the United
States Securities and Exchange Commission (the
"SEC").
e. "REGISTRABLE SECURITIES" means (i) the Common
Shares purchased by the Buyers pursuant to the
Securities Purchase Agreement, (ii) the Warrant
Shares issued or issuable upon exercise of the
Warrants and (iii) any shares of capital stock
issued or issuable with respect to such Common
Shares, Warrants or Warrant Shares as a result
of any stock split, stock dividend,
recapitalization, exchange or similar event or
otherwise, without regard to any limitation on
the exercise of the Warrants.
f. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933
Act and pursuant to Rule 415.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION
a. Shelf Registration. The Company shall prepare,
and, as soon as practicable, but in no event
later than thirty (30) calendar days after the
Closing Date (the "FILING DATE"), file with the
SEC a Registration Statement or Registration
Statements (as is necessary), containing the
Plan of Distribution set forth hereto as Exhibit
B, on Form S-3 (or
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if such form is unavailable, such other form as
is available for registration) covering the
resale of all of the Registrable Securities. The
Company shall use its reasonable best efforts to
have the Registration Statement declared
effective by the SEC as soon as practicable, but
in no event later than the earlier of (i) five
(5) business days after the Company is advised
orally or in writing by the SEC that the SEC
will not review or has no further comments
concerning the Registration Statement and (ii)
the ninetieth (90th) calendar day after the
Closing Date (the "EFFECTIVENESS DATE").
b. Piggy-Back Registrations. If at any time prior
to the expiration of the Registration Period (as
defined in Section 3(a)) the Registrable
Securities are not already covered by an
effective Registration Statement and the Company
proposes to 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 securities (other than on Form
S-4 or Form S-8 (or their equivalents at such
time) relating to securities to be issued solely
in connection with any sale, acquisition,
merger, consolidation, reorganization or similar
transaction of any entity or business or equity
securities issuable in connection with stock
option or other employee benefit plans) the
Company shall promptly send to each Investor
written notice of the Company's intention to
file a Registration Statement and of such
Investor's rights under this Section 2(b) 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, subject to the priorities set
forth in Section 2(b) below. No right to
registration of Registrable Securities under
this Section 2(b) shall be construed to limit
any registration required under Section 2(a).
The obligations of the Company under this
Section 2(b) may be waived by the Buyers. If an
offering in connection with which an Investor is
entitled to registration under this Section 2(b)
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. If a registration
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pursuant to this Section 2(b) is to be an
underwritten public offering and the managing
underwriter(s) advise the Company in writing,
that in their reasonable good faith opinion,
marketing or other factors dictate that a
limitation on the number of shares of Common
Stock which may be included in the Registration
Statement is necessary to facilitate and not
adversely affect the proposed offering, then the
Company shall include in such registration: (1)
first, all securities the Company proposes to
sell for its own account, (2) second, up to the
full number of securities proposed to be
registered for the account of the holders of
securities entitled to inclusion of their
securities in the Registration Statement by
reason of demand registration rights, and (3)
third, the securities requested to be registered
by the Investors and other holders of securities
entitled to participate in the registration, as
of the date hereof, drawn from them pro rata
based on the number each has requested to be
included in such registration.
c. Allocation of Registrable Securities. The
initial number of Registrable Securities
included in any "piggyback" Registration
Statement under Section 2(b) and each increase
in the number of Registrable Securities included
therein shall be allocated pro rata among the
Investors based on the number of Registrable
Securities held, or which could be held, by each
Investor at the time the Registration Statement
covering such initial number of Registrable
Securities or increase thereof is declared
effective by the SEC.
d. Legal Counsel. The Investors shall have the
right to select one (1) legal counsel to review
and oversee at the Buyers' expense any offering
pursuant to this Section 2 ("LEGAL COUNSEL"),
which shall be Xxxxxxxx Xxxxxxxxx Xxxxxx
Aronsohn & Xxxxxx LLP or such other counsel as
hereafter designated by the holders of a
majority of Registrable Securities. The Company
shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this
Agreement.
e. Ineligibility for Form S-3. In the event that
Form S-3 is not available for any registration
of Registrable Securities hereunder, the Company
shall (i) register the sale of the Registrable
Securities on another appropriate form, if any,
and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is
available, provided that the Company shall
maintain the effectiveness of the
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Registration Statement then in effect until such
time as a Registration Statement on Form S-3
covering the Registrable Securities has been
declared effective by the SEC.
f. Rule 416. The Company and the Investors each
acknowledge that each Registration Statement
prepared in accordance hereunder shall include
an indeterminate number of Registrable
Securities pursuant to Rule 416 under the 1933
Act so as to cover any and all Registrable
Securities which may become issuable to prevent
dilution resulting from stock splits, stock
dividends or similar transactions in accordance
with the provisions contained in the Warrants
(collectively, the "RULE 416 SECURITIES"). In
this regard, the Company agrees to use
reasonable efforts to ensure that the maximum
number of Registrable Securities which may be
registered pursuant to Rule 416 under the 1933
Act are covered by each Registration Statement.
g. Sufficient Number of Shares Registered. In the
event the number of shares available under a
Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the
Registrable Securities (a "DEFICIT FAILURE"),
the Company shall amend the Registration
Statement, or file a new Registration Statement
(on the short form available therefor, if
applicable), or both, so as to cover at least
one hundred percent (100%) of such Registrable
Securities in each case, as soon as practicable,
but in any event not later than fifteen (15)
days after the necessity therefor arises. The
Company shall use its reasonable best efforts to
cause such amendment and/or new Registration
Statement to become effective as soon as
practicable following the filing thereof. For
purposes of the foregoing provision, the number
of shares available under a Registration
Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any
time the number of Registrable Securities is
greater than the number of shares of Common
Stock available for resale under such
Registration Statement. For purposes of the
calculation set forth in the foregoing sentence,
any restrictions on the exercisability of the
Warrants shall be disregarded and such
calculation shall assume that the Warrants are
then exercisable into shares of Company Common
Stock.
3. RELATED OBLIGATIONS
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Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(g),
the Company will use its reasonable best efforts to effect the registration of
the Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
a. Registration. The Company shall promptly prepare
and file with the SEC a Registration Statement
with respect to the Registrable Securities as
provided in Section 2(a), and shall keep such
Registration Statement effective pursuant to
Rule 415 at all times until the earlier of (i)
the date on which the Investors shall have sold
all the Registrable Securities or (ii) the date
on which all Registrable Securities may be sold
without volume restrictions pursuant to Rule
144(k) promulgated under the 1933 Act (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. Amendments. 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 such Registration Statement,
which prospectus is to be filed pursuant to Rule
424 promulgated under the 1933 Act, as may be
necessary to keep such 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 such Registration Statement
until such time as all of such Registrable
Securities shall have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers thereof as
set forth in such Registration Statement.
c. Legal Counsel Review. The Company shall permit
Legal Counsel to review and comment upon a
Registration Statement and all amendments and
supplements thereto at least seven (7) days
prior to their filing with the SEC, and not file
any document in a form to which Legal Counsel
reasonably objects. The Company shall not submit
a request for acceleration of the effectiveness
of a
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Registration Statement or any amendment or
supplement thereto without the prior approval of
Legal Counsel, which approval shall not be
unreasonably withheld. The Company shall furnish
to Legal Counsel, without charge, (i) any
correspondence from the SEC or the staff of the
SEC to the Company or its representatives
relating to any Registration Statement, (ii)
promptly after the same is prepared and filed
with the SEC, one (1) copy of any Registration
Statement and any amendment(s) thereto,
including financial statements and schedules,
all documents incorporated therein by reference
and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one
(1) copy of the prospectus included in such
Registration Statement and all amendments and
supplements thereto.
d. Disclosure Materials. The Company shall furnish
to each Investor whose Registrable Securities
are included in any Registration Statement,
without charge, (i) promptly after the same is
prepared and filed with the SEC, at least one
(1) copy of such Registration Statement and any
amendment(s) thereto, including financial
statements and schedules, all documents
incorporated therein by reference and all
exhibits, (ii) upon the effectiveness of any
Registration Statement, ten (10) copies of the
prospectus included in such Registration
Statement and all amendments and supplements
thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such
other documents, including copies of any
preliminary or final prospectus, as such
Investor may reasonably request from time to
time in order to facilitate the disposition of
the Registrable Securities owned by such
Investor.
e. State Securities Laws. If state securities law
registration or qualification is required, the
Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities
covered by a Registration Statement under such
state securities or "blue sky" laws of such
jurisdictions in the United States as Legal
Counsel or any Investor reasonably requests,
(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
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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 (x) qualify to do business
in any jurisdiction where it would not otherwise
be required to qualify but for this Section
3(e), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general
consent to service of process in any such
jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the
Company of any notification with respect to the
suspension of the registration or qualification
of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any
jurisdiction in the United States or its receipt
of actual notice of the initiation or
threatening of any proceeding for such purpose.
f. Underwriting Agreement. In the event the
Investors who hold a majority of the Registered
Securities being offered in an offering are
entitled to select underwriters for such
offering, the Company agrees to enter into and
to 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.
g. Notification. As promptly as practicable after
becoming aware of such event, the Company shall
notify Legal Counsel and each Investor in
writing of the happening of any event as a
result of which the prospectus included in a
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 promptly prepare a supplement or
amendment to such Registration Statement to
correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or
such other number of copies as Legal Counsel or
such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel
and each Investor in writing (i) when a
prospectus or any prospectus supplement or
post-effective amendment has been filed, and
when a Registration Statement or any
post-effective amendment has become effective
(notification of such effectiveness shall be
delivered to Legal Counsel within one (1) day of
such
8
effectiveness by facsimile or by overnight
mail), (ii) of any request by the SEC for
amendments or supplements to a Registration
Statement or related prospectus or related
information, and (iii) of the Company's
reasonable determination that a post-effective
amendment to a Registration Statement would be
appropriate.
h. Stop-Order and Suspension. The Company shall use
its reasonable best efforts to prevent the
issuance of any stop order or other suspension
of effectiveness of a Registration Statement, or
the suspension of the qualification of any of
the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension
is issued, to obtain the withdrawal of such
order or suspension at the earliest possible
moment and to notify Legal Counsel and each
Investor who holds Registrable Securities being
sold (and, in the event of an underwritten
offering, the managing underwriters) of the
issuance of such order and the resolution
thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such
purpose.
i. Confidential Information. 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 final, non-appealable 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
Agreement 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 written notice
to such Investor and allow such Investor, at the
Investor's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a
protective order for, such information.
j. Listing. The Company shall use its reasonable
best efforts either to (i) cause all the
Registrable Securities covered by a Registration
Statement to be listed on each securities
exchange on which securities of the same class
or series issued by the Company are then listed,
if any, if the listing
9
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 National Market System 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 Market for such
Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at
least two (2) market makers to register with the
National Association of Securities Dealers, Inc.
("NASD") as such with respect to such
Registrable Securities. The Company shall pay
all fees and expenses in connection with
satisfying its obligation under this Section
3(j).
k. Certificates. The Company shall cooperate with
the Investors who hold Registrable Securities
being offered to facilitate the timely
preparation and delivery of certificates (not
bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to
a Registration Statement and enable such
certificates to be in such denominations or
amounts, as the case may be, as the Investors
may reasonably request and registered in such
names as the Investors may request.
l. Transfer Agent. The Company shall provide a
transfer agent and registrar, which may be the
same Person, of all such Registrable Securities
not later than the effective date of such
Registration Statement.
m. Reasonable Best Efforts. The Company shall use
its reasonable best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or
approved by such other governmental agencies or
authorities as may be necessary to consummate
the disposition of such Registrable Securities.
n. Compliance with Securities Laws. The Company
shall otherwise use its reasonable best efforts
to comply with all applicable rules and
regulations of the SEC in connection with any
registration hereunder and the Company shall use
its reasonable best efforts to file with the SEC
in a timely manner all reports and documents
required of the Company under the 1933 Act and
the Securities Exchange Act of 1934, as amended
(the "1934 ACT").
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o. Confirmation. In addition to any notice required
to be delivered to Legal Counsel and to the
Investors pursuant to Section 3(g), within three
(3) business days after the Registration
Statement which includes the Registrable
Securities is ordered effective by the SEC, the
Company shall cause legal counsel for the
Company to deliver to the transfer agent for
such Registrable Securities confirmation,
substantially in the form set forth as Exhibit
A, that the Registration Statement has been
declared effective by the SEC.
p. Disposition. The Company shall take all other
reasonable actions necessary to expedite and
facilitate disposition by the Investors of
Registrable Securities pursuant to a
Registration Statement.
q. Limitation on Registration Statement.
Notwithstanding anything to the contrary
contained in this Agreement, the Registration
Statement required to be filed pursuant to
Section 2(a) shall register only the Registrable
Securities.
4. OBLIGATIONS OF THE INVESTORS
a. At least seven (7) days prior to the first
anticipated filing date of the Registration
Statement, the Company shall notify each
Investor in writing 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 such
Registration Statement. 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 and 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.
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 any 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 such Registration Statement.
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c. In the event any Investor elects to participate
in an underwritten public offering pursuant to
Section 2, each such Investor agrees to enter
into and to 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.
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, and
fees and disbursements of counsel for the Company shall be paid by the Company
and, in the event the Company fails to comply with the reasonable requests of
Legal Counsel made pursuant to Section 3(c) of this Agreement, the fees and
disbursements of Legal Counsel, shall be paid by the Company.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold
harmless and defend (i) each Investor who holds
such Registrable Securities, and (ii) the
directors, officers, partners, employees,
agents, representatives of, and each Person, if
any, who controls any Investor within the
meaning of the 1933 Act or 1934 Act, and any
underwriter (as defined in the 0000 Xxx) for the
Investors, and the directors and officers of,
and each Person, if any, who controls, any such
underwriter within the meaning of the 1933 Act
or the 1934 Act (each, an "INDEMNIFIED PERSON"),
subject to Section 6(d) with respect to the
number of legal counsel, against any losses,
claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees,
amounts paid in settlement or expenses, joint or
several, (collectively, "INDEMNIFIED DAMAGES")
incurred in investigating, preparing or
defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from
the foregoing by or before any court or
governmental, administrative or other regulatory
agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party
is or may
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be a party thereto (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 any
post-effective amendment thereto or in any
filing made in connection with the qualification
of the offering under the securities or other
"blue sky" laws of any jurisdiction in which
Registrable Securities are offered, or the
omission or alleged omission to state a material
fact required to be stated therein 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 1933 Act, the 1934 Act, any state securities
law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement
(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
each 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 by an Indemnified
Person 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 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(d); (ii) with
respect to any preliminary prospectus, shall not
inure to the benefit of any such Person from
whom the
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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(d), 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; (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, if such prospectus was timely made
available by the Company pursuant to Section
3(d); 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 10.
b. In connection with any Registration Statement in
which an Investor is participating, each such
Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in
Section 6(a), the Company, each of its
directors, each of its officers who signs the
Registration Statement, its employees and
agents, and each Person, if any, who controls
the Company within the meaning of the 1933 Act
or the 1934 Act (collectively and together with
an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim or Indemnified Damages to
which any Indemnified Party may become subject,
under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages
arise out of or are 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(d), such
Investor will reimburse any legal or other
expenses reasonably incurred by them in
connection with investigating or defending any
such Claim; provided,
14
however, that the indemnity agreement contained
in this Section 6(b) and the agreement with
respect to contribution contained in Section 7
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 or Indemnified
Damages 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 10. 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, or the Indemnified Party failed to
utilize such corrected prospectus.
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 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 or
proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified
Person or Indemnified Party shall, if a Claim in
respect thereof is to be 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
indemnifying
15
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
differing interests 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 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 to such
indemnifying party. The indemnifying party shall
pay reasonable fees for only one (1) separate
legal counsel for the Indemnified Person or
Indemnified Party, 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, if the
Investors are entitled to indemnification
hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as
applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the
indemnifying party in connection with any
negotiation or defense of any such action or
claim by the indemnifying party and shall
furnish to the indemnifying party all
information reasonably available to the
Indemnified Party or Indemnified Person which
relates to such action or claim. The
indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at
all times as to the status of the defense or any
settlement negotiations with respect thereto. No
indemnifying party shall be liable for any
settlement of any action, claim or proceeding
effected without its written consent; provided,
however, that the indemnifying party shall not
unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without
the consent of the Indemnified Party or
Indemnified Person, consent to entry of any
judgment or enter into any settlement or other
compromise which does not include as an
unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party
or Indemnified Person of a release from all
liability in respect to such claim or
litigation. Following
16
indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms
or corporations relating to the matter for which
indemnification has been made. 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.
e. 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 and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall
be in addition to (i) any cause of action or
similar right of the Indemnified Party or
Indemnified Person against the indemnifying
party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to
the law.
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 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
fraudulent misrepresentation; and (ii) 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 1934 Act so long as
the Company remains subject
17
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. LIQUIDATED DAMAGES
If: (a) any Registration Statement required to be filed pursuant to
Section 2(a) is not filed on or prior to the Filing Date, (b) unless waived by
the Investors, the Company files such Registration Statement without affording
Legal Counsel the opportunity to review and comment on the same as required by
Section 3(c), or (c) the Company fails to file with the SEC a request for
acceleration in accordance with Rule 461 promulgated under the 1933 Act, within
five (5) business days after the Company is advised orally or in writing by the
SEC that the SEC will not review or has no further comments concerning the
Registration Statement, or (d) a Registration Statement filed hereunder is not
declared effective by the SEC on or prior to the Effectiveness Date, or (e)
after a Registration Statement is filed with and declared effective by the SEC,
such Registration Statement ceases to be effective as to all Registrable
Securities to which it is required to relate at any time prior to the expiration
of the Registration Period without being succeeded within ten (10) trading days,
or if it would be Materially Detrimental, twenty (20) trading days, by an
amendment to such Registration Statement or by a subsequent Registration
Statement filed with and declared effective by the SEC, or (f) an amendment to a
Registration Statement is not filed by the Company with the SEC within ten (10)
trading days, or if it would be Materially Detrimental, twenty (20) trading
days, of the SEC's notifying the Company that such amendment is required in
order for such Registration Statement to be declared or remain effective, or (g)
the Common Stock is not listed or quoted, or is suspended from trading, on
Nasdaq for a period of ten (10) trading days in any 12 month period (which need
not be consecutive trading days), (any such failure or breach being referred to
as an "REGISTRATION DEFAULT," and, (w) for purposes of clause (a), (b) or (d),
the date on which such Registration Default occurs, (x) for purposes of clause
(c), the date on which such five (5) day period is exceeded, (y) for purposes of
clauses (e) and (f) the date on which the applicable trading day-period is
exceeded, or (z) for purposes of clause (g) the date on which such ten (10)
trading day period is exceeded, being referred to as an "EVENT DATE"), then the
Company shall pay to each Holder an amount, in cash, as liquidated damages
("LIQUIDATED DAMAGES")
18
(x) upon the occurrence of a Registration Default, an amount equal to one
percent (1%) of the aggregate Price Per Unit of the Units then held by such
Buyer, and (y) if the Registration Default has not been cured by the first month
anniversary following the date of the Registration Default, an amount equal to
one percent (1%) of the aggregate Price Per Unit of the Units then held by such
Buyer and (z) on each monthly anniversary thereafter until the Registration
Default has been cured, an amount equal to one percent (1%) of the aggregate
Price Per Unit of the Units then held by such Buyer; provided, however, that all
periods referred to in clauses (y) and (z) above shall be tolled during delays
caused by the action or inaction of any Buyer, and the Company shall have no
liability in respect of any such delay. The Liquidated Damages payable pursuant
hereto shall be payable within five (5) business days following the date of the
Registration Default or the monthly anniversary thereof, as the case may be.
Notwithstanding anything to the contrary contained herein, (x) Liquidated
Damages shall not be payable under this Section 9 for more than one Registration
Default occurring or existing at any one time, (y) no Liquidated Damages shall
be payable under this Section 9 in respect of any Registration Default which
also constitutes a Company Violation under the Securities Purchase Agreement or
is an exception from the liquidated damages provisions contained in Section 8 of
the Securities Purchase Agreement, or (z) that the Company shall have no
liability to any Investor for any Liquidated Damages at the occurrence of a
Registration Default or thereafter if the Company's violation of any such
material provision or failure to fulfill such material obligations is caused by
or results from any action or inaction of any such Investor or any other
Investor.
10. ASSIGNMENT OF REGISTRATION RIGHTS
The rights under 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; provided, however, that the transferee
or assignee may subsequently transfer or assign all or any portion of the
Registrable Securities if an exemption from registration under the 1933 Act is
applicable to such transfer or assignment; (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; and (v) such transfer shall have been made
in accordance with the applicable requirements of the Securities Purchase
Agreement.
19
11. 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 the written consent of the Company
and Investors who then hold two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 11 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
12. MISCELLANEOUS
a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is
deemed to own of record such Registrable
Securities. If the Company receives conflicting
instructions, notices or elections from two or
more Persons 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, consents, waivers or other
communications required or permitted to be given
under the terms of this Agreement must be in
writing and will be deemed to have been
delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission
is mechanically or electronically generated and
kept on file by the sending party); or (iii) one
(1) business day after deposit with a nationally
recognized overnight delivery service, in each
case properly addressed to the party to receive
the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Ph.D.
20
With a copy to:
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx, Xxx. 000
XxXxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esq.
If to Legal Counsel:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or at such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change.
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 all respects by the internal laws
of the State of New York (except for the proper
application of the United States federal
securities laws), without giving effect to any
choice of law or conflict of law provision or
rule (whether of the State of New York or any
other jurisdictions) that would cause the
application of the laws of any jurisdictions
other than the State of New York. Each party
hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts
sitting the City of New York, for the
adjudication of any dispute hereunder. If any
provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect
the validity or enforceability of the remainder
of this Agreement in that jurisdiction or the
validity or enforceability of any provision of
this Agreement in any other jurisdiction. In any
suit or action to enforce the provisions of this
Agreement, the prevailing party shall be
entitled to be
21
reimbursed for all reasonable legal fees and
expenses incurred by such party in connection
with such suit or action.
e. This Agreement, the Securities Purchase
Agreement and the Warrants 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 with
respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 10, this
Agreement shall inure to the benefit of and be
binding upon the permitted 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 identical
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 and other determinations to be made
by the Investors pursuant to this Agreement
shall be made, unless otherwise specified in
this Agreement, by Investors holding a majority
of the Registrable Securities, determined as if
all of the Warrants then outstanding have been
converted into Registrable Securities without
regard to any limitation on exercise of the
Warrants.
22
k. The language used in this Agreement will be
deemed to be the language chosen by the parties
to express their mutual intent and no rules of
strict construction will be applied against any
party.
l. This Agreement is intended for the benefit of
the parties hereto and their respective
permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be
enforced by, any other Person.
[signature pages follow]
23
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
ENTREMED, INC.
By: /s/ Xxxx X. Xxxxxxx, PhD
---------------------------------
Name: Xxxx X. Xxxxxxx, PhD
Title: Chairman and CEO
BUYER:
CRANSHIRE CAPITAL, L.P.
By: Downsview Capital, Inc.,
the General Partner
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
BUYER:
EURAM CAP STRAT "A" FUND LIMITED
By: JMJ Capital, Inc., the Investment
Manager
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
BUYER:
CLEVELAND OVERSEAS LTD.
By: Primeway S.A., Director
By: /s/ Beat Xxxx
-----------------
Name: Beat Xxxx
BUYER:
WINCHESTER GLOBAL TRUST
COMPANY LIMITED AS TRUSTEE FOR
CADUCEUS CAPITAL TRUST
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
CADUCEUS CAPITAL II, L.P.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
PW EUCALYPTUS FUND, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
PW EUCALYPTUS FUND, LTD.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
DMG LEGACY FUND LLC
By: DMG Advisors LLC, Managing Member
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
DMG LEGACY INSTITUTIONAL FUND LLC
By: DMG Advisors LLC, Managing Member
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
DMG LEGACY INTERNATIONAL LTD.
By: DMG Advisors LLC, Investment
Advisor
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
EDJ Limited
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Trading Advisor
BUYER:
Xxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
BUYER:
MAPLE BANK GMBH-MILAN BRANCH
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: X.X. Xxxxxxx
Title: Authorized Signatory
BUYER:
XXXXXX PARTNERS, L.P.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: General Partner
BUYER:
S.A.C. CAPITAL ASSOCIATES, LLC
BY: S.A.C. Capital Advisors, LLC
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: General Counsel
BUYER:
XXXXXX SERVICE
By: /s/ Xxxxxx Service
-------------------------------------
Name: Xxxxxx Service
BUYER:
STEELHEAD INVESTMENTS, LTD.
By: /s/ Xxxxx X'Xxxx
-------------------------------------
Name: Xxxxx X'Xxxx
Title: Authorized Signatory
BUYER:
VERTICAL INTERNATIONAL LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Authorized Signatory
BUYER:
ZLP MASTER FUND, LTD
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn:
---------------------------
Re: EntreMed, Inc.
Ladies and Gentlemen:
We are counsel to EntreMed, Inc., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and
among the Company and the buyers named therein (collectively, the "HOLDERS")
pursuant to which the Company issued to the Holders shares of its common stock,
par value $.01 per share (the "COMMON SHARES"), and Warrants exercisable into
its Common Stock (the "WARRANT SHARES"). Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the Common Shares and Warrant Shares,
under the Securities Act of 1933, as amended (the "1933 ACT"). In connection
with the Company's obligations under the Registration Rights Agreement, on
_________, 2001, the Company filed a Registration Statement on Form S-3 (File
No. _____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us [by telephone/in writing] that the SEC has entered an
order declaring the Registration Statement effective under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:
------------------------------
cc: [Legal Counsel]
EXHIBIT B
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable
exchange;
privately negotiated transactions;
short sales;
broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; and
any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
B-1
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the Shares or Warrants or shares of Common
Stock issuable upon exercise of Warrants owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of Selling
Stockholders to include the pledgee, transferee or other successors in interest
as Selling Stockholders under this prospectus.
The Selling Stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
B-2
