SYNTHEMED, INC. INVESTOR RIGHTS AGREEMENT
This
Investor Rights Agreement (this “Agreement”) is made and entered into by and
among SyntheMed, Inc., a Delaware corporation (the “Corporation”), and the
investors listed on the signature pages hereto (the “Investors”), as of the date
of execution by the Corporation.
RECITALS
WHEREAS
the
Corporation desires the Investors to purchase up to 6,000,000 shares of Common
Stock of the Corporation (the “Shares”) at a purchase price of $1.00 (US) per
share (the “Offering”) pursuant to individual subscription agreements in like
form entered into with each Investor (collectively, the “Subscription
Agreement”);
AND
WHEREAS
as an
inducement for the Investors to enter into the Subscription Agreement, the
Corporation desires to enter into this Agreement with the
Investors;
NOW
THEREFORE
in
consideration of the mutual covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. DEFINITIONS.
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(a)
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“Common
Stock”
means the Corporation’s Common Stock, par value of $0.001 per
share.
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(b)
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“Exchange
Act”
means the United States Securities
Exchange Act of 1934,
as amended.
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(c)
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“Final
Closing” means
the date on which the full amount of the Offering is sold or the
earlier
termination of the Offering period as determined by mutual agreement
of
the Corporation and the placement
agent.
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(d)
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“Holder”
means any person owning of record Registrable Securities or securities
convertible, exchangeable or exercisable into Registrable Securities
that
have not been sold in a public offering or sold pursuant to Rule
144
promulgated under the Securities Act or any assignee of record of
such
Registrable Securities to whom rights under this Agreement have been
duly
assigned in accordance with this
Agreement.
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(e)
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“register,”
“registered” and“registration”
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration
or
ordering of effectiveness of such registration
statement.
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(f)
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“Registrable
Securities”
means: (i) the Shares and any shares of Common Stock issued to the
placement agent in connection with the Offering or underlying warrants
(“Broker Warrants”) issued to the placement agent in connection with the
Offering and (ii) any shares of Common Stock or other securities
issued
in
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connection
with any stock split, stock dividend, recapitalization, reorganization, merger,
sale of assets or similar event in respect of the foregoing securities;
excluding in all cases, however, any securities that would otherwise be
Registrable Securities that have been sold (i) by a person in a transaction
in
which rights under this Agreement are not assigned in accordance with this
Agreement, (ii) in a public offering or (iii) pursuant to Rule 144 promulgated
under the Securities Act. Notwithstanding the foregoing, shares of Common Stock
issued or issuable pursuant to exercise of the Broker Warrants shall be deemed
Registrable Securities only for so long, and for such purposes, as Shares
continue to be Registrable Securities.
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(g)
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“Registration
Expenses”
means all expenses incurred by the Corporation in complying with
Section
2.1 hereof, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and accountants
for the Corporation, reasonable fees and expenses of one counsel
for all
the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding
the
compensation of regular employees of the Corporation, which shall
be paid
in any event by the Corporation).
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(h)
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“Securities
Act”
means the United States Securities
Act of 1933,
as amended.
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2. REGISTRATION.
2.1 Registration.
Within
30 days following the Final Closing, the Corporation will file with the SEC
a
registration statement on Form S-3 (or such other form as the Corporation may
then be eligible to utilize) covering resale of the Registrable Securities
by
the Holders thereof, together with any other securities entitled to be included
in such registration statement pursuant to contractual rights of the holders
thereof; provided, however, that the Corporation shall not be obligated to
effect, or take any action to effect, any such registration pursuant to this
Section 2 in any particular jurisdiction in which the Corporation would be
required to execute a general consent to service of process in effecting such
registration, unless the Corporation is already subject to service in such
jurisdiction and except as may be required by the Securities Act or applicable
rules or regulations thereunder.
2.2 Expenses
of Registration.
All
Registration Expenses incurred in connection with the registration pursuant
to
Section 2.1 shall be borne by the Corporation.
2.3 Obligations
of the Corporation.
In
connection with the registration pursuant to Section 2.1, the Corporation shall,
as expeditiously as reasonably possible:
(a) Prepare
and file with the SEC a registration statement with respect to the Registrable
Securities (such filing to occur not later than the time referred to in Section
2.1) and use its best efforts to cause such registration statement to become
effective on the earlier to occur of (i) 90 days following the final closing
of
the Offering or, in the case of SEC review, 120 days following the Final Closing
and (ii) five days following the date of SEC clearance to request effectiveness
of the registration statement, and keep such registration statement effective
and the related prospectus current until the distribution is completed, but
not
more than two years or such earlier date as any of the Registrable Securities
become eligible for sale pursuant to Rule 144(k)
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under
the
Securities Act, provided that such two year period shall be extended for a
period of time equal to the period the Holder refrains from selling any
Registrable Securities included in such registration statement due to
circumstances described in Section 2.3(f).
(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.
(c) Furnish
to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
all
amendments and supplements thereto, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use
its
best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions
as
shall be reasonably requested by the Holders, provided, however, that the
Corporation shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions unless the Corporation is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder.
(e) [Intentionally
omitted].
(f) Notify
each Holder of Registrable Securities covered by such registration statement
at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act if such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and, following such
notification, promptly deliver to each Holder copies of all amendments or
supplements referred to in paragraphs (b) and (c) of this Section
2.3.
(g) Furnish,
at the request of Holders of a majority of the Registrable Securities (other
than the Holders of Broker Warrants), on the date that the registration
statement becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Corporation for the purposes of such registration,
in
form and substance as is customarily given to underwriters in an underwritten
public offering addressed to the Holders and (ii) a “comfort” letter dated as of
such date, from the independent certified public accountants of the Corporation,
in form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to Holders of a majority of the Registrable Securities (other
than
Holders of Broker Warrants), addressed to the Holders.
(h) Use
its
best efforts to list the Registrable Securities covered by such registration
statement with any securities exchange or interdealer quotation system on which
the Common Stock is then listed or quoted.
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(i) Make
available for inspection by each seller of Registrable Securities, and any
attorney, accountant or other agent retained by such seller (an “Advisor”), all
financial and other records, pertinent corporate documents and properties of
the
Corporation, and cause the Corporation’s officers, directors and employees to
supply all information reasonably requested by any such seller, attorney,
accountant or agent in connection with such registration statement. Such seller
will keep, and will cause its Advisors to keep, such information confidential
subject to Section 4.14.
2.4 Furnish
Information.
It
shall
be a condition precedent to the obligations of the Corporation to take any
action pursuant to Section 2.1 that the selling Holders shall timely furnish
to
the Corporation such information regarding themselves, the Registrable
Securities and other securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of Registrable Securities.
2.5 Indemnification.
In
connection with the registration pursuant to Section 2.1:
(a) By
the Corporation.
To the
extent permitted by law, the Corporation will indemnify and hold harmless each
Holder, the partners, members, officers and directors of each Holder, and each
person, if any, who controls such Holder within the meaning of the Securities
Act against any losses, claims, damages, or liabilities (joint or several)
to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
any
of the following statements, omissions or violations (collectively a
“Violation”):
(i) any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading,
or
(iii) any
violation or alleged violation by the Corporation of the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement; and the Corporation will reimburse each such Holder, partner, member,
officer or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Corporation (which consent shall not be unreasonably withheld), nor shall the
Corporation be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information and expressly stated to be for use in connection with such
registration by such Holder, partner, member, officer, director, underwriter
or
controlling person of such Holder.
(b) By
Selling Holders.
To the
extent permitted by law, each selling Holder will, severally and not jointly,
if
Registrable Securities held by such Holder are included in the
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securities
as to which such registration is being effected, indemnify and hold harmless
the
Corporation, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Corporation within
the meaning of the Securities Act, any underwriter (as defined in the Securities
Act) and any other Holder selling securities under such registration statement
or any of such other Holder’s partners, members, directors or officers or any
person who controls such underwriter or other Holder within the meaning of
the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities (joint or several) to which the Corporation or any such director,
officer, controlling person, underwriter or other such Holder, or a member,
partner, director, officer or controlling person of such underwriter or other
Holder may become subject under the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation promulgated under
the
Securities Act, the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement, insofar
as
such losses, claims, damages or liabilities (or actions in respect thereto)
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 by such Holder by an instrument
duly executed by such Holder and stated to be specifically for use in such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Corporation or any such director, officer,
controlling person, underwriter or other Holder, partner, member, officer,
director or controlling person of such other Holder or underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld; and
provided further, that the total amounts payable in indemnity by a Holder under
this Section 2.5(b) in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
(c) Notice.
Promptly after receipt by an indemnified party of notice of the commencement
of
any action (including any governmental action), such indemnified party will,
if
a claim in respect thereof is to be made against any indemnifying party under
this Section 2.5, 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 the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if the defendants
include both the indemnifying party and the indemnified party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified
party
reasonably may be deemed to conflict with the interests of the indemnifying
party. The failure to deliver written notice to the indemnifying party within
a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.5, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.5.
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(d) Contribution.
If the
indemnification provided for in this Section 2.5 is unavailable to a party
entitled to indemnification, then the indemnifying party shall contribute to
the
aggregate losses, claims, damages or liabilities of the indemnified party as
is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.
The
relative fault of the indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates
to
information supplied by, such indemnifying party or indemnified party, and
the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action; provided, however, that, in any such case,
(1)
no Holder shall be required to contribute any amount in excess of the public
offering price of all Registrable Securities offered and sold by such Holder
pursuant to such registration statement and (2) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Survival.
The
obligations of the Corporation and Holders under this Section 2.5 shall survive
the completion of any offering of Registrable Securities in a registration
statement.
2.6 Remedy.
If,
regardless of the reason, the registration statement referred to in this Section
2 is not declared effective by the Securities and Exchange Commission within
six
months of the Final Closing, the Corporation agrees to grant to the Holders
registration rights with respect to the Registrable Securities on terms similar
to the registration rights granted to investors in the Corporation’s Series C
Convertible Preferred Stock and warrant financing in March 2003, subject
to obtaining any consents required under agreements with existing holders of
registration rights (and the Corporation agrees to use its best efforts to
obtain any such required consents, it being understood that such efforts will
not require the Corporation to provide any additional consideration to or for
the benefit of such registration right holders).
3. LEGENDS.
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(a)
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The
Holders understand that any certificates evidencing Registrable Securities
shall not be endorsed with a restrictive legend except under the
circumstances referred to in the Subscription Agreement Each Holder
agrees
that it will comply with the prospectus delivery requirements of
the
Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement and shall sell
its
Registrable Securities in accordance with the plan of distribution
set
forth in the prospectus included in the Registration Statement. Each
Holder further agrees that, upon receipt of a notice from the Corporation
of the occurrence of any event the occurrence of which causes the
prospectus contained in the Registration Statement to become stale
or no
longer effective, such Holder will discontinue disposition of such
Registrable Securities under the Registration Statement until such
Holder
is advised in writing by the Corporation that the use of the prospectus,
or amended prospectus, as applicable, may be resumed. The Corporation
may
provide appropriate stop orders to enforce the provisions of this
paragraph. Each Holder, severally and not jointly with the other
Holders,
agrees that the issuance without a restrictive legend or removal
of the
restrictive legend from certificates representing Registrable Securities
as set forth in the Subscription Agreement is predicated upon the
Corporation’s reliance that the Holder will comply with
the
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provisions
of this subsection. Each Holder, severally and not jointly with the other
Holders, agrees to indemnify and hold harmless the Corporation and its transfer
agent and each of their respective directors, officers, employees and agents
against any and all losses, claims, damages or liabilities (joint or several)
(including reasonable attorneys’ fees) to which the Corporation or any such
other person may become subject in connection with or as a result of a breach
by
such Holder of the provisions of this subsection. Both the Corporation and
the
Corporation’s transfer agent and their respective directors, officers, employees
and agents may rely on this subsection.
4. MISCELLANEOUS.
4.1. Successors
and Assigns.
Except
as otherwise expressly provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted transferees and permitted assigns of the
parties.
4.2. Governing
Law.
This
Agreement shall be governed in all respects by the laws of the State of New
York
as applied to contracts made and to be performed entirely within that state
between residents of that state.
4.3. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, and all of which together shall constitute one
instrument.
4.4. Titles
and Subtitles.
The
titles of the paragraphs and subparagraphs of this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this
Agreement.
4.5. Stock
Splits, etc.
All
share numbers used in this Agreement are subject to adjustment in the case
of
any stock split, reverse stock split, combination or similar
events.
4.6. Notices.
Any
notice required or permitted to be given to a party pursuant to the provisions
of this Agreement shall be in writing and shall be effective on (a) the date
of
delivery in person, or the date of delivery by facsimile with confirmation
receipt, (b) the business day after deposit with a nationally-recognized courier
or overnight service, for United States deliveries or (c) five (5) business
days
after deposit in the United States mail by registered or certified mail for
United States deliveries. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed
to
the party to be notified at the address set forth below such party’s signature
on this Agreement or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto. All notices for
delivery outside the United States will be sent by facsimile, or by nationally
recognized courier or overnight service. Any notice given hereunder to more
than
one person will be deemed to have been given, for purposes of counting time
periods hereunder, on the date given to the last party required to be given
such
notice. Notices to the Corporation will be marked to the attention of the
President, with a copy to Xxxxx Xxxxxxxxx, Xxxxxxxxx Xxxxxx & Xxxx LLP, 00
Xxxx 00xx
Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, XX 00000. Notices shall be sent to the addresses on the signature
pages hereto, or such other addresses as a party may provide to the other
parties from time to time.
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4.7. Attorneys’
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
which
such party may be entitled.
4.8. Amendments
and Waivers.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the party
against whom enforcement of such amendment or waiver is sought; provided,
however that with respect to any Holder, the consent of the Holders of more
than
sixty-six and two-thirds percent (662/3%)
of the
Registrable Securities (other than Broker Warrants) shall be sufficient to
bind
any and all Holders.
4.9. Severability.
If any
provision of this Agreement is held to be unenforceable under applicable law,
then such provision shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision was so excluded and
shall be enforceable in accordance with its terms.
4.10. Entire
Agreement.
This
Agreement and the Subscription Agreement constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersede all prior negotiations, correspondence, agreements,
understandings, duties or obligations among the parties with respect to the
subject matter hereof.
4.11. Further
Assurances.
From
and after the date of this Agreement, upon the request of a party, the other
parties shall execute and deliver such instruments, documents or other writings
as may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
4.12. Assignment.
Rights
under this Agreement may be assigned in connection with any transfer or
assignment of Registrable Securities provided that: (a) such transfer may
otherwise be effected in accordance with applicable securities laws, and (b)
such other party agrees in writing with the Corporation to be bound by all
of
the provisions of this Agreement to the same extent as the
transferor.
4.13. Changes
in Stock.
If, and
as often as, there is any change in the Common Stock by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made to the provisions hereof so that the rights
granted hereby shall continue with respect to the Common Stock as so
changed.
4.14. Confidentiality.
Information related to the terms and conditions of the Offering, as well as
all
information contained in the Subscription Agreement (except information relating
solely to an Investor) and instruments and agreements delivered in connection
therewith, shall be deemed confidential and shall not be disclosed by the
Investor to any person unless and until such information becomes generally
available to the public other than by disclosure in violation of this Agreement.
All other information that has been designated by the Corporation as
“confidential” shall likewise be deemed confidential and not disclosed by the
Investor to any person unless and until such information (i) is or becomes
generally available to the public other than by disclosure in violation of
this
Agreement, (ii) was properly within such Investor’s
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possession
prior to its being furnished by the Corporation to such Investor, or (iii)
becomes available to such Investor through disclosure by third parties who
have
the right to disclose such information
[Remainder
of page intentionally left blank].
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SIGNATURE
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IN
WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement.
By:
Xxxxxx
Xxxxxx
President
and CEO
Address:
000 Xxxxxxxxx Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxxxx 00000
Dated:
SIGNATURE
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