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EXHIBIT 4.2
SERIES 2-__
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED
HEREBY MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES
LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase __________ shares
of Common Stock, $.01 par value per share
Date: July 27, 1999
ENTREMED, INC.
SERIES 2 STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, _____________ , or its
registered assigns, is entitled to purchase from ENTREMED, INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), at any time
or from time to time during the period specified in Section 2 hereof,
__________ fully paid and nonassessable shares of the Company's common stock,
par value $.01 per share (the "COMMON STOCK"), at an exercise price per share
(the "EXERCISE PRICE") of $25.45. The number of shares of Common Stock
purchasable hereunder (the "WARRANT SHARES") and the Exercise Price are subject
to adjustment as provided in Section 5 hereof. The term "WARRANTS" and "SERIES
2 WARRANTS" means this Warrant and the other Series 2 Warrants of the Company
issued pursuant to the Securities Purchase Agreement dated as of July 22, 1999,
by and among the Company and the Purchasers (the "SECURITIES PURCHASE
AGREEMENT").
This Warrant is subject to the following terms, provisions and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 8 hereof, this Warrant may be exercised at any
time during the Exercise Period (as defined below) by the holder hereof, in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the "EXERCISE AGREEMENT"), to
the Company by 5:00 p.m. New York time on any Business Day at the Company's
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the holder hereof) and upon payment to the
Company in cash, by certified or official bank check or by wire transfer for
the account of the Company, of the applicable Exercise Price for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be
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issued to the holder hereof or such holder's designee, as the record owner of
such shares, as of the close of business on the date on which this Warrant
shall have been surrendered and the completed Exercise Agreement shall have
been delivered and payment shall have been made for such shares as set forth
above or, if such day is not a Business Day, on the next succeeding Business
Day. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the holder
hereof within a reasonable time, not exceeding three Business Days, after this
Warrant shall have been so exercised (the "DELIVERY PERIOD"). If the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, and so long as the certificates therefor
do not bear a legend and the holder is not obligated to return such certificate
for the placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the Warrant Shares so purchased to the holder
by crediting the account of the holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system ("DTC TRANSFER"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Company
shall deliver to the holder physical certificates representing the Warrant
Shares so purchased. Further, the holder may instruct the Company to deliver to
the holder physical certificates representing the Warrant Shares so purchased
in lieu of delivering such shares by way of DTC Transfer. Any certificates so
delivered shall be in such denominations as may be requested by the holder
hereof, shall be registered in the name of such holder or such other name as
shall be designated by such holder and, following the date on which the Warrant
Shares may be sold by the holder pursuant to Rule 144(k) promulgated under the
Securities Act (or a successor rule), shall not bear any restrictive legend.
Upon a sale of any Warrant Shares pursuant to an effective registration
statement, any restrictive legend on the certificates representing such Warrant
Shares shall be removed. If this Warrant shall have been exercised only in
part, then, unless this Warrant has expired, the Company shall, at its expense,
at the time of delivery of such certificates, deliver to the holder a new
Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
2. Period of Exercise. Except as set forth in Section 3 below,
this Warrant may be exercised at any time or from time to time during the
period (the "EXERCISE PERIOD") beginning on (a) the date hereof and ending (b)
at 5:00 p.m. New York City time on the 540th day after the Closing Date (as
defined in the Securities Purchase Agreement), and, if such date is not a
Business Day, the next succeeding Business Day (the "EXERCISE DATE"), beginning
at 12:01 a.m. New York City time on the relevant date until 5:00 p.m., New York
City time, on the relevant date.
3. Mandatory Exercise. On any Notification Date (as defined
below), the Company may request that the Purchaser exercise this Warrant in
whole but not in part (the "MANDATORY EXERCISE") within twenty (20) Business
Days after the date of the Mandatory Exercise Notice (as defined below) by
delivering a written notice to the holder at such address as such holder shall
have provided to the Company in writing pursuant to Section 10 hereof (the
"MANDATORY EXERCISE NOTICE"). The Mandatory Exercise Notice shall set forth
the Exercise Price and the Closing Price of a share of Common Stock on each of
the ten (10) consecutive Trading Days immediately preceding the date of the
Mandatory Exercise Notice and shall state that this Warrant be exercised in
conformity with this Section 3 within twenty (20) Business Days. Within ten
(10) calendar days of receipt of a Mandatory Exercise Notice, the holder shall
deliver a written notice to the Company (the "PARTICIPATION NOTICE"), stating
whether or not the holder agrees to participate in such Mandatory Exercise. If
the holder states in its Participation Notice
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that it elects not to participate in the Mandatory Exercise, or if the holder
fails to deliver a Participation Notice within the time period specified in
this Section 3, then (i) the holder shall forfeit such holder's rights, title
and interest under this Warrant, (ii) this Warrant shall be deemed terminated
and (iii) the holder shall deliver to the Company within two (2) Business Days
of the date of such holder's Participation Notice this Warrant marked
"cancelled." If the holder states in its Participation Notice that it elects
to participate in the Mandatory Exercise, then this Warrant shall be deemed to
be exercised without any further action on the part of the holder hereof
pursuant to this Section 3 for all of the Warrant Shares that can be obtained
pursuant to such exercise on the twentieth (20th) Business Day after the
Mandatory Exercise Notice (the "AUTOMATIC MANDATORY EXERCISE DATE"), unless
prior to noon New York City time on the Automatic Mandatory Exercise Date, the
holder shall have exercised this Warrant in whole, but not in part, in the
manner set forth in Section 1 hereof. Notwithstanding the foregoing, no
Mandatory Exercise may occur unless: at all times from the Notification Date
through the Automatic Mandatory Exercise Date, a Registration Statement
covering all Registrable Securities (as those terms are defined in the
Registration Rights Agreement): (i) is effective, (ii) does not require any
amendment or supplement and (iii) discloses directly or through incorporation
by reference all material facts relating to the Company and the Registrable
Securities. For purposes of this Section 3, "NOTIFICATION DATE" shall mean any
Business Day during the Exercise Period but after the Trigger Date (as defined
below) which Business Day is immediately preceded by ten (10) consecutive
Trading Days on each of which the Closing Price for the Common Stock was
greater than 150% of the greater of the original Exercise Price or the Exercise
Price; and "TRIGGER DATE" shall mean the date that is 270 days after the date
Series 2 Warrants were first issued under and pursuant to the Securities
Purchase Agreement.
4. Certain Agreements of the Company. The Company hereby
covenants and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will,
upon issuance in accordance with the terms of this Warrant, be validly issued,
fully paid and nonassessable and free from all taxes, liens, claims and
encumbrances.
(b) Reservation of Shares. During the Exercise Period,
the Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise in full of this Warrant (without giving
effect to the limitations on exercise set forth in Section 8(g) hereof).
(c) Listing. The Company has secured the listing of the
shares of Common Stock issuable upon exercise of or otherwise pursuant to this
Warrant upon each national securities exchange or automated quotation system,
if any, upon which shares of Common Stock are then listed or become listed
(subject to official notice of issuance upon exercise of this Warrant) and
shall maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all shares of Common Stock from time to time issuable upon the
exercise of or otherwise pursuant to this Warrant; and the Company shall so
list on each national securities exchange or automated quotation system, as the
case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of or otherwise pursuant to
this Warrant if and so long as any shares of the same class shall be listed on
such national securities exchange or automated quotation system.
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(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the
date of issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the
states of the United States, and shall provide evidence of any such action so
taken to the holder of this Warrant prior to such date; provided, however, that
the Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.
5. Antidilution Provisions. During the Exercise Period, the
Exercise Price and the number of Warrant Shares issuable upon the exercise of
the Warrants, shall be subject to adjustment from time to time as provided in
this Section 5.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent; provided that in no event shall the Exercise Price
per share be reduced below $.01.
(a) Subdivision or Combination of Common Stock. If the
Company, at any time during the Exercise Period, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time during the Exercise Period, combines (by reverse
stock split, recapitalization, reorganization, reclassification or otherwise)
its shares of Common Stock into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(b) Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 5, the number
of shares of Common Stock issuable upon exercise of this Warrant shall be
increased or decreased to equal the quotient obtained by dividing (i) the
product of (A) the Exercise Price in effect immediately prior to such
adjustment, multiplied by (B) the number of shares of Common Stock issuable
upon exercise of this Warrant immediately prior to such adjustment, by (ii) the
adjusted Exercise Price.
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(c) Consolidation, Merger or Sale. In case of any
consolidation of the Company with, or merger of the Company into, any other
entity, or in case of any sale or conveyance of all or substantially all of the
assets of the Company other than in connection with a plan of complete
liquidation of the Company at any time during the Exercise Period, then as a
condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby the holder of this Warrant will have the right
to acquire and receive upon exercise of this Warrant in lieu of the shares of
Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock, securities, cash or assets as may be issued or
payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place. In any
such case, the Company will make appropriate provision to insure that the
provisions of this Section 5 will thereafter be applicable as nearly as may be
in relation to any shares of stock or securities thereafter deliverable upon
the exercise of this Warrant. The Company will not effect any consolidation,
merger or sale or conveyance unless prior to the consummation thereof, the
successor entity (if other than the Company) assumes by written instrument the
obligations under this Warrant and the obligations to deliver to the holder of
this Warrant such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the holder may be entitled to acquire.
Notwithstanding the foregoing, in the event of any consolidation of the Company
with, or merger of the Company into, any other entity, or the sale or
conveyance of all or substantially all of the assets of the Company, at any
time during the Exercise Period, the holder of the Warrant shall, at its
option, have the right to receive, in connection with such transaction, cash
consideration equal to the fair value of this Warrant as determined in
accordance with customary valuation methodology used in the investment banking
industry.
(d) Distribution of Assets. In case the Company shall
declare or make any distribution of its assets (other than cash) (or rights to
acquire its assets (other than cash)) to holders of Common Stock as a partial
liquidating dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the Company's shareholders
of shares (or rights to acquire shares) of capital stock of a subsidiary) (a
"DISTRIBUTION"), at any time during the Exercise Period, then, upon exercise of
this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, the holder of this Warrant shall be entitled to receive its
pro-rata amount of such assets (or such rights) as would have been payable to
the holder had such holder been the holder of such shares of Common Stock on
the record date for the determination of shareholders entitled to such
Distribution.
(e) Notice of Adjustment. Upon the occurrence of any
event which requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder of this Warrant,
which notice shall state the Exercise Price resulting from such adjustment and
the increase or decrease in the number of Warrant Shares issuable upon exercise
of this Warrant, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. Such calculation shall be
certified by the chief financial officer of the Company.
(f) Minimum Adjustment of the Exercise Price. No
adjustment of the Exercise Price shall be made in an amount of less than 1% of
the Exercise Price in effect at the time such adjustment is otherwise required
to be made, but any such lesser adjustment shall be
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carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried forward,
shall amount to not less than 1% of such Exercise Price.
(g) No Fractional Shares. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would otherwise
be issuable in an amount equal to the same fraction of the Market Price of a
share of Common Stock on the date of such exercise.
(h) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon
the Common Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company's past practices with respect to
declaring dividends and making distributions) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all of its
assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company
shall close or a record shall be taken for determining the holders of Common
Stock entitled to receive any such dividend, distribution, or subscription
rights or for determining the holders of Common Stock entitled to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities or
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be.
Such notice shall be given at least fifteen (15) days prior to the record date
or the date on which the Company's books are closed in respect thereto.
Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv)
above. Notwithstanding the foregoing, the Company may publicly disclose the
substance of any notice delivered hereunder prior to delivery of such notice to
the holder of this Warrant.
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(i) Certain Definitions.
(i) "BUSINESS DAY" means any day, other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive order to
close.
(ii) "CLOSING PRICE" shall mean for the Common
Stock as of any date, the closing bid price of such security on the principal
United States securities exchange or trading market on which such security is
listed or traded as reported by the Research Service of Nasdaq Trading and
Market Services (or a comparable reporting service of national reputation
selected by the holder and reasonably acceptable to the Company if the Research
Service of Nasdaq Trading and Market Services is not then reporting closing bid
prices of such security) (collectively, "NTMS"), or if the foregoing does not
apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by NTMS,
or, if no sale price is reported for such security by NTMS, the average of the
bid prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc., in each case for such date or,
if such date was not a Trading Day (as defined below) for such security, on the
next preceding day which was a Trading Day. If the Closing Price cannot be
calculated for a share of Common Stock as of either of such dates on any of the
foregoing bases, the Closing Price of such security on such date shall be the
fair market value as determined by an investment banking firm selected by the
holder and reasonably acceptable to the Company, with the costs of such
appraisal to be borne by the Company. The manner of determining the Closing
Price of the Common Stock set forth in the foregoing definition shall apply
with respect to any other security in respect of which a determination as to
market value must be made.
(iii) "COMMON STOCK," for purposes of this Section
5, includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting from
any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 5(c) hereof, the stock or other securities or
property provided for in such Section.
(iv) "MARKET PRICE" shall mean, with respect to
any date of determination, the average Closing Price during the five (5)
Trading Days ending on the Trading Day immediately preceding such date of
determination, appropriately adjusted to reflect any stock dividend, stock
split or similar transaction during either such relevant period. The manner
of determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(v) "TRADING DAY" shall mean a Business Day on
which at least 10,000 shares of Common Stock are traded on the principal United
States securities exchange or trading market on which such security is listed
or traded as reported by NTMS.
6. Issue Tax. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the holder of
this Warrant or such shares for any
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issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the holder of this Warrant.
7. No Rights or Liabilities as a Shareholder. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable in whole or in part, at any one
time, upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the Company
referred to in Section 8(e) below, provided, however, that any transfer or
assignment of this Warrant in part shall be in minimum increments of 100,000
shares. Any transfer or assignment of this Warrant shall be subject to the
conditions set forth in Sections 8(f), 8(g) and 9 hereof and to the provisions
of Sections 4(e) and 4(f) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the holder hereof at
the office or agency of the Company referred to in Section 8(e) below, for new
Series 2 Warrants of like tenor of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which may
be purchased hereunder, each of such new Series 2 Warrants to represent the
right to purchase such number of shares as shall be designated by the holder
hereof at the time of such surrender; provided, however, that no Series 2
Warrants shall be exercisable for less than 5,000 shares of Common Stock, and
provided further, that in no event shall any exchange of this Warrant pursuant
to this Section 8(b) affect in any way the restrictions on transferability set
forth in Section 8(a) hereof.
(c) Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the
surrender of this Warrant in connection with any transfer, exchange, or
replacement as provided in this Section 8, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal expenses,
if any, incurred
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by the holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of Series 2 Warrants pursuant to this
Section 8. The Company shall indemnify and reimburse the holder of this Warrant
for all losses and damages arising as a result of or related to any breach by
the Company of the terms of this Warrant, including costs and expenses
(including legal fees) incurred by such holder in connection with the
enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the holder hereof), a register for this Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at
the time of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be registered under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the case may
be, furnish to the Company a written opinion of counsel (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance reasonably
acceptable to the Company and (iii) that the transferee be an "ACCREDITED
INVESTOR" as defined in Rule 501(a) promulgated under the Securities Act;
provided that no such opinion, letter, or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act.
(g) Additional Restrictions on Exercise or Transfer.
Notwithstanding anything in Section 1 or Section 3 hereof to the contrary, this
Warrant shall not be exercisable to the extent (but only to the extent) that
(a) the number of shares of Common Stock beneficially owned by the holder of
this Warrant and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to
the limitation contained herein) and (b) the number of shares of Common Stock
issuable upon exercise of the Warrants (or portion thereof) with respect to
which the determination described herein is being made, would result in
beneficial ownership by such holder and its affiliates of more than 9.99% of
the outstanding shares of Common Stock. To the extent the above limitation
applies, the determination of whether and to what extent this Warrant shall be
exercisable with respect to other securities owned by such holder shall be in
the sole discretion of the holder and submission of this Warrant for full or
partial exercise shall be deemed to be the holder's determination of whether
and the extent to which this Warrant is exercisable, in each case subject to
such aggregate percentage limitation. No prior inability to exercise the
Warrants pursuant to this Section shall have any effect on the applicability of
the provisions of this Section with respect to any subsequent determination of
exercisability. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder,
except as otherwise provided in clause (a) hereof. The restrictions contained
in this Section 8(g) may not
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be amended without the consent of the holder of this Warrant and the holders of
a majority of the Company's then outstanding Common Stock. Nothing in this
Section 8(g) shall affect in any way the obligations of any holder regarding a
Mandatory Exercise as set forth in Section 3 hereof.
9. Registration Rights. The initial holder of this Warrant (and
certain assignees thereof) are entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement, including the right to assign such rights to certain
assignees, as set forth therein; provided that such initial holder and any
assignee agrees, in writing, to be bound by the terms and conditions of the
Securities Purchase Agreement and the Registration Rights Agreement.
10. Notices. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
EntreMed, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PhD.
Chairman, President and Chief
Executive Officer
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 10, and for purposes of notices provided
pursuant to Section 3 hereof, with a copy to:
First Security ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10
11
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
11. Governing Law; Jurisdiction. This Warrant shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed in the State of New York.
Each of the Company and the holder irrevocably consents to the jurisdiction of
the United States federal courts and state courts located in the State of New
York in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. Each of the Company and the holder irrevocably
waives any objection to the laying of venue and the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Each of the Company and
the holder further agrees that service of process upon the Company or the
holder mailed by certified or registered mail to the address set forth in
Section 10 shall be deemed in every respect effective service of process upon
the Company or the holder in any such suit or proceeding. Nothing herein shall
affect the holder's or the Company's right to serve process in any other manner
permitted by law. Each of the Company and the holder agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12 Miscellaneous.
(a) Amendments. Except as provided in Section 8(g)
hereof, this Warrant and any provision hereof may only be amended by an
instrument in writing signed by the Company and the holder hereof.
(b) Descriptive Headings. The descriptive headings of
the several Sections of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provisions
hereof.
(c) Definitions. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Securities Purchase Agreement.
11
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
ENTREMED, INC.
By:
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
Title: Chairman of the Board and
Chief Executive Officer
12
13
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: EntreMed, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PhD.
Chairman, President and Chief Executive Officer
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of ENTREMED, INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and herewith
makes payment of the applicable Exercise Price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
[ ] The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee
(which is _________________) with DTC through its Deposit Withdrawal
Agent Commission System ("DTC TRANSFER").
[ ] In lieu of receiving the shares of Common Stock issuable pursuant to
this Exercise Agreement by way of DTC Transfer, the undersigned hereby
requests that the Company cause its transfer agent to issue and
deliver to the undersigned physical certificates representing such
shares of Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder
and delivered to the undersigned at the address set forth below:
Dated:
----------------- -------------------------------------
Signature of Holder
-------------------------------------
Name of Holder (Print)
Address:
-------------------------------------
-------------------------------------
-------------------------------------
13
14
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the attached Warrant, with
respect to the number of shares of Common Stock covered thereby issuable
pursuant to the attached Warrant set forth hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
---------------------------- ------------------------------- -----------------
---------------------------- ------------------------------- -----------------
---------------------------- ------------------------------- -----------------
---------------------------- ------------------------------- -----------------
, and hereby irrevocably constitutes and appoints_______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated:
---------------------, ----
In the presence of
-------------------------------
Name:
-------------------------------------------------
Signature:
---------------------------------------
Title of Signing Officer or Agent (if any):
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
within Warrant.
