Exhibit 10.4

 

CELL THERAPEUTICS, INC.

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made as of the 21st day
of December, 2004, by and between Cell Therapeutics, Inc., a Washington
corporation (the “Company”), and the investor set forth on the signature page
hereto (“Investor”).

 

RECITALS:

 

The Company and the Investor have entered into that certain Financing Agreement
(the “Financing Agreement”) of even date herewith pursuant to which the Company
may issue shares of common stock, no par value per share (the “Common Stock”) to
the Investor in partial fulfillment of the Company’s obligations under Section
8.5 of the Financing Agreement and on the terms and conditions set forth
therein. In connection with the Financing Agreement, the Company has agreed to
enter into this Agreement with the Investor in order to provide the Investor
with certain rights to register the shares that may become issuable under
Section 8.5 of the Financing Agreement (the “Shares”).

 

AGREEMENT

 

The parties hereby agree as follows:

 

1. Definitions. Capitalized terms used herein, but not otherwise defined, shall
have the meaning ascribed to such terms in the Financing Agreement. As used in
this Agreement, the following defined terms shall have the following meanings:

 

(a) “Commission” means the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

 

(b) “Effectiveness Period” has the meaning assigned thereto in Section 2.1(b)(i)
hereof.

 

(c) “Effective Time” means the date on which the Commission declares the
Registration Statement effective or on which the Registration Statement
otherwise becomes effective.

 

(d) “Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

 

(e) The term “holder” means the record holder of such Common Stock.

--------------------------------------------------------------------------------

(f) “Prospectus” means the prospectus (including, without limitation, any
preliminary prospectus, any final prospectus and any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act)
included in the Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.

 

(g) The term “Registrable Securities” means (i) the Shares, and (ii) any other
shares of Common Stock of the Company issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Shares; provided,
however, that the foregoing definition shall exclude in all cases any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale;

 

(h) The term “Registration Statement” has the meaning set forth in Section
2.1(a).

 

(i) The term “SEC” means the Securities and Exchange Commission.

 

(j) The term “Shelf Registration Statement” means a “shelf” registration
statement filed under the Securities Act providing for the registration of, and
the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities pursuant to Rule 415 under the Securities Act and/or any
similar rule that may be adopted by the Commission, filed by the Company
pursuant to the provisions of Section 2.1 of this Agreement, including the
Prospectus contained therein, any amendments and supplements to such
registration statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.

 

2. Registration Rights. The Company and the Investor covenant and agree as
follows:

 

2.1 Required Registration.

 

(a) Unless otherwise instructed in writing by the Investor, the Company shall,
on or prior to 45 calendar days after the issuance of the Shares (as defined in
the Financing Agreement), file with the Commission a Shelf Registration
Statement (except if the Company is not then eligible to use Form S-3, in which
case such registration statement shall be on another appropriate form) (the
“Registration Statement”) relating to the offer and sale of the Registrable
Securities and, thereafter,

 

-2-

--------------------------------------------------------------------------------

shall use its commercially reasonable efforts to cause such Registration
Statement to be declared effective under the Securities Act as soon as
practicable and in any event on or prior to 135 calendar days after the issuance
of the Shares; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance pursuant to this
Section 2.1 (1) if the Company shall furnish to the Investor a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be effected at such time because the filing thereof would require premature
disclosure of a potential transaction or transactions (a “Potential
Transaction”), in which event the Company shall have the right to defer the
filing of such registration statement for a period of not more than 60 days;
provided, however, that the Company shall not utilize this right more than once
in any 270 day period; or (2) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance. Subject to any modifications that are responsive to comments, rules
or regulations of the SEC, the Registration Statement will include a customary
plan of distribution.

 

(b) The Company shall use its reasonable best efforts to:

 

(i) keep the Registration Statement continuously effective in order to permit
the Prospectus to be usable by the Investor for resales of Registrable
Securities until the earlier of (A) the sale under the Registration Statement of
all the Registrable Securities registered thereunder, and (B) the expiration of
the holding period applicable to such Registrable Securities held by persons
that are not affiliates of the Company under Rule 144(k) of the Securities Act
or any successor previously subject to specific permitted exceptions (such
period being referred to herein as the “Effectiveness Period”);

 

(ii) promptly prepare and file with the SEC such amendments and supplements to
the Registration Statement and the Prospectus as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement;

 

(iii) register and qualify the Registrable Securities covered by such
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Investor, provided that
the Company 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;

 

(iv) furnish to the Investor such number of copies of Prospectuses and such
other documents as the Investor from time to time may reasonably request in
order to facilitate the disposition of Registrable Securities owned by the
Investor;

 

(v) notify the Investor 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 of the happening of any event as a result of
which the Prospectus included in 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;

 

-3-

--------------------------------------------------------------------------------

(vi) cause all such Registrable Securities registered pursuant to Section 2.1 to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;

 

(vii) provide Investor’s counsel a copy of such Registration Statement, prior to
filing with the SEC, furnish Investor’s counsel a copy of any amendments and
supplements concurrently with filing with the SEC and as promptly as practicable
provide such counsel with any comment letters or similar notices received by the
Company from the SEC with respect thereto; and

 

(viii) provide a transfer agent and registrar for all Registrable Securities
registered hereunder a CUSIP number for all such Registrable Securities, in each
case not later than the Effective Time.

 

2.2 Restrictions on and Procedure for Sales Pursuant to Registration Statement;
Delay of Sale. The Company may suspend the Registration Statement and refuse to
permit the Investor to resell any Registrable Securities for a specified period
of time; provided, however, that (a) in order to exercise this right, the
Company must deliver a certificate in writing to the Investor to the effect that
the Registration Statement in its then current form omits discussion of a
Potential Transaction or contains an untrue statement of material fact or omits
to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, and
(b) in no event shall such delay exceed 60 consecutive days. During any
suspension as contemplated by this Section 2.2, the Company will not allow any
of its officers or directors to buy or sell shares of the Company’s securities.

 

2.3 Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 2 with respect to the
Registrable Securities of the Investor that the Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Investor’s Registrable Securities.

 

2.4 Registration Expenses. All expenses incurred in connection with a
Registration Statement pursuant to Section 2.1, including (without limitation)
all registration, filing, qualification, printers’ and accounting fees, and the
reasonable fees and disbursements of one counsel for the Investor selected by
Investor with the approval of the Company, which approval shall not be
unreasonably withheld, and counsel for the Company shall be borne by the
Company. The Company shall pay such Investor’s counsel reasonable fees and
disbursements within 30 days after receiving the Investor’s written demand
therefor, which shall include a copy of any related invoice(s) from Investor’s
counsel.

 

-4-

--------------------------------------------------------------------------------

2.5 Indemnification. In the event any Registrable Securities are included in a
Registration Statement under Section 2:

 

(a) To the extent permitted by law, the Company will indemnify and hold harmless
Investor and each person, if any, who controls Investor within the meaning of
the Securities Act or the Exchange 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 in any Registration Statement,
including any Prospectus contained therein or any amendments or supplements
thereto, or (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; and the Company will pay to each such Investor or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 2.5(a) 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 Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable to any Investor or controlling person
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 furnished expressly for use in connection
with such registration by any such Investor or controlling person.

 

(b) To the extent permitted by law, the Investor will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act and any controlling person of any Investor,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons 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 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 Investor expressly for use in connection with such
Registration Statement; and Investor will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 2.5(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 2.5(b) 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 Investor, which
consent shall not be unreasonably withheld; provided, that in no event shall any
indemnity under this subsection 2.5(b) exceed $2,500,000, except in the case of
willful fraud by Investor.

 

(c) Promptly after receipt by an indemnified party under this Section 2.5 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

 

-5-

--------------------------------------------------------------------------------

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 (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the reasonable fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if 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.

 

(d) If the indemnification provided for in this Section 2.5 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations; provided, that
in no event shall any contribution by Investor under this subsection 2.5(d)
exceed $2,500,000, except in the case of willful fraud by Investor. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.

 

(e) The obligations of the Company and Investor under this Section 2.5 shall
survive the completion of any offering of Registrable Securities in a
Registration Statement under this Section 2, and otherwise.

 

2.6 Reports under the Securities Exchange Act of 1934. With a view to making
available to the Investor the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Investor to sell securities of the Company to the public without
registration or pursuant to a Registration Statement, the Company agrees to use
its best commercial efforts to:

 

(a) make and keep public information available, as those terms are understood
and defined in SEC Rule 144, at all times so long as the Company remains subject
to the periodic reporting requirements under Sections 13 or 15(d) of the
Exchange Act;

 

(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and

 

-6-

--------------------------------------------------------------------------------

(c) furnish to Investor, so long as Investor owns any Registrable Securities,
forthwith upon request (i) 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
(ii) such other information as may be reasonably requested in availing any
Investor of any rule or regulation of the SEC which permits the selling of any
such securities without registration or pursuant to such form.

 

2.7 Termination of Registration Rights. (a) With respect to shares of
Registrable Securities issued to the Investor, (i) the Investor shall not be
entitled to exercise any right provided for in Section 2.1 after such time as
Rule 144(k) under the Securities Act is available for the sale of all of such
Investor’s shares that were issued, and (ii) the Company shall have no further
obligations under Section 2.1 following the Effectiveness Period, and (b) if the
Shares are not issued or issuable under the terms of Section 8.6B(1) of the
Financing Agreement, and in any event if the Shares have not been issued by
March 31, 2006, this Agreement shall become null and void.

 

3. Miscellaneous.

 

3.1 Successors and Assigns. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any of the Common Stock). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

3.2 Amendments and Waivers. Any term of this Agreement may be amended or waived
only with the written consent of the Company and the holders of a majority of
the Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.

 

3.3 Notices. Unless otherwise provided, any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party’s address or fax number as set forth on the signature page hereto
or as subsequently modified by written notice, and if to CTI, with a copy to
Wilson Sonsini Goodrich & Rosati, Professional Corporation, One Market, Spear
Tower, Suite 3300, San Francisco, CA 94118, Tel: (415) 947-2008, Fax: (415)
947-2099, Attn: Michael Kennedy, Esq.

 

3.4 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.

 

-7-

--------------------------------------------------------------------------------

3.5 Governing Law. This Agreement and all acts and transactions pursuant hereto
shall be governed, construed and interpreted in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of laws.

 

3.6 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

3.7 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

[Signature Page Follows]

 

-8-

--------------------------------------------------------------------------------

The parties have executed this Registration Rights Agreement as of the date
first above written.

 

CELL THERAPEUTICS, INC.

  INVESTOR: PHARMABIO DEVELOPMENT, INC.

By:

 

/s/ James Bianco

--------------------------------------------------------------------------------

  By:  

/s/ William O. Robb

--------------------------------------------------------------------------------

Name:

  James Bianco   Name:   William O. Robb

Title:

  Chief Executive Officer   Title:   Vice President

Address:

 

501 Elliott Avenue West, Suite 400

Seattle, Washington 98119

  Address:  

4709 Creekstone Drive

Riverbirch Bldg., Suite 200

Durham, NC 27703

        Tel:   (919) 998-2000         Fax:   (919) 998-2090         Soc. Sec. or
Tax I.D.