Exhibit 10.2

 

Execution Version

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of September 1, 2020 by and among Entasis Therapeutics Holdings Inc., a
Delaware corporation (the “Company”), and the “Investors” named in the
Securities Purchase Agreement, dated August 27, 2020, by and among the Company
and the Investors identified on Exhibit A attached thereto (the “Purchase
Agreement”). Capitalized terms used herein have the respective meanings ascribed
thereto in the Purchase Agreement unless otherwise defined herein.

 

The parties hereby agree as follows:

 

1.            Certain Definitions.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Closing Date” has the meaning ascribed to it in the Purchase Agreement.

 

“Closing Securities” has the meaning ascribed to it in the Purchase Agreement.

 

“Investors” means the Investors identified in the Purchase Agreement and any
Affiliate or permitted transferee of any such Investor who is a subsequent
holder of Registrable Securities.

 

“Prospectus” means (i) the prospectus included in any 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 such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as defined
in Rule 405 under the 1933 Act.

 

“Register,” “registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act, and the declaration or ordering of effectiveness of such
Registration Statement or document.

 

“Registrable Securities” means (i) the Shares and Warrant Shares (ii) any other
shares of Common Stock issued as a dividend or other distribution with respect
to, in exchange for or in replacement of the Shares or Warrant Shares, (iii) the
Warrants and (iv) any options, warrants or other rights to acquire, and any
securities received as a dividend or distribution in respect of, any of the
securities described in clauses (i), (ii) and (iii) above; provided, however,
that any such Registrable Securities shall cease to be Registrable Securities
(and the Company shall not be required to maintain the effectiveness of any, or
file another, Registration Statement hereunder with respect thereto) upon the
first to occur of (A) a Registration Statement with respect to the sale of such
Registrable Securities being declared effective by the SEC under the 1933 Act
and such Registrable Securities having been disposed of or transferred by the
holder thereof in accordance with such effective Registration Statement,
(B) such Registrable Securities having been previously sold or transferred in
accordance with Rule 144 (or another exemption from the registration
requirements of the 1933 Act) and (C) such securities becoming eligible for
resale without volume or manner-of-sale restrictions and without current public
information requirements pursuant to Rule 144.

 

 

 

“Registration Statement” means any registration statement of the Company under
the 1933 Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“SEC Guidance” means (i) any publicly-available written or oral guidance of the
SEC staff, or any comments, requirements or requests of the SEC staff and
(ii) the 1933 Act.

 

“Shares” means the shares of Common Stock purchased by the Investors pursuant to
the Purchase Agreement.

 

“Warrant Shares” has the meaning ascribed to it in the Purchase Agreement.

 

2.            Registration.

 

(a)  Registration Statements.

 

(i)  Promptly following the Closing Date but no later than forty-five (45)
calendar days after the Closing Date (the “Filing Deadline”), the Company shall
prepare and file with the SEC one Registration Statement covering the resale of
all of the Registrable Securities. Subject to any SEC comments, such
Registration Statement shall include the plan of distribution, substantially in
the form and substance, set forth in Part III of each Investor’s Selling
Stockholder Questionnaire. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Company will, (A) at least three
(3) Business Days prior to the anticipated filing of a Registration Statement or
any related Prospectus or any amendment or supplement thereto (including any
documents incorporated by reference therein), furnish to the Investors and their
respective counsel copies of all such documents proposed to be filed and make
such representatives of the Company as shall be reasonably requested by the
Investors available for discussion of such documents, (B) use its reasonable
best efforts to address in each such document prior to being so filed with the
SEC such comments as an Investor or its counsel reasonably shall propose within
two (2) Business Days of receipt of such copies by the Investors and (C) not
file any Registration Statement or any related Prospectus or any amendment or
supplement thereto containing information regarding an Investor to which such
Investor objects, unless such information is required to comply with any
applicable law or regulation. If a Registration Statement covering the
Registrable Securities is not filed with the SEC on or prior to the fifth
Business Day following the Filing Deadline, the Company will make pro rata
payments to each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1% of the aggregate amount paid pursuant to the Purchase
Agreement by such Investor for such Registrable Securities then held by such
Investor for each 30-day period or pro rata for any portion thereof following
the Filing Deadline for which no Registration Statement is filed with respect to
the Registrable Securities. Such payments shall constitute the Investors’
exclusive monetary remedy for such events, but shall not affect the right of the
Investors to seek injunctive relief. Such payments shall be made to each
Investor in cash no later than five (5) Business Days after the end of each
30-day period (the “Payment Date”). Interest shall accrue at the rate of 1% per
month on any such liquidated damages payments that shall not be paid by the
Payment Date until such amount is paid in full. Notwithstanding the foregoing,
the Company will not be liable for any liquidated damages under this
Section 2(a)(i) with respect to any Warrant Shares prior to their issuance.

 

 

 

(ii)  The Company shall take reasonable best efforts to register the Registrable
Securities on Form S-3 following the date such form is available for use by the
Company, provided that if at such time the Registration Statement is on
Form S-1, the Company shall maintain the effectiveness of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.

 

(b)  Expenses. The Company will pay all expenses associated with each
Registration Statement, including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with clearing the
Registrable Securities for sale under applicable state securities laws and
listing fees, but excluding discounts, commissions, fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
with respect to the Registrable Securities being sold. Except as provided in
Section 6 hereof, the Company shall not be responsible for legal fees incurred
by holders of Registrable Securities in connection with the performance of its
rights and obligations under the Transaction Documents.

 

(c)  Effectiveness.

 

(i)  The Company shall use reasonable best efforts to have the Registration
Statements declared effective as soon as practicable. The Company shall notify
the Investors by e-mail as promptly as practicable, and in any event, within
forty-eight (48) hours, after any Registration Statement is declared effective
and shall simultaneously provide the Investors with access to a copy of any
related Prospectus to be used in connection with the sale or other disposition
of the securities covered thereby. Subject to Section 2(d), if (A) a
Registration Statement covering the Registrable Securities is not declared
effective by the SEC prior to the earlier of (x) ten (10) Business Days after
the SEC informs the Company that no review of such Registration Statement will
be made or that the SEC has no further comments on such Registration Statement
and (y) the 90th day after the Closing Date (or the 120th day if the SEC reviews
such Registration Statement) (the “Effectiveness Deadline”), or (B) after a
Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to such Registration Statement for any reason (including without
limitation by reason of a stop order, or the Company’s failure to update such
Registration Statement), but excluding any Allowed Delay (as defined below) or,
if the Registration Statement is on Form S-1, for a period of twenty (20) days
following the date on which the Company files a post-effective amendment to
incorporate the Company’s Annual Report on Form 10-K (a “Maintenance Failure”),
then the Company will make pro rata payments to each Investor then holding
Registrable Securities, as liquidated damages and not as a penalty, in an amount
equal to 1% of the aggregate amount paid pursuant to the Purchase Agreement by
such Investor for such Registrable Securities then held by such Investor for
each 30-day period or pro rata for any portion thereof following the date by
which such Registration Statement should have been effective (the “Blackout
Period”). Such payments shall constitute the Investors’ exclusive monetary
remedy for such events, but shall not affect the right of the Investors to seek
injunctive relief. The amounts payable as liquidated damages pursuant to this
paragraph shall be paid no later than five (5) Business Days after each such
30-day period following the commencement of the Blackout Period until the
termination of the Blackout Period (the “Blackout Period Payment Date”). Such
payments shall be made to each Investor in cash. Interest shall accrue at the
rate of 1% per month on any such liquidated damages payments that shall not be
paid by the Blackout Payment Date until such amount is paid in full.
Notwithstanding the foregoing, the Company will not be liable for any liquidated
damages under this Section 2(c)(i) with respect to any Warrant Shares prior to
their issuance.

 

 

 

(ii)  Notwithstanding anything to the contrary contained herein, the Company
may, upon written notice to any holder of Registrable Securities included in a
Registration Statement, suspend the use of any Registration Statement, including
any Prospectus that forms a part of a Registration Statement, if the Company
(A) determines that it would be required to make disclosure of nonpublic
material information in the Registration Statement that would otherwise not be
required to be disclosed at that time that would be materially adverse to the
Company, or (B) the Company determines it must amend or supplement the
Registration Statement or the related Prospectus so that such Registration
Statement or Prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading; provided, however, in
no event shall holders of Registrable Securities be suspended from selling
Registrable Securities pursuant to the Registration Statement for a period that
exceeds 30 consecutive Trading Days or 60 total Trading Days in any 360-day
period (any such suspension contemplated by this Section 2(c)(ii), an “Allowed
Delay”). Upon disclosure of such information or the termination of the condition
described above, the Company shall provide prompt notice to holders whose
Registrable Securities are included in the Registration Statement, and shall
promptly terminate any suspension of sales it has put into effect and shall take
such other reasonable actions to permit registered sales of Registrable
Securities as contemplated hereby.

 

(d)  Rule 415; Cutback. If at any time the SEC takes the position that the
offering of some or all of the Registrable Securities in a Registration
Statement is not eligible to be made on a delayed or continuous basis under the
provisions of Rule 415 under the 1933 Act (provided, however, the Company shall
be obligated to use diligent efforts to advocate with the SEC for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09) or requires any Investor to be named as an “underwriter,” the Company
shall (i) promptly notify each holder of Registrable Securities thereof and
(ii) make reasonable best efforts to persuade the SEC that the offering
contemplated by such Registration Statement is a valid secondary offering and
not an offering “by or on behalf of the issuer” as defined in Rule 415 and that
none of the Investors is an “underwriter.” The Investors shall have the right to
select one legal counsel designated jointly by the Investors to review and
oversee any registration or matters pursuant to this Section 2(d), including
participation in any meetings or discussions with the SEC regarding the SEC’s
position and to comment on any written submission made to the SEC with respect
thereto. No such written submission with respect to this matter shall be made to
the SEC to which the Investors’ counsel reasonably objects. In the event that,
despite the Company’s reasonable best efforts and compliance with the terms of
this Section 2(d), the SEC refuses to alter its position, the Company shall
(A) remove from such Registration Statement such portion of the Registrable
Securities (the “Cut Back Shares”) and/or (B) agree to such restrictions and
limitations on the registration and resale of the Registrable Securities as the
SEC may require to assure the Company’s compliance with the requirements of
Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the
Company shall not agree to name any Investor as an “underwriter” in such
Registration Statement without the prior written consent of such Investor. In
the event of a cutback hereunder, the Company shall give the Investor at least
five (5) Business Days prior written notice along with the calculations as to
such Investor’s allotment. Any cutback imposed on the Investors pursuant to this
Section 2(d) shall be allocated among the Investors on a pro rata basis and
shall be applied first to any of the Registrable Securities of such Investor as
such Investor shall designate, unless the SEC Restrictions otherwise require or
provide or the Investors otherwise agree. No liquidated damages shall accrue as
to any Cut Back Shares until such date as the Company is able to effect the
registration of such Cut Back Shares in accordance with any SEC Restrictions
applicable to such Cut Back Shares (such date, the “Restriction Termination
Date”). In furtherance of the foregoing, each Investor shall provide the Company
with prompt written notice of its sale of substantially all of the Registrable
Securities under such Registration Statement such that the Company will be able
to file one or more additional Registration Statements covering the Cut Back
Shares. From and after the Restriction Termination Date applicable to any Cut
Back Shares, all of the provisions of this Section 2 (including the Company’s
obligations with respect to the filing of a Registration Statement and its
obligations to use reasonable best efforts to have such Registration Statement
declared effective within the time periods set forth herein and the liquidated
damages provisions relating thereto) shall again be applicable to such Cut Back
Shares; provided, however, that (x) the Filing Deadline for such Registration
Statement including such Cut Back Shares shall be ten (10) Business Days after
such Restriction Termination Date, and (y) the date by which the Company is
required to obtain effectiveness with respect to such Cut Back Shares shall be
the 60th day immediately after the Restriction Termination Date (or the 90th day
if the SEC reviews such Registration Statement).

 

 

 

(e)  Other Limitations. Notwithstanding any other provision herein or in the
Purchase Agreement, (i) the Filing Deadline and each Effectiveness Deadline for
a Registration Statement shall be extended and any Maintenance Failure shall be
automatically waived by no action of the Investors, in each case, without
default by or liquidated damages payable by the Company hereunder in the event
that the Company’s failure to make such filing or obtain such effectiveness or a
Maintenance Failure results from the failure of an Investor to timely provide
the Company with information requested by the Company and necessary to complete
a Registration Statement in accordance with the requirements of the 1933 Act (in
which case any such deadline would be extended, and a Maintenance Failure
waived, with respect to all Registrable Securities until such time as the
Investor provides such requested information) and (ii) in no event shall the
aggregate amount of liquidated damages (or interest thereon) paid hereunder
exceed, in the aggregate, 8% of the aggregate purchase price of the Closing
Securities purchased by the Investors under the Purchase Agreement.

 

3.            Company Obligations. The Company will use reasonable best efforts
to effect the registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as expeditiously as
possible:

 

(a)  use reasonable best efforts to cause such Registration Statement to become
effective and to remain continuously effective until such time as there are no
longer Registrable Securities held by the Investors (the “Effectiveness Period”)
and advise the Investors promptly in writing when the Effectiveness Period has
expired;

 

(b)  prepare and file with the SEC such amendments and post-effective amendments
to such Registration Statement and the related Prospectus as may be necessary to
keep such Registration Statement effective for the Effectiveness Period and to
comply with the provisions of the 1933 Act and the 1934 Act with respect to the
distribution of all of the Registrable Securities covered thereby;

 

(c)  permit, upon request, any counsel designated by an Investor to review each
Registration Statement and all amendments and supplements thereto prior to their
filing with the SEC;

 

(d)  furnish to each Investor whose Registrable Securities are included in any
Registration Statement (i) promptly after the same is prepared and filed with
the SEC, if requested by the Investor, one (1) copy of any Registration
Statement and any amendment thereto, each preliminary prospectus and Prospectus
and each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor (it being understood and
agreed that such documents, or access thereto, may be provided electronically);

 

(e)  use reasonable best efforts to (i) prevent the issuance of any stop order
or other suspension of effectiveness and, (ii) if such order is issued, obtain
the withdrawal of any such order at the earliest possible moment;

 

(f)  prior to any public offering of Registrable Securities, use reasonable best
efforts to assist or cooperate with the Investors and their counsel in
connection with their registration or qualification of such Registrable
Securities for the offer and sale under the securities or blue sky laws of such
jurisdictions reasonably requested by the Investors; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (i) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(f), (ii) subject itself to general
taxation in any jurisdiction where it would not otherwise be so subject but for
this Section 3(f), or (iii) file a general consent to service of process in any
such jurisdiction;

 

(g)  use reasonable best efforts to cause all Registrable Securities covered by
a Registration Statement to be listed on the Nasdaq Global Market (or the
primary securities exchange, interdealer quotation system or other market on
which the Common Stock then listed);

 

 

 

(h)  promptly notify the Investors, at any time prior to the end of the
Effectiveness Period, upon discovery that, or upon the happening of any event as
a result of which, the Prospectus includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare, file with the SEC and furnish
to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

 

(i)  otherwise use reasonable best efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, including,
without limitation, Rule 172 under the 1933 Act, file any final Prospectus,
including any supplement or amendment thereof, with the SEC pursuant to Rule 424
under the 1933 Act, promptly inform the Investors in writing if, at any time
during the Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Investors are required to
deliver a Prospectus in connection with any disposition of Registrable
Securities and take such other actions as may be reasonably necessary to
facilitate the registration of the Registrable Securities hereunder;

 

(j)  with a view to making available to the Investors the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC that may at
any time permit the Investors to sell shares of Common Stock to the public
without registration, the Company covenants and agrees to: (i) make and keep
public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be sold without restriction by the holders thereof
pursuant to Rule 144 or any other rule of similar effect or (B) such date as
there are no longer Registrable Securities; (ii) file with the SEC in a timely
manner all reports and other documents required of the Company under the 1934
Act; and (iii) furnish electronically to each Investor upon request, as long as
such Investor owns any Registrable Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of the 1934 Act,
(B) a copy of or electronic access to the Company’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as
may be reasonably requested in order to avail such Investor of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration; and

 

(k)  if requested by an Investor, cooperate with such Investor to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to an effective Registration
Statement, which certificates shall be free, to the extent permitted by the
Purchase Agreement and applicable law, of all restrictive legends, and to enable
such certificates to be in such denominations and registered in such names as
any such Investor may request.

 

 

 

4.            Due Diligence Review; Information. If any Investor is required
under applicable securities laws to be described in a Registration Statement as
an “underwriter,” the Company shall, upon reasonable prior notice, make
available, during normal business hours, for inspection and review by the
Investors, advisors to and representatives of the Investors (who may or may not
be affiliated with the Investors and who are reasonably acceptable to the
Company) (collectively, the “Inspectors”), all pertinent financial and other
records, and all other corporate documents and properties of the Company
(collectively, the “Records”) as may be reasonably necessary for the purpose of
such review, and cause the Company’s officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Inspectors (including, without limitation, in response to all questions and
other inquiries reasonably made or submitted by any of them), prior to and from
time to time after the filing and effectiveness of such Registration Statement
for the sole purpose of enabling such Investor and its accountants and attorneys
to conduct such due diligence solely for the purpose of establishing a due
diligence defense to underwriter liability under the 1933 Act; provided,
however, that each Inspector shall agree to hold in strict confidence and shall
not make any disclosure (except to such Investor) or use of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or the Purchase
Agreement. Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors’ ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.

 

Notwithstanding the foregoing, the Company shall not disclose material nonpublic
information to the Investors, or to advisors to or representatives of the
Investors, unless prior to disclosure of such information the Company identifies
such information as being material nonpublic information and provides the
Investors, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review and any Investor
wishing to obtain such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.

 

5.            Obligations of the Investors.

 

(a)  Each Investor shall execute and deliver a Selling Stockholder Questionnaire
prior to the Closing Date. Each Investor shall additionally furnish in writing
to the Company such other information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five (5) Business Days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify each Investor of the additional
information the Company requires from such Investor if such Investor elects to
have any of the Registrable Securities included in such Registration Statement
(the “Registration Information Notice”). An Investor shall provide such
information to the Company no later than two (2) Business Days following receipt
of a Registration Information Notice if such Investor elects to have any of the
Registrable Securities included in such Registration Statement. It is agreed and
understood that it shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that (i) such Investor
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities, and (ii) the
Investor execute such documents in connection with such registration as the
Company may reasonably request, including, without limitation, a waiver of its
registration rights hereunder to the extent an Investor elects not to have any
of its Registrable Securities included in a Registration Statement.

 

 

 

(b)  Each Investor, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of a Registration Statement hereunder, unless
such Investor has notified the Company in writing of its election to exclude all
of its Registrable Securities from such Registration Statement.

 

(c)  Each Investor agrees that, upon receipt of any notice from the Company of
either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or
(ii) the happening of an event pursuant to Section 3(h) hereof, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
any Registration Statement covering such Registrable Securities, until the
Investor is advised by the Company that such dispositions may again be made.

 

(d)  Each Investor covenants and agrees that it will comply with the prospectus
delivery requirements of the 1933 Act as applicable to it or an exemption
therefrom in connection with sales of Registrable Securities pursuant to any
Registration Statement.

 

6.            Indemnification.

 

(a)  Indemnification by the Company. The Company will indemnify and hold
harmless each Investor and its Affiliates and their respective officers,
directors, members, employees and agents, successors and assigns, against any
losses, claims, costs (including reasonable costs of preparation and reasonable
attorneys’, accountants’ and experts’ fees), expenses, judgements, fines,
damages or liabilities, joint or several, interest, settlements or any other
amounts to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, result from, relate to, or are based upon (i) any untrue
statement or alleged untrue statement or omission or alleged omission of any
material fact contained in any Registration Statement, any preliminary
Prospectus or final Prospectus, or any amendment or supplement thereof or
(ii) any violation or alleged violation by the Company or any of its
Subsidiaries of the 1933 Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the 1933 Act, the 1934 Act or any federal,
state, foreign or common law rule or regulation in connection with such
Registration Statement, disclosure document or related document or report or any
offering covered by such Registration Statement; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus, (ii) the use by an Investor of an outdated or defective Prospectus
after the Company has notified such Investor in writing that such Prospectus is
outdated or defective or (iii) an Investor’s failure to send or give a copy of
the Prospectus or supplement (as then amended or supplemented), if required (and
not exempted) to the Persons asserting an untrue statement or omission or
alleged untrue statement or omission at or prior to the written confirmation of
the sale of Registrable Securities.

 

 

 

(b)  Indemnification by the Investors. Each Investor agrees, severally but not
jointly, to indemnify and hold harmless, to the fullest extent permitted by law,
the Company, its directors, officers, employees, stockholders and each person
who controls the Company (within the meaning of the 1933 Act) against any
losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from any untrue statement of a material fact or any omission of
a material fact required to be stated in any Registration Statement or
Prospectus or preliminary Prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information regarding such Investor and furnished in writing by such Investor to
the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto. In no event shall the liability
of an Investor be greater than the dollar amount of the proceeds received by
such Investor upon the sale of the Registrable Securities included in such
Registration Statement giving rise to such indemnification obligation.

 

(c)  Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (A) the indemnifying party
has agreed to pay such fees or expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (C) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, which shall not be
unreasonably withheld or conditioned, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation.

 

 

 

(d)  Contribution. If for any reason the indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds received by it upon
the sale of the Registrable Securities giving rise to such contribution
obligation.

 

7.            Miscellaneous.

 

(a)  Amendments and Waivers. This Agreement may be amended only by a writing
signed by the Company and each of the Investors. The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of each Investor.

 

(b)  Notices. All notices and other communications provided for or permitted
hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement.

 

(c)  Assignments and Transfers by Investors. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Investors and their
respective successors and assigns. An Investor may transfer or assign, in whole
or from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Investor to such
person, provided that (i) the Investor agrees in writing with the transferee or
assignee to assign such rights and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (A) the name and address of such transferee or assignee and
(B) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; (v) such transfer
shall have been made in accordance with the applicable requirements of the
Purchase Agreement and (vi) unless the transferee or assignee is an Affiliate
of, and after such transfer or assignment continues to be an Affiliate of, such
Investor, the amount of Registrable Securities transferred or assigned to such
transferee or assignee represents at least $5.0 million of Registrable
Securities (based on the then-current market price of the Common Stock).

 

 

 

(d)  Assignments and Transfers by the Company. This Agreement may not be
assigned by the Company (whether by operation of law or otherwise) without the
prior written consent of each Investor, provided, however, that in the event
that the Company is a party to a merger, consolidation, share exchange or
similar business combination transaction in which the Common Stock is converted
into the equity securities of another Person, from and after the effective time
of such transaction, such Person shall, by virtue of such transaction, be deemed
to have assumed the obligations of the Company hereunder, the term “Company”
shall be deemed to refer to such Person and the term “Registrable Securities”
shall be deemed to include the securities received by the Investors in
connection with such transaction unless such securities are otherwise freely
tradable by the Investors after giving effect to such transaction.

 

(e)  Benefits of the Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. 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.

 

(f)  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. This Agreement may also be executed via
e-mail, which shall be deemed an original.

 

(g)  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.

 

(h)  Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provisions hereof prohibited or unenforceable in any respect.

 

(i)  Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

(j)  Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

 

 

 

(k)  Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof (other than sections 5-1401 and 5-1402 of the General Obligations Law).
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

(l)  Filing Restrictions. The Company will register the resale of Registrable
Securities representing Cut Back Shares on an effective Registration Statement
prior to or concurrent with registering the resale of its securities by a
selling security holder not holding Registrable Securities; provided, however,
that this Section 7(l) shall not apply to Registrable Securities representing
Cut Back Shares that were excluded from any such Registration Statement on
account of the failure of a holder of such Registrable Securities to comply with
the provisions hereof, including, but not limited to, the requirement of a
holder to provide information required to be included in a Registration
Statement.

 

(m)  Independent Nature of Investors’ Obligations and Rights. The obligations of
each Investor hereunder are several and not joint with the obligations of any
other Investor hereunder, and no Investor shall be responsible in any way for
the performance of the obligations of any other Holder hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Investor pursuant hereto or thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the Holders are
in any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Investors are not acting in
concert or as a group, and the Company shall not assert any such claim, with
respect to such obligations or transactions. Each Investor shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose. The use of
a single agreement with respect to the obligations of the Company contained was
solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Holder. It is expressly understood
and agreed that each provision contained in this Agreement is between the
Company and an Investor, solely, and not between the Company and the Investors
collectively and not between and among Investors.

 

 

 

(n)  Registration Rights. The Company covenants that it will not, and it will
cause its Subsidiaries not to, grant any right of registration under the 1933
Act to any Person other than pursuant to this Agreement, unless the rights so
granted to another Person do not limit or restrict the rights of the Investors
hereunder.

 

(o)  Gross-Up. For the avoidance of doubt, the amount of any liquidated damages
or indemnification payments payable to an Investor pursuant to this Agreement
shall include a gross-up to take into account such Investor’s and its
Affiliates’ equity ownership in the Company such that, after payment of the
grossed-up amount, the Investor has received the full value of such payment,
taking into account the value of its equity ownership in the Company.

 

(p)  No Recourse. Notwithstanding anything that may be expressed or implied in
this Agreement, each Party covenants, agrees and acknowledges that no recourse
under this Agreement or any documents or instruments delivered in connection
with this Agreement shall be had against any of the Company’s or an Investor’s
former, current or future direct or indirect equity holders, controlling
persons, stockholders, directors, officers, employees, agents, Affiliates,
members, financing sources, managers, general or limited partners or assignees
(each, a “Related Person” and collectively, the “Related Persons”), in each case
other than the Company, an Investor or any of their respective permitted assigns
under this Agreement, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any applicable law, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by any of the Related Persons,
as such, for any obligation or liability of the Company or an Investor under
this Agreement or any documents or instruments delivered in connection herewith
for any claim based on, in respect of or by reason of such obligations or
liabilities or their creation; provided, however, nothing in this
Section 7(o) shall relieve or otherwise limit the liability of the Company or an
Investor, as such, for any breach or violation of its obligations under this
Agreement or such agreements, documents or instruments. For the avoidance of
doubt, none of the Parties will have any recourse, be entitled to commence any
proceeding or make any claim under this Agreement or in connection with the
transactions contemplated hereby except against any of the Parties or their
respective successors and permitted assigns, as applicable.

 

[remainder of page intentionally left blank]

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

COMPANY:

ENTASIS THERAPEUTICS HOLDINGS INC.

 

  By:   /s/ Manoussos Perros, Ph.D.     Name: Manoussos Perros, Ph.D.    
Title:   President and Chief Executive Officer

 

 

 

INVESTOR: ARMISTICE CAPITAL MASTER FUND LTD.       By:     /s/ Steven Boyd    
Name: Steven Boyd     Title:   CIO of Armistice Capital, LLC, the Investment
Manager

 

 

 

INVESTOR: INNOVIVA, INC.       By:     /s/ Pavel Raifeld     Name: Pavel Raifeld
    Title:   Chief Executive Officer