EXHIBIT 10.4
Execution Copy
CRITICAL THERAPEUTICS, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement dated as of October
3, 2003 is entered into by and among Critical Therapeutics, Inc., a Delaware
corporation (the "Company"), the individuals and entities listed on Exhibit A
attached hereto under the heading "Series A Investors" (the "Series A
Investors"), and the individuals and entities listed on Exhibit B attached
hereto under the heading "Series B Investors" (the "Series B Investors" and
together with the Series A Investors, the "Investors").
Recitals
WHEREAS, the Company and the Series A Investors are parties to an
Investor Rights Agreement dated as of July 6, 2001, as amended (the "Original
Agreement"); and
WHEREAS, the Company and the Series B Investors have entered into a
Series B Convertible Preferred Stock Purchase Agreement of even date herewith
(the "Purchase Agreement"); and
WHEREAS, the Company and the Investors desire to provide for certain
arrangements with respect to (i) the registration of shares of capital stock of
the Company under the Securities Act (defined below) and (ii) the Investors'
right of first refusal with respect to certain issuances of securities of the
Company; and
WHEREAS, the Company and the Investors desire to amend and restate the
Original Agreement to modify certain terms thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Certificate of Incorporation" means the Company's Certificate
of Incorporation as amended and in effect as of the date first written above.
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.001 par value per
share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Initiating Holders" means the Stockholders initiating a
request for registration pursuant to Section 2.1(a) or 2.1(b), as the case may
be.
"Initial Public Offering" means the initial underwritten
public offering of shares of Common Stock pursuant to an effective Registration
Statement.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Statement" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
"Registration Expenses" means the expenses described in
Section 2.4.
"Registrable Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Shares, (ii) any shares of Common
Stock, and any shares of Common Stock issued or issuable upon the conversion or
exercise of any other securities of the Company, acquired by the Investors and
(iii) any other shares of Common Stock issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, however, that shares of Common Stock which are
Registrable Shares shall cease to be Registrable Shares upon any sale pursuant
to a Registration Statement or Rule 144 under the Securities Act. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Registrable Shares, the determination of such percentage
shall include shares of Common Stock issuable upon conversion of the Shares even
if such conversion has not been effected.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Selling Stockholder" means any Stockholder owning Registrable
Shares included in a Registration Statement.
"Shares" shall mean (i) the shares of Series B Convertible
Preferred Stock, $.001 par value per share (the "Series B Preferred Stock"), of
the Company issued or issuable under the Series B Convertible Preferred Stock
Purchase Agreement dated as of October 3, 2003, and (ii) the shares of Series A
Convertible Preferred Stock, $.001 par value per share (the "Series A
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Preferred Stock"), of the Company issued or issuable under (a) the Series A
Convertible Preferred Stock Purchase Agreement dated as of July 6, 2001 by and
among the Company and the individuals and entities listed on Exhibit A thereto,
(b) the Series A Convertible Preferred Stock Purchase Agreement dated as of
October 24, 2002 by and among the Company and the individuals and entities
listed on Exhibit A thereto, and (c) a Warrant dated June 26, 2002 for the
purchase of 90,000 shares of Series A Preferred Stock issued to Silicon Valley
Bank.
"Stockholders" means the Investors and any persons or entities
to whom the rights granted under this Agreement are transferred by any
Investors, their successors or assigns pursuant to Section 7 hereof.
2. Registration Rights
2.1 Required Registrations.
(a) At any time following the closing of the Initial
Public Offering, a Stockholder or Stockholders holding in the aggregate at least
35% of the Registrable Shares then outstanding may request, in writing, that the
Company effect the registration on Form S-1 or Form S-2 (or any successor form)
of Registrable Shares owned by such Stockholder or Stockholders having an
aggregate value of at least $5,000,000 (based on the then current market price
or fair value).
(b) At any time while the Company is eligible to file
a Registration Statement on Form S-3 (or any successor form relating to
secondary offerings), a Stockholder or Stockholders holding Registrable Shares
then outstanding may request, in writing, that the Company effect the
registration on Form S-3 (or such successor form), of Registrable Shares having
an aggregate value of at least $1,000,000 (based on the then current public
market price).
(c) Upon receipt of any request for registration
pursuant to this Section 2, the Company shall promptly give written notice of
such proposed registration to all other Stockholders. Such Stockholders shall
have the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of their Registrable Shares as such Stockholders may request in such notice of
election, subject in the case of an underwritten offering to the approval of the
managing underwriter as provided in Section 2.1(d) below. Thereupon, the Company
shall, as expeditiously as possible, use its best efforts to effect the
registration on an appropriate registration form of all Registrable Shares which
the Company has been requested to so register (provided, however, that in the
case of a registration requested under Section 2.1(b), the Company will only be
obligated to effect such registration on Form S-3 (or any successor form)).
(d) If the Initiating Holders intend to distribute
the Registrable Shares covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.1(a) or (b), as the case may be, and the Company shall include such
information in its written notice referred to in Section 2.1(c). The right of
any other Stockholder to include its Registrable Shares in such registration
pursuant to Section 2.1(a) or (b), as the case may be, shall be conditioned upon
such other Stockholder's participation in
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such underwriting on the terms set forth herein. If the managing underwriter
determines that the marketing factors require a limitation of the number of
shares to be underwritten, the number of Registrable Shares to be included in a
Registration Statement filed pursuant to this Section 2.1, shall be reduced pro
rata among the requesting Stockholders based on the quotient of (1) the total
Registrable Shares to be included in the Registration Statement, divided by (2)
the total number of Registrable Shares that the Stockholders requested to be
included in the Registration Statement.
(e) The Initiating Holders shall have the right to
select the managing underwriter(s) for any underwritten offering requested
pursuant to Section 2.1(a) or (b), subject to the approval of the Company, which
approval will not be unreasonably withheld, conditioned or delayed.
(f) The Company shall not be required to effect more
than two registrations pursuant to Section 2.1(a). In addition, the Company
shall not be required to effect any registration (other than on Form S-3 or any
successor form relating to secondary offerings) within six months after the
effective date of the Registration Statement relating to the Initial Public
Offering. For purposes of this Section 2.1(f), a Registration Statement shall
not be counted until such time as such Registration Statement has been declared
effective by the Commission (unless the Initiating Holders withdraw their
request for such registration (other than as a result of information concerning
the business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and elect
not to pay the Registration Expenses therefor pursuant to Section 2.4). For
purposes of this Section 2.1(f), a Registration Statement shall not be counted
if, as a result of an exercise of the underwriter's cut-back provisions, less
than 55% of the total number of Registrable Shares that Stockholders have
requested to be included in such Registration Statement are so included.
(g) If at the time of any request to register
Registrable Shares by Initiating Holders pursuant to this Section 2.1, the
Company is engaged or has plans to engage in a registered public offering or is
engaged in any other activity which, in the good faith determination of the
Company's Board of Directors, would be adversely affected by the requested
registration, then the Company may at its option direct that such request be
delayed for a period not in excess of 120 days from the date of such request,
such right to delay a request to be exercised by the Company not more than once
in any 12-month period.
2.2 Incidental Registration.
(a) Whenever the Company proposes to file a
Registration Statement (other than a Registration Statement filed pursuant to
Section 2.1) at any time and from time to time, it will, prior to such filing,
give written notice to all Stockholders of its intention to do so. Upon the
written request of a Stockholder or Stockholders given within 20 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its best efforts
to cause all Registrable Shares which the Company has been requested by such
Stockholder or Stockholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition
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in accordance with the intended methods of distribution specified in the request
of such Stockholder or Stockholders; provided that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this Section
2.2 without obligation to any Stockholder.
(b) If the registration for which the Company gives
notice pursuant to Section 2.2(a) is a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.2(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.2 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein. All Stockholders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the underwriting by the Company, provided that, such underwriting
agreement shall not provide for indemnification or contribution obligations on
the part of Stockholders materially greater than the obligations of the
Stockholders pursuant to Section 2.5. Notwithstanding any other provision of
this Section 2.2, if the managing underwriter determines that the inclusion of
all shares requested to be registered would adversely affect the offering, the
Company may limit the number of Registrable Shares to be included in the
registration and underwriting. The Company shall so advise all holders of
Registrable Shares requesting registration, and the number of shares that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner. The securities of the Company held by holders other
than Stockholders shall be excluded from such registration and underwriting to
the extent deemed advisable by the managing underwriter, and, if a further
limitation on the number of shares is required, the number of shares that may be
included in such registration and underwriting shall be allocated among all
Stockholders requesting registration in proportion, as nearly as practicable, to
the respective number of shares of Common Stock (on an as-converted basis) which
they held at the time the Company gives the notice specified in Section 2.2(a).
If any Stockholder would thus be entitled to include more securities than such
holder requested to be registered, the excess shall be allocated among other
requesting Stockholders pro rata in the manner described in the preceding
sentence. If any holder of Registrable Shares disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by written notice
to the Company, and any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
2.3 Registration Procedures.
(a) If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration
Statement with respect to such Registrable Shares and use its best efforts to
cause that Registration Statement to become effective as soon as possible
(subject to the Company's right to postpone or withdraw any registration
effected under Section 2.2);
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(ii) as expeditiously as possible prepare
and file with the Commission any amendments and supplements to the Registration
Statement and the prospectus included in the Registration Statement as may be
necessary to comply with the provisions of the Securities Act (including the
anti-fraud provisions thereof) and to keep the Registration Statement effective
for 12 months from the effective date or such lesser period until all such
Registrable Shares are sold or, in the case of a registration effected under
Section 2.2, until the termination of the primary offering;
(iii) as expeditiously as possible furnish
to each Selling Stockholder such reasonable numbers of copies of the Prospectus,
including any preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by such Selling Stockholder;
(iv) as expeditiously as possible use its
best efforts to register or qualify the Registrable Shares covered by the
Registration Statement under the securities or Blue Sky laws of such states as
the Selling Stockholders shall reasonably request, and do any and all other acts
and things that may be necessary or desirable to enable the Selling Stockholders
to consummate the public sale or other disposition in such states of the
Registrable Shares owned by the Selling Stockholder; provided, however, that the
Company shall not be required in connection with this paragraph (iv) to qualify
as a foreign corporation or execute a general consent to service of process in
any jurisdiction;
(v) as expeditiously as possible, cause all
such Registrable Shares to be listed on each securities exchange or automated
quotation system on which similar securities issued by the Company are then
listed;
(vi) promptly provide a transfer agent and
registrar for all such Registrable Shares not later than the effective date of
such registration statement;
(vii) promptly make available for inspection
by the Selling Stockholders, any managing underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant or other agent retained by any such underwriter or selected by the
Selling Stockholders, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement;
(viii) as expeditiously as possible, notify
each Selling Stockholder, promptly after it shall receive notice thereof, of the
time when such Registration Statement has become effective or a supplement to
any Prospectus forming a part of such Registration Statement has been filed; and
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(ix) as expeditiously as possible following
the effectiveness of such Registration Statement, notify each seller of such
Registrable Shares of any request by the Commission for the amending or
supplementing of such Registration Statement or Prospectus.
(b) If the Company has delivered a Prospectus to the
Selling Stockholders and after having done so the Prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the Selling Stockholders and, if requested, the Selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(c) In the event that, in the judgment of the
Company, it is advisable to suspend use of a Prospectus included in a
Registration Statement due to pending material developments or other events that
have not yet been publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company shall notify all
Selling Stockholders to such effect, and, upon receipt of such notice, each such
Selling Stockholder shall immediately discontinue any sales of Registrable
Shares pursuant to such Registration Statement until such Selling Stockholder
has received copies of a supplemented or amended Prospectus or until such
Selling Stockholder is advised in writing by the Company that the then current
Prospectus may be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in such
Prospectus. Notwithstanding anything to the contrary herein, the Company shall
not exercise its rights under this Section 2.3(c) to suspend sales of
Registrable Shares more than two times in any 365-day period and for not more
than 60 days in the aggregate in any 365 day period.
2.4 Allocation of Expenses. The Company will pay all
Registration Expenses for all registrations under this Agreement; provided,
however, that if a registration under Section 2.1 is withdrawn at the request of
the Initiating Holders (other than as a result of information concerning the
business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and if the
Initiating Holders elect not to have such registration counted as a registration
requested under Section 2.1, the requesting Stockholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and expenses
of one counsel selected by the Selling Stockholders to represent the Selling
Stockholders, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of Selling
Stockholders' own counsel (other than the counsel selected to represent all
Selling Stockholders).
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2.5 Indemnification and Contribution.
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless each Selling Stockholder, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Stockholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such Selling Stockholder, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such Selling Stockholder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that (i) any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Stockholder, underwriter or controlling
person specifically for use in the preparation thereof, or (ii) any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in any
registration statement or preliminary prospectus if such untrue statement or
alleged untrue statement or omission or alleged omission is completely corrected
in the final prospectus or an amendment or supplement to such prospectus and the
relevant Selling Stockholder (having previously been furnished by or on behalf
of the Company with a sufficient number of copies of same), fails to deliver
such prospectus as so amended or supplemented before or concurrently with the
sale of the Registrable Shares to the person asserting such loss, claim, damage
or liability, and such loss, claim, damage or liability arises due to the
failure by the Selling Stockholder to deliver such prospectus as so amended or
supplemented before or concurrently with the sale of the Registrable Shares.
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, each
Selling Stockholder, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims,
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damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such Selling Stockholder
furnished in writing to the Company by or on behalf of such Selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of a Selling Stockholder hereunder shall be limited to an amount
equal to the net proceeds to such Selling Stockholder of Registrable Shares sold
in connection with such registration.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that, counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); 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 under this Section except to the extent
that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense 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 the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further, that in no event shall the
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which 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, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 2.5 is due in accordance with its terms but for any reason is held to be
unavailable to an Indemnified Party in respect to any losses, claims, damages
and liabilities referred to herein, then the Indemnifying Party shall, in lieu
of indemnifying such Indemnified Party, contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims, damages or
liabilities to which such party
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may be subject in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Selling Stockholders on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Selling Stockholders
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of material fact related to information supplied by the
Company or the Selling Stockholders and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 2.5 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph of Section 2.5, (a) in no case shall any one
Selling Stockholder be liable or responsible for any amount in excess of the net
proceeds received by such Selling Stockholder from the offering of Registrable
Shares and (b) the Company shall be liable and responsible for any amount in
excess of such proceeds; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve such
party from any other obligation it or they may have thereunder or otherwise
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its prior written consent,
which consent shall not be unreasonably withheld.
2.6 Other Matters with Respect to Underwritten Offerings. In
the event that Registrable Shares are sold pursuant to a Registration Statement
in an underwritten offering pursuant to Section 2.1, the Company agrees to (a)
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its best efforts to cause
its legal counsel to render customary opinions to the underwriters and the
Selling Stockholders with respect to the Registration Statement; and (c) use its
best efforts to cause its independent public accounting firm to issue customary
"cold comfort letters" to the underwriters and the Selling Stockholders with
respect to the Registration Statement.
2.7 Information by Holder. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
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2.8 "Stand-Off" Agreement; Confidentiality of Notices. Each
Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder for a period of 180 days following the
effective date of a Registration Statement; provided that,:
(a) such agreement shall only apply to the Initial
Public Offering; and
(b) all stockholders of the Company then holding at
least 1% of the outstanding Common Stock (on an as-converted basis) and all
officers and directors of the Company enter into similar agreements.
The Company may impose stop-transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of such 180-day period.
Any Stockholder receiving any written notice from the Company regarding
the Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
2.9 Limitations on Subsequent Registration Rights. The Company
shall not, without the prior written consent of Stockholders holding at least
50% of the Registrable Shares then held by all Stockholders, enter into any
agreement (other than this Agreement) with any holder or prospective holder of
any securities of the Company which grant such holder or prospective holder
rights to include securities of the Company in any Registration Statement on a
basis that is on parity with or senior in any way in priority to the
Stockholders.
2.10 Rule 144 Requirements. After the earliest of (i) the
closing of the sale of securities of the Company pursuant to a Registration
Statement, (ii) the registration by the Company of a class of securities under
Section 12 of the Exchange Act, or (iii) the issuance by the Company of an
offering circular pursuant to Regulation A under the Securities Act, the Company
agrees to:
(a) make and keep current public information about
the Company available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents of the Company as such holder may
11
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
2.11 Termination of Registration Rights. No holder of
Registrable Shares shall be entitled to exercise any rights provided for in this
Section 2 (i) later than five (5) years after the closing of the Initial Public
Offering, or (ii) if the Company has closed its Initial Public Offering, is
subject to, and in compliance with its obligations under, the Exchange Act, and
such holder is not subject to or obligated to enter into a market stand-off,
lock up or similar arrangement with respect to securities of the Company at such
time, when such holder is eligible to sell all of such holder's shares under
Rule 144 of the Securities Act within any three (3) month period without volume
limitations, or under Rule 144(k) promulgated thereunder.
3. Right of First Refusal.
3.1 Rights of Investors.
(a) The Company shall not issue, sell or exchange,
agree to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, (i) any shares of its Common Stock, (ii) any other equity securities
of the Company, including, without limitation, shares of preferred stock, (iii)
any option, warrant or other right to subscribe for, purchase or otherwise
acquire any equity securities of the Company, or (iv) any debt securities
convertible into capital stock of the Company (collectively, the "Offered
Securities"), unless in each such case the Company shall have first complied
with this Section 3.1. The Company shall deliver to each Investor a written
notice of any proposed or intended issuance, sale or exchange of Offered
Securities (the "Offer"), which Offer shall (i) identify and describe the
Offered Securities, (ii) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (iii) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (iv) offer to issue and sell to or
exchange with such Investor (A) a pro rata portion of the Offered Securities
determined by dividing the aggregate number of shares of Common Stock then held
by such Investor (giving effect to the conversion of all shares of convertible
preferred stock then held) by the total number of shares of Common Stock then
outstanding (giving effect to the conversion of all outstanding shares of
convertible preferred stock) (the "Basic Amount"), and (B) any additional
portion of the Offered Securities attributable to the Basic Amounts of other
Investors as such Investor shall indicate it will purchase or acquire should the
other Investors subscribe for less than their Basic Amounts (the
"Undersubscription Amount").
(b) To accept an Offer, in whole or in part, an
Investor must deliver a written notice to the Company prior to 30 days after the
date of delivery of the Offer, setting forth the portion of the Investor's Basic
Amount that such Investor elects to purchase and, if such Investor shall elect
to purchase all of its Basic Amount, the Undersubscription Amount (if any) that
such Investor elects to purchase (the "Notice of Acceptance"). If the Basic
Amounts subscribed for by all Investors are less than the total of all of the
Basic Amounts available for purchase, then each Investor who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the
12
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all of the Basic Amounts available for purchase and the Basic Amounts
subscribed for (the "Available Undersubscription Amount"), each Investor who has
subscribed for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Undersubscription
Amount subscribed for by such Investor bears to the total Undersubscription
Amounts subscribed for by all Investors, subject to rounding by the Board of
Directors to the extent it deems reasonably necessary.
(c) The Company shall have 90 days from the
expiration of the period set forth in Section 3.1(b) above to issue, sell or
exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Investors (the "Refused Securities"), but
only to the offerees or Investors described in the Offer (if so described
therein) and only upon terms and conditions (including, without limitation, unit
prices and interest rates) which are not more favorable, in the aggregate, to
the acquiring person or persons or less favorable to the Company than those set
forth in the Offer.
(d) In the event the Company shall propose to sell
less than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 3.1(c) above), then each Investor may, at its
sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that shall
be not less than the number or amount of the Offered Securities that the
Investor elected to purchase pursuant to Section 3.1(b) above multiplied by a
fraction, (i) the numerator of which shall be the number or amount of Offered
Securities the Company actually proposes to issue, sell or exchange (including
Offered Securities to be issued or sold to Investors pursuant to Section 3.1(b)
above prior to such reduction) and (ii) the denominator of which shall be the
original amount of the Offered Securities. In the event that any Investor so
elects to reduce the number or amount of Offered Securities specified in its
Notice of Acceptance, the Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until such
securities have again been offered to the Investors in accordance with Section
3.1(a) above.
(e) Upon the closing of the issuance, sale or
exchange of all or less than all of the Refused Securities, the Investors shall
acquire from the Company, and the Company shall issue to the Investors, the
number or amount of Offered Securities specified in the Notices of Acceptance,
as reduced pursuant to Section 3.1(d) above if the Investors have so elected,
upon the terms and conditions specified in the Offer. The purchase by the
Investors of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and the Investors of a purchase agreement
relating to such Offered Securities reasonably satisfactory in form and
substance to the Investors and their respective counsel.
(f) Any Offered Securities not acquired by the
Investors or other persons in accordance with Section 3.1(c) above may not be
issued, sold or exchanged until they are again offered to the Investors under
the procedures specified in this Agreement.
(g) The rights of the Investors under this Section 3
shall not apply to:
13
(1) the issuance of any shares of Common
Stock as a stock dividend to holders of Common Stock or upon any subdivision or
combination of shares of Common Stock;
(2) the issuance of any shares of Common
Stock upon conversion of shares of convertible preferred stock;
(3) the issuance of up to 5,965,000 shares
of Common Stock or the grant of options therefor, including shares issued upon
exercise of options outstanding on the date of this Agreement (such number to be
proportionately adjusted in the event of any stock splits, stock dividends,
recapitalizations or similar events occurring on or after the date of this
Agreement) to officers, directors, consultants and employees of the Company or
any subsidiary pursuant to any plan, agreement or arrangement approved by a vote
of not less than a majority of the Board of Directors of the Company and by a
majority of the members of the Board of Directors who are not employees of the
Company or any of its subsidiaries (it being understood that any shares subject
to options that expire or terminate unexercised shall not count towards the
maximum number set forth in this clause (3));
(4) the issuance of up to 602,222 shares of
Common Stock or the grant of options therefor, including shares issued upon
exercise of options outstanding on the date of this Agreement (such number to be
proportionately adjusted in the event of any stock splits, stock dividends,
recapitalizations or similar events occurring on or after the date of this
Agreement) to North Shore - Long Island Jewish Research Institute or any of its
affiliates as consideration for one or more licenses of intellectual property
and/or related assets or services;
(5) the issuance of securities solely in
consideration for the acquisition (whether by merger or otherwise) by the
Company or any of its subsidiaries of all or substantially all of the stock or
assets of any other entity in a transaction approved by a majority of the Board
of Directors and each of the MPM, HCV, ATV and JJDC Designees (as defined in
that certain Stockholders' Voting Agreement dated as of the date hereof);
(6) the issuance of securities pursuant to
an equipment lease financing that is approved by a majority of the Board of
Directors and each of the MPM, HCV, ATV and JJDC Designees;
(7) the issuance of shares of Common Stock
by the Company in a firm-commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act.
3.2 Termination. This Section 3 shall terminate upon the
earlier of the following events:
(a) The sale of all or substantially all of the
assets or business of the Company, by merger, sale of assets or otherwise; or
(b) The closing of the Initial Public Offering.
14
4. Covenants.
4.1 Inspection and Observation. The Company shall permit each
Investor, or any authorized representative thereof, to visit and inspect the
properties of the Company, including its corporate and financial records, and to
discuss its business and finances with officers of the Company, during normal
business hours following reasonable notice and as often as may be reasonably
requested.
4.2 Financial Statements and Other Information.
(a) The Company shall deliver to each Major Investor
(as defined in paragraph (c) below):
(i) within 120 days after the end of each
fiscal year of the Company, an audited balance sheet of the Company as at the
end of such year and audited statements of income and of cash flows of the
Company for such year, certified by certified public accountants of established
national reputation selected by the Company, and prepared in accordance with
generally accepted accounting principles ("GAAP");
(ii) within 45 days after the end of each
fiscal quarter of the Company (other than the fourth quarter), an unaudited
balance sheet of the Company as at the end of such quarter, and unaudited
statements of income and of cash flows of the Company for such fiscal quarter
and for the current fiscal year to the end of such fiscal quarter;
(iii) within 30 days after the end of each
month (other than the last month of any fiscal quarter), an unaudited balance
sheet of the Company as at the end of such month and unaudited statements of
income and of cash flows of the Company for such month and for the current
fiscal year to the end of such month, setting forth in comparative form the
Company's projected financial statements for the corresponding periods for the
current fiscal year;
(iv) as soon as available, but in any event
prior to the commencement of each new fiscal year, a business plan and projected
financial statements for such fiscal year;
(v) such other notices, information and data
with respect to the Company as the Company delivers to the holders of its
capital stock at the same time it delivers such items to such holders; and
(vi) with reasonable promptness, such other
information and data as such Investor may from time to time reasonably request,
except such information which, if disclosed, would breach the attorney-client
privilege.
(b) The foregoing financial statements shall be
prepared on a consolidated basis if the Company then has any subsidiaries. The
financial statements delivered pursuant to clauses (ii) and (iii) of paragraph
(a) shall be accompanied by a certificate of the
15
chief financial officer of the Company stating that such statements have been
prepared in accordance with GAAP consistently applied (except as noted) and
fairly present the financial condition and results of operations of the Company
at the date thereof and for the periods covered thereby.
(c) For purposes of this Agreement, the term "Major
Investor" shall mean an Investor who purchased not less than 700,000 Shares so
long as such Investor continues to own not less than 700,000 Shares. For
purposes of determining the number of Shares held by an Investor: (i) the
foregoing numbers shall be adjusted for any stock splits, stock dividends,
recapitalizations or similar events; (ii) Shares shall include Shares which have
been converted into Common Stock so long as such Common Stock is held by such
Investor; and (iii) Shares shall include Shares held by affiliates of such
Investor and, with respect to an Investor that is a corporation, partnership or
limited liability company, Shares distributed to and held by its shareholders,
partners or members.
4.3 Material Changes and Litigation. The Company shall
promptly notify the Investors of any material adverse change in the business,
prospects, assets or condition, financial or otherwise, of the Company and of
any litigation or governmental proceeding or investigation brought or, to the
best of the Company's knowledge, threatened against the Company, or against any
Founder, officer, director, key employee or principal stockholder of the Company
which, if adversely determined, would have a material adverse effect on the
business, prospects, assets or condition (financial or otherwise) of the
Company. The Company shall also promptly notify the Investors if at any time the
Company does not have sufficient operating capital to operate the Company in a
manner similar to its current operations for a period of at least 60 days.
4.4 Agreements with Employees; Options.
(a) The Company shall require (i) all persons now or
hereafter employed by the Company and (ii) all consultants, and other
independent contractors (other than the Founders, as defined in the Purchase
Agreement), utilized by the Company who have access to confidential and
proprietary information of the Company to enter into invention and
non-disclosure agreements substantially in the form of Exhibit E-1 to the
Purchase Agreement and shall require all persons, hereafter hired as employees
of the Company, at or above the director level or whose responsibilities are
technical in nature to enter into non-competition agreements substantially in
the form of Exhibit B hereto, or such other form as may be approved by the Board
of Directors of the Company.
(b) The Company agrees that it will not, without the
prior written consent of the holders of at least sixty-five percent (65%) of the
Shares then outstanding, terminate, amend or waive any rights under any
inventions, confidentiality, non-competition, restricted stock or consulting
agreement between the Company and any Founder.
(c) Unless otherwise agreed by a majority of the
members of the Board of Directors who are not employees of the Company or a
subsidiary of the Company and except as separately required in the Founders'
Restricted Stock Agreements (as defined in the Series A Convertible Preferred
Stock Purchase Agreement dated as of July 6, 2001, and in the
16
form of Exhibit J to such Agreement), all options or restricted stock granted or
issued under the 2000 Equity Incentive Plan of the Company shall become
exercisable at the rate of 25% on the first anniversary of employment and
2.0834% per month thereafter over the subsequent three years so long as the
holder continues to be an employee or consultant of the Company, until fully
vested.
4.5 Directors. The Company shall promptly reimburse in full
each director of the Company who is not an employee of the Company for all of
his reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any committee thereof and the Company shall
purchase and maintain Directors and Officers liability insurance coverage in
form and amounts customary in the industry naming each of the Company's officers
and directors named insureds thereon.
4.6 Reservation of Common Stock. The Company shall reserve and
maintain a sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares.
4.7 Termination of Covenants. The covenants of the Company
contained in Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.10 and 4.11 shall
terminate, and be of no further force or effect, upon the Mandatory Conversion
Date as defined in Article IV, Section 5(a) of the Certificate of Incorporation.
4.8 Confidentiality. Each Investor agrees that he, she or it
will keep confidential and will not disclose, divulge or use for any purpose
other than to monitor his, her or its investment in the Company any
confidential, proprietary or secret information which such Investor may obtain
from the Company pursuant to financial statements, reports and other materials
submitted by the Company to such Investor pursuant to this Agreement, or
pursuant to visitation or inspection rights granted hereunder ("Confidential
Information"), unless such Confidential Information is known, or until such
Confidential Information becomes known, to the public (other than as a result of
a breach of this Section 4.8 by such Investor); provided, however, that an
Investor may disclose Confidential Information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company, (ii) to any prospective Investor of any Shares from such Investor as
long as such prospective purchaser agrees to be bound by the provisions of this
Section 4.8, (iii) to any affiliate of such Investor or to a partner,
stockholder or subsidiary of such Investor, provided that such affiliate agrees
in writing to be bound by the provisions of this Section 4.8, or (iv) as may
otherwise be required by law, provided that the Investor takes reasonable steps
to minimize the extent of any such required disclosure. In addition, the Company
shall not, without the prior written consent of the applicable Strategic
Investor (as defined below), which consent may be withheld in the sole
discretion of such Strategic Investor, use the name of such Strategic Investor
or any affiliate thereof in any press release or other public statement
regarding the transaction contemplated hereunder or regarding the investment by
such Strategic Investor in the Company. For purposes hereof, the term "Strategic
Investor" shall mean each of the following investors: (i) Xxxxxxx & Xxxxxxx
Development Corporation and (ii) MedImmune Ventures, Inc.
17
4.9 Investor Ownership Levels. Each of the Investors and the
Company hereby agree that in the event that the Outstanding Securities (as
defined below) represent greater than 19.99% of the Company's outstanding
capital stock on a fully-diluted basis (the "Threshold Level") as a result of
any adjustment to a Series A Conversion Price or Series B Conversion Price (as
such term is defined in Company's Certificate of Incorporation) or otherwise,
the Company and each such Investor shall take all necessary or desirable actions
within its or their control to allow any Strategic Investor to receive, in lieu
of any such Outstanding Securities which would cause such Strategic Investor's
aggregate holdings to exceed the Threshold Level or in exchange for any such
Outstanding Securities which exceed the Threshold Level if and to the extent
that such Outstanding Securities are then beneficially owned by such Strategic
Investor, Non-voting Preferred Shares as described below. As used herein,
"Outstanding Securities" shall mean the aggregate number of shares of Common
Stock held by a Strategic Investor on a fully diluted basis assuming the
exercise, exchange or conversion of (i) any and all options, warrants or other
rights requiring the Company to issue to such Strategic Investor any shares of
Common Stock and (ii) any other securities (including the Shares or any other
series of Preferred Stock of the Company) held by such Strategic Investor
exercisable or exchangeable for, or convertible into, shares of Common Stock. A
new series of Non-voting Preferred Stock shall be created, the rights and
preferences of which shall be substantially identical to those of the shares
held by a Strategic Investor, except that such shares shall have no voting
rights (the "Non-voting Preferred Shares"). The Non-voting Preferred Shares
shall be convertible upon the same terms as other preferred stock into a new
series of Common Stock the rights and preferences of which shall be
substantially identical to those of the Common Stock, except that such shares
shall have no voting rights (the "Non-voting Common Stock"). Each share of
Non-voting Common Stock shall convert into one share of Common Stock upon an
initial public offering by the Company of its Common Stock. It is hereby agreed
and acknowledged that the rights of each Strategic Investor and the obligations
of each other Investor and the Company set forth herein shall be exercisable
solely at the discretion of such Strategic Investor.
4.10 Changes in Nature of Business. Except as authorized by a
majority of the Board of Directors of the Company, including each of the MPM,
HCV, ATV and JJDC Designees, the Company shall not make, or permit any
subsidiary of the Company to make, any material change in the nature of its
business as contemplated in written materials delivered to the Series B
Investors prior to the date hereof.
4.11 Transfers of Technology. Except as authorized by a
majority of the Board of Directors of the Company, including each of the MPM,
HCV, ATV and JJDC Designees, the Company shall not transfer any ownership or
interest in, or material rights relating to, any of its Intellectual Property
(as defined in the Purchase Agreement) to any person or entity which is not an
affiliate or subsidiary of the Company; provided, however, that this Section
4.11 shall not apply to transfers or licenses of Intellectual Property
accomplished in the ordinary course of business.
18
5. Indemnification of Investors.
5.1 In the event that any Investor or any director, officer,
employee, affiliate or agent thereof (each, an "Indemnitee") becomes involved in
any capacity in any action, proceeding, investigation or inquiry in connection
with or arising out of any matter related to the Company or any Indemnitee's
role or position with the Company, the Company shall reimburse each Indemnitee
for reasonable legal and other expenses (including the cost of any investigation
and preparation) as they are incurred by such Indemnitee in connection
therewith. The Company also agrees to indemnify such Indemnitee, pay on demand
and protect, defend, save and hold harmless from and against any and all
liabilities, damages, losses, settlements, claims, actions, suits, penalties,
fines, costs or expenses (including, without limitation, reasonable attorneys'
fees) (any of the foregoing, a "Claim") incurred by or asserted against any
Indemnitee of whatever kind of nature, arising from, in connection with or
occurring as a result of the Purchase Agreement or this Agreement or the matters
contemplated by the Purchase Agreement or this Agreement. The foregoing
agreement shall be in addition to any rights that any Indemnitee may have at
common law or otherwise.
5.2 The right to indemnification provided by Section 5.1 shall
not apply to Claims or legal or other expenses suffered or incurred in
connection with (a) any claim, action, proceeding, investigation or inquiry
arising out of any action taken by the respective Investor or any of its
Indemnitees (i) not in good faith, (ii) not reasonably believed by such person
to be in, or not opposed to, the best interests of the Company, or (iii)
involving negligence or misconduct of such person or (b) any action or
proceeding or portion thereof in which the Company, on one hand, and the
respective Investor or any of his or its respective Indemnitees, on the other,
are opposing parties unless and only to the extent that the Board of Directors
of the Company (excluding any director who is interested in the matter), the
stockholders of the Company (excluding any stockholder who is interested in the
matter), or a court of competent jurisdiction determines in view of all the
circumstances that the Indemnitee is fairly and reasonably entitled to
indemnification, (c) any action or proceeding or portion thereof the purpose of
which is to adjudicate the respective rights as between holders of the Company's
equity or debt securities, or (d) any settlement of a claim, action, or
proceeding entered into by or on behalf of the Indemnitee without the Company's
consent; provided that this Section 5.2 shall not limit the right of any person
to indemnification pursuant to the Company's Certificate of Incorporation,
Bylaws or any other agreement between the Company and the Indemnitee, each as
amended from time to time.
5.3 The Indemnitee shall promptly notify the Company in
writing upon receiving notice of any actual or threatened claim, action,
proceeding, investigation or inquiry in respect of which indemnification could
be sought under the preceding sections (provided that the failure to give such
notice shall not relieve the Company of any of its obligations hereunder except
to the extent it is actually prejudiced thereby). Legal counsel for the defense
of any Claim shall be selected by the Indemnitee and retained by the Company,
and the Company and the Indemnitee shall each cooperate with the reasonable
requests of such counsel. Notwithstanding the Company's assumption of the
defense of any such claim, an Indemnitee shall be entitled to participate in,
but not control, the defense thereof with counsel of his or its choosing and
such
19
participation shall be at his or its own expense unless and to the extent that
the targets of any such claim include both the Company and the Indemnitee and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. In such event, the Company
shall not have the right to control the defense of such claim on behalf of the
respective Indemnitee and the fees and disbursements of separate counsel for the
Indemnitee shall be paid by the Company; provided that the Company shall not be
liable for the fees and expenses of more than one counsel (in addition to its
counsel) for all Indemnitees in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. The Company agrees that, without the
respective Investor's prior consent, not to be unreasonably withheld, it will
not settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect to which indemnification could
be sought under this Section.
5.4 The Company shall advance all expenses reasonably incurred
by or on behalf of the Indemnitees in connection with any Claim or potential
Claim within twenty (20) days after the receipt by the Company of a statement or
statements from the Indemnitee, accompanied by appropriate supporting
documentation, requesting such advance payment or payments from time to time and
an undertaking of the Indemnitee to repay such amounts to the Company if the
Indemnitee is subsequently determined not to be entitled to indemnification
therefor.
6. Remedies. In case any one or more of the material representations,
warranties, covenants or agreements ("Material Terms") set forth in this
Agreement shall have been breached by any party hereto, the party or parties
entitled to the benefit of such Material Term may proceed to protect and enforce
its or their rights, either by suit in equity and/or action at law, including,
but not limited to, an action for damages as a result of any such breach and/or
an action for specific performance of such Material Term. In addition to, and
not to the exclusion of, any other remedy, in the event that the Company has
breached a Material Term which is not cured by 30 days after receipt by the
Company of notice of such breach (the "Redemption Trigger Date") the Investors
shall have the right to require the Company to redeem their Shares pursuant to
Section 6 of Part C of Article Fourth (or any successor provision thereto) of
the Certificate of Incorporation. The rights, powers and remedies of the parties
under this Agreement are cumulative and not exclusive of any other right, power
or remedy which such parties may have under any other agreement or law. No
single or partial assertion or exercise of any right, power or remedy of a party
hereunder shall preclude any other or further assertion or exercise thereof.
7. Transfers of Rights. This Agreement, and the rights and obligations
of each Investor hereunder, may be assigned by such Investor to any partner,
stockholder or affiliate of such Investor, and such transferee shall be deemed a
"Investor" for purposes of this Agreement; provided that the transferee provides
written notice of such assignment to the Company and agrees in writing to be
bound hereby.
20
8. General.
(a) Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(b) Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, each Investor shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the Commonwealth of
Massachusetts (without reference to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and
other communications under this Agreement shall be in writing and shall be
deemed delivered (i) two business days after being sent by registered or
certified mail, return receipt requested, postage prepaid or (ii) one business
day after being sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery, in each case to the intended recipient
as set forth below:
If to the Company, at 000 Xxxxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000, Attention: President, or at such other address or addresses
as may have been furnished in writing by the Company to the Investors, with a
copy to Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxx, Esq.; or
If to an Investor, at his or its address set forth on Exhibit A, or at
such other address or addresses as may have been furnished to the Company in
writing by such Investor.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(e) Complete Agreement. This Agreement constitutes
the entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(f) Amendments and Waivers. Any term of this
Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived with respect to all parties to this Agreement (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
21
least sixty-five percent (65%) of the Registrable Shares held by all of the
Stockholders. Notwithstanding the foregoing, this Agreement may be amended or
terminated, and any right hereunder may be waived with respect to all parties to
this Agreement with the consent of the holders of less than all Registrable
Shares only in a manner which applies to all such holders in the same fashion.
The Company shall give prompt written notice of any amendment or termination
hereof or waiver hereunder to any Stockholder that did not consent in writing to
such amendment, termination or waiver. Any such amendment, termination or waiver
effected in accordance with this Section 8(f) shall be binding on all parties
hereto, even if they do not execute such consent and the Company. No waivers of
or exceptions to any term, condition or provision of this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
(g) Pronouns. Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.
(h) Counterparts; Facsimile Signatures. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which together shall constitute one and the
same document. This Agreement may be executed by facsimile signatures.
(i) Section Headings. The section headings are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
[Remainder of Page Left Blank Intentionally]
22
Executed as of the date first written above.
COMPANY:
CRITICAL THERAPEUTICS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx, M.D.
Title: President and CEO
[Investor Rights Agreement]
INVESTORS:
MPM BIOVENTURES II, L.P.
By: MPM Asset Management II, L.P.,
its General Partner
By: MPM Asset Management II LLC,
its General Partner
By: /s/ Xxxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Investment Manager
MPM BIOVENTURES II-QP, L.P.
By: MPM Asset Management II, L.P.,
its General Partner
By: MPM Asset Management II LLC,
its General Partner
By: /s/ Xxxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Investment Manager
MPM BIOVENTURES GMBH & CO.
PARALLEL-BETEILIGUNGS KG
By: MPM Asset Management II, L.P.,
in its capacity as the Special
Limited Partner
By: MPM Asset Management II LLC,
its General Partner
By: /s/ Xxxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Investment Manager
MPM ASSET MANAGEMENT
INVESTORS 2001 LLC
By: /s/ Xxxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Investment Manager
[Investor Rights Agreement]
HEALTHCARE VENTURES VI L.P.
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Administrative Partner
HealthCare Partners VI, L.P.
The General Partner of
HealthCare Ventures VI, L.P.
[Investor Rights Agreement]
XXXXXXX AND XXXXXXX DEVELOPMENT CORPORATION
By: /s/ Ting Pau Oei
--------------------------------------
Name: Ting Pau Oei
Title: Vice President
[Investor Rights Agreement]
ADVANCED TECHNOLOGY VENTURES VII, L.P.
By ATV Associates VII, L.L.C., its General
Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
ADVANCED TECHNOLOGY VENTURES VII (B), L.P.
By ATV Associates VII, L.L.C., its General
Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
ADVANCED TECHNOLOGY VENTURES VII (C), L.P.
By ATV Associates VII, L.L.C., its General
Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
ATV ENTREPRENEURS VII, L.P.
By ATV Associates VII, L.L.C., its General
Partner
By: /s/ Xxxx Xxxxxx
---------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
[Investor Rights Agreement]
ADVANCED TECHNOLOGY VENTURES VI, L.P.
By ATV Associates VI, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
ATV ENTREPRENEURS VI, L.P.
By ATV Associates VI, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
ATV ALLIANCE 2003, L.P.
By ATV Alliance Associates, L.L.C., its
General Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
[Investor Rights Agreement]
MEDIMMUNE VENTURES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------
Name:
Title: President
[Investor Rights Agreement]
OXFORD BIOSCIENCE PARTNERS IV L.P.
By OBP Management IV L.P.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
mRNA FUND II L.P.
By OBP Management IV L.P.
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
[Investor Rights Agreement]
/s/ Xxxxxxx Xxxxxxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxxxxxx
[Investor Rights Agreement]
/s/ Xxxx Xxxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxxx
[Investor Rights Agreement]
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
[Investor Rights Agreement]
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
[Investor Rights Agreement]
/s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
[Investor Rights Agreement]
/s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
[Investor Rights Agreement]
ALEXANDRIA EQUITIES, LLC, a Delaware limited
liability company
By: ALEXANDRIA REAL ESTATE EQUITIES, INC.,
a Maryland corporation, managing member
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx,
Chief Executive Officer
[Investor Rights Agreement]
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: Director
[Investor Rights Agreement]
SILICON VALLEY BANCSHARES
By /s/ Xxxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Treasurer
[Investor Rights Agreement]
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
[Investor Rights Agreement]
EXHIBIT A
List of Investors
SERIES A INVESTORS:
MPM BioVentures II, L.P.
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
MPM BioVentures II-QP, L.P.
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
MPM BioVentures GMBH & Co. Parallel-
Beteiligungs KG
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
MPM Asset Management Investors 2001 LLC
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
HealthCare Ventures VI L.P.
Attn: Xxxxxxx Xxxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx & Xxxxxxx Development Corporation
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Ting Pau Oei
Xxxxxxx Xxxxxxxxxxxx
c/o X.X. Xxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
A-1
Xxxx Xxxxxxxxxx, Ph.D.
c/o Alnylam Pharmaceuticals
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx
c/o North River Holdings
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx
c/o Greylock Management Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxx, M.D.
c/o Critical Therapeutics, Inc.
000 Xxxxxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Silicon Valley Bancshares
Treasury Department
0000 Xxxxxx Xxxxx, XX 000
Xxxxx Xxxxx, XX 00000
SERIES B INVESTORS:
MPM BioVentures II, L.P.
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
MPM BioVentures II-QP, L.P.
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
MPM BioVentures GMBH & Co. Parallel-
Beteiligungs KG
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
A-2
MPM Asset Management Investors 2001 LLC
c/o Xxxxxxxx Xxxxxxxxx
MPM Asset Management LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
HealthCare Ventures VI L.P.
Attn: Xxxxxxx Xxxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx and Xxxxxxx Development Corporation
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Ting Pau Oei
Advanced Technology Ventures VII, L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Advanced Technology Ventures VII (B), L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Advanced Technology Ventures VII (C), L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
ATV Entrepreneurs VII, L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Advanced Technology Ventures VI, L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
ATV Entrepreneurs VI, L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
A-3
ATV Alliance 2003, L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
MedImmune Ventures, Inc.
00 Xxxx Xxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Teachers Insurance and Annuity Association of America
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Oxford Bioscience Partners IV L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx
mRNA Fund II LP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Xxxxx X. Xxxxx
c/o Xxxxxxxx, Xxxxx, Xxxxx & Xxxxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Alexandria Equities, LLC
000 X. Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Xxxxxxx Xxxxxxxxxxxx
c/o X.X. Xxxxx Securities Corp.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxxxx
c/o North River Holdings
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
A-4
Xxxxxxx X. Xxxxxxxxx
x/x Xxxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
A-5
