Designation Agreement
Exhibit 10.3
Execution Version
December 2, 2024
0 Xxxxxxxxx Xxxxx, Xxxxx Xxxxx
South San Francisco, CA 94080
Celadon Partners SPV 24
PO Box 500
00 Xxxx Xxxxxx
Grand Cayman, KY1-1106
Cayman Islands
Ladies and Gentlemen:
Reference is hereby made in this agreement (“Agreement”) to that certain
Securities Purchase Agreement, dated as of the date hereof, by and among Senti Biosciences, Inc., a Delaware corporation (the “Company”) and the parties named therein (the “Purchase Agreement”) pursuant to which Celadon Partners SPV 24, a Cayman Islands limited liability company (the “Investor”)
shall purchase certain of the Company’s Securities. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.
In consideration of the representations, warranties, covenants and agreements contained herein and in the Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound hereby, the Company and the Investor hereby agree as follows:
| 1. |
Board of Directors Composition.
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| (a) |
Following the Initial Closing, upon the approval by the Company’s Board of Directors, the authorized number of directors of the Company’s Board of Directors shall be set at nine members. For so
long as the Investor and its affiliates in the aggregate beneficially own at least either 2,666 shares of the Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization with respect to such Series A Preferred Stock) issued pursuant to the Purchase Agreement or 2,666,500 of the Conversion Shares issuable upon conversion of the Series A Preferred Stock pursuant to the Certificate of
Designation, the Company thereafter shall not increase the size of the Board of Directors without the consent of the Investor.
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| (b) |
Following the increase in the authorized size of the Company’s Board of Directors in 1(a) herein (the “Board Increase”), (i)
the Board of Directors shall comprise of Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xx and four (4) vacant seats, subject to the filling of such vacant seats at or immediately following the Board Increase as
provided below, and (ii) Xxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxx shall initially be among the “independent directors” as defined under Nasdaq Listing Rule 5602(a)(2).
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| (c) |
For so long as the Investor and its affiliates in the aggregate beneficially own at least either 2,666 shares of the Series A Preferred Stock (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization with respect to such Series A Preferred Stock) issued pursuant to the Purchase Agreement or 2,666,500 of the Conversion Shares issuable upon conversion of the Series
A Preferred Stock pursuant to the Certificate of Designation (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such Conversion Shares), the
Investor shall have the right to designate (i) two (2) directors to the Board of Directors, who can be non-independent directors, and (ii) one (1) additional director to the Board of Directors, who shall qualify as an “independent director”
as defined under Nasdaq Listing Rule 5605(a)(2).
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| (d) |
If, at any time on or after the date of this Agreement, Investor and its affiliates in the aggregate cease to beneficially own at least 2,666 of the Series A Preferred Stock issued pursuant to the
Purchase Agreement (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such Series A Preferred Stock) or 2,666,500 of the Conversion Shares
issuable upon conversion of the Series A Preferred Stock pursuant to the Certificate of Designation (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with
respect to such Conversion), the rights conferred under this section shall no longer apply and, if requested by the Company, the Investor shall request its director designees mentioned in clauses (i) and (ii) herein to resign from the Board
of Directors; provided that once the Investor ceases to beneficially own its threshold amount of Series A Preferred Stock or Conversion Shares, the Company will have
no obligation to include these director designees as nominees in the Company’s annual meeting of stockholders for the applicable year(s) when such director designees’ term is completed.
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| (e) |
For the avoidance of doubt, all director candidates to the Board of Directors, including the designees set forth above, shall be subject to (i) evaluation and approval by the Board of Directors and
the Nominating and Corporate Governance Committee of the Board of Directors (the “NCGC”) in accordance with the Company’s Corporate Governance Guidelines, (ii)
appointment by the Board of Directors in accordance with the Company’s Amended and Restated Bylaws, as amended and/or restated from time to time, (iii) following any initial appointment, election by the Company’s stockholders in accordance
with the Company’s Second Amended and Restated Certificate of Incorporation, as amended and/or restated from time to time, (iv) satisfaction of eligibility, independence and other criteria applicable generally to all other members of the
Company’s Board of Directors and (v) compliance with applicable law or regulation or the rules of the principal market on which the Common Stock is traded. For the avoidance of doubt, the Investor will endeavor to ensure that directors meet
reasonable requirements of expertise set by the NCGC, and furthermore, will remain open to director nominations suggested by the rest of the Board of Directors.
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| (f) |
Subject to the right of the Investor to substitute or replace designees, the Investor’s initial designees pursuant to Section 1(c)(i) shall initially consist of one vacancy and Xxxxxx Xxxx and the
Investor’s initial designee pursuant to Section 1(c)(ii) shall initially consist of one vacancy. The Company agrees that such persons satisfy all criteria for appointment to and membership on the Board of Directors, including as provided in
Section 1(e).
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| (g) |
The Company agrees to appoint the directors designated by the Investor (i) pursuant to Section 1(c)(i) herein, initially as Class II Director (which class’s term will end at the Company’s annual
meeting of stockholders to be held in 2027) and (ii) pursuant to Section 1(c)(ii) herein, initially as Class III Director (which class’s term will end at the Company’s annual meeting of stockholders to be held in 2028), effective at or
immediately following the Board Increase. Upon or prior to the Board Increase, the Company shall take all necessary action by the Company or its Board of Directors to effect such appointments effective automatically at such time.
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| (h) |
Upon the conclusion of the term(s) on the Company’s Board of Directors of each of directors designated by the Investor, so long as the Investor maintains its applicable threshold amount pursuant to
Section 1(c) and subject to Section 1(e) herein, the Company agrees to include the directors designated by the Investor as a nominee in the Company’s slate of nominees for election as directors of the Company at the Company’s annual meeting
of stockholders for the applicable year(s), and to use its best efforts to cause the election of such directors (which efforts shall be no less than the Company’s efforts with respect to any other nominee). Furthermore, for the avoidance of
doubt, failure of the stockholders of the Company to elect the directors designated by the Investor for one or more additional terms shall not be deemed a breach of the Company’s obligations hereunder. In such case, and in the event any
designated director is not elected by the stockholders or resigns or otherwise ceases to serve as a director for any reason, pursuant to Section 1(c) herein, the Investor may designate substitute directors, subject to the nomination
criteria in Section 1(e) herein, who the Company shall appoint to the Board of Directors promptly following notice by the Investor.
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| (i) |
The Company’s Board of Directors and/or its NCGC shall offer the directors designated by the Investor the opportunity to serve on each of the committees of the Company’s Board of Directors,
including those existing at the date hereof and those created by the Board of Directors hereafter, subject to the satisfaction of independence and other qualifications required to serve on such committee(s).
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| (j) |
In connection with the appointment of the directors designated by the Investor to the Company’s Board of Directors (A) such appointed directors must provide to the Company (i) all information
reasonably requested by the Company that is required to be or customarily disclosed for directors, candidates for directors, and their affiliates and representatives in a proxy statement or other filings under applicable law or regulation
or stock exchange rules or listing standards, in each case, relating to his or her nomination or election as a director of the Company and (ii) information reasonably requested by the Company in connection with assessing eligibility,
independence and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, in each case, relating to his or her nomination or election as a director of the Company, including, any customary
background checks, interviews, questionnaires or other investigations as may be conducted by or on behalf of the Company with respect to all directors generally, and (B) such appointed directors must agree to comply with all of the
Company’s policies and procedures to the same extent as each other director of the Company, including, but not limited to, any corporate governance guidelines, code of conduct and securities trading policy, in each case as may be adopted
and/or amended from time to time.
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| 2. |
Information Rights.
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| (a) |
For so long as the Investor has the right to designate the one or more directors to the Board of Directors pursuant to Section 1(c) herein, the Company shall deliver to the Investor copies of all
material substantive materials provided to (i) the Board of Directors or any committee thereof at substantially the same time as provided to the directors of the Company or to the directors of the Company serving on such committee, as
applicable and (ii) the Company’s senior lenders at substantially the same time as provided to the Company’s senior lenders; provided that each such Investor may elect, from time and time and in its sole discretion, not to receive copies of
any or all of such materials; provided, further, that the Company should not be required to comply with this Section 2(a) to the extent a director designated pursuant to Section 1(c)(i) herein is currently a director on the Company’s Board
of Directors.
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| (b) |
For so long as the Investor holds record and beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than five percent (5%) of the outstanding shares of the Company’s
Common Stock (which shall be determined assuming the conversion of all of the shares of Series A Preferred Stock and the Warrant Shares), the Company shall provide to the Investor reasonable access, to the extent reasonably requested by
such Investor, to the Company and its subsidiaries’ office properties, books and records, and to discuss their affairs, finances and matters related to capital structure and financing with its and their officers, all upon reasonable notice
and at reasonable times at the Company’s principal place of business; provided that any access pursuant to this Section 2(b) shall be conducted in a manner as not to interfere unreasonably with the conduct of the business of the Company and
its subsidiaries.
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| 3. |
Miscellaneous.
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| (a) |
Except as set forth in the Purchase Agreement or this Agreement, the Company shall not make any public announcement with respect to the existence or terms of this Agreement or the transactions
provided for herein without the prior consent of the other party (which consent shall not be unreasonably withheld). Notwithstanding the foregoing, nothing in this Section 2(a) shall prevent any party from making any public announcement it
considers necessary in order to satisfy its obligations under the law, including applicable securities laws, or under the rules of any national securities exchange or securities market, in which case the Company shall allow the Investor
reasonable time to comment on such release or announcement in advance of such issuance, and the Company will consider in good faith the Investor’s comments. The Company shall not include the name of the Investor in any press release or
public announcement (which, for the avoidance of doubt, shall not include any filing with the SEC) without the prior written consent of the Investor, except as otherwise required by law or the applicable rules or regulations of any
securities exchange or securities market, after consultation with legal counsel, in which case the Company shall allow the Investor, to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or
announcement in advance of such issuance.
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| (b) |
Any notices or other communications required or permitted to be given hereunder shall be provided pursuant to the Purchase Agreement.
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| (c) |
If any part or provision of this Agreement is held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be
replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the parties
hereto.
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| (d) |
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to choice of laws or conflicts of laws provisions thereof that would require
the application of the laws of any other jurisdiction, except to the extent that mandatory principles of Delaware law may apply. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of
or based upon this Agreement except in the state and federal courts sitting in the City of New York, Borough of Manhattan, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
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| (e) |
EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 2(E) HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
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| (f) |
No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in case of an amendment, by the Company and the Investor. Any waiver of any
term or condition shall be in writing executed by the party entitled to waive such term or condition. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The failure of either party to assert any of its rights hereunder shall not constitute a waiver of such rights.
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| (g) |
The Company acknowledges and agrees that the Investor would be damaged irreparably and would not have an adequate remedy at law if any provision of this Agreement is not performed in accordance
with its specific terms or is otherwise breached. Accordingly, in addition to any other remedy to which the Investor may be entitled, at law or in equity, the Investor will be entitled to an injunction or injunctions to prevent breaches or
threatened breaches of the provisions of this Agreement and to seek to enforce specifically this Agreement and its provisions, without bond or other security being required and without any proof of actual damages. The rights, obligations
and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Nothing herein will be considered an election of remedies or a waiver of the right
to pursue any other right or remedy to which the Investors may be entitled.
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| (h) |
The titles, subtitles and headings in this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
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| (i) |
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party; provided that a facsimile or pdf signature including any electronic signatures complying with the U.S. federal ESIGN Act of 2000, e.g., xxx.xxxxxxxx.xxx shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction of a) signature.
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| (j) |
This Agreement constitutes the entire agreement between the parties hereto respecting the subject matter of this Agreement and supersedes all prior agreements, negotiations, understandings,
representations and statements respecting the subject matter of this Agreement, whether written or oral.
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| (k) |
The obligations set forth herein this Agreement shall terminate upon the mutual written consent of the Company and the Investor.
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[signature pages follow]
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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above written.
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COMPANY:
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By:
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Name:
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Xxxxxxx Xx
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Title:
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Chief Executive Officer
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[Signature Page to Agreement with Celadon]
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above written.
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INVESTOR:
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CELADON PARTNERS SPV 24
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By:
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Name:
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Title:
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[Signature Page to Agreement with Celadon]
