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Portions of this Exhibit 10.34 have been redacted and are the subject
of a confidential treatment request filed with the Secretary of the Securities
and Exchange Commission.
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STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, dated July 17, 1997 is entered into by
and among Helicon Therapeutics, Inc., a Delaware corporation (the "Corporation")
and those stockholders of the Corporation listed on Schedule 1 hereto
(hereinafter referred to collectively as the "Investors").
W I T N E S S E T H:
WHEREAS, the Corporation was organized to discover, develop and market
pharmaceutical products; and
WHEREAS, the Corporation and certain of the Investors entered into a
Convertible Preferred Stock Purchase Agreement dated of even date herewith (the
"Series A Stock Purchase Agreement") in connection with which the Corporation
sold shares of its Series A Convertible Preferred Stock, par value $.001 per
share, and the Corporation granted to such Investors certain registration and
other rights with respect to such shares; and
WHEREAS, OSI, in consideration of the issuance of ** shares of
Preferred Shares of the Corporation to OSI pursuant to the Series A Stock
Purchase Agreement, has contributed to the Corporation (i) ** , (ii) a
non-exclusive, royalty-free license to use screening technology (as defined
herein) and commercialize products which are the subject of an OSI patent
application covering a method of screening and modulation transcription and
(iii) ** and
WHEREAS, CSHL, in consideration of the issuance of ** shares of
Preferred Shares of the Corporation pursuant to the Series A Stock Purchase
Agreement, has contributed to the Corporation (i) an exclusive royalty free
license to commercialize technology which is the subject of a CSHL patent
application covering a method of cloning and characterizing genes associated
with long-term memory, under which CSHL shall be entitled to reimbursement from
the Corporation for patent and related expenses and (ii) ** and
WHEREAS, an aggregate of ** shares of Senior Common Stock, par value
$.001 per share, and Ordinary Common Stock, par value $.001 per share, of the
Corporation has been issued to certain CSHL individuals, as more fully set forth
on Schedule 1, subject to vesting as provided thereon; and
WHEREAS, the parties to this Agreement believe it is in their mutual
best interests to provide for continuity and harmony in the management and the
policies of the Corporation; and
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** This portion has been redacted pursuant to a request for confidential
treatment.
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WHEREAS, the parties hereto, inter alia, are entering into this
Agreement for the mutual purposes of (a) providing for the management of the
Corporation and (b) providing for certain restrictions on transfer of the
Preferred Stock or Common Stock, as the case may be.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and undertakings of the Corporation and the Investors hereunder and
under the Series A Stock Purchase Agreement, as the case may be, the parties
hereto do hereby agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following respective meanings:
"Board" shall mean the Board of Directors of the Corporation.
"Budget" shall have the meaning set forth in Section 2.9 hereof.
"Certificate" shall mean the Certificate of Incorporation of the
Corporation, as filed with the Secretary of State of the State of Delaware on
July 10, 1997, as amended from time to time.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Common Stock" shall mean the Senior Common Stock, par value $.001 per
share, and Ordinary Common Stock, par value $.001 per share, of the Corporation.
"CSHL" shall mean Cold Spring Harbor Laboratory, a New York
corporation.
"Environmental Laws" shall mean all applicable federal, state and local
laws, ordinances, rules and regulations that regulate, fix liability for, or
otherwise relate to, the handling, use (including use in industrial processes,
in construction, as building materials, or otherwise), storage and disposal of
hazardous and toxic wastes and substances, and to the discharge, leakage,
presence, migration, threatened release or release (whether by disposal, a
discharge into any water source or system or into the air, or otherwise) of any
pollutant or effluent. Without limiting the preceding sentence, the term
"Environmental Laws" shall specifically include the following federal and state
laws, as amended:
FEDERAL
Comprehensive Environmental Response,
Compensation and Liability Act of 1980,
42 U.S.C. 9601 et seq.;
Resource Conservation and Recovery Act of 1976,
42 U.S.C. 6901 et seq.;
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Federal Water Pollution Control Act,
33 U.S.C. 1251 et seq.; and
Clean Air Act, 42 U.S.C. 7401 et seq.
STATE
NEW YORK ENVIRONMENTAL STATUTES
Environmental Conservation Law 1-0101 et seq.
"Equity Percentage" shall mean, as to any Investor, that percentage
figure which expresses the ratio that (a) the number of shares of issued and
outstanding Common Stock then owned by such Investor bears to (b) the aggregate
number of shares of issued and outstanding Common Stock then owned by all
Investors. For purposes solely of the computation set forth in clauses (a) and
(b) above, all issued and outstanding securities held by the Investors that are
convertible into or exercisable or exchangeable for shares of Common Stock
(including any issued and issuable shares of Preferred Stock) or for any such
convertible, exercisable or exchangeable securities, shall be treated as having
been so converted, exercised or exchanged at the rate or price at which such
securities are convertible, exercisable or exchangeable for shares of Common
Stock in effect at the time in question (which, for purposes of Section 2.3 of
this Agreement, shall be at the time of delivery by the Corporation of the
notice of the Offer contemplated by Section 2.3(b), whether or not such
securities are at such time immediately convertible, exercisable or
exchangeable.
"Excess Securities" shall have the meaning set forth in Section 2.3(d)
hereof.
"Excess Securities Notice" shall have the meaning set forth in Section
2.3(d) hereof.
"Excess Securities Period" shall have the meaning set forth in Section
2.3(d) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Act Registration Statement" shall have the meaning set forth
in Section 2.6 hereof.
"Excluded Forms" shall have the meaning given such term in Section 3.5
hereof.
"Excluded Securities" shall mean, collectively:
(i) the Reserved Shares;
(ii) Common Stock issued or issuable to officers, directors or
employees of or consultants or independent contractors to the Corporation,
pursuant to any written agreement, plan
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or arrangement, to purchase, or rights to subscribe for, such Common Stock, that
has been approved in form and in substance by the holders of a majority of the
voting power of the Series A Preferred Shares then outstanding;
(iii) any securities issued upon the exercise of any rights,
options or warrants to purchase such capital stock or exchange of any
convertible or exchangeable securities;
(iv) any securities issued pursuant to the acquisition of
another Corporation by the Corporation by merger or purchase of all or
substantially all assets of that corporation whereby the Corporation owns not
less than fifty-one percent (51%) of the voting power or assets of such
corporation following such merger or purchase of all or substantially all of
such corporation's assets which acquisition has been approved in accordance with
the Certificate; or
(v) any securities issued as a stock dividend or upon any
stock split or other subdivision of shares of Common Stock.
"Fixed Royalty Payments" shall mean the fixed royalty payments referred
to in the Roche Research Agreement.
"Hazardous Materials" shall include without limitation, any flammable
explosives, petroleum products, petroleum byproducts, radioactive materials,
hazardous wastes, hazardous substances, toxic substances or other similar
materials regulated by Environmental Laws.
"Investors" shall mean each of the persons listed on Schedule 1 hereto,
severally but not jointly and severally.
"Large Stockholders" shall mean (i) ** and (ii) **
"Notice of Acceptance" shall have the meaning set forth in Section
2.3(c) hereof.
"Offer" shall have the meaning set forth in Section 2.3(b) hereof.
"Offered Securities" shall mean, except for Excluded Securities, (i)
any shares of Common Stock, Preferred Stock or any other equity security of the
Corporation, (ii) any debt security or capitalized lease with any equity feature
with respect to the Corporation (except as may be issued to banks or leasing
companies in order to obtain financing or secure leases of equipment), or (iii)
any option, warrant or other right to subscribe for, purchase or otherwise
acquire any such equity security, debt security or capitalized lease (except as
may be issued to banks or leasing companies in order to obtain financing or
secure leases of equipment).
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** This portion has been redacted pursuant to a request for confidential
treatment.
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"OSI" shall mean Oncogene Science, Inc., a Delaware corporation.
"Other Shares" shall have the meaning set forth in Section 3.5(e)
hereof.
"Preferred Shares" shall mean the Series A Preferred Shares.
"Preferred Shares Investors" shall mean Roche, OSI and CSHL.
"Preferred Stock" shall mean the Preferred Stock, par value $.001 per
share, of the Corporation.
"Property" shall include, without limitation, land, buildings and
laboratory facilities owned or leased by the Corporation or as to which the
Corporation now has any duties, responsibilities (for clean-up, remedy or
otherwise) or liabilities under any Environmental Laws, or as to which the
Corporation or any subsidiary of the Corporation may have such duties,
responsibilities or liabilities because of past acts or omissions of the
Corporation or any such subsidiary or their predecessors, or because the
Corporation or any such subsidiary or their predecessors in the past was such an
owner or operator of, or bore some other relationship with, such land, buildings
and/or laboratory facilities.
"Refused Securities" shall have the meaning set forth in Section 2.3(f)
hereof.
"Reserved Shares" shall mean the shares of Common Stock reserved by the
Corporation for issuance upon the conversion of the Series A Preferred Shares.
"Restricted Securities" shall mean any of (a) the Series A Preferred
Shares and the Common Stock issued or issuable upon the conversion of the Series
A Preferred Shares, (b) all shares of Common Stock issued or issuable in respect
thereof by way of stock splits, stock dividends, stock combinations,
recapitalizations or like occurrences, and (c) any other shares of Common Stock
or other securities of the Corporation which are convertible into or exercisable
for (i) shares of Common Stock or (ii) securities convertible into or
exercisable for shares of Common Stock (including, without limitation, other
classes or series of Convertible Preferred Stock, warrants, options or other
rights to purchase Common Stock or convertible debentures or other convertible
debt securities) and the Common Stock issued or issuable upon such conversion or
exercise of such other securities, which may be issued hereafter to any of the
Investors, have not been sold (A) in connection with an effective registration
statement filed pursuant to the Securities Act, or (B) pursuant to Rule 144 or
Rule 144A promulgated by the Commission under the Securities Act.
"Restricted Shares" shall mean the shares of Common Stock issued or
issuable upon the conversion or exchange of the Restricted Securities or
otherwise constituting a portion of the Restricted Securities.
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"Roche" shall mean **
"Roche Research Agreement" means the Collaborative Research and
Licensing Agreement, of even date herewith, between the Corporation and Roche.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Preferred Shares" shall mean shares of Series A Preferred
Stock issued pursuant to the Series A Stock Purchase Agreement.
"Series A Preferred Stock" shall mean Series A Convertible Preferred
Stock, par value $.001 per share, of the Corporation.
"Series A Stock Purchase Agreement" shall mean the Convertible
Preferred Stock Purchase Agreement, among the Corporation and certain of the
Investors listed on Schedule 1 thereto.
"Stockholders" shall mean all holders of capital stock of the
Corporation.
"Target Month" shall have the meaning set forth in Section 2.8(a)
hereof.
"Termination Date" shall have the meaning set forth in Section 5.5
hereof.
"30-Day Period" shall have the meaning set forth in Section 2.3(b)
hereof.
"Transfer" shall include any disposition of any Restricted Securities
or of any interest therein which would constitute a sale thereof within the
meaning of the Securities Act.
SECTION 2. Certain Covenants of the Corporation.
2.1 Meetings of the Board of Directors. The Corporation shall call, and
use its best efforts to have, regular meetings of the Board not less often than
quarterly. The Corporation shall pay all reasonable and appropriately documented
travel expenses and other out-of-pocket expenses incurred by directors who are
not employed by the Corporation in connection with attendance at meetings to
transact the business of the Corporation or attendance at meetings of the Board
or any committee thereof.
2.2 Reservation of Shares of Common Stock and Preferred Stock, Etc. The
Corporation shall at all times have authorized and reserved out of its
authorized but unissued shares of Common Stock, a sufficient number of shares of
Common Stock to provide for the conversion
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** This portion has been redacted pursuant to a request for confidential
treatment.
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of the Series A Preferred Shares. Neither the issuance of the Series A Preferred
shares, nor the shares of Common Stock issuable upon the conversion of the
Series A Preferred Shares, shall be subject to a preemptive right of any other
Stockholder.
2.3 Right of First Refusal.
(a) The Corporation shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange, any
Offered Securities unless in each case the Corporation shall have first offered
to sell to the Preferred Shares Investors all of such Offered Securities on the
terms set forth herein. Each Preferred Shares Investor shall be entitled to
purchase up to its pro rata share of the Offered Securities based upon its
relative Equity Percentage (the "Equity Percentage").
(b) The Corporation shall deliver to each Preferred Shares Investor
written notice of the offer to sell the Offered Securities, specifying the price
and terms and conditions of the offer (the "Offer"). The Offer by its terms
shall remain open and irrevocable for a period of 30 days from the date of its
delivery to such Preferred Shares Investor (the "30-Day Period"), subject to
extension to include the Excess Securities Period (as such term is hereinafter
defined).
(c) Each Preferred Shares Investor shall evidence its intention to
accept the Offer by delivering a written notice signed by the Preferred Shares
Investor setting forth the number of shares that the Preferred Shares Investor
elects to purchase (the "Notice of Acceptance"). The Notice of Acceptance must
be delivered to the Corporation prior to the end of the 30-Day Period.
(d) If any Preferred Shares Investor fails to exercise its right
hereunder to purchase its Equity Percentage of the Offered Securities, the
Corporation shall so notify the other Preferred Shares Investors in a written
notice (the "Excess Securities Notice"). The Excess Securities Notice shall be
given once by the Corporation with respect to all Preferred Shares Investors
promptly after it learns of the intention of one or more Preferred Shares
Investors not to purchase all of its or their Equity Percentage of the Offered
Securities, but in no event later than ten (10) days after the expiration of the
30-Day Period. The Preferred Shares Investors who or which have agreed to
purchase their Equity Percentage of the Offered Securities shall have the right
to purchase the portion not purchased by such other Preferred Shares Investors
(the "Excess Securities"), in amounts based on the relative stock ownership in
the Corporation of each purchasing Preferred Shares Investor, by giving written
notice within ten (10) days after receipt of the Excess Securities Notice from
the Corporation. The twenty (20) day period during which (i) the Corporation
must give the Excess Securities Notice to the other Preferred Shares Investors,
and (ii) each of the other Preferred Shares Investors must give the Corporation
notice of its intention to purchase all or any portion of its pro rata share of
the Excess Securities, is hereinafter referred to as the "Excess Securities
Period."
(e) If the Preferred Shares Investors tender their Notice of Acceptance
prior to the end of the 30-Day Period indicating their intention to purchase all
of the Offered Securities or, if prior to the termination of the Excess
Securities Period, the Preferred Shares Investors tender Excess Securities
Notices to purchase all of the Excess Securities, the Corporation shall schedule
a
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closing of the sale of all such Offered Securities. Upon the closing of the sale
of the Offered Securities to be purchased by the Preferred Shares Investors,
each Preferred Shares Investor shall (i) purchase from the Corporation that
portion of the Offered Securities (including the Excess Securities) for which it
tendered a Notice of Acceptance and an Excess Securities Notice, if applicable,
upon the terms specified in the Offer, and (ii) execute and deliver an agreement
further restricting transfer of such Offered Securities substantially as set
forth in Section 3.1, 3.2 and 3.3 of this Agreement. In addition, with respect
to the Offered Securities being purchased by the Preferred Shares Investors, the
Corporation shall provide each such Preferred Shares Investor with the rights
and benefits set forth in this Agreement. The obligation of the Preferred Shares
Investors to purchase such Offered Securities is further conditioned upon the
preparation of a purchase agreement embodying the terms of the Offer, which
shall be reasonably satisfactory in form and substance to such Preferred Shares
Investor and the Preferred Shares Investor's counsel.
(f) The Corporation shall have ninety (90) days from the expiration of
the 30-Day Period, or the Excess Securities Period, if applicable, to sell the
Offered Securities (including the Excess Securities) refused by the Preferred
Shares Investors (the "Refused Securities") to any other person or persons, but
only upon terms and conditions which are in all material respects (including,
without limitation, price and interest rate) no more favorable to such other
person or persons, and no less favorable to the Corporation, than those set
forth in the Offer. Upon and subject to the closing of the sale of all of the
Refused Securities (which shall include full payment to the Corporation), each
Preferred Shares Investor shall (i) purchase from the Corporation those Offered
Securities (including the Excess Securities) for which it tendered a Notice of
Acceptance and an Excess Securities Notice, if applicable, upon the terms
specified in the Offer, and (ii) execute and deliver an agreement restricting
transfer of such Offered Securities (including the Excess Securities)
substantially as set forth in Sections 3.1, 3.2 and 3.3 of this Agreement. In
addition, with respect to the Offered Securities being purchased by the
Preferred Shares Investors, the Corporation shall provide each such Preferred
Shares Investor with the rights and benefits set forth in this Agreement. The
obligation of the Preferred Shares Investor to purchase such Offered Securities
(including the Excess Securities) is further conditioned upon the preparation of
a purchase agreement embodying the terms of the Offer, which shall be reasonably
satisfactory in form and substance to such Preferred Shares Investor and the
Preferred Shares Investor's counsel. The Corporation shall not make any purchase
of Offered Securities utilizing the funds of the Corporation.
(g) In each case, any Offered Securities not purchased either by the
Preferred Shares Investors or by any other person in accordance with this
Section 2.3 may not be sold or otherwise disposed of until they are again
offered to the Preferred Shares Investors under the procedures specified in
Paragraphs (a), (b), (c), (d), (e) and (f) hereof.
(h) Each Preferred Shares Investor may, by prior written consent, waive
its rights under this Section 2.3. Such a waiver shall be deemed a limited
waiver and shall only apply to the extent specifically set forth in the written
consent of such Preferred Shares Investor.
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2.4 Purchase of Common Stock or Other Securities. Roche shall have the
right to purchase additional shares of Common Stock or other securities (as
provided below, if an initial public offering of any securities of the
Corporation has not yet taken place) within sixty (60) days of its making of
each Fixed Royalty Payment pursuant to the Collaboration Agreement between it
and the Corporation.
The number of such new shares shall equal the Fixed Royalty
Payment divided by (a) if prior to the Termination Date, the lowest price per
share at which the Corporation issued shares of Common Stock or other securities
(based in good faith on the convertibility of such other securities into Common
Stock) within the six (6) months prior to the purchase by Roche (or within the
twelve (12) months prior to the purchase by Roche if no shares of Common Stock
or other securities (if an initial public offering of any securities of the
Corporation has not yet taken place) were issued within such six (6) month
period; or if no shares of Common Stock or other securities (if an initial
public offering of any securities of the Corporation has not yet taken place)
were issued within such twelve (12) month period, the fair market value of the
shares of Common Stock or other securities (if an initial public offering of any
securities of the Corporation has not yet taken place) as determined in good
faith by the Board of Directors) (excluding any Excluded Securities) and (b) if
after the Termination Date, ** of the market price of Common Stock for
investment at the time of the Fixed Royalty Payment.
"Market price" per share of Common Stock shall be deemed to be
the average of the daily closing prices for the thirty (30) consecutive trading
days immediately preceding the Fixed Royalty Payment date and the closing price
for each day shall be the last reported sales price regular way or, in case no
such reported sale takes place on such day, the closing bid price regular way,
in either case on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System) on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the highest reported bid price
for the Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date the Common Stock is not listed
or admitted to trading on any national securities exchange and is not quoted by
NASDAQ or any similar organization, the fair value of a share of Common Stock on
such date, as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be conclusive absent manifest error,
shall be used.
Upon any such sale to Roche, each other Preferred Shares
Investor shall have the right to proportionally increase its percentage of the
outstanding capital stock, pari passu with Roche's proportional increase in its
percentage of the outstanding capital stock, by subscribing for and purchasing
such number of additional shares of Common Stock or other securities at the
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** This portion has been redacted pursuant to a request for confidential
treatment.
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same price as paid by Roche as is necessary to proportionally increase the
percentage of outstanding shares of capital stock owned by such other Preferred
Shares Investor immediately prior to the sale to Roche by the same proportional
increase in Roche's percentage of outstanding shares of capital stock as a
result of the sale to Roche.
Roche's right to purchase additional shares of Common Stock
shall expire only upon the expiration of its Collaboration Agreement entered
into as of July 1, 1997 with Hoffman-La Roche Inc.
2.5 Negative Covenants.
(a) Required Approvals. The Corporation shall not, directly or
indirectly, take any of the actions specified in Article III, Section A.5(c) of
the Certificate without the prior written consent or vote of the holders of
seventy percent (70%) of the then outstanding Preferred Shares, determined in
accordance with Section A.5(a) of the Certificate. In addition, the Corporation
shall not, directly or indirectly, take any of the actions specified in Article
V, Section A.2 of the Certificate without the written approval of the Board,
including Series A Preferred Directors as that term is used in the Certificate.
(b) Stock and Option Agreements. Without the prior written consent or
vote of the holders of a majority of the then outstanding Preferred Shares,
determined in accordance with Section A.5(a) of Article III of the Certificate
(including, in such calculation, any outstanding Restricted Shares held by such
holders), the Corporation shall not issue any shares of Common Stock or options,
warrants or other rights to acquire Common Stock or other securities of the
Corporation to any employee, officer, director, consultant, independent
contractor or other person or entity except for Excluded Securities.
(c) Registration Rights. The Corporation shall not hereafter grant to
any persons any rights to register or qualify stock of the Corporation under
federal or state securities laws, unless it shall have first obtained the
written consent of the holders of a majority of the voting power of the
Preferred Shares then outstanding, determined in accordance with Section A.5(a)
of Article III of the Certificate (including, in such calculation, any
outstanding Restricted Shares held by such holders).
2.6 Filing of Reports Under the Exchange Act.
The Corporation shall give prompt notice to the holders of Preferred
Shares, and ** of (i) the filing of any registration statement or other
appropriate approved form (an "Exchange Act Registration Statement") pursuant to
the Exchange Act, relating to any class of equity securities of the Corporation,
(ii) the effectiveness of such Exchange Act Registration Statement, and (iii)
the number of shares of such class of equity securities outstanding, as reported
in such Exchange Act Registration Statement, in order to enable the Investors to
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** This portion has been redacted pursuant to a request for confidential
treatment.
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comply with any reporting requirements under the Exchange Act or the Securities
Act. Upon the written request of a majority in interest of the holders of
Preferred Shares, the Corporation shall, at any time after the Corporation has
registered any shares of Common Stock under the Securities Act, file an Exchange
Act Registration Statement relating to any class of equity securities of the
Corporation then held by the holders of Preferred Shares or issuable upon
conversion or exercise of any class of debt or equity securities or warrants or
options of the Corporation then held by the Investors, whether or not the class
of equity securities with respect to which such request is made shall be held by
the number of persons which would require the filing of a registration statement
under Section 12(g)(1) of the Exchange Act.
(a) If the Corporation shall have filed an Exchange Act Registration
Statement or a registration statement (including an offering circular under
Regulation A promulgated under the Securities Act) pursuant to the requirements
of the Securities Act, which shall have become effective (and in any event, at
all times following the initial public offering of any of the securities of the
Corporation), then the Corporation shall comply with all of the reporting
requirements of the Exchange Act (whether or not it shall be required to do so)
and shall comply with all other public information reporting requirements of the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any of the Restricted Securities by any holder of
Restricted Securities (including any such exemption pursuant to Rule 144 or Rule
144A thereof, as amended from time to time, or any successor rule thereto or
otherwise).
The Corporation shall cooperate with each holder of Restricted
Securities in supplying such information as may be necessary for such holder of
Restricted Securities to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act (under Rule 144 or Rule
144A thereunder or otherwise) for the sale of any of the Restricted Securities
by any holder of Restricted Securities. In particular, the Corporation shall
furnish to any holder of Restricted Securities upon request, (i) a written
statement by the Corporation as to its compliance with the reporting
requirements of Rule 144 (at any time after 90 days after the effective date of
the Exchange Act Registration Statement), the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements) or
as to whether it qualifies as a registrant whose securities may be sold on a
registration statement on Form S-3, and (ii) a copy of the most recent annual or
quarterly report of the Corporation and such other reports and documents filed
by the Corporation with the Commission.
2.7 Access to Records. The Corporation shall afford to each of the
Investors and such Investor's employees, counsel and other authorized
representatives, free and full access, at all reasonable times and for
reasonable periods of time, to all of the books, records and properties of the
Corporation and to all officers of the Corporation, subject to the limitations
set in Section 2.16.
2.8 Financial Reports. Until such time that the Corporation has a class
of its equity securities registered under the Exchange Act and is required to
file reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act,
except with respect to the obligation set forth in
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Section 2.8(e) hereunder which shall survive such time, the Corporation shall
furnish each of the Investors with the financial information described below,
subject to the limitations set forth in Section 2.16 below:
(a) Upon receipt of a request from any of the Large Stockholders prior
to the end of a monthly accounting period, the Corporation shall deliver to such
Large Stockholders, within 30 days after the last day of each month (the "Target
Month") (or such other calendar period as is approved by the Board), unaudited
financial statements, including a balance sheet as of the last date of such
Target Month, a statement of income (or monthly operating expenses) for such
month, together with a cumulative statement of income from the first day of the
current year to the last day of such month, which statements shall be prepared
from the books and records of the Corporation, a cash flow analysis, together
with cumulative cash flow analyses from the first day of the current year to the
last day of such month, and a comparison between the actual monthly operating
expenses and the projected figures for such month and the comparable figures for
the prior year, subject to the provisions of Section 2.9 hereof.
(b) Upon receipt of a request from any of the Investors prior to the
end of a quarterly accounting period, the Corporation shall deliver to such
Investors, within 45 days after the end of such quarterly accounting period,
unaudited financial statements for such quarterly account period, certified by
the Chief Financial Officer or the Treasurer of the Corporation, as presenting
fairly the financial condition and results of operations of the Corporation and
as having been prepared on a basis consistent with the accounting principles
reflected in the Corporation's annual audited financial statements, accompanied
by a report, signed by the Chief Financial Officer or the Treasurer of the
Corporation, summarizing the operating and financial highlights of the
Corporation for such quarterly accounting period, which report shall include (a)
a comparison between the actual quarterly operating and financial results, the
Budget (as defined in Section 2.9 hereof) and the results of the similar
quarterly accounting period for the prior fiscal year of the Corporation,
together with an explanation of material variances from the Budget and such
similar quarterly accounting period, as the case may be, and (b) a narrative
analysis of operations and trends in the business of the Corporation during such
quarterly accounting period.
(c) Within 120 days after the end of each fiscal year of the
Corporation, audited financial statements of the Corporation, which shall
include an income statement and a statement of cash flow for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance with
generally accepted accounting principles consistently applied, and accompanied
by the report of such independent certified public accountants as shall have
been approved by the Board.
(d) If for any period the Corporation shall have any subsidiary or
subsidiaries whose accounts are consolidated with those of the Corporation, then
the financial statements delivered for such period pursuant to paragraphs (a),
(b) and (c) of this Section 2.8 shall be the consolidated and consolidating
financial statements of the Corporation for all such consolidated subsidiaries.
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(e) Promptly upon becoming available:
(i) copies of all financial statements, reports, press
releases, notices, proxy statements and other documents sent by the Corporation
to its Stockholders or released to the public and copies of all regular and
periodic reports, if any, filed by the Corporation with the Commission or any
securities exchange or self-regulatory organization; and
(ii) any other financial or other information available to
management of the Corporation that any of the Investors shall have reasonably
requested on a timely basis.
2.9 Budget and Operating Forecast. The Corporation shall prepare and
submit to the Board and each of the Investors an operating plan with quarterly
breakdowns (the "Budget") for each fiscal year at least 45 days prior to the
beginning of each fiscal year of the Corporation. The Budget shall be deemed
accepted as the Budget for such fiscal year only when it has been approved by
the Board. The Budget shall be reviewed by the Corporation periodically and all
changes therein, and all material deviations therefrom, shall be reviewed by the
Board on at least a quarterly basis.
2.10 System of Accounting. The Corporation shall maintain, and cause
each of its subsidiaries, when and if any shall exist, to maintain, its books of
accounts, related records and system of accounting in accordance with good
business practices and generally accepted accounting principles, and shall cause
the matters contained therein to be appropriately and accurately reflected in
the financial reports (which shall be prepared in accordance with generally
accepted accounting principles) furnished pursuant to this Agreement.
2.11 Restriction on Transfer Rights; Confidentiality. The rights
granted to each of the Investors pursuant to Sections 2.7 through 2.9 hereof
shall not be transferred or assigned by any Investor to, and shall not inure to
the benefit of, any successor, transferee or assignee of any Investor, which is
engaged in any line of business directly competitive with the Corporation;
provided that such prohibition shall not apply to any transfer or assignment to
any successor, transferee or assignee of any Investor which is an affiliate of
such Investor, including any trusts of which the Investor is the settlor or any
family member of such Investor. Each Investor shall hold in confidence the terms
of this Agreement, and all information regarding the Corporation which such
Investor receives pursuant to this Agreement, unless such information has
already been disclosed to the public or as otherwise required by law.
2.12 Confidentiality and Non-Competition Agreements for Key Employees.
Subject to the rules of the Cold Spring Harbor Laboratories, the Corporation
shall cause each person who is presently an employee of or a consultant or
independent contractor to the Corporation or who becomes an employee of or a
consultant to the Corporation subsequent to the date hereof and who shall have
or be proposed to have access to confidential or proprietary information of the
Corporation to execute a confidentiality and non-competition agreement in form
and substance attached hereto or otherwise approved by the Board prior to the
commencement of such person's employment by the Corporation in such capacity.
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2.13 Stock Restriction Acknowledged by Directors, Officers, Employees
and Consultants who are or become Stockholders. The Corporation shall cause each
of its directors, officers, employees consultants or independent contractors who
own any shares of capital stock of the Corporation, or has been issued any
options, warrants or other rights to purchase any shares of such capital stock,
or who may own in the future any such shares, or options, warrants or other
rights to purchase any shares of such capital stock, or who may own in the
future any such shares, or options, warrants or other rights to purchase such
shares, in each case other than Refused Securities purchased in accordance with
Section 2.3(f) hereof, to execute an acknowledgment that they are aware of and
understand the restrictions on the transfer of such shares, under the
Certificate of Incorporation of the Corporation, this Stockholders' Agreement
and any other contractual agreement to which they are a party, prior and as a
condition to the acquisition of such shares, or options, warrants or rights, by
such person.
2.14 Marketing and Promotional Material. Each of the Investors will
have the right to review and approve, in advance of publication, distribution or
dissemination, any reference to such Investor or any entity affiliated with such
Investor (other than the Corporation), contained in any document, instrument,
report or filing or in any advertising, marketing, promotional and similar
materials.
2.15 Environmental Matters. The Corporation shall promptly advise the
Investors in writing of any pending or threatened claim, demand or action by any
governmental authority or third party relating to any Hazardous Materials
affecting the Property of which it has knowledge. The Corporation shall not
discharge, place, release, spill or dispose of any Hazardous Materials or any
other pollutants or effluents upon the Property or elsewhere (including, but not
limited to, underground injection of such substances), and the Corporation shall
not discharge into the air any emission which would require a permit under the
Clean Air Act or its state counterparts or any other Environmental Laws, except
in compliance with the Environmental Laws. The Stockholders of the Corporation
shall have no control over, or authority with respect to, the waste disposal
operations of the Corporation.
The Corporation hereby indemnifies, defends and holds harmless
the Investors from and against any and all manner of actions, causes of action,
suits, debts, accounts, controversies, judgments, claims, demands, losses or
liabilities of any nature (including reasonable attorneys' fees) directly or
indirectly arising out of or attributable to (a) any misrepresentation or breach
of the representations and covenants set forth in Section 5.17 of the Stock
Purchase Agreement, or (b) the use, generation, storage, release, threatened
release, discharge, disposal or presence of Hazardous Materials on, under or
about the Property by any person during the period that the Corporation was the
legal or equitable owner of the Property or which occurred prior to such time
and was otherwise actually known by, or should have been known by, the
Corporation. The obligation of the Corporation to indemnify the Investors shall
specifically cover and include, without limitation, all fines and penalties
imposed by federal, state or local authorities, costs of removing or
neutralizing the Hazardous Materials, injury to the property adjoining the
Property, injury to persons living or working on or about the Property or
adjoining or otherwise affecting property, and all other indirect or
consequential damages incurred by the Investors.
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2.16 Limitations and Roche Rights. Notwithstanding the provisions of
Sections 2.7, and 2.8(e)(ii), the Corporation shall not be required to provide
Roche with access to information set forth in such Sections (a) to the extent
that the Board of Directors determines in good faith that the Corporation and
Roche, as the case may be, have conflicting interests relating to such
information, or (b) to the extent that such information relates to potential or
actual licensing, development, joint venture or similar transactions between the
Corporation and a third party; provided that the Corporation shall act
reasonably in determining whether to provide such access to information.
2.17 Duration of Section. With the exception of Section 2.4, this
Section 2 and the rights and obligations of the parties hereunder shall
automatically terminate on the consummation of a firm commitment underwritten
public offering of Common Stock registered under the Securities Act pursuant to
which (X) Common Stock is offered to the public at a price of at least ** per
share (subject to adjustment for stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences) and (Y) the net proceeds
to the Corporation are at least ** (the "Termination Date"). Prior to the
Termination Date the rights and obligations of any Investor under this Section 2
shall terminate upon the date on which such Investor no longer owns any
Preferred Shares or Common Stock.
SECTION 3. TRANSFER OF SECURITIES.
3.1 Restriction on Transfer. The Restricted Securities shall not be
transferable, except upon the conditions specified in this Section 3, which
conditions are intended solely to ensure compliance with the provisions of the
Securities Act in respect of the Transfer thereof.
3.2 Restrictive Legend. Each certificate evidencing any Restricted
Securities and each certificate evidencing any such securities issued to
subsequent transferees of any Restricted Securities shall (unless otherwise
permitted by the provisions of Section 3.3 or 3.10 hereof) be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAW OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY, THE TRANSFER
OF THESE SECURITIES IS SUBJECT TO THE
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** This portion has been redacted pursuant to a request for confidential
treatment.
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CONDITIONS SPECIFIED IN A STOCKHOLDERS' AGREEMENT DATED JUNE 1, 1997, AMONG THE
CORPORATION AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF SUCH
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.
3.3 Notice of Transfer. By acceptance of any Restricted Securities, the
holder thereof agrees to give prior written notice to the Corporation of such
holder's intention to effect any Transfer and to comply in all other respects
with the provisions of this Section 3.3.
Each such notice shall describe the manner and circumstances
of the proposed Transfer and shall be accompanied by:
(a) the written opinion of counsel for the holder of such Restricted
Securities, or, at such holder's option, a representation letter of such holder,
addressed to the Corporation (which opinion of counsel, or representation
letter, as the case may be, shall be reasonably acceptable to the Corporation),
as to whether, in the case of a written opinion, in the opinion of such counsel,
such proposed Transfer involves a transaction requiring registration of such
Restricted Securities under the Securities Act and applicable state securities
laws or an exemption thereunder is available, or, in the case of a
representation letter, such letter sets forth a factual basis for concluding
that such proposed transfer involves a transaction requiring registration of
such Restricted Securities under the Securities Act and applicable state
securities laws or that an exemption thereunder is available; or
(b) if such registration is required and if the provisions of Section
3.4 hereof are applicable, a written request addressed to the Corporation by the
holder of such Restricted Shares pursuant to the terms and provisions of Section
3.4 hereof;
provided, however, that in the case of any holder of Restricted Securities that
is a partnership, no such opinion of counsel or representation letter of the
holder shall be necessary for a Transfer by such holder to a partner of such
holder, or a retired partner if, with respect to such Transfer by a partnership,
(i) such Transfer is made in accordance with the partnership agreement of such
partnership, and (ii) the transferee agrees in writing to be subject to the
terms of Sections 3.1, 3.2, 3.3 and 3.10 hereof to the same extent as if such
transferee were originally a signatory to this Agreement.
If in such opinion of counsel or as reasonably concluded from
the facts set forth in the representation letter of the holder (which opinion
and counsel, or representation letter, as the case may be, shall be reasonably
acceptable to the Corporation), the proposed Transfer may be effected without
registration under the Securities Act and any applicable state securities laws
or "blue sky" laws, then the holder of Restricted Securities shall thereupon be
entitled to effect such Transfer in accordance with the terms of the notice
delivered by it to the Corporation.
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Each certificate or other instrument evidencing the securities
issued upon such Transfer (and each certificate or other instrument evidencing
any such securities not Transferred) shall bear the legend set forth in Section
3.2 hereof unless:
(a) in such opinion of such counsel or as can be concluded
from the representation letter of such holder (which opinion and counsel or
representation letter shall be reasonably acceptable to the Corporation) the
registration of future Transfers is not required by the applicable provisions of
the Securities Act and state securities laws, or
(b) the Corporation shall have waived the requirement of such
legend; provided, however, that such legend shall not be required on any
certificate or other instrument evidencing the securities issued upon such
Transfer in the event such Transfer shall be made in compliance with the
requirements of Rule 144 (as amended from time to time or any similar or
successor rule) promulgated under the Securities Act.
The holder of Restricted Securities shall not effect any
Transfer until such opinion of counsel or representation letter of such holder
has been given to and accepted by the Corporation (unless waived by the
Corporation), which acceptance shall not be unreasonably withheld, or until
registration of the Restricted Shares involved in the above-mentioned request
has become effective under the Securities Act. In the event that an opinion of
counsel is required by the registrar or transfer agent of the Corporation to
effect a transfer of Restricted Securities in the future, the Corporation shall
seek and obtain such opinion from its counsel, and the holder of such Restricted
Securities shall provide such reasonable assistance as is requested by the
Corporation (other than the furnishing of an opinion of counsel) to satisfy the
requirements of the registrar or transfer agent to effectuate such transfer.
3.4 Required Registration. If the Corporation shall be requested (i) by
holders of at least ** of the outstanding Restricted Securities (based on the
underlying Common Stock for which the Restricted Securities are convertible or
exercisable) to effect the registration under the Securities Act of Restricted
Shares, or (ii) after the first registration pursuant to this Section 3.4, by
one or more of the holders of Restricted Securities to effect the registration
under the Securities Act of Restricted Shares having a proposed aggregate
offering price equal to or greater than ** then the Corporation shall promptly
give written notice of such proposed registration to all holders of Restricted
Securities, and thereupon the Corporation shall promptly use its best efforts to
effect the registration under the Securities Act of the Restricted Shares that
the Corporation has been requested to register for disposition as described in
the request of such holders of Restricted Securities and in any response
received from any of the holders of Restricted Securities within 30 days after
the giving of the written notice by the Corporation; provided, however, that the
Corporation shall not be obligated to effect any registration under the
Securities Act except in accordance with the following provisions and Section
3.6:
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** This portion has been redacted pursuant to a request for confidential
treatment.
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(a) Subject to Section 3.6, the Corporation shall not be
obligated to file and cause to become effective more than two (2) registration
statements requested by Roche, in which Restricted Shares are registered under
the Securities Act pursuant to this Section 3.4, if all of the Restricted Shares
offered pursuant to such registration statements are sold thereunder upon the
price and terms offered.
(b) Notwithstanding the foregoing, the Corporation may include
in each such registration requested pursuant to this Section 3.4 any authorized
but unissued shares of Common Stock (or authorized treasury shares) for sale by
the Corporation or any issued and outstanding shares of Common Stock for sale by
others; provided, however, that, if the number of shares of Common Stock so
included pursuant to this clause (b) exceeds the number of Restricted Shares
requested by the holders of Restricted Shares requesting such registration, then
such registration shall be deemed to be a registration in accordance with and
pursuant to Section 3.5; and provided further, however, that the inclusion of
such previously authorized but unissued shares by the Corporation or issued and
outstanding shares of Common Stock by others in such registration does not
adversely affect, in the sole opinion of the holders of Restricted Securities
requesting such registration, the ability of the holders of Restricted
Securities requesting such registration to market the entire number of
Restricted Shares requested by them.
3.5 Piggyback Registration.
(a) Each time the Corporation proposes for any reason to register any
of its securities under the Securities Act, other than pursuant to a
registration statement on Form S-4 or Form S-8 or similar or successor forms
(collectively, "Excluded Forms"), the Corporation shall promptly give written
notice of such proposed registration to all holders of Restricted Securities,
which shall offer such holders the right to request inclusion of any Restricted
Shares in the proposed registration.
(b) Each holder of Restricted Securities shall have 30 days from the
receipt of such notice to deliver to the Corporation a written request
specifying the number of Restricted Shares such holder intends to sell and the
holder's intended method of disposition.
(c) In the event that the proposed registration by the Corporation is,
in whole or in part, an underwritten public offering of securities of the
Corporation, any request under section 3.5(b) may specify that the Restricted
Shares by included in the underwriting (i) on the same terms and conditions as
the shares of Common Stock, if any, otherwise being sold through underwriters
under such registration, or (ii) on terms and conditions comparable to those
normally applicable to offerings of common stock in reasonably similar
circumstances in the event that no shares of Common Stock other than Restricted
Shares are being sold through underwriters under such registration.
(d) Upon receipt of a written request pursuant to Section 3.5(b), the
Corporation shall promptly use its best efforts to cause all such Restricted
Shares to be registered under the Securities Act, to the extent required to
permit sale or disposition as set forth in the written request.
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(e) Notwithstanding the foregoing, if the managing underwriter of any
such proposed registration determines and advises in writing that the inclusion
of all Restricted Shares proposed by the holders thereof to be included in the
underwritten public offering, together with any other issued and outstanding
shares of Common Stock proposed to be included therein by holders other than the
holders of Restricted Securities (such other shares hereinafter collectively
referred to as the "Other Shares"), would materially interfere with the
successful marketing of the Corporation's securities, then the total number of
such securities proposed to be included in such underwritten public offering
shall be reduced, (i) first by the shares requested to be included in such
registration by the holders of Other Shares, and (ii) second, if necessary, (A)
one-half (1/2) by the securities proposed to be issued by the Corporation, and
(B) one-half (1/2) by the Restricted Shares proposed to be included in such
registration by the holders thereof, on a pro rata basis, based upon the number
of Restricted Shares sought to be registered by each such holder. The shares of
Common Stock that are excluded from the underwritten public offering pursuant to
the preceding sentence shall be withheld from the market by the holders thereof
for a period, not to exceed 180 days from the closing of such underwritten
public offering, that the managing underwriter reasonably determines as
necessary in order to effect such underwritten public offering.
3.6 Registrations on Form S-2 and S-3. At such time as the Corporation
shall have qualified for the use of Form S-2 or Form S-3 (or any successor form
promulgated under the Securities Act), each holder of Restricted Securities
shall have the right to request in writing an unlimited number (but not more
than two (2) annually) of registrations on Form S-2 or Form S-3. Each such
request by a holder shall: (a) specify the number of Restricted Shares which the
holder intends to sell or dispose of, (b) state the intended method by which the
holder intends to sell or dispose of such Restricted Shares, and (c) request
registration of Restricted Shares having a proposed aggregate offering price of
at least ** . Upon receipt of a request pursuant to this Section 3.6, the
Corporation shall use its best efforts to effect such registration or
registrations on Form S-2 or Form S-3.
3.7 Preparation and Filing. If and whenever the Corporation is under an
obligation pursuant to the provision of this Section 3 to use its best efforts
to effect the registration of any Restricted Shares, the Corporation shall, as
expeditiously as practicable:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective in accordance with Section 3.7(b)
hereof;
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** This portion has been redacted pursuant to a request for confidential
treatment.
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the earlier of (i) the sale of all Restricted Shares covered hereby or
(ii) nine months, and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Restricted Shares covered by
such registration statement;
(c) furnish to each holder whose Restricted Shares are being registered
pursuant to this Section 3 such number of copies of any summary prospectus or
other prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such holder may
reasonably request in order to facilitate the public sale or other disposition
of such Restricted Shares;
(d) use its best efforts to register or qualify the Restricted Shares
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as each holder whose Restricted Shares are being registered
pursuant to this Section 3 shall reasonably request and do any and all other
acts or things which may be necessary or advisable to enable such holder to
consummate the public sale or other disposition in such jurisdictions of such
Restricted Shares; provided, however, that the Corporation shall not be required
to consent to general service of process for all purpose in any jurisdiction
where it is not then subject to process, qualify to do business as a foreign
corporation where it would not be otherwise required to qualify or submit to
liability for state or local taxes where it is not otherwise liable for such
taxes;
(e) at any time when a prospectus covered by such registration
statement and relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 3.7(b) hereof, notify
each holder whose Restricted Shares are being registered pursuant to this
Section 3 of the happening of any event as a result of which the prospectus
included in such registration, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and, at the request of such holder, prepare,
file and furnish to such holder a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
(f) if the Corporation has delivered preliminary or final prospectuses
to the holders of Restricted Shares that are being registered pursuant to this
Section 3 and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Corporation shall promptly notify such
holders and, if requested, such holders shall immediately cease making offers of
Restricted Shares and return all prospectuses to the Corporation. The
Corporation shall promptly provide such holders with revised prospectuses and,
following receipt of the revised prospectuses, such holders shall be free to
resume making offers of the Restricted Shares; and
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(g) furnish, at the request of any holder whose Restricted Shares are
being registered pursuant to this Section 3, on the date that such Restricted
Shares are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 3, if such securities are being sold
through underwriters, or, on the date that the registration statement with
respect to such securities becomes effective, if such securities are not being
sold through underwriters, (i) an opinion, dated such date, of the counsel
representing the Corporation for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the holder or holders
making such request, and (ii) a letter dated such date, from the independent
certified public accountants of the Corporation, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering , addressed to the underwriters, if any, and to
the holder or holders making such request.
3.8 Expenses. The Corporation shall pay all expenses incurred by the
Corporation in complying with the Section 3, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), fees and expenses of
complying with the securities and blue sky laws of all such jurisdictions in
which the Restricted Shares are proposed to be offered and sold, printing
expenses and fees and disbursements of counsel (including with respect to each
registration effected pursuant to Sections 3.4, 3.5 and 3.6, the reasonable fees
and disbursements of counsel for the holders of Restricted Shares that are being
registered pursuant to this Section 3); provided, however, that all underwriting
discounts and selling commissions applicable to the Restricted Shares covered by
registrations effected pursuant to Section 3.4, 3.5 or 3.6 hereof shall be borne
by the seller or sellers thereof, in proportion to the number of Restricted
Shares sold by each such seller or sellers.
3.9 Indemnification.
(a) Indemnity by the Corporation. In the event of any registration
under the Securities Act of any Restricted Shares pursuant to this Section 3 or
otherwise, or registration or qualification of any Restricted Shares pursuant to
Section 3.7(d) hereof, the Corporation shall:
(i) indemnify and hold harmless any seller of such shares (the
"Seller"), any underwriter, any officer, director, employee or agent of any
Seller or underwriter, and each other person or entity, if any, who controls any
Seller or underwriter within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several ("Claims"),
to which each such indemnified party may become subject, under the Securities
Act or otherwise, insofar as any Claims (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 the registration statement or preliminary prospectus
(if used prior to the effective date of the registration statement) or summary
or final prospectus or any amendment or supplement thereto (if used during the
period the Corporation is required to keep the registration statement current)
or any document filed under a state securities or blue sky law (collectively,
"Registration Documents") or insofar as any Claims (or actions in respect
thereof) arise out of or are based upon the omission or alleged omission to
state in any Registration Document a material fact required to be
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stated therein or necessary to make the statements made therein not misleading
or insofar as any Claims (or actions in respect thereof) arise out of or are
based upon any violation by the Corporation of any Federal, state or common law
rule or regulation applicable to the Corporation; and
(ii) reimburse each indemnified party for all legal or other
expenses reasonably incurred by it in connection with investigating or defending
any Claim or action, including any amounts paid in settlement of any litigation,
commenced or threatened, if such settlement is effected with the written consent
of the Corporation (which consent shall not unreasonably be withheld); provided,
however, that the Corporation shall not be liable to a particular indemnified
party to the extent that any Claim or expense arises out of or is based upon any
untrue statement or omission made in any Registration Document in reliance upon
and in conformity with written information furnished to the Corporation by or on
behalf of such indemnified party through an instrument duly executed by such
indemnified party specifically stating that it is for use in the preparation of
the Registration Document.
(b) Indemnity by the Sellers. In the event of any registration under
the Securities Act of any shares of Common Stock pursuant to this Agreement,
each Seller severally shall:
(i) indemnify and hold harmless the Corporation, each of its
directors, each of its officers who have signed the registration statement, each
other person, if any, who controls the Corporation within the meaning of Section
15 of the Securities Act, and each underwriter and each other person, if any,
who controls such underwriter within the meaning of Section 15 of the Securities
Act against any Claims to which each such indemnified party may become subject
under the Securities Act or otherwise, insofar as such Claims (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 Document, or
arise out of or are based upon the omission or alleged omission to state in any
Registration Document a material fact required to be stated therein or necessary
to make the statements made therein not misleading; and
(ii) reimburse each indemnified party for all legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such Claim or action, including any amounts paid in settlement of any
litigation, commenced or threatened, if such settlement is effected with the
prior written consent of the Seller (which consent shall not unreasonably be
withheld); provided, however, that such indemnification or reimbursement shall
be payable only if, and to the extent that, any Claim or expense arises out of
or is based upon an untrue statement or omission made in any Registration
Document in reliance upon and in conformity with written information furnished
to the Corporation through an instrument duly executed by the Seller
specifically stating that it is for use in the preparation thereof; and provided
further that the liability of such Seller shall be limited to an amount equal to
the net proceeds to such Seller of shares of Common Stock sold by such Seller
pursuant to such registration as contemplated herein.
(c) Procedure for Indemnification. Promptly after receipt by an
indemnified party, under Section 3.9(a) or 3.9(b), of notice of the commencement
of any action, the indemnified party
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shall notify the indemnifying party in writing of the commencement thereof, if a
claim in respect thereof is to be made against an indemnifying party under any
of these Sections; but the omission of such notice shall not relieve the
indemnifying party from liability which it may have to the indemnified party
under this Section 3.9, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice and shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 3.9.
In case any action is brought against the indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and to the extent that
it chooses, to assume the defense thereof with counsel reasonably satisfactory
to the indemnified party, and after notice from the indemnifying party to the
indemnified party that it so chooses, the indemnifying party shall not be liable
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof; provided however, that (i) if the
indemnifying party fails to take reasonable steps necessary to defend diligently
the claim within 20 days after receiving notice from the indemnified party that
the indemnified party believes it has failed to do so, or (ii) if the
indemnified party who is a defendant in any action or proceeding which is also
brought against the indemnifying party reasonably shall have concluded that
there may be legal defenses available to the indemnified party which are not
available to the indemnifying party, or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm of
counsel for all indemnified parties in each jurisdiction, except to the extent
any indemnified party or parties reasonably shall have concluded that there may
be legal defenses available to such party or parties which are not available to
the other indemnified parties or to the extent representation of all indemnified
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct) and the indemnifying party shall be liable
for any expenses therefor.
(d) Non-Exclusive Indemnity. Any indemnity agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party.
(e) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses:
(i) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other (determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge,
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access to information and opportunity to correct or prevent such untrue
statement or omission); or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other (taking into
consideration the fact that the provision of the registration rights hereunder
is a material inducement to the Investors to acquire shares of Common Stock), as
well as any other relevant equitable considerations.
No person or entity found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not found guilty of such
fraudulent misrepresentation. Notwithstanding anything to the contrary in this
Section 3.9(e), no indemnifying party (other than the Corporation) shall be
required, pursuant to this Section 3.9(e), to contribute any amount in excess of
the net proceeds received by such indemnifying party from the sale of shares of
Common Stock in the offering to which the losses, claims, damages, liabilities
or expenses of the indemnified party relate.
(f) Notwithstanding any of the foregoing, if, in connection with an
underwritten public offering of any Restricted Shares, the Corporation, the
holders of such Restricted Shares and the underwriters enter into an
underwriting or purchase agreement relating to such offering which contains
substantially similar provisions covering indemnification among the parties,
then the indemnification provision of this Section 3.9 shall be deemed
inoperative for purposes of such offering.
3.10 Removal of Legends, Etc. Notwithstanding the foregoing provisions
of this Section 3, the restrictions imposed by this Section 3 upon the
transferability of any Restricted Securities shall cease and terminate when (a)
any such Restricted Securities are sold or otherwise disposed of in accordance
with the intended method of disposition by the seller or sellers thereof set
forth in a registration statement or such other method contemplated by Section
3.3 hereof that does not require that the securities transferred bear the legend
set forth in Section 3.2 hereof, including a Transfer pursuant to Rule 144 or a
successor rule thereof (as amended from time to time), or (b) the holder of
Restricted Securities has met the requirements for transfer of such Restricted
Securities pursuant to subparagraph (k) of Rule 144 or a successor rule thereof
(as amended from time to time) promulgated by the Commission under the
Securities Act. Whenever the restrictions imposed by this Section 3 have
terminated, a holder of a certificate for Restricted Securities as to which such
restrictions have terminated shall be entitled to receive from the Corporation,
without expense and the Corporation shall use its reasonable best efforts to
provide such holder with, a new certificate not bearing the restrictive legend
set forth in Section 3.2 hereof and not containing any other reference to the
restrictions imposed by this Section 3.
SECTION 4. Securities Act Registration Statements. Except for
securities of the Corporation registered on Forms S-2 or S-3, or successor
approved forms, of the Securities and Exchange Commission, the Corporation shall
not file any registration statement under the
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Securities Act covering any securities unless it shall first have given each
holder of Restricted Securities written notice thereof. The Corporation further
covenants that each holder of Restricted Securities shall have the right, at any
time when it may be deemed to be a controlling person of the Corporation, within
the meaning of the Securities Act, to participate in the preparation of such
registration statement and to request the insertion therein of material
furnished to the Corporation in writing which in such holder's judgment should
be included. In connection with any registration statement referred to in this
Section 4, the Corporation shall indemnify, to the extent permitted by law, each
holder of Restricted Securities, its officers, partners and directors and each
person, if any, who controls any such holder within the meaning of the
Securities Act in the same manner and to the same extent as the Corporation is
required to indemnify a seller of Restricted Securities in Section 3.9 hereof.
If, in connection with any such registration statement, any holder of Restricted
Securities shall furnish written information to the Corporation expressly for
use in the registration statement, then such holder shall indemnify the
Corporation, each director of the Corporation, each officer of the Corporation
who signs such registration statement and each person, if any, who controls the
Corporation within the meaning of the Securities Act to the same extent as a
seller of Restricted Securities is required to indemnify such persons in Section
3.9 hereof.
SECTION 5. ELECTION OF DIRECTORS.
5.1 Voting for Directors. At each annual meeting of the stockholders of
the Corporation and at each special meeting of the stockholders of the
Corporation called for the purposes of electing directors of the Corporation,
and at any time at which stockholders of the Corporation shall have the right
to, or shall, vote for or consent to the election of directors, then, in each
such event, each Investor shall vote all Preferred Shares and any other shares
of voting stock of the Corporation then owned (or controlled as to voting
rights) by it, whether by purchase, exercises of rights, warrants or options,
stock dividends or otherwise:
(a) to fix and maintain the number of directors on the Board of
Directors of the Corporation at no more than ** ;
(b) to elect to the Board ** designated by Roche (the ** ) for so long
as Roche owns at least ** of the shares of Series A Preferred Stock originally
issued to it by the Corporation (subject to adjustment for stock splits, stock
dividends, stock combinations, recapitalizations and like occurrences) ** ; and
- --------------------
** This portion has been redacted pursuant to a request for confidential
treatment.
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(c) to elect to the Board ** designated by OSI (the ** ) and **
designated by Cold Spring Harbor Laboratory (the ** ) for so long as OSI and
Cold Spring Harbor Laboratory, respectively, owns at least ** of the shares of
Series A Preferred Stock originally issued to it by the Corporation (subject to
adjustment for stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences).
The ** and ** and the ** shall be the Series A Directors (as defined in
the Certificate) under the Certificate.
5.2 Cooperation of the Corporation. The Corporation shall use its best
efforts to effectuate the purposes of this Section 5, including promoting the
adoption of any necessary amendment of the By-Laws of the Corporation and the
Certificate.
5.3 Notices. The Corporation shall provide the Investors with at least
twenty (20) days' prior notice in writing of any intended mailing by the
Corporation of notice to the Investors of a meeting at which directors are to be
elected, and such notice shall include the names of the persons designated
pursuant to Section 5.1 hereof. Roche, OSI and Cold Spring Harbor Laboratory,
respectively, shall each notify the Corporation in writing at least three (3)
days prior to such mailing, of the persons designated by Roche, OSI and Cold
Spring Harbor Laboratory pursuant to Section A.5.1 hereof, as nominees for
election to the Board. In the absence of any notice from Roche, OSI and Cold
Spring Harbor Laboratory, as the case may be, the director(s) then serving and
previously designated shall be renominated.
5.4 Removal. Except as otherwise provided in this Section 5, no
Investor shall vote to remove any member of the Board designated in accordance
with the foregoing provisions of this Section 5 unless the party that designated
such director (the "Designating Party") shall so vote or otherwise consent, and,
if the Designating Party shall so vote or otherwise consent, then the
non-designating party shall likewise so vote. Except as otherwise provided in
this Section 5, any vacancy on the Board created by the resignation, removal,
incapacity or death of any person designated under the foregoing provisions of
this Section 5 shall be filled by another person designated by the original
Designating Party. Each Investor shall vote all shares of voting stock of the
Corporation owned or controlled by such Investor in accordance with each such
new designation, and no such vacancy shall be filled in the absence of a new
designation by the original Designating Party.
5.5 Duration of Section. This Section 5 and the rights and obligations
of the parties hereunder shall automatically terminate on the consummation of a
firm commitment underwritten public offering of Common Stock registered under
the Securities Act pursuant to which (X) Common Stock is offered to the public
at a price of at least ** per share (subject to adjustment for stock splits,
stock dividends, stock combinations, recapitalizations and like
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** This portion has been redacted pursuant to a request for confidential
treatment.
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occurrences) and (Y) the net proceeds to the Corporation are at least ** (the
"Termination Date"). Prior to the Termination Date the rights and obligations of
any Investor under this Section 5 shall terminate upon the date on which such
Investor no longer owns any Preferred Shares, whereupon the obligations of the
remaining Investors to vote in favor of the designee, if any, of any such
Investor shall also terminate.
5.6 Observation Rights. In the event that Roche elects (or is deemed to
elect) not to designate ** to attend all meetings of the Board of Directors of
the Corporation, and shall, upon the written request of the Roche Observer,
provide such ** with such notice and other information with respect to such
meetings as are delivered to the directors of the Corporation. The foregoing
observation rights shall be conditioned upon the ** executing and delivering to
the Corporation a customary confidentiality agreement pursuant to which such **
agrees to hold in confidence the confidential information of the Corporation.
Notwithstanding the foregoing, the Corporation shall not be required to
permit the ** to attend all or any portion of a meeting, or to provide to such
** information with respect to a meeting, (a) to the extent that the Board of
Directors determines in good faith that the Corporation and Roche have
conflicting interests relating to a matter to be discussed, or (b) to the extent
that a matter to be discussed at such meeting and information related thereto
relates to potential or actual licensing, development, joint venture or similar
transactions between the Corporation and a third party, provided that the
Corporation shall act reasonably in determining whether to permit such
attendance or provide such information.
SECTION 6. Employee Stock Option Plan. The Investors shall vote in
favor of the establishment of a stock option plan, and from time to time shall
vote in favor of any amendments thereto, in such form and substance as
recommended by the Board of Directors (the "Stock Plan"), to provide for stock
options (the "Options") being granted to eligible officers, employees,
consultants, Board members and scientific advisers, providing for the purchase
of an amount of shares of Common Stock not to exceed ** of the shares of capital
stock outstanding. This Section 6 shall terminate upon the Termination Date.
SECTION 7. Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements 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 any such covenant or agreement contained in this Agreement. 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.
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** This portion has been redacted pursuant to a request for confidential
treatment.
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SECTION 8. Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall bind and inure to the benefit of the
Corporation and each of the Investors and the respective successors and assigns
of the Corporation and each of the Investors. Subject to the provisions of
Sections 3.1, 3.2, 3.3 and 3.10 hereof, which are intended solely to ensure
compliance with the provisions of the Securities Act, this Agreement and the
rights and duties of the Investors set forth herein may be assigned, in whole or
in part, by each Investor with the prior written consent of the Large
Stockholders. Any transferee (other than an Investor) to whom rights under
Section 3 are transferred shall, as a condition to such transfer, deliver to the
Corporation a written instrument by which such transferee identifies itself,
gives the Corporation notice of the transfer of such rights, identifies the
securities of the Corporation owned or acquired by it and agrees to be bound by
the obligations imposed hereunder to the same extent as if such transferee were
an Investor hereunder. A transferee to whom rights are transferred pursuant to
this Section 8 will be thereafter deemed to be an Investor for the purpose of
the execution of such transferred rights and may not again transfer such rights
to any other person or entity, other than as provided in this Section 8. Neither
this Agreement nor any of the rights or duties of the Corporation set forth
herein shall be assigned by the Corporation, in whole or in part, without having
first received the written consent of the Investors holding a majority in voting
power of the outstanding Preferred Shares, with each such holder entitled to the
number of votes for each such share of Preferred Stock as equals the number of
shares of Common Stock (including fractional shares) into which each such share
of Preferred Stock is then convertible, rounded up to the nearest one-tenth of a
share.
SECTION 9. Duration of Agreement. The rights and obligations of the
Corporation and each Investor set forth herein shall survive indefinitely,
unless and until, by their respective terms, they are no longer applicable.
SECTION 10. Entire Agreement. This Agreement, together with the other
writings referred to herein or delivered pursuant hereto which form a part
hereof, contains the entire agreement among the parties with respect to the
subject matter hereof and amends, restates and supersedes all prior and
contemporaneous arrangements or understandings with respect thereto. This
Agreement may not be amended except in writing by the holders of at least
two-thirds (2/3) of the outstanding capital stock of the Corporation inclusive
of the Large Stockholders.
SECTION 11. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered, certified or overnight mail, postage prepaid, or telecopies
with a confirmation copy by regular mail, addressed or telecopied, as the case
may be, to such party at the address or telecopier number, as the case may be,
set forth on Schedule 2 hereto or such other address or telecopier number, as
the case may be, as may hereafter be designated in writing by the addressee to
the addressor.
SECTION 12. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
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prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding choice
of law rules thereof.
SECTION 14 . Interpretation. When the context in which words are used
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural, and vice versa. Headings contained herein are
inserted only as a matter of convenience and in no way define, limit, extend or
interpret the scope of this Agreement or any Section hereof. Pronouns stated in
either the masculine, the feminine or the neuter gender shall include the
masculine, feminine and the neuter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
HELICON THERAPEUTICS, INC.
By: /s/
Name:
Title:
**
By: /s/
Name:
Title:
ONCOGENE SCIENCE, INC.
By: /s/
Name:
Title:
COLD SPRING HARBOR LABORATORY
By: /s/
Name:
Title:
/s/
----------------------------------
**
/s/
----------------------------------
**
/s/
----------------------------------
**
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** This portion has been redacted pursuant to a request for confidential
treatment.
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Other CSHL Individuals*
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
- --------
* The Other CSHL Individuals shall be determined at a later closing date
at which time Ordinary Common Stock shall be issued to such persons
pursuant to the terms and conditions of this Agreement.
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SCHEDULE 1
PERCENTAGE OF TOTAL
NUMBER OF SHARES OF
NUMBER OF CAPITAL STOCK
NAME AND ADDRESS OF STOCKHOLDER SHARES OUTSTANDING TYPE
- ------------------------------- --------- ------------------- ---------
ONCOGENE SCIENCE, INC. ** ** Preferred
106 Charles Lindbergh Boulevard
Uniondale, NY 11553
COLD SPRING HARBOR LABORATORY ** ** Preferred
Cold Spring Harbor, New York
** ** ** Preferred
and
**
with a simultaneous copy to:
HOFFMANN - LA ROCHE INC.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: General Counsel
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** This portion has been redacted pursuant to a request for confidential
treatment.
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** ** **
Senior
c/o CSHL
Common
** ** **
Senior
c/o CSHL
Common
** ** **
Senior
c/o CSHL
Common
"The Other CSHL Stockholders" ** **
Ordinary
Common
- ---------------------------- ------- ------
Total ** 100%
- --------------------
** This portion has been redacted pursuant to a request for confidential
treatment.
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SCHEDULE 2
ADDRESSES FOR NOTICES
HELICON THERAPEUTICS, INC.
106 Charles Lindbergh Boulevard
Uniondale, NY 11553
COLD SPRING HARBOR LABORATORY
Hershey Building
One Bungtown Road
Cold Spring Harbor, New York
ONCOGENE SCIENCE, INC.
106 Charles Lindbergh Boulevard
Uniondale, NY 11553
**
and
**
with a simultaneous copy to:
HOFFMANN - LA ROCHE INC.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: General Counsel
**
c/o CSHL
**
c/o CSHL
**
c/o CSHL
- --------------------
** This portion has been redacted pursuant to a request for confidential
treatment.
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