Dicerna Pharmaceuticals
Dicerna Pharmaceuticals Inc (Form: 8-K, Received: 03/30/2017 16:29:38)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): March 30, 2017

 

 

DICERNA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36281   20-5993609

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

87 Cambridgepark Drive

Cambridge, MA 02140

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (617) 621-8097

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On March 30, 2017, Dicerna Pharmaceuticals, Inc. (the “Company”) entered into a redeemable convertible preferred stock purchase agreement (“Stock Purchase Agreement”) with seven institutional investors (“Investors”), led by funds advised by Bain Capital Life Sciences L.P. (“Lead Investor”), pursuant to which the Company agreed to issue and sell in a private placement 700,000 shares of its newly designated Redeemable Convertible Preferred Stock, par value $0.0001 per share (“Redeemable Convertible Preferred”), at a purchase price of $100.00 per share, for total gross proceeds of $70.0 million (“Private Placement”). Other participants in the financing include EcoR1 Capital, Cormorant Asset Management, RA Capital, Domain Associates and Skyline Ventures, among others. A copy of the form of the Redeemable Convertible Preferred Stock Certificate is attached hereto as Exhibit 4.1. The Private Placement is expected to close on or before April 11, 2017, subject to the satisfaction of customary closing conditions.

The Company shall have the right to require the Investors to convert the Redeemable Convertible Preferred into common stock (“Mandatory Conversion”), at any time following the earlier of (i) the second anniversary of the closing of the Private Placement or (ii) the occurrence of both of the following: (a) (1) the time that the Company first administers, after the issue date, a dose of a pharmaceutical product candidate (which such product candidate shall be one of the following candidates, or a variation thereof: DCR-PHXC, DCR-PCSK9 or the undisclosed rare disease program currently in pre-clinical development (each a “Product Candidate”)) to a human being pursuant to an investigational new drug application (“IND”) filed by the Company with the United States Food and Drug Administration; or (2) after the Company has first administered, after the issue date, a dose of a Product Candidate to a human being pursuant to a clinical trial authorization with the Medicine and Healthcare Products Regulatory Agency in the European Union and an IND relating to such Product Candidate has become effective; and (b) the Company enters into a partnership or license agreement with a major company in the pharmaceutical or biotechnology industry relating to a non-Product Candidate, pursuant to which such company provides an up-front cash payment to the Company of a minimum amount agreed upon by the Company and the Lead Investor and agrees to customary future milestone and royalty payments, provided, that, in each case ((i) and (ii)), the trading price of the Company’s common stock exceeds 200% of the Conversion Price, as defined below, for 45 out of the 60 most recent trading days. The Company’s ability to require conversion shall be subject to (i) a 19.99% blocker provision to comply with NASDAQ Listing Rules (“19.99% Conversion Blocker”), (ii) if so elected by an investor, a 9.99% blocker provision (“9.99% Conversion Blocker”) that will prohibit beneficial ownership of more than 9.99% of the outstanding shares of the Company’s common stock or voting power at any time, and (iii) applicable regulatory restrictions. The 19.99% Conversion Blocker and the 9.99% Conversion Blocker are hereinafter referred to as the “Conversion Blockers”. “Conversion Price” shall mean an initial price of $3.19 per share, subject to proportionate adjustment for any stock split, stock dividend, combination or other similar recapitalization event.

Following the date of a Mandatory Conversion, any shares of Redeemable Convertible Preferred that are not converted as a result of the Conversion Blockers or applicable regulatory restrictions shall continue to be entitled to all of the rights of the holders of Redeemable Convertible Preferred except that they will no longer be entitled to cumulative dividends, priority distribution of assets upon consummation of a change of control or a liquidation event and certain special voting provisions.

On or at any time following the seventh anniversary of the closing of the Private Placement, (i) the Company shall also have the right to redeem the Redeemable Convertible Preferred for a cash consideration equal to the sum of the Accrued Value, as of the date of redemption, plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred that have not previously been added to the Accrued Value, and (ii) the holders of a majority of the Redeemable Convertible Preferred shall also have the right to cause the Company to redeem the Redeemable Convertible Preferred at the same price. “Accrued Value” means, with respect to each share of Redeemable Convertible Preferred, the sum of (i) the Stated Value plus (ii) on each quarterly dividend date, an additional amount equal to the dollar value of any dividends on a share of Redeemable Convertible Preferred which have accrued on any dividend payment date and have not previously been added to such Accrued Value.

At any time and from time to time at their election, the holders of Redeemable Convertible Preferred will have the option to convert the Redeemable Convertible Preferred into shares of the Company’s common stock by dividing (i) the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred that have not previously been added to the Accrued Value by (ii) the Conversion Price in effect at the time of such conversion. The conversion of shares of Redeemable Convertible Preferred into shares of common stock is subject to the Conversion Blockers.

The Company also expects to enter into an amended and restated registration rights agreement, by and among the Company and the Investors (“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Investors will be entitled to certain demand, shelf and “piggyback” registration rights with respect to the shares of common stock issuable upon conversion of the Redeemable Convertible Preferred, subject to the limitations set forth in the Registration Rights Agreement.


The above descriptions of the Stock Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by reference to Exhibits 10.1 and 10.2 attached hereto, respectively.

 

Item 3.02 Unregistered Sale of Equity Securities.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02. The shares of Redeemable Convertible Preferred and the shares of common stock issuable upon conversion of the Redeemable Convertible Preferred are expected to be offered and sold by the Company pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) thereunder. Each of the Investors provided a written representation to the Company that they qualify as an “accredited investor” as that term is defined in Rule 501 under the Securities Act.

 

Item 3.03 Material Modifications of Rights of Security Holders.

The Company expects to file a Certificate of Designation of Redeemable Convertible Preferred Stock (“Certificate of Designation”) with the Secretary of State of the State of Delaware establishing that each share of Redeemable Convertible Preferred will have a stated value of $100.00 (“Stated Value”). Upon the effectiveness of the Certificate of Designation, each holder of Redeemable Convertible Preferred will be entitled to receive cumulative dividends on the Accrued Value of each share of Redeemable Convertible Preferred at an initial rate of 12% per annum, compounded quarterly and subject to two rate reductions, of 4% each, upon the occurrence of certain agreed-upon milestone events. Dividends on the Redeemable Convertible Preferred are payable in kind and will accrue on the Accrued Value of each share of Redeemable Convertible Preferred until the earlier of conversion, redemption, consummation of a change of control, a liquidation event, or upon failure to mandatorily convert due to the Conversion Blockers or applicable regulatory restrictions.

In the event of a liquidation, dissolution or winding up of the Company, the holder of each share of Redeemable Convertible Preferred will be entitled to receive, in preference to the holders of the common stock and any junior preferred stock, an amount per share equal to the greater of (i) the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred that have not previously been added to the Accrued Value, or (ii) the amount that such shares would have been entitled to receive if they had converted into common stock immediately prior to such liquidation, dissolution or winding up.

Upon consummation of a specified change of control transaction, each holder of Redeemable Convertible Preferred will be entitled to receive in preference to the holders of common stock and any junior preferred stock, an amount equal to the greater of (i) 101% of the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Redeemable Convertible Preferred that have not previously been added to the Accrued Value, or (ii) the amount that such shares would have been entitled to receive if they had converted into common stock immediately prior to such event.

In addition, for so long as any shares of Redeemable Convertible Preferred remain outstanding, without the approval of holders of a majority of the Redeemable Convertible Preferred, the Company may not, among other things, (i) amend, modify or fail to give effect to any right of holders of the Redeemable Convertible Preferred, (ii) change the authorized number of Redeemable Convertible Preferred or issue additional Redeemable Convertible Preferred or create a new class or series of equity securities or securities convertible into equity securities with equal or superior rights, preferences or privileges to those of the Redeemable Convertible Preferred in terms of liquidation preference, dividend rights or certain governance rights, (iii) issue shares of common stock or securities convertible into common stock while the Company has insufficient shares to effect the conversion of the Redeemable Convertible Preferred into common stock, (iv) declare or pay dividends or redeem or repurchase any capital stock (other than certain repurchases from employees, directors, advisors or consultants upon termination of service) or (v) incur certain indebtedness in excess of $10 million. Except as set forth above or as otherwise required by law, holders of shares of Redeemable Convertible Preferred are entitled to vote together with shares of common stock (based on one vote per share of common stock into which the shares of Redeemable Convertible Preferred are convertible on the applicable record date) on any matter on which the holders of common stock are entitled to vote.

A copy of the Certificate of Designation is attached hereto as Exhibit 3.1 and incorporated herein by reference. The foregoing description of the Certificate of Designation is qualified in its entirety by reference to Exhibit 3.1 attached hereto.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 28, 2017, the Board of Directors of the Company (the “Board”) voted to increase the size of the Board from eight directors to nine directors and, in accordance with the Stock Purchase Agreement, appointed Adam M. Koppel, M.D., Ph.D., a managing director of the Lead Investor, as a director of the Company, effective immediately following and contingent upon, the closing of the Private Placement, to fill the resulting vacancy.


To the extent such director is not reelected at any time and, so long as the Lead Investor owns at least 25% of the Redeemable Convertible Preferred (or underlying common stock) owned by it at the closing of the Private Placement, it shall have the right to designate a board observer.

Mr. Koppel will receive the Company’s standard compensation provided to all the Company’s non-employee directors for service on the Board, which includes an annual retainer of $35,000 per annum, pro rated for the current term, plus an option to purchase 25,000 shares of Common Stock that begins vesting upon closing of the Private Placement.

In connection with his appointment, Mr. Koppel will enter into an indemnification agreement with the Company substantially in the form of the indemnification agreement previously approved by the Board, together with a form of letter agreement (“Letter Agreement”) between Mr. Koppel and the Company, which serves as an addendum to such indemnification agreement. On March 28, 2017, the Board approved an addendum, in substantially the same form as the Letter Agreement, for use in all director indemnification agreements. The form of indemnification agreement is filed as Exhibit 10.10 to the Company’s Amendment No. 3 to Registration Statement on Form S-1, filed on January 28, 2014, and the form of Letter Agreement is filed herewith as Exhibit 10.3, and both are incorporated by reference herein.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws.

The Company expects to file with the Secretary of State of the State of Delaware the Certificate of Designation attached hereto as Exhibit 3.1 and incorporated herein by reference. The Certificate of Designation will establish and designate the Redeemable Convertible Preferred and the rights, preferences, privileges and limitations thereof.

 

Item 8.01 Other Events.

On March 30, 2017, the Company issued a press release entitled “Dicerna Secures $70 Million in Convertible Preferred Stock Financing.” A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Cautionary Note on Forward-Looking Statements

This Current Report on Form 8-K includes forward-looking statements that are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements concerning the completion, timing and size of the Private Placement, the anticipated use of proceeds from the Private Placement and other statements that are other than statements of historical facts. These forward-looking statements involve significant risks and uncertainties. These statements reflect the Company’s current expectations concerning future events, actual events could differ materially from those anticipated as a result of many factors, including, but not limited to, the risks that the Private Placement may be delayed or may not occur due to market or other conditions and the satisfaction of customary closing conditions related to the Private Placement. Additional information concerning these and other factors that may cause actual events to differ materially from those anticipated is contained in the “Risk Factors” section of the Company’s most recent Form 10-Q filing and its other periodic reports and filings with the SEC. Investors should not place undue reliance on forward-looking statements contained in this Current Report or elsewhere. All forward-looking statements are based on information currently available to the Company, and the Company undertakes no obligation to revise or update them to reflect events or circumstances after the date of this Current Report.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit
No.

  

Description

  3.1    Certificate of Designation of Redeemable Convertible Preferred Stock.
  4.1    Form of Redeemable Convertible Preferred Stock Certificate.
10.1    Form of Redeemable Convertible Preferred Stock Purchase Agreement.


Exhibit
No.

  

Description

10.2    Form of Amended and Restated Registration Rights Agreement.
10.3    Form of Letter Agreement.
99.1    Press Release titled “Dicerna Secures $70 Million in Convertible Preferred Stock Financing” issued by Dicerna Pharmaceuticals, Inc. on March 30, 2017.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 30, 2017     DICERNA PHARMACEUTICALS, INC.
    By:  

/s/ Douglas M. Fambrough, III

      Douglas M. Fambrough, III, Ph.D.
      Chief Executive Officer


EXHIBIT INDEX

 

Exhibit
No.

  

Description

  3.1    Certificate of Designation of Redeemable Convertible Preferred Stock.
  4.1    Form of Redeemable Convertible Preferred Stock Certificate.
10.1    Form of Redeemable Convertible Preferred Stock Purchase Agreement.
10.2    Form of Amended and Restated Registration Rights Agreement.
10.3    Form of Letter Agreement.
99.1    Press Release titled “Dicerna Secures $70 Million in Convertible Preferred Stock Financing” issued by Dicerna Pharmaceuticals, Inc. on March 30, 2017.

Exhibit 3.1

CERTIFICATE OF DESIGNATION

OF

REDEEMABLE CONVERTIBLE PREFERRED STOCK

OF

DICERNA PHARMACEUTICALS, INC.

Pursuant to Section 151

of the General Corporation Law of

the State of Delaware

The undersigned, Douglas M. Fambrough, III, hereby certifies that:

I. He is the duly elected and acting President and Chief Executive Officer of Dicerna Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”).

II. The Amended and Restated Certificate of Incorporation of the Company (the “ Certificate of Incorporation ”) authorizes Five Million (5,000,000) shares of preferred stock, par value $0.0001 per share.

III. The following is a true and correct copy of the resolutions duly adopted by the Board of Directors of the Company (the “ Board of Directors ”) at a meeting on March 28, 2017, which constituted all requisite actions on the part of the Company with respect to the authorization of the filing of this Certificate of Designation (this “ Certificate of Designation ”).

 

RESOLUTIONS

WHEREAS, the Board of Directors is authorized to provide for the issuance of the shares of preferred stock in one or more series and, by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and the relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, of the shares of each such series; and

WHEREAS, the Board of Directors desires, pursuant to its authority as aforesaid, to designate a new series of preferred stock, set the number of shares constituting such series and fix the rights, preferences, privileges and restrictions of such series.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby designates a new series of preferred stock and the number of shares constituting such series and fixes the rights, preferences, powers and restrictions relating to such series as follows:

 

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1. Designation and Number . The shares of such series shall be designated as the Redeemable Convertible Preferred Stock with par value $0.0001 per share (the “ Convertible Preferred Stock ”). The number of shares initially constituting the Convertible Preferred Stock shall be Seven Hundred Thousand (700,000).

2. Dividends .

(a) From and after the Issue Date, cumulative dividends shall accrue on the Accrued Value of each share of Convertible Preferred Stock at the Annual Rate. Dividends on each share of Convertible Preferred Stock shall be cumulative and shall accrue daily from and after the Issue Date, but shall compound on a quarterly basis on each Quarterly Dividend Date whether or not earned or declared, and whether or not there are earnings or profits, surplus or other funds or assets of the Company legally available for the payment of dividends. All such dividends shall compound and be added to the Accrued Value on each Quarterly Dividend Date, as provided in the definition of “Accrued Value” in Section 10 hereof. None of such dividends shall be paid in cash unless such dividends are paid pursuant to Section 3 or Section 8 , and for the avoidance of doubt, such dividends shall remain accrued when compounded and added to the Accrued Value until paid in cash pursuant to such Sections.

(b) In the event that the Board of Directors shall declare a dividend payable upon the then outstanding shares of Common Stock (other than a stock dividend on the Common Stock payable solely in the form of additional shares of Common Stock), the holders of the Convertible Preferred Stock shall be entitled, in addition to any cumulative dividends to which the Convertible Preferred Stock may be entitled under Section 2(a) above, to receive the amount of dividends per share of Convertible Preferred Stock that would be payable on the number of whole shares of the Common Stock into which each share of such Convertible Preferred Stock held by each holder could be converted pursuant to the provisions of Section 5 below, such number to be determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend.

(c) The Board of Directors may fix a record date for the determination of holders of shares of Common Stock or the Convertible Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than 60 days and no less than 10 days prior to the date fixed for the payment thereof.

3. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales .

(a) Payments to Holders of Convertible Preferred Stock . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (each, a “ Liquidation Event ”) or Deemed Liquidation Event, the holders of shares of Convertible Preferred Stock shall be entitled to be paid, with respect to each share of Convertible Preferred Stock then outstanding held by the holder, out of the assets of the Company available for distribution to its stockholders, on a preferred basis prior and in preference to any distribution to the holders of any Common Stock or any other Junior Stock of the Company, an amount in cash per share of Convertible Preferred Stock equal to (i) in the event of a Deemed Liquidation Event, the greater of (x) 101% multiplied by the sum of the Accrued Value plus an amount equal to all

 

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accrued or declared and unpaid dividends on the Convertible Preferred Stock that have not previously been added to the Accrued Value or (y) such amount per share as would have been payable in respect of the shares of Common Stock into which such share of Convertible Preferred Stock is then convertible, assuming all outstanding shares of Convertible Preferred Stock were converted into Common Stock immediately prior to such Deemed Liquidation Event in accordance with Section 5 below (without regard as to whether sufficient shares of Common Stock are available out of the Company’s authorized but unissued stock for the purpose of effecting the conversion of the Convertible Preferred Stock and without regard to any limitation on conversion in accordance with Section 5(j) below) or (ii) in the event of a Liquidation Event that is not a Deemed Liquidation Event, the greater of (x) the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Convertible Preferred Stock that have not previously been added to the Accrued Value or (y) such amount per share as would have been payable in respect of the shares of Common Stock into which such share of Convertible Preferred Stock is then convertible, assuming all outstanding shares of Convertible Preferred Stock were converted into Common Stock immediately prior to such Liquidation Event in accordance with Section 5 below (without regard as to whether sufficient shares of Common Stock are available out of the Company’s authorized but unissued stock for the purpose of effecting the conversion of the Convertible Preferred Stock and without regard to any limitation on conversion in accordance with Section 5(j) below) (the amount payable pursuant to this sentence is hereinafter referred to as the “ Liquidation Amount ”). If upon any such Liquidation Event or Deemed Liquidation Event, the assets of the Company available for distribution to the Company’s stockholders shall be insufficient to pay the holders of shares of the Convertible Preferred Stock the full amount to which they shall be entitled pursuant to the preceding sentence of this Section 3(a) , the holders of shares of Convertible Preferred Stock shall share ratably in any distribution of the assets available for distribution and funds of the Company in proportion to the respective amounts which would otherwise be payable in respect of such shares of Convertible Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(b) Payments to Holders of Common Stock . In the event of any Liquidation Event or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Convertible Preferred Stock, the remaining assets and funds of the Company available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

(c) Deemed Liquidation Events .

(i) Definition . Each of the following events shall be considered a “Deemed Liquidation Event” unless the Required Holders elect otherwise by written notice sent to the Company at least five (5) days prior to the effective date of any such event:

(1) a reorganization, merger or consolidation in which

 

  (A) the Company is a constituent party or

 

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  (B) a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such reorganization, merger or consolidation, except any such reorganization, merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such reorganization, merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such reorganization, merger or consolidation, a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly-owned subsidiary of another corporation immediately following such reorganization, merger or consolidation, the parent corporation of such surviving or resulting corporation;

(2) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all of the assets of the Company and its subsidiaries taken as a whole or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly-owned subsidiary of the Company;

(3) issuance or transfer of shares of capital stock of the Company, in a single transaction or series of related transactions, representing at least fifty percent (50%) of the voting power of the voting securities of the Company (but excluding issuances of equity securities (or securities convertible into equity securities) by the Company in a bona fide financing that is primarily for its capital-raising purposes and in which all consideration from such issuances, net of expenses, is received by the Company); or

(4) any tender offer or exchange offer (whether by the Company or another person or entity) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of fifty percent (50)% or more of the outstanding Common Stock.

(ii) Effecting a Deemed Liquidation Event .

(1) The Company shall not have the power to effect a Deemed Liquidation Event unless the agreement or plan of merger or consolidation or other agreement for such transaction (the “ Merger Agreement ”) provides that the consideration payable to the stockholders of the Company shall be allocated among the holders of capital stock of the Company in accordance with Sections 3(a) and (b)  as if the consideration payable to stockholders were all assets of the Company available for distribution to stockholders.

 

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(2) In the event of a Deemed Liquidation Event referred to in Section 3(c)(i)(1)(B) , 3(c)(i)(2) or 3(c)(i)(3) , if the Company does not effect a dissolution of the Company under the General Corporation Law upon the consummation of such Deemed Liquidation Event, then the Company shall send a written notice to each holder of Convertible Preferred Stock no later than the fifth (5th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of Sections 3(c)(ii)(2) , (3) , (4)  and (5)  to require the redemption of such shares of Convertible Preferred Stock, and unless the Required Holders agree otherwise in a written instrument delivered to the Company, the Company shall use the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors), together with any other assets of the Company available for distribution to its stockholders (the Available Proceeds ”), to the extent legally available therefor, on the twentieth (20th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Convertible Preferred Stock at a price per share equal to the Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Convertible Preferred Stock, the Company shall redeem a pro rata portion of each holder’s shares of Convertible Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Company has funds legally available therefor. Prior to the distribution or redemption provided for in this Section 3(c)(ii)(2) , the Company shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event. If the Company is required by the provisions of this Section 3(c)(ii)(2) to redeem shares, the redemption shall occur in accordance with the provisions of Sections 3(c)(ii)(2) , (3) , (4)  and (5) . The date upon which any such redemption is required to be effected pursuant to this Section 3(c)(ii)(2) shall be the “ Redemption Date ”.

(3) The Company shall send written notice of any redemption pursuant to this Section 3(c)(ii) (the “ Redemption Notice ”) to each holder of record of Convertible Preferred Stock as required by Section 3(c)(ii)(2) . Each Redemption Notice shall state:

 

  (A) the number of shares held by the holder that the Company shall redeem on the Redemption Date specified in the Redemption Notice (which number shall not be less than the number of shares the Company is then required to redeem);

 

  (B) the Redemption Date and the redemption price; and

 

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  (C) that the holder is to surrender to the Company, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Convertible Preferred Stock to be redeemed.

If the Company receives, on or prior to the tenth (10 th ) day after the date of delivery of the Redemption Notice to a holder of Convertible Preferred Stock, written notice from such holder that such holder elects to be excluded from the redemption provided in this Section 3(c)(ii) , then the shares of Convertible Preferred Stock registered on the books of the Company in the name of such holder at the time of the Company’s receipt of such notice shall thereafter be “ Excluded Shares .” Excluded Shares shall not be redeemed or redeemable pursuant to this Section 3(c)(ii) , whether on such Redemption Date or thereafter.

(4) On or before the applicable Redemption Date, each holder of shares to be redeemed on such Redemption Date shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company, in the manner and at the place designated in the Redemption Notice, and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares represented by a certificate are redeemed, a new certificate representing the unredeemed shares shall promptly be issued to such holder.

(5) If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the redemption price payable upon redemption of the shares to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that the certificates evidencing any of the shares so called for redemption shall not have been surrendered, dividends with respect to such shares shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the redemption price without interest upon surrender of their certificate or certificates therefor. Any shares of Convertible Preferred Stock that are redeemed or otherwise acquired by the Company or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.

(iii) Amount Deemed Paid or Distributed . The consideration paid by the Company upon a Liquidation Event or Deemed Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to the holders of the capital stock of the Company by the Company or the acquiring person, firm or other entity, with the value of such property, rights or securities determined in good faith by the Board of Directors; provided , however , that, in the event of a Deemed Liquidation Event, if the value received by stockholders with respect to a share of Common Stock is not at least two hundred percent (200%) of the Conversion Price, then the consideration paid to the holders of Convertible Preferred Stock under this Section 3 (whether on redemption or otherwise) must be made in cash.

 

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4. Voting . On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent in lieu of meeting), each holder of Convertible Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Convertible Preferred Stock held by such holder are convertible on the record date for determining stockholders entitled to vote on such matter (as adjusted from time to time pursuant to Section 5 hereof and subject to the limitations set forth in Section 5(j) below, but without regard as to whether sufficient shares of Common Stock are available out of the Company’s authorized but unissued stock, for the purpose of effecting the conversion of the Convertible Preferred Stock). Holders of Convertible Preferred Stock shall be entitled to notice of any meeting of stockholders and, except as otherwise provided herein or otherwise required by law, to vote together with the holders of Common Stock as a single class.

5. Conversion . The holders of the Convertible Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

(a) Right to Convert . Each share of Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing (i) the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Convertible Preferred Stock that have not previously been added to the Accrued Value by (ii) the Conversion Price (as defined below) in effect at the time of conversion. The “ Conversion Price ” shall initially be equal to $3.19 per share. The rate at which shares of Convertible Preferred Stock may be converted into shares of Common Stock shall be subject to adjustment as provided in Section 5(d) , (e) , (f)  and (g)  below.

In the event of a notice of redemption of any shares of Convertible Preferred Stock pursuant to Section 8 hereof, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the date fixed for redemption, unless the redemption price is not paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full.

(b) Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of the Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock, which shall be the last reported closing sale price of a share of Common Stock on the Conversion Date if the Common Stock is then listed and trading on a Trading Market or, if the Common Stock is not then so listed and trading, as determined in good faith by the Board of Directors. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Convertible Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

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(c) Mechanics of Conversion .

(i) Holders of Convertible Preferred Stock shall effect conversions by providing the Company with a written notice of conversion (a “ Notice of Conversion ”) on the Trading Day on which such holder wishes to effect such conversion (the “ Conversion Date ”). Each Notice of Conversion shall specify the number of shares of Convertible Preferred Stock to be converted, the applicable Conversion Price, the number of shares of Common Stock to be issued, and the number of shares of Convertible Preferred Stock owned subsequent to the conversion at issue. The shares of Common Stock shall be deemed to have been issued, and the holder or any other person so designated to be deemed to have become a holder of record of such shares for all purposes, as of the date of delivery to the Company of the Notice of Conversion. To effect conversions of shares of Convertible Preferred Stock, a holder shall not be required to surrender the certificate(s) representing the shares of Convertible Preferred Stock to the Company unless all of the shares of Convertible Preferred Stock represented thereby are so converted, in which case such holder shall deliver the certificate representing such shares of Convertible Preferred Stock promptly following the Conversion Date at issue. Conversions of less than the total amount of shares of Convertible Preferred Stock represented by a certificate held by the holder will have the effect of lowering the outstanding number of Convertible Preferred Stock held by such holder by an amount equal to the number so converted, as if the original stock certificate(s) were cancelled and one or more new stock certificates evidencing the new number of shares of Convertible Preferred Stock were issued; provided , however , that in such cases the holder may request that the Company deliver to the holder a certificate representing such non-converted shares of Convertible Preferred Stock; provided , further , that the failure of the Company to deliver such new certificate shall not affect the rights of the holder to submit a further Notice of Conversion with respect to such Convertible Preferred Stock and, in any such case, the holder shall be deemed to have submitted the original of such new certificate at the time that it submits such further Notice of Conversion. In the case of a dispute between the Company and a holder as to the calculation of the Conversion Price, the total number of shares of Convertible Preferred Stock outstanding or the number of shares of Common Stock issuable upon a conversion, the Company shall issue to such holder the number of shares of Common Stock that are not disputed within the time periods specified below and shall submit the disputed calculations to a certified public accounting firm of national reputation (other than the Company’s regularly retained accountants) within two (2) Trading Days following the Company’s receipt of such holder’s Notice of Conversion. The Company shall cause such accountant to calculate the Conversion Price, the total number of shares of Convertible Preferred Stock outstanding or the number of shares of Common Stock issuable upon conversion as provided herein and to notify the Company and such holder of the results in writing no later than two (2) Trading Days following the day on which such accountant received the disputed calculations (the “ Dispute Procedure ”). Such accountant’s calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such accountant.

(ii) Not later than two (2) Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Company shall deliver, or cause to be delivered, to the converting holder the number of shares of Common Stock being acquired upon the conversion of the Convertible Preferred Stock. If, in the case of any Notice of Conversion, such shares of Common Stock are not delivered to or as directed by the applicable holder by the Share Delivery

 

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Date, the holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such shares of Common Stock, to rescind such conversion, in which event the Company shall promptly return to the holder any original Convertible Preferred Stock certificate delivered to the Company and the holder shall promptly return to the Company the shares of Common Stock issued to such holder pursuant to the rescinded Conversion Notice.

(iii) The Company shall at all times when the Convertible Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Convertible Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Convertible Preferred Stock, the Company shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Convertible Preferred Stock, the Company shall take commercially reasonable efforts to effect any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price, as applicable.

(iv) The Company understands that a delay in the delivery of the shares of Common Stock after the Share Delivery Date could result in economic loss to the holder. As compensation to the holder for such loss, if (i) the Company fails to deliver the number of shares of Common Stock to which the holder is entitled upon the holder’s exercise of the Convertible Preferred Stock within the time periods specified above (or, to the extent shares of Common Stock are subject to a Dispute Procedure, within one (1) Business Day of the Company’s receipt the accountant’s calculation) and (ii) the holder has not exercised its Buy-In rights as provided below respect to such shares, the Company agrees to pay (as liquidated damages and not as a penalty) to the holder for late issuance of the shares of Common Stock upon exercise of the Convertible Preferred Stock the proportionate amount of $100 per Trading Day (increasing to $200 per Trading Day after the tenth (10 th ) Trading Day) after the Share Delivery Date for each $10,000 of shares of Common Stock for which the Convertible Preferred Stock is exercised which are not timely delivered. For purposes of clarification, if the Company is obligated to make payments of liquidated damages pursuant to this Section for late issuance of shares of Common Stock, then it shall not also be obligated to make Buy-In payments as described below with respect to those same shares of Common Stock. The Company shall pay any payments incurred under this Section in immediately available funds upon demand.

(v) In addition to any other rights available to the Holder, if the Company fails for any reason to effect delivery of the shares of Common Stock to the holder by the Share Delivery Date (or, to the extent shares of Common Stock are subject to a Dispute Procedure, within one (1) Business Day of the Company’s receipt of the accountant’s calculation) and if after such date the holder is required by its broker to purchase (in an open market transaction or otherwise) or the holder or its brokerage firm otherwise purchases, shares

 

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of Common Stock to deliver in satisfaction of a sale by the holder of the Common Stock which the holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the holder the amount, if any, by which (x) the holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased, minus any amounts paid to the holder by the Company as liquidated damages as described in Section 5(b)(iv) above, exceeds (y) the amount obtained by multiplying (1) the number of shares of Common Stock that the Company was required to deliver to the holder in connection with the conversion at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the holder, either reinstate the portion of the Convertible Preferred Stock and equivalent number of shares of Common Stock for which such conversion was not honored (in which case such conversion shall be deemed rescinded) or deliver to the holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the holder $1,000, assuming no liquidated damages. The holder shall provide the Company written notice indicating the amounts payable to the holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of Convertible Preferred Stock as required pursuant to the terms hereof.

(vi) All shares of Convertible Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion and payment of any dividends declared but unpaid on the Convertible Preferred Stock. Any shares of Convertible Preferred Stock so converted shall be retired and canceled and shall not be reissued, and the Company (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of Convertible Preferred Stock accordingly.

(vii) The Company shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Convertible Preferred Stock pursuant to this Section 5 . The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Convertible Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

 

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(d) Adjustment for Stock Splits and Combinations . If the Company shall at any time or from time to time after the Issue Date effect a subdivision of the outstanding shares of Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common stock issuable on conversion of each share of shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Company shall at any time or from time to time after the Issue date combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

(e) Adjustment for Certain Dividends and Distributions . In the event the Company at any time or from time to time after the Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price, as applicable, then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided , however , that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided further , however , that no such adjustment shall be made if the holders of Convertible Preferred Stock simultaneously receive (i) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Convertible Preferred Stock had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of shares of Convertible Preferred Stock which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

 

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(f) Adjustment for Reclassification, Exchange, or Substitution . If the Common Stock issuable upon the conversion of the Convertible Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each such share of Convertible Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable, upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Convertible Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

(g) Adjustment for Merger or Reorganization, etc . If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock (but not the Convertible Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by paragraphs (d) , (e)  or (f)  of this Section 5 ), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Convertible Preferred Stock shall be convertible into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Company issuable upon conversion of one share of Convertible Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 5 with respect to the rights and interests thereafter of the holders of the Convertible Preferred Stock to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Conversion Price, as applicable) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Convertible Preferred Stock.

(h) Certificate as to Adjustments . Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 5 , the Company at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Convertible Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Convertible Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as reasonably practicable after the written request at any time of any holder of Convertible Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Convertible Preferred Stock.

 

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(i) Notice of Record Date . In the event:

 

  (i) that the Company declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the Company;

 

  (ii) that the Company subdivides or combines its outstanding shares of Common Stock;

 

  (iii) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution on the Common Stock), or of any consolidation or merger of the Company into or with another Person, or a Deemed Liquidation Event; or

 

  (iv) of a Liquidation Event;

then the Company shall cause to be filed at its principal office or at the office of the transfer agent of the Convertible Preferred Stock, and shall cause to be mailed to the holders of the Convertible Preferred Stock at their last addresses as shown on the records of the Company or such transfer agent, at least ten days prior to the date specified in (A) below or twenty days before the date specified in (B) below, a notice stating

 

  (A) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or

 

  (B) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up.

(j) Beneficial Ownership Limitation .

(i) The Company may not issue to a holder, or group of affiliated holders, of shares of Convertible Preferred Stock, upon conversion of such Convertible Preferred Stock, a number of shares of Common Stock that would cause such holder, or group of affiliated holders, to beneficially own, in the aggregate, a number of shares of the Company’s capital stock that represents in excess of 19.99% of the Company’s voting power, unless (x) the Company obtains the approval of its stockholders as required by the applicable rules of the relevant Trading Market for issuances of shares of Common Stock in excess of such amount or (y) the Company is not subject to rules of the relevant Trading Market limiting issuances of shares of Common Stock in excess of such amount.

 

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(ii) Notwithstanding anything to the contrary herein, upon the written election of a holder of shares of Convertible Preferred Stock, no such holder of Convertible Preferred Stock shall be entitled to effect a conversion of any portion of its shares of Convertible Preferred Stock, to vote in its capacity as a holder of shares of Convertible Preferred Stock with respect to matters submitted to holders of the Common Stock or take delivery of shares of Common Stock upon conversion of such shares of Convertible Preferred Stock, in each case, to the extent that, after giving effect to such conversion, action or delivery, as applicable, such holder, together with all other Attribution Parties (as defined below), collectively would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (such percentage, subject to such modifications in accordance with, and subject to the limitations set forth in, this Section 5(j)(ii) , the “ Maximum Percentage ”). For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such holder and the other Attribution Parties shall include the number of shares of Common Stock held by the holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of such shares of Convertible Preferred Stock with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unconverted portion of such shares of Convertible Preferred Stock beneficially owned by such holder or any other Attribution Party and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 5(j)(ii) . For purposes of determining the number of shares of Common Stock the holder may acquire upon the conversion of shares of its Convertible Preferred Stock without exceeding the Maximum Percentage, such holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other written notice by the Company or the transfer agent setting forth the number of shares of Common Stock outstanding (the “ Reported Outstanding Share Number ”). If the Company receives a Conversion Notice from a holder of Convertible Preferred Stock at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify such holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such holder’s beneficial ownership, as determined pursuant to this Section 5(j)(ii) , to exceed the Maximum Percentage, such holder must notify the Company of a reduced number of shares of Convertible Preferred Stock to be converted pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of a holder of Convertible Preferred Stock, where such request indicates that it is being made pursuant to this Certificate of Designation, the Company shall within two (2) business days confirm orally and in writing or by electronic mail to such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company by such holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon the conversion of any of such holder’s shares of Convertible Preferred Stock results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock, the number of shares so issued by which such holder’s and

 

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the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “ Excess Shares ”) shall be deemed null and void and shall be cancelled ab initio , and such holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void and/or any other shares of Convertible Preferred Stock have been purported to be converted or mandatorily converted in excess of the limitations set forth in this Section 5(j)(ii) , the Company shall return to the Holder the number of shares of Convertible Preferred Stock corresponding to such excess.

Upon delivery of a written notice to the Company, a holder of Convertible Preferred Stock may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage that is not in excess of 19.99% (except that such increased percentage may exceed 19.99% in the event that (x) the Company obtains the approval of its stockholders as required by the applicable rules of the relevant Trading Market for issuances of shares of Common Stock in excess of such amount or (y) the Company is not subject to rules of the relevant Trading Market limiting issuances of shares of Common Stock in excess of such amount) as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to such holder of shares of Convertible Preferred Stock and the other Attribution Parties and not to any other holder of Convertible Preferred Stock. For purposes of clarity, the shares of Common Stock underlying such holder’s shares of Convertible Preferred Stock in excess of the Maximum Percentage shall not be deemed to be beneficially owned by such holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(j)(ii) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 5(j)(ii) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation as contained in this paragraph may not be waived and shall apply to a successor holder of the Convertible Preferred Stock.

As used in this Certificate of Designation with respect to any holder of Convertible Preferred Stock, “ Attribution Parties ” means, collectively, the following persons and entities: such holder, any of its Affiliates or principals, any person acting or who could be deemed to be acting as a group together with such holder or any of the foregoing for purposes of Section 13(d) of the Exchange Act, and any other persons whose beneficial ownership of the Common Stock would or could be aggregated with such holder’s and the other Attribution Parties’ for purposes of Section 13(d) of the Exchange Act.

The limitation contained in this Section 5(j)(ii) shall apply to a holder from and after the delivery of such written election to the Company and shall cease to apply thereafter only upon sixty-one (61) days’ written notice from such holder to the Company of an election to increase or decrease or remove such limitation; provided , that such election to be subject to such limitation shall be irrevocable if the holder so electing specifies in writing to the Company that such election is irrevocable. For the avoidance of doubt, the limitation contained in this Section 5(j)(ii) shall not apply to any holder that has not elected in writing to be subject to such limitation.

 

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6. Mandatory Conversion .

(a) Trigger Event . If at any time following the earlier of

(i) the second anniversary of the Issue Date or

(ii) the time at which both a Dosing Event and a Partnership Event have occurred and the certification and public announcement of each has been made pursuant to Section 9 below,

the closing sale price of the Common Stock on the principal Trading Market exceeds two-hundred percent (200%) of the Conversion Price for forty-five (45) out of sixty (60) consecutive Trading Days, then the Company shall have the right to require conversion of the Convertible Preferred Stock, in whole or in part, on a pro rata basis by all holders thereof based on the number of shares of Convertible Preferred Stock then held, at the then effective conversion rate in accordance with Section 5(a)(i) , subject to the limitations set forth in this Section 6 .

(b) Limitations on Mandatory Conversion .

(i) Certain Equity Conditions . The Company shall be prohibited from exercising its right to require conversion pursuant to Section 6(a) , and any such exercise shall be void ab initio , at any time at which there exists an Equity Conditions Failure.

(ii) Effect of Blocker Provisions . To the extent any conversion in accordance with this Section 6 , would (x) cause a holder to beneficially own a number of shares of Common Stock that exceeds the amount that could be issued to such holder pursuant to Section 5(j) or (y) in the reasonable judgment of the applicable holder, result in a violation by such holder of the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended from time to time (an “ HSR Violation ”), then, at the Mandatory Conversion Time (as defined below) (i) only such portion of such holder’s shares of Convertible Preferred Stock that may be converted without exceeding the limitations in Section 5(j) and without resulting in an HSR Violation shall be converted to Common Stock and (ii) the remaining shares of Convertible Preferred Stock that would otherwise have been converted into Common Stock, from the Mandatory Conversion Time forward, shall, in respect of payment of dividends and distribution of assets of the Company upon a Liquidation Event or Deemed Liquidation Event, have only such rights as are applicable to shares of Common Stock and the provisions of Section 7 (other than Section 7(a) ) shall no longer apply; provided , that, for the avoidance of doubt, the other rights applicable to such shares of Convertible Preferred Stock, including the Conversion Rights, shall not be modified.

(c) Procedural Requirements . All holders of record of shares of Convertible Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Convertible Preferred Stock pursuant to this Section 6 . Such notice must include a certification that there does not then exist an Equity Conditions Failure. The Company shall send such notice at least thirty (30) days in advance of the occurrence of the conversion requested pursuant to Section 6(a) (the time of such occurrence, the “ Mandatory Conversion Time ”). Prior to the Mandatory Conversion Time specified in the notice, each holder of shares of Convertible Preferred Stock shall surrender his or its certificate

 

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or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit) to the Company at the place designated in such notice. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form reasonably satisfactory to the Company, duly executed by the registered holder or by his or its attorney duly authorized in writing. All rights with respect to the Convertible Preferred Stock converted pursuant to Section 6(a) , including the rights to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender the certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit) therefor, to receive the items provided for in the next sentence of this Section 6(c) . As soon as practicable after the Mandatory Conversion Time (but in any event within three Trading Days), the Company shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Convertible Preferred Stock converted. Such converted Convertible Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Company may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Convertible Preferred Stock accordingly.

7. Protective Covenants . At any time when shares of Convertible Preferred Stock are outstanding, the Company shall not, either directly or indirectly (including through any subsidiary of the Company) by amendment, merger, consolidation, reclassification, reorganization or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the Required Holders, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act taken or transaction entered into without such consent or vote shall be null and void ab initio , and of no force or effect:

(a) amend, modify or fail to give effect to the rights of the holders of Convertible Preferred Stock;

(b) increase or decrease the number of authorized shares of Convertible Preferred Stock (except as permitted under Section 8(i) hereunder) or issue additional shares of Convertible Preferred Stock;

(c) create or issue any equity securities or securities convertible into equity securities with equal or superior rights, preferences or privileges to those of the Convertible Preferred Stock in respect of (i) payment of dividends, (ii) distribution of assets of the Company upon a Liquidation Event or Deemed Liquidation Event or (iii) rights to vote or appoint directors or other rights relating to control or governance of the Company to which holders of Common Stock are not entitled solely by virtue of their ownership thereof;

 

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(d) other than the issuance of shares of Common Stock on exercise or conversion of securities outstanding on the Issue Date, issue any shares of Common Stock or securities convertible into or exercisable (directly or indirectly) for Common Stock if at such time (or after giving affect to such issuance) the Company does not have sufficient shares of Common Stock available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Convertible Preferred Stock into Common Stock (assuming that accrued and unpaid dividends at such time include all dividends that would have accrued on the Convertible Preferred Stock for a period of five years from the date thereof) and the exercise and conversion of all other securities convertible or exercisable (directly or indirectly) for Common Stock;

(e) declare or pay any dividends or distributions on or make redemptions or repurchases of equity securities, except for repurchases from employees, directors, advisors or consultants upon termination pursuant to contractual call rights;

(f) create any subsidiary that is not 100% owned by the Company or another 100% owned subsidiary of the Company; provided , however , that this restriction shall not apply, in the case of any subsidiary created outside of the United States, solely to the extent that, due to local law or regulatory requirements, the Company is not permitted to legally own such subsidiary; or

(g) enter into any debt or lease transaction, other than working capital loans, equipment leases and other similar transactions, or accounts receivable, in the ordinary course of business, in which the Company (taken together with its subsidiaries) borrows in excess of $10 million at any one time outstanding in the aggregate for all such transactions or otherwise incur any indebtedness or enter into any agreement the terms of which prohibit redemption of the Convertible Preferred Stock.

8. Redemptions .

(a) Seven-Year Redemption . On or at any time after the seventh anniversary of the Issue Date,

(i) if requested by the Required Holders, each holder of Convertible Preferred Stock shall have the right to require the Company to redeem all of such holder’s Convertible Preferred Stock, for cash, at a redemption price per share of Convertible Preferred Stock equal to the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Convertible Preferred Stock that have not previously been added to the Accrued Value.

(ii) the Company shall have the right to redeem, in whole or in part, on a pro rata basis from all holders thereof based on the number of shares of Convertible Preferred Stock then held, the outstanding Convertible Preferred Stock, for cash, at a redemption price per share of the sum of the Accrued Value plus an amount equal to all accrued or declared and unpaid dividends on the Convertible Preferred Stock that have not previously been added to the Accrued Value.

(b) Limitations on Redemption Right . The Company shall be prohibited from exercising its right to redeem Convertible Preferred Stock pursuant to Section 8(a)(ii) , and any such exercise shall be void ab initio , at any time at which there exists an Equity Conditions Failure.

 

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(c) Exercise of Redemption Right .

(i) Any holder of Convertible Preferred Stock may exercise the holder’s redemption right under Section 8(a)(i) by delivering to the Company at its principal office a written notice stating the holder’s intention to exercise the holder’s redemption right and the number of the holder’s shares of Convertible Preferred Stock to be redeemed. The Company shall be obligated to redeem the total number of shares of Convertible Preferred Stock specified in the holder’s redemption notice on or before the earlier of the sixtieth (60 th ) business day following its receipt of the initial redemption request triggering the notice described in Section 8(d) below pursuant to Section 8(a) .

(ii) The Company may exercise its redemption right under Section 8(a)(ii) by delivering to the applicable holder at the address for such holder last shown on the records of the transfer agent therefor (or the records of the Company, if it serves as its own transfer agent) a written notice stating the Company’s intention to exercise its redemption right, the number of the holder’s shares of Convertible Preferred Stock to be redeemed and the time of such redemption, which shall not be sooner than thirty (30) days after the delivery of such notice.

(d) Notice of Redemption . The Company shall provide notice of any redemption requested by the Company under Section 8(a)(ii) , specifying the time and place of redemption and the redemption price, by first class or registered mail, postage prepaid, return receipt requested, to each holder of record of Convertible Preferred Stock at the address for such holder last shown on the records of the transfer agent therefor (or the records of the Company, if it serves as its own transfer agent), not less than fifteen (15) days prior to each redemption date. In the case of redemptions requested by the Company pursuant to Section 8(a)(ii) , such notice must include a certification that there does not then exist an Equity Conditions Failure. In the case of redemptions requested by a holder under Section 8(a)(i) , the Company shall use its commercially reasonable efforts, and shall take all reasonable action necessary, to pay the redemption price as provided in this Section 8 .

(e) Insufficient Funds . If the funds of the Company legally available for redemption by the holder pursuant to Section 8(a)(i) of the Convertible Preferred Stock on any redemption date are insufficient to redeem all shares of the Convertible Preferred Stock being redeemed by the Company on such date, those funds which are legally available will be used first to redeem, on a pro rata basis from the holders thereof based on the number of shares of Convertible Preferred Stock then held, the maximum possible number of shares of the Convertible Preferred Stock being redeemed in accordance with the aggregate redemption proceeds payable with respect to the shares of Convertible Preferred Stock to be redeemed. At any time thereafter when additional funds of the Company become legally available for the redemption of the Convertible Preferred Stock, such funds will be used to redeem the balance of the shares of Convertible Preferred Stock which the Company was theretofore obligated to redeem as provided in the immediately preceding sentence. Any shares of Convertible Preferred Stock which are not redeemed as a result of the circumstances described in this Section 8(e) shall remain outstanding until such shares shall have been redeemed and the redemption price therefor, as applicable, shall have been paid or set aside for payment in full.

 

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(f) Rights Terminated . Upon (i) presentation and surrender of the certificate or certificates representing the shares of Convertible Preferred Stock being redeemed pursuant to this Section 8 and receipt of the redemption price therefor or (ii) irrevocable deposit in trust by the Company for holders of the Convertible Preferred Stock being redeemed pursuant to this Section 8 of an amount in cash equal to the redemption price for the shares of Convertible Preferred Stock being redeemed on any redemption date, each holder of Convertible Preferred Stock will cease to have any rights as a stockholder of the Company by reason of the ownership of such redeemed shares of Convertible Preferred Stock (except for the right to receive the redemption price therefor upon the surrender of the certificate or certificates representing the redeemed shares if such certificate or certificates have not been surrendered), and such redeemed shares of Convertible Preferred Stock will not from and after the date of payment in full of the redemption price therefor be deemed to be outstanding.

(g) Restrictions on Other Payments . After the receipt by the Company of a redemption request pursuant to Section 8(a)(i) , unless and until the full redemption price for the shares of Convertible Preferred Stock to be redeemed on any redemption date has been paid to the holders requesting such redemption, (i) no dividends shall be paid or declared or set aside for payment or other distribution upon any capital stock of the Company and (ii) no shares of capital stock of the Company shall be redeemed, retired, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any such shares) by the Company or any subsidiary (except by conversion into or exchange for shares of Common Stock for which adjustment may be made pursuant to Section 5 above).

(h) Conversion Prior to Redemption . At any time after delivering a request for redemption pursuant to Section 8(a)(i) or the receipt by a holder of a notice of redemption from the Company pursuant to Section 8(a)(ii) and prior to receipt of the redemption price therefor (or, if later, the time of redemption specified in the notice delivered pursuant to Section 8(d) ), such holder shall be permitted to convert any or all of its Convertible Preferred Stock, including any shares subject to a redemption notice, in the manner contemplated by Section 5 .

(i) Reacquired Shares . Any shares of Convertible Preferred Stock converted, redeemed, purchased, or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof, and shall not be reissued and the Company from time to time shall take such action as may be necessary to reduce the authorized Convertible Preferred Stock accordingly.

9. Notice of Adjustment . In the event the Company determines that a Dosing Event or a Participation Event has occurred, the Company shall so certify to the holders thereof in writing in the form attached hereto and as promptly as practicable, but in any event within four (4) business days of such occurrence, issue a public announcement of such event. For purposes of this Section 9 , “ public announcement ” shall mean disclosure in a press release reported by a national news service or in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission.

 

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10. Definitions . The following terms shall have the following respective meanings:

Accrued Value ” means, with respect to each share of Convertible Preferred Stock, the sum, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Convertible Preferred Stock, of (i) the Original Purchase Price plus (ii) on each Quarterly Dividend Date, an additional amount equal to the dollar value of any dividends on a share of Convertible Preferred Stock which have accrued on any dividend payment date and have not been previously added to such Accrued Value.

affiliate ” means, with respect to any Person (as defined herein), any (x) spouse, parent, sibling or descendant of such Person (or a spouse, parent, sibling or descendant of a director, officer, or partner of such Person) and (y) other Persons that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. The term “ control ” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Annual Rate ” means 12.0% per annum, subject to reduction for either or both of the following events:

(a) Upon the occurrence of a Dosing Event following the Issue Date, the Annual Rate shall thereafter be reduced by 400 basis points.

(b) Upon the occurrence of a Partnership Event following the Issue Date, the Annual Rate shall thereafter be reduced by 400 basis points.

In no event shall the Annual Rate be reduced in respect of more than one Dosing Event or more than one Partnership Event.

In no event shall the Annual Rate be lower than 4.0%.

By way of illustration, if neither a Dosing Event nor a Partnership Event occurs, the Annual Rate shall remain at 12.0%; if a Dosing Event occurs at a time when a Partnership Event has not occurred, the Annual Rate shall be 8.0% from and after the Dosing Event; if a Partnership Event occurs at a time when a Dosing Event has not occurred, the Annual Rate shall be 8.0% from and after the Partnership Event; if, after the occurrence of a Dosing Event, a Partnership Event occurs, the Annual Rate shall be 4.0% from and after the Partnership Event; and if, after the occurrence of a Partnership Event, a Dosing Event occurs, the Annual Rate shall be 4.0% from and after the Dosing Event.

beneficial ownership ” shall be calculated in accordance with Section 13(d) of the Exchange Act.

Common Stock ” means the common stock, par value $0.0001 per share, of the Company.

A “ Dosing Event ” shall have occurred (1) at the time that the Company first administers, after the Issue Date, a dose of a pharmaceutical product candidate (which such product candidate shall be one of the following candidates, or a variation thereof: DCR- PHXC, DCR-PCSK9 or

 

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the “undisclosed rare diseased program currently in pre-clinical development” (as defined in the letter agreement) (each, a “ Product Candidate ”)) to a human being pursuant an investigational new drug application (“ IND ”) filed by the Company with the United States Food and Drug Administration; or (2) after the Company has first administered, after the Issue Date, a dose of a Product Candidate to a human being pursuant to a clinical trial authorization with the Medicine and Healthcare Products Regulatory Agency in the European Union and an IND relating to such Product Candidate has become effective.

Equity Conditions ” means: (i) the Company shall not be in breach of any of its obligations in any material respect under this Certificate of Designation, the Redeemable Convertible Preferred Stock Purchase Agreement dated as of March 30, 2017 (the “ Purchase Agreement ”) or the Registration Rights Agreement dated as of             , 2017; and (ii) all shares of Common Stock into which the Convertible Preferred Stock is convertible shall, upon issuance, be freely tradable by the holder under an effective registration statement filed by the Company pursuant to the Securities Act of 1933, amended, or Rule 144 promulgated thereunder without any volume or manner of sale limitations applicable to “affiliates,” as defined therein. For purposes of part (i)  of this definition, the Company shall be deemed to be in breach of its obligations if the Common Stock issuable on conversion of the Convertible Preferred Stock is not then listed for trading on a Trading Market or if the Company has received a final notice of de-listing from a Trading Market.

Equity Conditions Failure ” means that on any applicable date of determination, any of the Equity Conditions have not been satisfied or any of the Equity Conditions would not reasonably be expected to be satisfied in the foreseeable future.

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Issue Date ” means, with respect to each share of the Convertible Preferred Stock, the date on which such share of Convertible Preferred Stock was issued.

Junior Stock ” means each class or series of capital stock of the Company created after the Issue Date that does not expressly rank pari passu with or senior to the shares of Convertible Preferred Stock as to payment of dividends and to distribution of assets of the Company upon a Liquidation Event or Deemed Liquidation Event.

letter agreement ” means the letter agreement, dated March 30, 2017, among the Company and the investors named in the Purchase Agreement.

Original Purchase Price ” means $100.00 per share of Convertible Preferred Stock.

A “ Partnership Event ” shall have occurred at the time the Company executes its first binding partnership or license agreement after the Issue Date with a “major” (as defined in the letter agreement) company in the pharmaceutical or biotechnology industry (the “ Industry Partner ”) relating to product candidates of the Company other than DCR- PHXC, DCR-PCSK9 or the “undisclosed rare disease program currently in pre-clinical development” (as defined in the letter agreement) pursuant to which (i) the Company has received a cash payment from the Industry Partner in at least a “minimum amount” (as defined in the letter agreement); and (ii) the

 

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Industry Partner agrees to make one or more milestone payments to the Company due in connection with the filing of an IND or CTA, initiation of a clinical trial, or other milestone payment and the payment of a commercial sales-based royalty to the Company that, in the case of each such milestone payment and sales-based royalty, in the good faith judgment of the Board of Directors, is not inconsistent with then-current norms in the biotechnology industry with respect to programs partnered at a comparable stage of development. Notwithstanding the foregoing, the upfront cash payment in subsection (i) above shall not be deemed satisfied to the extent such payment includes a clawback or similar right to recoupment; provided , however , that to the extent any associated claw-backs expire or are no longer in effect, subsection (i) of the above shall have been deemed to have been satisfied at the time of such expiration.

Person ” means, without limitation, an individual, a partnership, a corporation, an association, a joint stock corporation, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental authority.

Quarterly Dividend Date ” shall mean March 31, June 30, September 30 and December 31 of each year.

Required Holders ” means holders of a majority of the then outstanding shares of Convertible Preferred Stock.

Trading Day ” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market or (b) if the Common Stock is not then listed or quoted and traded on any Trading Market, then a day on which trading occurs on the Nasdaq Global Market (or any successor thereto).

Trading Market ” means the following market(s) or exchange(s) on which the Common Stock is listed or quoted for trading on the date in question (as applicable): the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the NYSE MKT or any successor markets thereto.

[ Remainder of Page Intentionally Left Blank ]

 

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IN WITNESS WHEREOF, this Certificate of Designation has been signed on behalf of the Company by its President and Chief Executive Officer as of             , 2017.

 

DICERNA PHARMACEUTICALS, INC.
By:  

 

Name:   Douglas M. Fambrough, III
Title:   President, Chief Executive Officer

[Convertible Preferred Stock Certificate of Designation]


NOTICE OF ADJUSTMENT

Dated: __________________

The undersigned, on behalf of Dicerna Pharmaceuticals, Inc., hereby certifies to each holder of Convertible Preferred Stock that on [Insert Date] the following event has occurred (check one):

____ Dosing Event

____ Partnership Event

Following such occurrence, the Annual Rate is equal to:         %.

The Company hereby undertakes to provide reasonable details and supporting documentation regarding the subject matter of this Notice to each holder upon request.

 

DICERNA PHARMACEUTICALS, INC.
By:  

 

Name:  
Title:  

Exhibit 4.1

See Restrictive Legends on Reverse Side of Certificate

Incorporated Under the Laws of the

State of Delaware

 

**P-            **

             **        **  

D ICERNA P HARMACEUTICALS , I NC .

Redeemable Convertible Preferred Stock

THIS CERTIFIES THAT                      is the owner of                                  (               ) shares of the REDEEMABLE CONVERTIBLE PREFERRED STOCK of

D ICERNA P HARMACEUTICALS , I NC .

transferable only on the records of the corporation upon surrender of this certificate, properly endorsed or assigned.

This certificate and the shares it represents are subject to the provisions of the Certificate of Incorporation and the Bylaws of the corporation, and any amendments thereto, as well as the restrictive legends on the back of this certificate, to all of which the holder of this certificate, by acceptance hereof, assents. Upon request, stockholders may obtain free of charge from the corporation’s principal office a statement describing the preferences, limitations and relative rights granted to or imposed upon each class or series of shares or upon the holders of such shares.

IN WITNESS WHEREOF, the said corporation has caused this certificate to be signed by its duly authorized officers and its corporate seal to be hereunto affixed this          day of                 ,                 .

 

 

    

 

Secretary      Chief Executive Officer


FOR VALUE RECEIVED, the undersigned,                      , hereby sell(s), assign(s) and transfer(s) unto                 ,                     Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint                     Attorney to transfer the said Shares on the books of the within named Corporation with full power of substitution in the premises.

Dated:                                 

 

In the Presence Of:                                                                                                        

 

   (Witness)    (Stockholder)

NOTICE: The signature of this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatsoever.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.

Exhibit 10.1

EXECUTION VERSION

 

 

REDEEMABLE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

AMONG

DICERNA PHARMACEUTICALS, INC.

AND

THE INVESTORS NAMED HEREIN

DATED AS OF MARCH 30, 2017

 

 


This REDEEMABLE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into this 30 th day of March, 2017 by and among Dicerna Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”), and the Persons named on the signature pages hereto under the heading “Investors” (the “ Investors ”). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 9 hereof.

BACKGROUND

A. The Company has authorized the issuance and sale of 700,000 shares of its Redeemable Convertible Preferred Stock, par value $0.0001 per share (“ Redeemable Convertible Preferred Stock ”), which will be convertible into shares of the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”), and which will have the rights, preferences and privileges set forth in the form of Certificate of Designation attached hereto as Exhibit A (the “ Certificate of Designation ”). The shares of Common Stock into which the Redeemable Convertible Preferred Stock is convertible are sometimes referred to herein as the “ Conversion Shares ” and the shares of Redeemable Convertible Preferred Stock and the Conversion Shares are sometimes referred to herein collectively as the “ Securities .”

B. The Company desires to issue and to sell to the Investors, and the Investors desire to purchase from the Company, the shares of Redeemable Convertible Preferred Stock set forth on Schedule I attached hereto in the column “Shares Purchased,” all in accordance with the terms and provisions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto, intending to be bound, hereby agree as follows:

1. Sale and Purchase of the Redeemable Convertible Preferred Stock . Upon the terms and subject to the conditions herein contained, the Company agrees to sell to the Investors, and each Investor severally and not jointly agrees to purchase from the Company, at the Closing, the number of shares of Redeemable Convertible Preferred Stock set forth in the column “Shares Purchased” opposite such Investor’s name on Schedule I attached hereto, for a purchase price per share equal to $100.00 (the “ Purchase Price ”), which shall be paid in cash, as set forth in the column “Consideration” opposite such Investor’s name on Schedule I attached hereto.

2. Closing; Payment of Purchase Price; Use of Proceeds .

2.1. Closing . The closing (the “ Closing ”) with respect to the transaction contemplated in Section 1 hereof shall take place at the offices of Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199 at 10:00 a.m. Eastern Time on April 11, 2017, or at such other time and place as the Company and the Investors may agree (the “ Closing Date ”). At the Closing, the Company shall deliver to each Investor a certificate representing the Redeemable Convertible Preferred Stock which such Investor is purchasing at the Closing as set forth on Schedule I attached hereto, registered in the name of such Investor, against delivery to the Company by such Investor of a wire transfer in the amount of the Purchase Price therefor.

 

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2.2. Use of Proceeds . The Company shall use the proceeds from the sale of Redeemable Convertible Preferred Stock hereunder for general corporate purposes, including the continued development of the Company’s proprietary pipeline of product candidates through preclinical and into clinical development.

3. Representations and Warranties of the Investors . Each Investor, severally and not jointly, hereby represents and warrants to the Company as follows:

3.1. Organization . Such Investor is duly formed or organized, validly existing and in good standing under the laws of its jurisdiction of organization or formation, and has all requisite corporate, limited liability company, partnership or trust (as the case may be) power and authority to enter into the Transaction Documents to which it is a party and perform its obligations thereunder.

3.2. Authorization; Enforceability . Such Investor has full right, power, authority and capacity to enter into each of the Transaction Documents to which it is a party and to consummate the transactions contemplated by each such Transaction Document. The execution, delivery and performance of each of the Transaction Documents to which it is a party has been duly authorized by all necessary action on the part of such Investor. This Agreement has been duly executed and delivered by such Investor, and the other Transaction Documents and instruments referred to herein to which it is a party will be duly executed and delivered by such Investor, and each such agreement constitutes or will constitute a valid and binding obligation of such Investor enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general equitable principles.

3.3. Brokers . There is no investment banker, broker, finder, financial advisor or other person that has been retained by or is authorized to act on behalf of such Investor and who is entitled to any fee or commission for which the Company will be liable in connection with the transactions contemplated by this Agreement.

3.4. Investment Representations and Warranties . Such Investor understands that neither the offer and sale of Redeemable Convertible Preferred Stock by the Company to the Investors as contemplated hereby nor the conversion of the Redeemable Convertible Preferred Stock into Conversion Shares has been, nor will be, registered under the Securities Act and each are being made in reliance upon federal and state exemptions for transactions not involving a public offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of such Investor’s representations as expressed herein.

3.5. Acquisition for Own Account . Such Investor is acquiring the Securities for its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act.

 

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3.6. Ability to Protect Its Own Interests and Bear Economic Risks . Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

3.7. Purchaser Status . Such Investor is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act. Such Investor is not party to any voting agreements or similar arrangements with respect to the Securities. Such Investor is not a member of a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, voting or disposing of the Securities.

3.8. Access to Information . Such Investor has been given access to all Company documents, records and other information, and has had adequate opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents, accountants, and representatives concerning the Company’s business, operations, financial condition, assets, liabilities and all other matters relevant to its investment in the Securities. The representations of such Investor contained in this Section 3.8 shall not affect the ability of such Investor to rely on the representations and warranties made by the Company pursuant to Section 4 of this Agreement.

3.9. Restricted Securities . Such Investor understands that the Securities will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the Securities Act only in certain limited circumstances.

3.10. General Solicitation . Such Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

3.11. Interested Stockholder . Such Investor is not an “interested stockholder” (as defined in Section 203(c)(5) of the General Corporation Law of the State of Delaware) of the Company.

4. Representations and Warranties by the Company . The Company represents and warrants to the Investors that the statements contained in this Section 4 are complete and accurate as of the date of this Agreement.

4.1. Capitalization .

(a) As of the date hereof, and after giving effect to the filing of the Certificate of Designation, the authorized capital stock of the Company consists of (i) 150,000,000 shares of Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), of which 700,000 shares are designated Redeemable Convertible Preferred Stock. As of the date hereof, (A) 20,794,193 shares of Common Stock are issued and outstanding; (B) no shares of Common Stock are held

 

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in the treasury of the Company; (C) no shares of Preferred Stock are issued or outstanding; (D) an aggregate of 736,467 shares of Common Stock are reserved for future issuance under the Company’s 2014 Performance Incentive Plan and 2016 Inducement Plan; (E) 6,055,178 shares of Common Stock are subject to outstanding options to acquire shares of Common Stock (which outstanding options have a weighted average exercise price of $9.55 per share); (F) 10,000 shares of unvested restricted Common Stock are outstanding; and (G) 87,901 shares of Common Stock underlie outstanding warrants to purchase shares of Common Stock. As of the date hereof, and after giving effect to the filing of the Certificate of Designation, the Company has no other shares of capital stock, authorized, issued or outstanding. A capitalization table presenting the capitalization of the Company after giving effect to the filing of the Certificate of Designation and the Closing (but prior to giving effect to the conversion of the Redeemable Convertible Preferred Stock into Common Stock) is delivered to the Investors on even date herewith.

(b) All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance with all federal and state securities laws.

(c) Except as set forth in the SEC Reports, no Person is entitled to pre-emptive rights with respect to any securities of the Company. Except as set forth in Section 4.1(a), there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any Subsidiary is or may be obligated to issue any amounts of equity securities of any kind.

(d) The Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof.

(e) Except as set forth in the SEC Reports and, except as may be provided in the Transaction Documents, there are no voting agreements, buy-sell agreements or right of first purchase agreements among the Company and any of the stockholders of the Company relating to the securities of the Company held by them.

(f) The issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors).

(g) The Company does not have outstanding any stockholder rights plans or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

(h) The respective rights, preferences, privileges and restrictions of the Redeemable Convertible Preferred Stock and the Common Stock are as stated in the Certificate of Incorporation and Certificate of Designation.

 

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4.2. Issuance of Securities . The Redeemable Convertible Preferred Stock being purchased by the Investors hereunder has been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable and will be free and clear of any Encumbrances or restrictions on transfer other than restrictions under the Transaction Documents and the Certificate of Incorporation and under applicable state and federal securities laws. The Company has reserved a sufficient number of shares of Common Stock for issuance upon conversion of the Redeemable Convertible Preferred Stock and, upon issuance in accordance with the terms of this Agreement or the Certificate of Designation, such shares of Common Stock will be duly and validly issued, fully paid and nonassessable and will be free and clear of any Encumbrances or restrictions on transfer other than restrictions under the Transaction Documents and the Certificate of Incorporation and under applicable state and federal securities laws. The sale of the Redeemable Convertible Preferred Stock hereunder is not, and the subsequent conversion of the Redeemable Convertible Preferred Stock into Conversion Shares will not be, subject to any preemptive rights, rights of first refusal or other similar rights or any anti-dilution provisions contained in the Certificate of Incorporation, Bylaws or any agreement. Assuming the accuracy of the representations and warranties of each Investor in Section  3 hereof, the Conversion Shares will be issued in compliance with all applicable federal and state securities laws.

4.3. Incorporation and Good Standing of the Company . The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted and as described in the SEC Reports and to enter into and perform its obligations under this Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in the Commonwealth of Massachusetts and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except whether the failure to so qualify or be in good standing would not have a Material Adverse Effect.

4.4. Subsidiaries . The SEC Reports set forth a list of each direct and indirect Subsidiary of the Company, including its name and jurisdiction of incorporation or formation. Each Subsidiary has been duly incorporated or organized, as the case may be, and is validly existing as a corporation, partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority (corporate or other) to own, lease and operate its properties and to conduct its business as presently conducted. Each Subsidiary is duly qualified as a foreign corporation, partnership or limited liability company, as applicable, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not have a Material Adverse Effect. All of the issued and outstanding capital stock or other equity or ownership interests of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company, directly or through subsidiaries, free and clear of any Encumbrances or preemptive and similar rights to subscribe for or purchase securities.

 

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4.5. Consents . The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than (a) as required pursuant to the Hart–Scott–Rodino Antitrust Improvements Act of 1976, (b) the filing of the Certificate of Designation with the Secretary of State of the State of Delaware, (c) notification to any Trading Market on which any of the securities of the Company are listed or designated in connection with the issuance and sale of the Redeemable Convertible Preferred Stock hereunder and the Conversion Shares issuable upon conversion of the Redeemable Convertible Preferred Stock, (d) the filings required to comply with the Company’s registration obligations under the Registration Rights Agreement and (e) compliance with applicable U.S. federal and state securities laws, which compliance will have occurred within the appropriate time periods.

4.6. Authorization; Enforcement .

(a) The Company has all requisite corporate power and has taken all necessary corporate action required for (a) the due authorization, execution, delivery and performance by the Company of each of the Transaction Documents, (b) the authorization of the performance of all obligations of the Company under each of the Transaction Documents, (c) the authorization, issuance (or reservation for issuance) and delivery of the Securities and (d) the adoption and filing of the Certificate of Designation and performance of its obligations thereunder. No action on the part of the stockholders of the Company is required in connection with the transactions contemplated by the Transaction Documents. This Agreement has been duly executed and delivered by the Company, and the other Transaction Documents and instruments referred to herein to which it is a party will be duly executed and delivered by the Company, and each such agreement constitutes or will constitute a valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general equitable principles.

(b) On or prior to the date of this Agreement, the Board of Directors of the Company (the “ Board ”) has duly adopted resolutions, among other things, (i) authorizing and approving each of the Transaction Documents and the transactions contemplated thereby and (ii) adopting the Certificate of Designation.

4.7. No Conflicts . The Company is not in violation of its Certificate of Incorporation or Bylaws and the execution, delivery and performance of and compliance with each of the Transaction Documents, the filing of the Certificate of Designation and the consummation of the transactions contemplated by each of the Transaction Documents (including, without limitation, the issuance and sale of the Redeemable Convertible Preferred Stock and the conversion of the Redeemable Convertible Preferred Stock into Conversion Shares) will not (a) result in a violation of the Certificate of Incorporation or Bylaws or the certificates of formation, operating agreements, certificates of incorporation or bylaws of any Subsidiary, (b) conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a

 

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default) under, or give rise to any right of termination, acceleration or cancellation under, any material agreement, lease, mortgage, license, indenture, instrument or other contract to which the Company or any Subsidiary is a party, (c) result in a material violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected, (d) result in a material violation of any rule or regulation of FINRA or any Trading Markets or (e) result in the creation of any Encumbrance upon any of the Company’s or any Subsidiary’s assets.

4.8. Material Contracts . Each Material Contract of the Company is in the SEC Reports. Each Material Contract is the legal, valid and binding obligation of the Company enforceable against the Company and, to the knowledge of the Company, any other party thereto, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and by general equitable principles. There has not occurred any breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any Person, or any combination thereof, would constitute a breach, violation or default by the Company under any such Material Contract or, to the knowledge of the Company, by any other Person to any such Material Contract, except for such violations or defaults that would not have a Material Adverse Effect. The Company has not been notified that any party to any Material Contract intends to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the transactions contemplated hereby or otherwise.

4.9. Voting Rights . Other than as provided by the Transaction Documents or any agreement or other document listed as an exhibit to an SEC Report, there are no provisions in the Certificate of Incorporation, Bylaws or any instrument or contract to which the Company or any Subsidiary is a party which (a) may affect or restrict the voting rights of the Investors with respect to the Securities in their capacity as stockholders of the Company, (b) may adversely affect the Company’s or the Investors’ right or ability to consummate the transactions contemplated by, or comply with the terms of, the Transaction Documents, (c) require the vote of more than a majority of the Company’s issued and outstanding Common Stock to take or prevent any corporate action, other than those matters requiring a different vote under Delaware law or (d) entitle any party to nominate or elect any director of the Company or require any of the Company’s stockholders to vote for any such nominee or other person as a director of the Company.

4.10. No Integrated Offering . Neither the Company, nor any of its Affiliates or any other Person acting on the Company’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising with respect to the Securities nor have any of such Persons made any offers or sales of any security of the Company or its Affiliates or solicited any offers to buy any security of the Company or its Affiliates under circumstances that would require registration of the Securities under the Securities Act or cause this offering of Securities to be integrated with any prior offering of securities of the Company for purposes of the Securities Act or any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated, nor will the Company take any action or steps that would cause the offering or issuance of the Securities to be integrated with other offerings.

 

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4.11. Offering; Exemption . Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3 of this Agreement, no registration under the Securities Act or any applicable state securities law is required for the offer and sale of Redeemable Convertible Preferred Stock by the Company to the Investors as contemplated hereby or for the conversion of the Redeemable Convertible Preferred Stock into Conversion Shares.

4.12. SEC Reports; Consolidated Financial Statements .

(a) Except as set forth in the SEC Reports, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2014 (the foregoing materials, including (i) the exhibits thereto and documents incorporated by reference therein and (ii) the draft of the 10-K attached hereto as Exhibit E (the “ Draft 10-K ”), being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied as to form in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, in each case since January 1, 2014, when filed (or, in the case of the Draft 10-K, as of the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. All Material Contracts to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject that are required to be included as part of or specifically identified in the SEC Reports are so included or specifically identified.

(b) The consolidated financial statements of the Company included in the SEC Reports present fairly, in all material respects, the financial position of the Company as of the dates indicated and the results of operations, changes in stockholders’ equity and cash flows for the periods specified. Such consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto and except in the case of unaudited consolidated financial statements, which are subject to normal recurring year-end adjustments and may not contain certain footnotes as permitted by applicable rules of the Commission.

(c) The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) which (a) are designed to ensure that material information relating to the Company, including each consolidated Subsidiary, is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly

 

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during the periods in which the periodic reports required under the Exchange Act are being prepared; (b) have been evaluated by management of the Company for effectiveness as of the end of the Company’s most recent fiscal quarter; and (c) are effective in all material respects to perform the functions for which they were established. Since the end of the Company’s most recent audited fiscal year, there have been no significant deficiencies or material weaknesses in the Company’s internal control over financial reporting (whether or not remediated) and no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

4.13. No Undisclosed Material Liabilities . As of the date of this Agreement, there are no liabilities of the Company, of any kind whatsoever, whether interest-bearing indebtedness or liabilities accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities:

(a) reflected in the consolidated financial statements included in the SEC Reports;

(b) incurred in the ordinary course of business;

(c) created under, or incurred in connection with, the Transaction Documents; or

(d) which would not in the aggregate be material to the Company.

4.14. Litigation . Except as set forth in the SEC Reports, (a) there is no action, suit, proceeding, inquiry or investigation brought by or before any Governmental Entity now pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary, which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect or materially and adversely affect the consummation of the transactions contemplated by the Transaction Documents or the performance by the Company of its obligations thereunder, (b) the aggregate of all pending legal or governmental proceedings to which the Company or any Subsidiary is a party or of which any of their respective properties or assets is the subject, including ordinary routine litigation incidental to the Company’s business, if determined adversely to the Company, would not reasonably be expected to have a Material Adverse Effect and (c) neither the Company nor any Subsidiary is in default with respect to any judgment, order or decree of any Governmental Entity.

4.15. Taxes . The Company and each Subsidiary have filed all necessary federal, foreign, state, local and other tax returns that are required to be filed or have properly requested extensions thereof and have paid all material taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, except as may be being contested in good faith and by appropriate proceedings. The Company has made adequate charges, accruals and reserves in the applicable consolidated financial statements referred to in Section 4.12 hereof in respect of all taxes for all periods as to which the tax liability of the Company or any Subsidiary has not been finally determined.

 

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4.16. Employee Matters .

(a) The Company has listed any “employee benefit plan” (except for personal benefit plans) subject to the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), that it maintains for employees as an exhibit to an SEC Report.

(b) (i) No director or officer or other employee of the Company will become entitled to any retirement, severance or similar benefit or enhanced or accelerated benefit (including any acceleration of vesting) or lapse of repurchase rights or obligations with respect to any employee benefit plan subject to ERISA or other benefit under any compensation plan or arrangement of the Company (each, an “ Employee Benefit Plan ”) solely as a result of the transactions contemplated by this Agreement; and (ii) no payment made or to be made to any current or former employee or director of the Company, or any of its Affiliates by reason of the transactions contemplated hereby (whether alone or in connection with any other event, including, but not limited to, a termination of employment) will constitute an “excess parachute payment” within the meaning of Section 280G of the Code.

(c) No officer or employee of the Company, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and, to the knowledge of the Company, the continued employment of each such officer or employee does not subject the Company or any Subsidiary to any material liability with respect to any of the foregoing matters.

(d) The Company and each Subsidiary are in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws (including, without limitation, common law), judicial decisions, regulations, ordinances, rules, judgments, orders and codes respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, and no work stoppage or labor strike against the Company or any Subsidiary is pending or, to the knowledge of the Company, threatened, nor is the Company or any Subsidiary involved in or, to the knowledge of the Company, threatened with any labor dispute, grievance or litigation relating to labor matters involving any employees of the Company or any Subsidiary, except for any of the foregoing which would not have a Material Adverse Effect. To the Company’s knowledge, there are no suits, actions, disputes, claims (other than routine claims for benefits), investigations or audits pending or, to the knowledge of the Company, threatened in connection with any Employee Benefit Plan.

4.17. Compliance with Laws . Neither the Company nor any Subsidiary (i) is in violation in any material respect of any applicable federal, state, local, foreign or other law, statute, regulation, rule, ordinance, code convention, directive, order, judgment or other legal requirement (collectively, “ Laws ”) of any Governmental Entity or (ii) to the knowledge of the Company, is being investigated with respect to, or has been threatened in writing to be charged with or given notice of any violation in any material respect of, any applicable Law.

 

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4.18. Brokers . There is no investment banker, broker, finder, financial advisor or other person that has been retained by or is authorized to act on behalf of the Company and who is entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

4.19. Environmental Matters . The Company and its Subsidiaries (A) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “ Environmental Laws ”); (B) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their business; and (C) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except in any such case for any such failure to comply, or failure to receive required permits, licenses or approvals, or liability as would not, individually or in the aggregate, have a Material Adverse Effect.

4.20. Intellectual Property Matters . Except as set forth in the SEC Reports, (a) the Company is the sole and exclusive owner of, or has obtained valid and enforceable licenses for, the inventions, patent applications, patents, trademarks, trade names, service names, copyrights, trade secrets, know-how and other intellectual property that is used in connection with, and is material to, the business of the Company and its Subsidiaries as currently conducted or as currently proposed to be conducted (collectively, “ Intellectual Property ”); (b) to the knowledge of the Company, there are no third parties who have rights to any Intellectual Property, except for customary reversionary rights of third-party licensors with respect to Intellectual Property that is exclusively licensed to the Company; (c) to the knowledge of the Company, there is no infringement by third parties of any Intellectual Property; (d) there is no pending or, to the knowledge of the Company, threatened material action, suit, proceeding or claim by others: (i) challenging the Company’s rights in or to any Intellectual Property, and the Company is unaware of any facts that would form a reasonable basis for any such action, suit, proceeding or claim; (ii) challenging the validity, enforceability, ownership, inventorship or scope of any Intellectual Property, and the Company is unaware of any facts that would form a reasonable basis for any such action, suit, proceeding or claim; or (iii) asserting that the Company infringes or otherwise violates, or would, upon the commercialization of any product or service infringe or violate any patent, trademark, trade name, service name, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any facts that would form a reasonable basis for any such action, suit, proceeding or claim; (e) the Company has complied in all material respects with the terms of each material agreement pursuant to which Intellectual Property has been licensed to the Company, and all such agreements are in full force and effect; (f) the product candidates currently under development by the Company fall within the scope of the claims of one or more patents or patent applications owned by, or exclusively licensed to, the Company; (g) all Intellectual Property is in full force and effect, valid, subsisting and enforceable; and (h) inventorship of the patents within the Intellectual Property is properly identified on such patents in all material respects. The Company has taken reasonable and customary measures to maintain and protect, as applicable, the confidentiality of Intellectual Property, including but not limited to, the trade secrets and know-how within the Intellectual

 

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Property. The Company has written agreements with its employees and contractors involved in the creation of Intellectual Property that oblige each employee or contractor, as applicable, to: (i) assign to the Company all Intellectual Property created or provided in the course of their employment or engagement; and (ii) keep Intellectual Property, as applicable, confidential and to safeguard it from unauthorized access, use, copying and disclosure.

4.21. Related-Party Transactions . Except for the transaction contemplated hereby and as set forth in the SEC Reports, there are no business relationships or related-party transactions involving the Company or any Subsidiary or any other person of the type required to be disclosed in the SEC Reports pursuant to Item 404 of Regulation S-K promulgated by the Commission.

4.22. Title to Property and Tangible Assets . Except as set forth in the SEC Reports, the Company and each Subsidiary have good and marketable title to all of the real and tangible personal property and other tangible assets owned by the Company or any such Subsidiary, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims and other defects (“ Liens ”), except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Except as set forth in the SEC Reports , the real property, improvements on real property, equipment and tangible personal property held under lease by the Company or any Subsidiary are held under valid and enforceable leases.

4.23. Absence of Changes . Since December 31, 2016, except as set forth in a subsequent SEC Report filed (or, in the case of the Draft 10-K, attached hereto) prior to the date hereof or as contemplated by the Transaction Documents, or in connection with the filing of the Certificate of Designation, there has not been:

(1) any amendment of any term of any outstanding security of the Company;

(2) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company or any repurchase, redemption or other acquisition by the Company of any outstanding shares of its capital stock;

(3) any transaction or commitment made, or any contract, agreement or settlement entered into, by (or judgment, order or decree affecting) the Company relating to its assets or business (including the acquisition or disposition of any material amount of assets) or any relinquishment by the Company or any Subsidiary of any contract or other right, other than transactions, commitments, contracts, agreements or settlements (excluding settlements of litigation and tax proceedings) in the ordinary course of business, in each case, only if material to the Company and its Subsidiaries taken together as a whole;

 

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(4) any (A) grant of any severance or termination pay to (or amendment to any such existing arrangement with) any director or officer of the Company or any Subsidiary, (B) entering into of any employment, deferred compensation, supplemental retirement or other similar agreement (or any amendment to any such existing agreement) with any director or officer of the Company or any Subsidiary, (C) increase in, or accelerated vesting and/or payment of, benefits under any existing severance or termination pay policies or employment agreements or (D) increase in or enhancement of any rights or features related to compensation, bonus or other benefits payable to directors, officers of the Company or any Subsidiary, in each case, other than in the ordinary course of business consistent with past practice, in each case only if required to be set forth in an SEC Report;

(5) any material tax election made or changed, any audit settled or any amended tax returns filed;

(6) any damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the Company’s or its Subsidiaries’ properties or assets when taken together as a whole;

(7) any sale, assignment or transfer, or any agreement to sell, assign or transfer, any material asset, liability, property, obligation or right of the Company or any Subsidiary to any Person, including, without limitation, the Investors and their Affiliates, in each case, other than in the ordinary course of business;

(8) any material obligation or liability incurred, or any loans or advances made, by the Company or any Subsidiary to any of its or their Affiliates, other than expenses allowable in the ordinary course of business of the Company;

(9) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any material property, rights or assets other than in the ordinary course of business of the Company;

(10) any material waiver of any rights or claims of the Company or any Subsidiary;

(11) any material lien upon, or adversely affecting, any property or other assets of the Company or any Subsidiary;

(12) any material change or amendment to a contract filed as an exhibit to an SEC Report that is material to the Company and each Subsidiary taken together as a whole;

(13) any agreement or commitment by the Company or any Subsidiary to do any of the foregoing; or

 

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(14) any other change, development, occurrence or event that has had or would reasonably be expected to have a Material Adverse Effect.

4.24. Foreign Corrupt Practices Act . Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “ FCPA ”)) or employee from corporate funds; (iii) violated or is in violation of any provision of the FCPA or, to the knowledge of the Company, any applicable non-U.S. anti-bribery statute or regulation; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official, such foreign official or employee; and the Company and its Subsidiaries have conducted their respective businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

4.25. Money Laundering Laws . The operations of the Company and its Subsidiaries are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and to the knowledge of the Company, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

4.26. OFAC . Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or person acting on behalf of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds herefrom, or lend, contribute or otherwise make available such proceeds to any Subsidiary or any joint venture partner or other person or entity, for the purpose of financing the activities of or business with any person, or in any country or territory, that currently is subject to any U.S. sanctions administered by OFAC or in any other manner that will result in a violation by any person (including any person participating in the transaction whether as underwriter, advisor, investor or otherwise) of U.S. sanctions administered by OFAC.

4.27. Regulatory Permits . Except as set forth in the SEC Reports, (a) the Company and each Subsidiary have such permits, licenses, certificates, approvals, clearances, authorizations or amendments thereto (the “ Regulatory Permits ”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business of

 

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the Company as currently conducted and as described in the SEC Reports, including, without limitation, any Investigational New Drug Application (“ IND ”) as required by the United States Food and Drug Administration (“ FDA ”) or authorizations issued by federal, state, local or foreign agencies or bodies engaged in the regulation of pharmaceuticals and biological products such as those being developed by the Company (collectively, “ Regulatory Authorities ”); (b) the Company and each Subsidiary are in compliance in all material respects with the requirements of the Regulatory Permits, and all of the Regulatory Permits are valid and in full force and effect, in each case in all material respects; (c) the Company has not received any notice of proceedings relating to the revocation, termination, modification or impairment of any of the Regulatory Permits; (d) neither the Company nor any Subsidiary has failed to file with the FDA or any other Regulatory Authority any required application, submission, report, document, notice, supplement or amendment, and all such filings were in material compliance with applicable laws when filed and have been supplemented as necessary to remain in material compliance with applicable laws and no material deficiencies have been asserted by the FDA or any other Regulatory Authority with respect to any such filings

4.28. Preclinical and Clinical Data and Regulatory Compliance . The preclinical tests and clinical trials (collectively, “ Studies ”) that are described in, or the results of which are referred to in, the SEC Reports were and, if still pending, are being conducted in all material respects in accordance with the protocols, procedures and controls designed and approved for such Studies and each description of the results of such Studies is accurate and complete in all material respects, and the Company and each Subsidiary have no knowledge of any other studies the results of which are inconsistent with, or otherwise call into question, the results described in the SEC Reports. Except as set forth in the SEC Reports, neither the Company nor any Subsidiary has received any written notice of, or correspondence from, any Regulatory Authority or institutional review board requiring the termination, suspension or material modification of any Studies that are described or referred to in the SEC Reports and the Company and each Subsidiary have operated and currently are in compliance in all material respects with applicable laws, rules, regulations and policies of the Regulatory Authorities, including current Good Laboratory Practices and current Good Clinical Practices.

4.29. Insurance . The Company and each Subsidiary are insured by reputable institutions with policies in such amounts and with such deductibles and covering such risks as the Company reasonably believes are generally deemed adequate and customary for its business including, but not limited to, policies covering real and personal property owned or leased by the Company and each Subsidiary against theft, damage, destruction and acts of vandalism and policies covering the Company and each Subsidiary for product liability claims and clinical trial liability claims. The Company has no reason to believe that it or any Subsidiary will not be able (a) to renew its existing insurance coverage as and when such policies expire or (b) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not have a Material Adverse Effect. To the knowledge of the Company, neither the Company nor any Subsidiary has been denied any insurance coverage which it has sought or for which it has applied, except as would not have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company carries director and officer insurance with customary coverage limits for a Company of its size.

 

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4.30. Investment Company . The Company is not, and will not be, immediately following receipt of payment for the shares of Redeemable Convertible Preferred Stock being purchased pursuant to this Agreement, required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

4.31. Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

4.32. Accountants . Deloitte & Touche LLP, who expressed its opinion with respect to the consolidated financial statements included in the SEC Reports, is (a) an independent registered public accounting firm as required by the Securities Act, the Exchange Act and the rules of the Public Company Accounting Oversight Board (“ PCAOB ”), (b) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X under the Securities Act and (c) a registered public accounting firm as defined by the PCAOB whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

4.33. Application of Takeover Protections . The Company and the Board have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, the Bylaws or the laws of its state of incorporation (including Section 203 of the Delaware General Corporation Law) that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Redeemable Convertible Preferred Stock and the conversion of the Redeemable Convertible Preferred Stock into Conversion Shares.

4.34. No Registration Rights . No Person has the right to (i) prohibit the Company from filing a Registration Statement or (ii) require the Company to register any securities for sale under the Securities Act by reason of the filing of a Registration Statement except in the case of clause (ii) for rights which have been properly satisfied or waived. The granting and performance of the registration rights under the Transaction Documents will not violate or conflict with, or result in a breach of any provision of, or constitute a default under, any agreement, indenture, or instrument to which the Company is a party.

 

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4.35. Disclosure . The representations and warranties contained in this Agreement and the other Transaction Documents and in the certificates and exhibits and schedules delivered to the Investors by the Company pursuant to this Agreement and the other Transaction Documents do not contain any untrue statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under which they were made.

5. Conditions of Parties Obligations .

5.1. Conditions of the Investors Obligations . The obligations of the Investors to purchase the shares of Redeemable Convertible Preferred Stock set forth on Schedule I attached hereto at the Closing are subject to the fulfillment prior to the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Investors in their sole discretion.

(a) Representations and Warranties . The representations and warranties of the Company contained in this Agreement and in any certificate, if any, or other writing, if any, delivered by the Company pursuant hereto shall be true and correct in all material respects on and as of the Closing Date except those representations and warranties qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects, with the same effect as though such representations and warranties had been made on and as of the Closing Date.

(b) Performance . The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with it on or before the Closing.

(c) Certificate of Designation . Prior to the Closing, (i) the Certificate of Designation shall have been filed with the Secretary of State of the State of Delaware, and (ii) the Investors shall have received confirmation from the Secretary of State of the State of Delaware reasonably satisfactory to the Investors that such filing has occurred.

(d) Qualification Under State Securities Laws . All registrations, qualifications, permits and approvals, if any, required to be obtained prior to the Closing under applicable state securities laws shall have been obtained for the lawful execution, delivery and performance of this Agreement or the other Transaction Documents, including, without limitation, the offer and sale of the Securities

(e) Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by (i) the Company and (ii) the Investors.

(f) No Stockholder Approval Required . No approval on the part of the stockholders of the Company shall be required in connection with the execution and delivery by the Company of the Certificate of Designation, this Agreement and the other Transaction Documents and the consummation of the transactions to be performed by the Company contemplated by the Transaction Documents.

 

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(g) Supporting Documents . The Investors at the Closing shall have received the following:

(1) A good standing certificate of the Company and each Subsidiary if good standing certificates are issuable in its jurisdiction;

(2) An opinion from Sidley Austin LLP, counsel to the Company, dated as of the Closing Date, in a form satisfactory to the Investors;

(3) Copies of resolutions of the Board, certified by the Secretary of the Company, authorizing and approving the filing of the Certificate of Designation, the execution, delivery and performance of the Transaction Documents and all other documents and instruments to be delivered pursuant hereto and thereto;

(4) A copy of the Certificate of Incorporation and Bylaws, certified by the Secretary of the Company; and

(5) A certificate of incumbency executed by the Secretary of the Company (A) certifying the names, titles and signatures of the officers authorized to execute the documents referred to in subparagraphs (3) and (4) above and (B) further certifying that the Certificate of Designation delivered to the Investors at the time of the execution of this Agreement has been validly adopted and has not been amended or modified.

(h) No Effect on Nasdaq Listing . The Nasdaq Stock Market shall have confirmed to the Company in writing that its review of the Transaction Documents is complete and shall not have raised objections to the terms thereof.

(i) No Material Adverse Effect . There shall have been no Material Adverse Effect with respect to the Company since the date hereof.

(j) Adoption and Approval of Waiver of Corporate Opportunity . The Board shall adopt and approve the terms of Section  6.10 of this Agreement and the letter agreement attached as Exhibit D .

(k) Compliance Certificate . The Company shall have delivered to the Investors a Compliance Certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date to the effect that the conditions specified in subsections (a), (b), (c), (d), (e), (f), (h), (i) and (j) of this Section 5.1 have been satisfied.

5.2. Conditions of the Company s Obligations . The obligations of the Company under Section 1 hereof are subject to the fulfillment prior to or on the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Company.

 

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(a) Covenants; Representations and Warranties . (i) The Investors at the Closing Date shall have performed in all material respects all of their respective obligations and conditions hereunder required to be performed or complied by them at or prior to the Closing Date and (ii) the representations and warranties of the Investors at the Closing Date contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date as if made at and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date).

(b) Registration Rights Agreement . The Investors shall have executed and delivered the Registration Rights Agreement.

5.3. Conditions of Each Party s Obligations . The respective obligations of each party to consummate the transactions at the Closing contemplated hereunder are subject to the parties being reasonably satisfied as to the absence of (a) litigation challenging or seeking damages in connection with the transactions contemplated by this Agreement or any of the other Transaction Documents, in which there has been issued any order or injunction delaying or preventing the consummation of the transactions contemplated hereby, and (b) any statute, rule, regulation, injunction, order or decree, enacted, enforced, promulgated, entered, issued or deemed applicable to this Agreement or the transactions contemplated hereby by any court, government or governmental authority or agency or legislative body, domestic, foreign or supranational prohibiting or enjoining the transactions contemplated by this Agreement.

6. Covenants .

6.1. Reporting Requirements . As long as an Investor holds Redeemable Convertible Preferred Stock (or underlying Conversion Shares), the Company covenants to timely file (or obtain or avail itself of extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company from and after the date hereof pursuant to the Exchange Act.

6.2. Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

6.3. Securities Laws Disclosure; Publicity . The Company shall, by 5:30 p.m. (New York City time) on the fourth business day immediately following the date hereof, file with the Commission a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated hereby and filing the Transaction Documents as exhibits thereto. The Company and Bain Capital Life Sciences, LP shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Investors shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of an Investor, or without the prior consent of Bain Capital Life Sciences, LP, with respect to any press release of the Company, except if such disclosure is required by law, in which case the disclosing party

 

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shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not include the name of any Investor in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Investor, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement, (B) the Current Report on Form 8-K required by this Section, (C) any filing required by the Commission and (D) the filing of final Transaction Documents (including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (ii) and reasonable opportunity to comment.

6.4. Reservation of Common Stock . As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue all of the shares of Common Stock issuable upon conversion of the Redeemable Convertible Preferred Stock.

6.5. Listing of Common Stock . The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock on a Trading Market. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and to comply in all material respects with the Company’s reporting, filing and other obligations under the rules and listing standards of the Trading Market.

6.6. Filings . The Company shall make all filings with the Commission and its Trading Markets as required by the transactions contemplated hereby. With respect to any conversion from Redeemable Convertible Preferred Stock into Common Stock, the Company and each Investor (i) shall use their respective commercially reasonable efforts to promptly file or cause to be filed, (x) within 10 business days from the date that either the Company or any Investor provides any notice of conversion required pursuant to Section 5 or 6 of the Certificate of Designation (for which within five business days the Investor determines that a filing under the Hart Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and so notifies the Company), all required filings under the HSR Act and, (y) as promptly as reasonably practicable, all required filings under other applicable antitrust laws that the Company or any Investor reasonably determines in good faith to be necessary or appropriate to effect the transactions contemplated by this Agreement including but not limited to, the conversion of Redeemable Preferred Stock into Common Stock, (ii) shall consult and cooperate with each other in the preparation of such filings, and (iii) shall promptly inform the other parties of any material communication received by such party from any Governmental Entity regarding the transactions contemplated by this Agreement and shall enable the other party to participate in any communications and meetings with any Governmental Entity regarding the transactions contemplated by this Agreement unless prohibited by the Governmental Entity. Each of the Company and any Investor that files such notice pursuant to the HSR Act or any other applicable antitrust law in accordance with the preceding sentence acknowledges that no conversion of Redeemable Preferred Common Stock into Common Stock will be consummated until any waiting period prescribed under the HSR Act or any other applicable antitrust law has elapsed.

 

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6.7. Rule 16b-3 Exemption . The Company shall use commercially reasonable efforts in the form of resolutions adopted by the Board in its discretion as may be required to cause the receipt at the Closing of the shares of Redeemable Convertible Preferred Stock, any subsequent conversion thereof and the receipt of any Conversion Shares deliverable upon such conversion, in each case, by each Investor that may from time to time be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

6.8. Board Representation . Immediately following the Closing, the Company covenants and agrees that it will increase the size of its Board to nine directors and take all steps necessary to appoint Adam Koppel. Concurrently with such appointment, the Company and such director shall enter into the Company’s standard form of indemnification agreement attached hereto as Exhibit C and the letter agreement attached hereto as Exhibit D . In addition, the such director shall be entitled to receive from the Company and its Subsidiaries, if applicable, the same insurance coverage in connection with his or her service as a member of the Board or any committee thereof as is provided for each of the other members of the Board or committee, as applicable. Such insurance coverage shall be provided through customary director and officer indemnity insurance on commercially reasonable terms. The Company agrees that it will reimburse such director for reasonable costs and expenses in attending Board meetings in accordance with the Company’s policies.

6.9. Board Observer . The Company covenants and agrees that, in the event that the director referred to in Section 6.8 is not re-elected or otherwise ceases to serve as a director at any time that investment funds advised by Bain Capital Life Sciences, LP (such funds, the “ Bain Investors ”) own at least 25% of the Redeemable Convertible Preferred Stock (or underlying Common Stock) held by them as of the Closing, the Company shall take all necessary action to appoint as an observer to the Board an individual designated by Bain Capital Life Sciences, LP (such individual, the “ Bain Observer ”); provided , however , that the Bain Observer shall agree to hold in confidence and trust all information so provided, and if requested by the Company, shall enter into a non-disclosure agreement in a form mutually acceptable to the Company and the Bain Observer; and provided further , that the Company reserves the right, in its reasonable discretion, to withhold any information and to exclude the Bain Observer from any meeting or portion thereof if access to such information or attendance at such meeting would, in the opinion of the Company’s counsel, be reasonably likely to adversely affect the attorney-client privilege between the Company and its counsel or create an actual conflict of interest, if there is an executive session of the Board, or if the Board determines that the Bain Observer is a competitor of the Company or is employed by a competitor of the Company.

6.10. Waiver of Corporate Opportunity .

(a) To the fullest extent permitted by applicable law, the Company hereby agrees that the Exempted Persons shall not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company or any of its subsidiaries. To the fullest extent permitted by applicable law, the Company, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Company and its subsidiaries in, or in being offered an

 

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opportunity to participate in, business opportunities that are from time to time available to the Exempted Persons, even if the opportunity is one that the Company or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. The Company hereby further agrees that each Exempted Person shall have no duty to communicate or offer such business opportunity to the Company (and that there shall be no restriction on the Exempted Persons using the general knowledge and understanding of the Company and the industry in which it operates that it has gained as an Exempted Person in considering and pursuing such opportunities or in making investment, voting, monitoring, governance or other decisions relating to other entities or securities) and, to the fullest extent permitted by applicable law, shall not be liable to the Company or any of its subsidiaries or stockholders for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Exempted Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Company or its subsidiaries, or uses such knowledge and understanding in the manner described herein. The parties specifically agree that each Exempted Person is an intended third-party beneficiary of this Section 6.10 and is entitled to rely upon and enforce the rights and obligations granted herein. “ Exempted Person ” shall mean the Bain Investors, including Bain Capital Life Sciences Fund, L.P. and BCIP Life Sciences Associates, LP, and all of their respective partners, principals, directors, officers, members, managers, managing directors, operating partners and/or employees, including any of the foregoing who serve as officers or directors of the Company, including the director named in Section 6.8. In addition to and notwithstanding the foregoing, a corporate opportunity shall not be deemed to belong to the Company if it is a business opportunity that the Company is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Company’s business or is of no practical advantage to it or that is one in which the Company has no interest or reasonable expectancy.

(b) The Company hereby covenants and agrees that it shall not take any action, or adopt any resolution, inconsistent with the provisions of this Section 6.10.

6.11. Certain Tax Matters . Unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Internal Revenue Code, the parties covenant and agree that they shall each treat the Redeemable Convertible Preferred Stock as “common stock” under Section 305 of the Code and shall not treat the Redeemable Convertible Preferred Stock as giving rise to any deemed dividends or distributions to the holders of Redeemable Convertible Preferred Stock under Section 305 of the Code.

7. Transfer Restrictions; Restrictive Legend .

7.1. Transfer Restrictions . Each Investor understands that the Company may, as a condition to the transfer of any of the Securities, require that the request for transfer be accompanied by an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed transfer does not result in a violation of the Securities Act, unless such transfer is covered by an effective registration statement or by Rule 144 under the Securities Act; provided ,

 

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however , that an opinion of counsel shall not be required for a transfer by any Investor that is (A) a partnership transferring, for no additional consideration, assets owned by it to its partners or former partners pro rata in accordance with partnership interests, (B) a corporation transferring, for no additional consideration, to a wholly owned subsidiary or a parent corporation that owns all of the capital stock of the Investor, (C) a limited liability company transferring, for no additional consideration, assets owned by it to its members or former members pro rata in accordance with their interest in the limited liability company, (D) an individual transferring, for no additional consideration, to a family member or trust for the benefit of such individual, or (E) transferring its Securities to any Affiliate of the Investor, in the case of an institutional investor, or other Person under common management with the Investor; and provided , further , that the transferee in each case agrees to be subject to the restrictions in this Section 7. It is understood that the certificates evidencing the Securities may bear substantially the following legends:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.”

7.2. Unlegended Certificates . The Company shall be obligated to promptly reissue unlegended certificates upon the request of any holder thereof (x) at such time as the holding period under Rule 144 or another applicable exemption from the registration requirements of the Securities Act has been satisfied or (y) at such time as a registration statement is available for the transfer of the Securities. The Company is entitled to request from any holder requesting unlegended certificates under clause (x) of the foregoing sentence an opinion of counsel reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend.

8. Registration, Transfer and Substitution of Certificates for Convertible Preferred Stock .

8.1. Stock Register; Ownership of Convertible Preferred Stock . The Company will keep at its principal office a register in which the Company will provide for the registration of transfers of the Convertible Preferred Stock. The Company may treat the Person in whose name any of the Convertible Preferred Stock are registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary. All references in this Agreement to a “holder” of any Convertible Preferred Stock shall mean the Person in whose name such Convertible Preferred Stock are at the time registered on such register.

 

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8.2. Replacement of Certificates . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing Convertible Preferred Stock, and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Company or, in the case of any such mutilation, upon surrender of such certificate for cancellation at the office of the Company maintained pursuant to Section 8.1 hereof, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing Convertible Preferred Stock of like tenor.

9. Definitions . Unless the context otherwise requires, the terms defined in this Section 9 shall have the meanings specified for all purposes of this Agreement.

Except as otherwise expressly provided, all accounting terms used in this Agreement, whether or not defined in this Section 9, shall be construed in accordance with GAAP. If and so long as the Company has one or more Subsidiaries, such accounting terms shall be determined on a consolidated basis for the Company and each of its Subsidiaries, and the consolidated financial statements and other financial information to be furnished by the Company pursuant to this Agreement shall be consolidated and presented with consolidating financial statements of the Company and each of its Subsidiaries.

Affiliate ” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act.

Agreement ” has the meaning assigned to it in the introductory paragraph hereof.

Bain Investors ” has the meaning assigned to it in Section 6.9 hereof.

Bain Observer ” has the meaning assigned to it in Section 6.9 hereof.

Board ” has the meaning assigned to it in Section 4.6(b) hereof.

Bylaws ” means the Company’s Amended and Restated Bylaws as in effect as of the date hereof.

Certificate of Designation ” has the meaning assigned to it in the recitals hereof.

Certificate of Incorporation ” means the Company’s Amended and Restated Certificate of Incorporation as in effect as of the date hereof.

Closing ” has the meaning assigned to it in Section 2.1 hereof.

Closing Date ” has the meaning assigned to it in Section 2.1 hereof.

Code ” means the Internal Revenue Code of 1986, as amended.

Commission ” means the Securities and Exchange Commission.

Common Stock ” has the meaning assigned to it in the recitals hereof.

 

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Company ” has the meaning assigned to it in the introductory paragraph hereof.

Conversion Shares ” has the meaning assigned to it the recitals hereof.

Damages ” has the meaning assigned to it in Section 10.2(a) hereof.

Employee Benefit Plan ” has the meaning assigned to it in Section 4.16(b) hereof.

Encumbrances ” means any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or other encumbrance.

Environmental Laws ” has the meaning assigned to it in Section 4.19 hereof.

ERISA ” has the meaning assigned to it in Section 4.16(a) hereof.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Exempted Person ” has the meaning assigned to it in Section 6.10 hereof.

FDA ” has the meaning assigned to it in Section 4.27 hereof.

GAAP ” means U.S. generally accepted accounting principles consistently applied.

Governmental Entity ” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

IND ” has the meaning assigned to it in Section 4.27 hereof.

Intellectual Property ” has the meaning assigned to it in Section 4.20 hereof.

Investor Party ” has the meaning assigned to it in Section 10.2(a) hereof.

knowledge ” of the Company or any similar phrase means the actual knowledge, after due inquiry, of the following persons: Douglas M. Fambrough, III, Jack Green, Barbara Fielman, Bob D. Brown, Jennifer Lockridge, David Miller, Bart Wise and James B. Weissman.

Laws ” has the meaning assigned to it in Section 4.17 hereof.

Material Adverse Effect ” means (i) any material adverse effect on the issuance or validity of the Securities or the transactions contemplated hereby or the enforceability or validity of the Certificate of Designation or on the ability of the Company to perform its obligations under this Agreement and the other Transaction Documents or (ii) any material

 

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adverse effect on the financial condition, properties, assets, liabilities, business or operations of the Company and its Subsidiaries, taken as a whole, except, in the case of (i) or (ii) to the extent such effect results directly from the announcement or the existence of this Agreement or the transactions contemplated hereby.

Material Contract ” means all written and oral contracts, agreements, deeds, mortgages, leases, subleases, licenses, instruments, notes, commitments, commissions, undertakings, arrangements and understandings which are required to be filed as exhibits by the Company with the Commission pursuant to Items 601(b)(4) and 601(b)(10) of Regulation S-K promulgated by the Commission.

PCAOB ” has the meaning assigned to it in Section 4.32 hereof.

Person ” means and includes all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures, limited liability companies and other entities and governments and agencies and political subdivisions.

Purchase Price ” has the meaning assigned to it in Section 1 hereof.

Investors ” has the meaning assigned to it in the introductory paragraph of this Agreement and shall include any Affiliates of the Investors.

Registration Rights Agreement ” means the Registration Rights Agreement in the form attached hereto as Exhibit B .

Regulatory Authorities ” has the meaning assigned to it in Section 4.27 hereof.

Regulatory Permits ” has the meaning assigned to it in Section 4.27 hereof.

Required Investors ” means any Investor which, together with its Affiliates, beneficially owns at least a majority of the Redeemable Convertible Preferred Stock (or underlying Conversion Shares), determined on an as-converted basis without regard to limitations on conversion, then beneficially owned by the Investors.

SEC Reports ” has the meaning assigned to it in Section 4.12(a) hereof.

Securities ” has the meaning assigned to it in the recitals hereof.

Securities Act ” or “ Act ” means the Securities Act of 1933, as amended.

Redeemable Convertible Preferred Stock ” has the meaning assigned to such term in the recitals hereof.

Studies ” has the meaning assigned to such term in Section 4.28 hereof.

 

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Subsidiary ” means any corporation, association trust, limited liability company, partnership, joint venture or other business association or entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such Person.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the NYSE MKT.

Transaction Documents ” means this Agreement, the Registration Rights Agreement and the Certificate of Designation.

10. Survival; Indemnification .

10.1. Survival . The representations, warranties, covenants, indemnities and agreements contained in this Agreement, in the Certificate of Designation and in the other Transaction Documents shall survive Closing of the transactions contemplated by this Agreement.

10.2. Indemnification .

(a) In consideration of each Investor’s execution and delivery of this Agreement and acquiring the Securities hereunder and in addition to all of the Company’s other obligations under the Transaction Documents to which it is a party, subject to the provisions of this Section 10.2, the Company shall indemnify and hold harmless each Investor, each of its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title), each Person, if any, who controls the Investor (within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act), and the respective directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “ Investor Party ”), from and against all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (including all judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation) (collectively, “ Damages ”) that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents to which it is a party, or (b) any action, suit, claim or proceeding (including for these purposes a derivative action brought on behalf of the Company) instituted against such Investor Party arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents; provided ,  however , that (x) the foregoing indemnity shall not apply to any Damages to the extent, but only to the extent, that such Damages resulted directly from a breach of

 

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any of the Investor’s representations, warranties, covenants or agreements contained in this Agreement or the Registration Rights Agreement, and (y) the Company shall not be liable under this Section 10.2 to the extent, but only to the extent, that a court of competent jurisdiction shall have determined by a final judgment (from which no further appeals of right are available) that such Damages directly resulted from any acts or failures to act, undertaken or omitted to be taken by such Investor Party through its fraud, bad faith or willful misconduct.

10.3. Conduct of Indemnification Proceedings .  Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification, and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party;  provided  that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person, unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person, or (c) in the reasonable judgment of any such person, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person), or (d) if such Claim seeks any equitable relief or alleges any legal, regulatory or ethical violations by such person; and  provided ,  further , that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that (i) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation, or (ii) that includes the granting of any equitable relief or the admission by the indemnified party of its officers, directors, managers, partners or Affiliates of any legal, regulatory or ethical violations.

11. Enforcement .

11.1. Cumulative Remedies . None of the rights, powers or remedies conferred upon the Investors on the one hand or the Company on the other hand shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred by this Agreement, any of the other Transaction Documents or the Certificate of Designation or now or hereafter available at law, in equity, by statute or otherwise. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investors and the Company will be entitled to seek specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

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11.2. No Implied Waiver . Except as expressly provided in this Agreement, no course of dealing between the Company and the Investors or any other holder of shares of Redeemable Convertible Preferred Stock and no delay in exercising any such right, power or remedy conferred hereby or by the Certificate of Designation, or by any of the other Transaction Documents or now or hereafter existing at law in equity, by statute or otherwise, shall operate as a waiver of, or otherwise prejudice, any such right, power or remedy.

12. Non-Public Information . The Company covenants and agrees that, following the Closing, neither it nor any other Person acting on its behalf, will provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless (a) a representative or person employed by or otherwise affiliated or associated with such Investor or its affiliate then serves on the Board or (b) prior thereto, such Investor shall have agreed in writing to receive such information. The Company understands and confirms that each Investor shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

13. Miscellaneous .

13.1. Waivers and Amendments . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only in writing executed by the Company and the Required Investors; provided , that such written consent must also be executed by any Investor that is disproportionately and adversely affected. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company. Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or terminated orally or by course of dealing, but only by an instrument in writing.

13.2. Notices . All notices, requests, consents, and other communications under this Agreement shall be in writing Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by facsimile or e-mail or (iii) delivered by overnight courier, in each case, addressed as follows:

If to the Company to:

Dicerna Pharmaceuticals, Inc.

87 Cambridgepark Drive

Cambridge, MA 02140

Attention:     Douglas Fambrough, President and Chief Executive Officer

Facsimile:    (617) 612-6298

E-mail:          dfambrough@dicerna.com

and

 

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Attention:     Jack Green, Chief Financial Officer

Facsimile:    (617) 612-6298

E-mail:         jackgreen@dicerna.com

with a copy (which shall not constitute notice) to:

Sidley Austin LLP

1001 Page Mill Road

Building 1

Palo Alto, CA 94304

Facsimile    (650) 565-6001

Attention:     Sam ZuckerE-mail: szucker@sidley.com

If to any Investor:

To the address set forth on Schedule 1 hereto;

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:     Michael D. Beauvais

Facsimile:    (617) 235-0641

E-mail:         michael.beauvais@ropesgray.com

or at such other address as the Company or such Investor each may specify by written notice to the other parties hereto. Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section 13.2.

13.3. No Waivers . No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

13.4. Successors and Assigns . All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of the Investors and the successors of the Company, whether so expressed or not.

13.5. Headings . The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

 

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13.6. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of law principles.

13.7. Fees and Expenses . The Company agrees to pay, reimburse and hold the Bain Investors harmless from liability for the payment of all out-of-pocket fees and expenses incurred by it in connection with its diligence investigation of the Company, the preparation and negotiation of this Agreement and the consummation of the transactions contemplated hereby, up to $300,000 in the aggregate. An estimate of the fees and expenses of third parties may be paid by checks delivered or wire transfers to such parties at the Closing by the Bain Investors, the amount of such checks or wire transfers being deducted from the aggregate amount to be paid by the Bain Investors at the Closing for the shares of Redeemable Convertible Preferred Stock to be purchased by them hereunder.

13.8. Jurisdiction . Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state court located in the State of New York, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.2 shall be deemed effective service of process on such party.

13.9. Waiver of Jury Trial . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY OTHER AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE. The Company acknowledges that it has been informed by the Investors that the provisions of this Section 13.9 constitute a material inducement upon which the Investors are relying and will rely in entering into this Agreement. Any Investor or the Company may file an original counterpart or a copy of this Section 13.9 with any court as written evidence of the consent of the Investors and the Company to the waiver of the right to trial by jury.

 

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13.10. Counterparts; Effectiveness . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

13.11. Entire Agreement . The Transaction Documents, including the Certificate of Designation, contain the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and such agreements supersede and replace all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and thereof.

13.12. Severability . If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum extent allowable by law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.

13.13. Waiver of Conflicts . Each Investor acknowledges that it (i) has read the Transaction Documents, (ii) has been represented in the preparation, negotiation and execution of the Transaction Documents by legal counsel of its own choice or has voluntarily declined to seek such legal counsel, and (iii) understands the terms and consequences of the Transaction Documents and is fully aware of the legal and binding effect thereof. Each Investor understands that the Company has been represented in the preparation, negotiation and execution of the Transaction Documents by Sidley Austin LLP and that Sidley Austin LLP has not represented any Investor (or any director, employee or stockholder of the Company or any Investor) in the preparation, negotiation and execution of the Restated Charter or any Transaction Agreement. Each party hereto acknowledges that Sidley Austin LLP may have an investment in certain of the Investors or may have in the past performed, and may continue to perform, legal services for certain of the Investors (or Affiliates thereof) in matters unrelated to the transactions contemplated hereby, including the representation of such Investors (or Affiliates thereof) in venture capital financings and other matters. Accordingly, each party hereto hereby (i) acknowledges that it has had an opportunity to ask for, and has obtained, information relevant to such representation, including disclosure of the reasonably foreseeable adverse consequences of such representation, (ii) gives its informed consent to representation by Sidley Austin LLP of certain of the Investors in such unrelated matters and to representation of the Company by Sidley Austin LLP in connection with this Agreement and the transactions contemplated hereby, and (iii) waives any conflict arising out of such representation with respect to the matters contemplated hereby.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Redeemable Convertible Preferred Stock Purchase Agreement to be duly executed as of the day and year first above written.

 

THE COMPANY
DICERNA PHARMACEUTICALS, INC.
By:  

/s/ Douglas M. Fambrough, III

Name:   Douglas M. Fambrough, III
Title:   President, Chief Executive Officer

[Signature Page to Redeemable Convertible Preferred Stock Purchase Agreement]


Investors:     Bain Capital Life Sciences Fund, L.P.
    By: Bain Capital Life Sciences Partners, LP,
    its general partner
   

By: Bain Capital Life Sciences Investors, LLC

its general partner

    By:  

/s/ Jeffrey Schwartz

    Name:   Jeffrey Schwartz
    Title:   Managing Director
    BCIP Life Sciences Associates, LP
    By: Boylston Coinvestors, LLC
    its general partner
    By:  

/s/ Jeffrey Schwartz

    Name:   Jeffrey Schwartz
    Title:   Authorized Signatory
    Cormorant Private Healthcare Fund I, LP
    By: Cormorant Private Healthcare GP, LLC,
    its general partner
    By:  

/s/ Bihua Chen

    Name:   Bihua Chen
    Title:   Managing Member
    Cormorant Global Healthcare Master Fund, LP
    By: Cormorant Global Healthcare GP, LLC,
    its general partner
    By:  

/s/ Bihua Chen

    Name:   Bihua Chen
    Title:   Managing Member
    CRMA SPV, L.P.
    By: Cormorant Asset Management, LLC,
    its Special Limited Partner
    By:  

/s/ Bihua Chen

    Name:   Bihua Chen
    Title:   Managing Member

[Signature Page to Redeemable Convertible Preferred Stock Purchase Agreement]


    Domain Partners VIII, L.P.
    By: One Palmer Square Associates VIII, LLC
    its general partner
    By:  

/s/ Lisa A. Kraeutler

    Name:   Lisa A. Kraeutler
    Title:   Attorney-in-Fact
    DP VIII Associates, L.P.
    By: One Palmer Square Associates VIII, LLC
    its general partner
    By:  

/s/ Lisa A. Kraeutler

    Name:   Lisa A. Kraeutler
    Title:   Attorney-in-Fact
    EcoR1 Capital Fund, L.P.
    By: EcoR1 Capital, LLC,
    its general partner
    By:  

/s/ Oleg Nodelman

    Name:   Oleg Nodelman
    Title:   Manager
    EcoR1 Capital Fund Qualified, L.P.
    By: EcoR1 Capital, LLC,
    its general partner
    By:  

/s/ Oleg Nodelman

    Name:   Oleg Nodelman
    Title:   Manager
    RA Capital Healthcare Fund, L.P.
    By: RA Capital Management, LLC,
    its general partner
    By:  

/s/ Nicholas McGrath

    Name:   Nicholas McGrath
    Title:   Authorized Signatory

[Signature Page to Redeemable Convertible Preferred Stock Purchase Agreement]


Blackwell Partners LLC – Series A
By:  

/s/ Abayomi A. Adigun

Name:   Abayomi A. Adigun
Title:  

Investment Manager

DUMAC, Inc.

Authorized Agent

By:  

/s/ Jannine M. Lall

Name:   Jannine M. Lall
Title:  

Controller

DUMAC, Inc.

Authorized Agent

RTW Master Fund, LTD
By:  

/s/ Roderick Wong

Name:   Roderick Wong
Title:   Director
RTW Innovation Master Fund, LTD
By:  

/s/ Roderick Wong

Name:   Roderick Wong
Title:   Director
Skyline Venture Partners V, L.P.
By: Skyline Venture Management V, LLC,
its general partner
By:  

/s/ John G. Freund

  John G. Freund, Managing Director

[Signature Page to Redeemable Convertible Preferred Stock Purchase Agreement]


SCHEDULE I

 

Investor

   Shares Purchased      Consideration  

Bain Capital Life Sciences Fund, L.P.

200 Clarendon Street, Boston, MA 02116

     226,130      $ 22,613,000  

BCIP Life Sciences Associates, LP

200 Clarendon Street, Boston, MA 02116

     23,870      $ 2,387,000  

Blackwell Partners LLC – Series A

280 S. Mangum Street, Suite 210, Durham, NC 27701

     14,076      $ 1,407,600  

Cormorant Private Healthcare Fund I, LP

200 Clarendon Street, 52 nd Floor, Boston, MA 02116

     66,500      $ 6,650,000  

Cormorant Global Healthcare Master Fund, LP

200 Clarendon Street, 52 nd Floor, Boston, MA 02116

     15,800      $ 1,580,000  

CRMA SPV, L.P.

PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

     3,200      $ 320,000  

Domain Partners VIII, L.P.

One Palmer Square, Suite 515, Princeton, NJ 08542

     49,632      $ 4,963,200  

DP VIII Associates, L.P.

One Palmer Square, Suite 515, Princeton, NJ 08542

     368      $ 36,800  

EcoR1 Capital Fund, L.P.

     24,129      $ 2,412,900  

EcoR1 Capital Fund Qualified, L.P.

     78,371      $ 7,837,100  

RA Capital Healthcare Fund, L.P.

20 Park Plaza, Suite 1200, Boston, MA 02116

     62,424      $ 6,242,400  

RTW Innovation Master Fund, LTD

250 West 55 th Street, 16 th Floor, Suite A, New York, NY 10019

     2,920      $ 292,000  

RTW Master Fund, LTD

250 West 55 th Street, 16 th Floor, Suite A, New York, NY 10019

     82,580      $ 8,258,000  

Skyline Venture Partners V, L.P.

525 University Avenue, Suite 1350, Palo Alto, CA 94301

     50,000      $ 5,000,000  


EXHIBIT A

CERTIFICATE OF DESIGNATION


EXHIBIT B

REGISTRATION RIGHTS AGREEMENT


EXHIBIT C

FORM OF DIRECTOR INDEMNIFICATION AGREEMENT


EXHIBIT D

FORM OF LETTER AGREEMENT


EXHIBIT E

DRAFT 10-K

Exhibit 10.2

 

 

 

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

DICERNA PHARMACEUTICALS, INC.

AND

THE INVESTORS NAMED HEREIN

DATED AS OF                , 2017

 

 

 


This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, the “ Agreement ”), dated as of                , 2017 is made by and among:

i. Dicerna Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”); and

ii. each Person executing this Agreement and listed as an “Investor” on the signature pages hereto (collectively, together with their Permitted Transferees that become party hereto, the “ Investor s ”).

RECITALS

WHEREAS, the Company and the Investors entered into that certain Redeemable Convertible Preferred Stock Purchase Agreement, dated as of March 30, 2017 (the “ Purchase Agreement ”), pursuant to which the Company is selling, and each Investor is purchasing, on the date hereof, an aggregate of seven hundred thousand (700,000) shares of Preferred Stock;

WHEREAS, Section 10 of that certain Amended and Restated Registration Rights Agreement, dated as of July 30, 2013, by and among the Company and the persons identified on the signature pages thereto (the “ Existing Registration Rights Agreement ”) provides that any provision thereof may be amended or waived with the prior written consent of the Company and an Investor Majority (as defined in the Existing Registration Rights Agreement);

WHEREAS, the undersigned Investors constitute an Investor Majority; and

WHEREAS, this Agreement amends, restates, replaces and supersedes in its entirety the Existing Registration Rights Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

EFFECTIVENESS

Section 1.1. Effectiveness . This Agreement shall become effective upon the closing of the Investment.

ARTICLE II

DEFINITIONS

Section 2.1. Definitions . As used in this Agreement, the following terms shall have the following meanings:


Affiliate ” means, with respect to any specified Person, (a) any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person, (b) in the event that the specified Person is a natural Person, a Member of the Immediate Family of such Person or (c) any investment fund advised or managed by, or under common control or management with, such Person; provided that the Company and each of its subsidiaries shall be deemed not to be Affiliates of any Investor. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

Agreement ” shall have the meaning set forth in the preamble.

Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

Common Stock ” means the common stock of the Company, par value $0.0001 per share.

Company Indemnitees ” shall have the meaning set forth in Section 3.9.5.

Conversion Shares ” means all shares of Common Stock issuable upon conversion of the Preferred Stock.

Demand Notice ” shall have the meaning set forth in Section 3.1.3.

Demand Registration ” shall have the meaning set forth in Section 3.1.1(a).

Demand Registration Request ” shall have the meaning set forth in Section 3.1.1(a).

Demand Registration Statement ” shall have the meaning set forth in Section 3.1.1(c).

Demand Suspension ” shall have the meaning set forth in Section 3.1.6.

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

Existing Registration Rights Agreement ” shall have the meaning set forth in the recitals.

FINRA ” means the Financial Industry Regulatory Authority.

Holders ” means Investors who then hold Registrable Securities under this Agreement.

Investment ” means the transactions contemplated by the Purchase Agreement.

Investor ” shall have the meaning set forth in the preamble.

Issuer Free Writing Prospectus ” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.

Loss ” shall have the meaning set forth in Section 3.9.1.

 

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Member of the Immediate Family ” means, with respect to any Person who is an individual, (a) each parent, spouse (but not including a former spouse or a spouse from whom such Person is legally separated) or child (including those adopted) of such individual and (b) each trustee, solely in his or her capacity as trustee, for a trust naming only one or more of the Persons listed in sub-clause (a) as beneficiaries.

Permitted Transferee ” means (i) any Affiliate of an Investor and (ii) such other Persons designated with Requisite Investor Approval.

Person ” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

Piggyback Notice ” shall have the meaning set forth in Section 3.3.1.

Piggyback Registration ” shall have the meaning set forth in Section 3.3.1.

Potential Takedown Participant shall have the meaning set forth in Section 3.2.5(b).

Preferred Stock ” means the Redeemable Convertible Preferred Stock of the Company, par value $0.0001 per share.

Pro Rata Portion ” means, with respect to each Holder requesting that its shares be registered or sold in an Underwritten Public Offering, a number of such shares equal to the aggregate number of Registrable Securities to be registered or sold (excluding any shares to be registered or sold for the account of the Company) multiplied by a fraction, the numerator of which is the aggregate number of Registrable Securities held by such Holder, and the denominator of which is the aggregate number of Registrable Securities held by all Holders requesting that their Registrable Securities be registered or sold.

Prospectus ” means (i) the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments and supplements, and all other material incorporated by reference in such prospectus, and (ii) any Issuer Free Writing Prospectus.

Public Offering ” means the offer and sale of Registrable Securities for cash pursuant to an effective Registration Statement under the Securities Act (other than a Registration Statement on Form S-4 or Form S-8 or any successor form).

Purchase Agreement ” shall have the meaning set forth in the recitals.

Registrable Securities ” means (i) all shares of Common Stock held as of the date hereof; (ii) all shares of Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security outstanding as of the date hereof and not then subject to vesting or forfeiture to the Company (including, for the avoidance of doubt, any Conversion Shares into which the Preferred Stock is convertible from time to time after the date hereof) and (iii) all shares of Common Stock directly or indirectly issued or then issuable with respect to the securities referred to in clauses (i) or (ii) above by way of a stock dividend or stock split, or in

 

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connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (v) such securities shall have been disposed of in accordance with an effective Registration Statement, (w) such securities shall have been Transferred pursuant to Rule 144, (x) such holder is able to immediately sell such securities under Rule 144 without any restrictions on transfer (including without application of paragraphs (c), (d), (e), (f) and (h) of Rule 144), as reasonably determined by the Holder (it being understood that a written opinion of counsel reasonably acceptable to the Company to the effect that such securities may be so offered and sold and that any restrictive legends on the securities may be removed shall be conclusive evidence that this clause (x) has been satisfied), (y) such securities shall have been otherwise transferred and a new certificate for it not bearing a legend restricting further transfer under the Securities Act shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the Holder thereof shall exist under the Securities Act, or (z) such securities shall have ceased to be outstanding.

Registration ” means registration under the Securities Act of the offer and sale to the public of any Registrable Securities under a Registration Statement. The terms “ register ”, “ registered ” and “ registering ” shall have correlative meanings.

Registration Expenses ” shall have the meaning set forth in Section 3.8.

Registration Statement ” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement other than a registration statement (and related Prospectus) filed on Form S-4 or Form S-8 or any successor form thereto.

Representatives ” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.

Requisite Investor Approval ” means the prior written consent of the Requisite Investors.

Requisite Investor s ” means the holders of a majority of the Registrable Securities then held by the Investors.

Rule 144 ” means Rule 144 under the Securities Act (or any successor rule).

SEC ” means the Securities and Exchange Commission or any successor agency having jurisdiction under the Securities Act.

Securities Act ” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

 

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Selling Expenses ” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder (other than the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 3.8).

Shelf Period ” shall have the meaning set forth in Section 3.2.3.

Shelf Registration ” shall have the meaning set forth in Section 3.2.1(a).

Shelf Registration Notice ” shall have the meaning set forth in Section 3.2.2.

Shelf Registration Request ” shall have the meaning set forth in Section 3.2.1(a).

Shelf Registration Statement ” shall have the meaning set forth in Section 3.2.1(a).

Shelf Suspension ” shall have the meaning set forth in Section 3.2.4.

Shelf Takedown Notice ” shall have the meaning set forth in Section 3.2.5(b).

Shelf Takedown Request ” shall have the meaning set forth in Section 3.2.5(a).

Transfer ” means, with respect to any Registrable Security, any interest therein, or any other securities or equity interests relating thereto, a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition thereof, including the grant of an option or other right, whether directly or indirectly, whether voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. “ Transferred ” shall have a correlative meaning.

Underwritten Public Offering ” means an underwritten Public Offering, including any bought deal or block sale to a financial institution conducted as an underwritten Public Offering, in which the aggregate offering price, net of underwriting discounts and commissions but before expenses, of the Registrable Securities to be offered is at least $10,000,000.

Underwritten Shelf Takedown ” means an Underwritten Public Offering pursuant to an effective Shelf Registration Statement.

WKSI ” means any Securities Act registrant that is a well-known seasoned issuer as defined in Rule 405 under the Securities Act at the most recent eligibility determination date specified in paragraph (2) of that definition.

Section 2.2. Other Interpretive Provisions . (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified.

(c) The term “including” is not limiting and means “including without limitation.”

 

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(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

ARTICLE III

REGISTRATION RIGHTS

The Company will perform and comply, and cause each of its subsidiaries to perform and comply, with such of the following provisions as are applicable to it. Each Holder will perform and comply with such of the following provisions as are applicable to such Holder.

Section 3.1. Demand Registration .

Section 3.1.1. Request for Demand Registration .

 

  (a) At any time and from time to time each Holder shall have the right to make up to two (2) written demands (a “ Demand Registration Request ”) that the Company file a Registration Statement on Form S-1 for Registration of all or part of the Registrable Securities that the Holders request to be registered. Any such Registration pursuant to a Demand Registration Request shall hereinafter be referred to as a “ Demand Registration .”

 

  (b) Each Demand Registration Request shall specify (x) the kind and aggregate amount of Registrable Securities to be registered, and (y) the intended method or methods of disposition thereof.

 

  (c) Subject to Section 3.1.2, upon receipt of a Demand Registration Request, the Company shall as promptly as practicable file a Registration Statement (a “ Demand Registration Statement ”) relating to such Demand Registration (or amend an existing registration statement to allow the resale by holders of Registrable Securities), and use its commercially reasonable efforts to cause such Demand Registration Statement to be promptly declared effective under the Securities Act.

Section 3.1.2. Limitations on Demand Registrations .

 

  (a) The Company shall not be obligated to take any action to effect any Demand Registration (i) if a Demand Registration or Piggyback Registration was declared effective or an Underwritten Shelf Takedown was consummated within the preceding ninety (90) days (unless otherwise consented to by the Company); (ii) after the Company has effected two (2) Demand Registrations pursuant to Section 3.1.1 (plus two (2) additional Demand Registrations if requested by the Requisite Investors); (iii) if the aggregate offering price, net of underwriting discounts and commissions

 

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  but before expenses, of the Registrable Securities to be offered is less than $5,000,000; (iv) if the Holder proposes to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 3.2; or (v) if, within the preceding thirty (30) days of the delivery of such Demand Registration Request, the Company has delivered a Piggyback Notice for a proposed Piggyback Registration and the Company is actively pursuing in good faith such Piggyback Registration.

Section 3.1.3. Demand Notice . Promptly upon receipt of a Demand Registration Request pursuant to Section 3.1.1 (but in no event more than two (2) Business Days thereafter), the Company shall deliver a written notice (a “ Demand Notice ”) of any such Demand Registration Request to all other Holders and the Demand Notice shall offer each such Holder the opportunity to include in the Demand Registration that number of Registrable Securities as each such Holder may request in writing. Subject to Section 3.1.7, the Company shall include in the Demand Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days after the date that the Demand Notice was delivered.

Section 3.1.4. Demand Withdrawal . Each Holder that has requested its Registrable Securities be included in a Demand Registration pursuant to this Section 3.1 may withdraw all or any portion of its Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the effectiveness of the applicable Demand Registration Statement. Upon receipt of a notice to such effect with respect to all of the Registrable Securities included in such Demand Registration, the Company shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement. If the initiating Holders elect not to pay the registration expenses therefor, such Demand Registration shall be counted as “effected” and the Holders shall forfeit their right to one Demand Registration Statement pursuant to Section 3.1.2.

Section 3.1.5. Effective Registration . The Company shall use commercially reasonable efforts to cause the Demand Registration Statement to become effective and remain effective for not less than one hundred eighty (180) days (or such shorter period as will terminate when all Registrable Securities covered by such Demand Registration Statement have been sold or withdrawn), or, if such Demand Registration Statement relates to an Underwritten Public Offering, such longer period as in the opinion of counsel for the underwriter or underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer.

Section 3.1.6. Delay in Filing; Suspension of Registration . If the Company receives a Demand Registration Request and the Company furnishes to the initiating Holders making such demand a copy of a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would

 

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(a) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (b) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (c) render the Company unable to comply with requirements under the Securities Act or Exchange Act (an “ Officer s Certificate ”), then the Company shall have the right to defer taking action with respect to such filing (a “ Demand Suspension ”), and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period or periods of not more than an aggregate of sixty (60) days per calendar year after the request of the initiating Holders is given; provided , however , that the Company shall not register any securities for its own account or that of any other stockholder during such period or periods (except for any securities so registered pursuant to Section 3.3.1(ii) and (iii) hereof). In the case of a Demand Suspension, the Holders agree to suspend use of the applicable Prospectus in connection with any sale or purchase, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Holders in writing upon the termination of any Demand Suspension, amend or supplement the Prospectus, if necessary, and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request. The Company shall, if necessary, supplement or amend the Demand Registration Statement, if required by the registration form used by the Company for the Demand Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder.

Section 3.1.7. Priority of Securities Registered Pursuant to Demand Registrations . If the managing underwriter or underwriters of a proposed Underwritten Public Offering of the Registrable Securities included in a Demand Registration advise the Company in writing that, in its or their opinion, that marketing factors (including potential impact on the price, timing or distribution of the securities offered or the market for the securities offered) require a limitation on the number of shares to be underwritten, then the securities to be included in such Registration shall be, in the case of any Demand Registration, (x) first, allocated to each Holder that has requested to participate in such Demand Registration an amount equal to the lesser of (i) the number of such Registrable Securities requested to be registered or sold by such Holder, and (ii) a number of such shares equal to such Holder’s Pro Rata Portion, and (y) second, and only if all the securities referred to in clause (x) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters can be sold without having such adverse effect.

Section 3.1.8. Resale Rights . In the event that an Investor requests to participate in a Demand Registration pursuant to this Section 3.1 in connection with a distribution of Registrable Securities to its partners or members, the Registration shall provide for resale by such partners or members, if requested by an Investor.

Section 3.2. Shelf Registration .

Section 3.2.1. Request for Shelf Registration .

 

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  (a) Upon the written request of any Holder from time to time (a “ Shelf Registration Request ”), provided the Company is eligible to use a Registration Statement on Form S-3 for transactions involving secondary offerings, the Company shall promptly file with the SEC a shelf Registration Statement pursuant to Rule 415 under the Securities Act (“ Shelf Registration Statement ”) relating to the offer and sale of Registrable Securities by such Holder from time to time in accordance with the methods of distribution elected by such Holder, and the Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to promptly become effective under the Securities Act. Any such Registration pursuant to a Shelf Registration Request shall hereinafter be referred to as a “ Shelf Registration .” The Company shall use its commercially reasonable efforts to qualify and remain qualified to register securities pursuant to a Registration Statement on Form S-3 (or any successor form) under the Securities Act. Notwithstanding the above, the Company shall not be obligated to effect any Shelf Registration if the aggregate offering price, net of underwriting discounts and commissions but before expenses, of the Registrable Securities to be offered is less than $5,000,000.

 

  (b) If on the date of the Shelf Registration Request the Company is a WKSI, then the Shelf Registration Request may request Registration of an unspecified amount of Registrable Securities to be sold by unspecified Holders. If on the date of the Shelf Registration Request the Company is not a WKSI, then the Shelf Registration Request shall specify the aggregate amount of Registrable Securities to be registered. The Company shall provide to the Investors the information necessary to determine the Company’s status as a WKSI upon request.

Section 3.2.2. Shelf Registration Notice . Promptly upon receipt of a Shelf Registration Request (but in no event more than two (2) Business Days thereafter (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”)), the Company shall deliver a written notice (a “ Shelf Registration Notice ”) of any such request to all other Holders, which notice shall specify, if applicable, the amount of Registrable Securities to be registered, and the Shelf Registration Notice shall offer each such Holder the opportunity to include in the Shelf Registration that number of Registrable Securities as each such Holder may request in writing. The Company shall include in such Shelf Registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”) after the date that the Shelf Registration Notice has been delivered.

Section 3.2.3. Continued Effectiveness . The Company shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming part of the Shelf Registration Statement to be usable by Holders until the earlier of: (i) the date as of which all

 

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Registrable Securities have been sold pursuant to the Shelf Registration Statement or another Registration Statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder); and (ii) the date as of which no Holder holds Registrable Securities (such period of effectiveness, the “ Shelf Period ”). Subject to Section 3.2.4, the Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Period if the Company voluntarily takes any action or omits to take any action that would result in Holders of the Registrable Securities covered thereby not being able to offer and sell any Registrable Securities pursuant to such Shelf Registration Statement during the Shelf Period, unless such action or omission is required by applicable law.

Section 3.2.4. Suspension of Registration . If the Company furnishes to Holders requesting a Shelf Registration pursuant to this Section 3.2.1 an Officer’s Certificate, then the Company shall have the right to defer taking action with respect to such filing (a “ Shelf Suspension ”), and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period or periods of not more than an aggregate of sixty (60) days per calendar year after the request of the initiating Holders is given, provided , however , that the Company shall not register any securities for its own account or that of any other stockholder during such period or periods (except for any securities so registered pursuant to Section 3.3.1(ii) and (iii) hereof). In the case of a Shelf Suspension, the Holders agree to suspend use of the applicable Prospectus in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Holders in writing upon the termination of any Shelf Suspension, amend or supplement the Prospectus, if necessary, and furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request. The Company shall, if necessary, supplement or amend the Shelf Registration Statement, if required by the registration form used by the Company for the Shelf Registration Statement or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder.

Section 3.2.5. Shelf Takedown .

 

  (a) At any time the Company has an effective Shelf Registration Statement with respect to a Holder’s Registrable Securities, by notice to the Company specifying the intended method or methods of disposition thereof, each Holder may make a written request (a “ Shelf Takedown Request ”) to the Company to effect a Public Offering, including an Underwritten Shelf Takedown, of all or a portion of such Holder’s Registrable Securities that may be registered under such Shelf Registration Statement, and as soon as practicable the Company shall amend or supplement the Shelf Registration Statement as necessary for such purpose.

 

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  (b) Promptly upon receipt of a Shelf Takedown Request (but in no event more than two (2) Business Days thereafter (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”)) for any Underwritten Shelf Takedown, the Company shall deliver a notice (a “ Shelf Takedown Notice ”) to each other Holder with Registrable Securities covered by the applicable Registration Statement, or to all other Holders if such Registration Statement is undesignated (each a “ Potential Takedown Participant ”). The Shelf Takedown Notice shall offer each such Potential Takedown Participant the opportunity to include in any Underwritten Shelf Takedown such number of Registrable Securities as each such Potential Takedown Participant may request in writing. The Company shall include in the Underwritten Shelf Takedown all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days (or such shorter period as may be reasonably requested in connection with an underwritten “block trade”) after the date that the Shelf Takedown Notice has been delivered. Notwithstanding the delivery of any Shelf Takedown Notice, all determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown contemplated by this Section 3.2.5 shall be determined by the Holders of a majority of the Registrable Securities proposed to be sold in such Underwritten Shelf Takedown.

 

  (c) The Company shall not be obligated to take any action to effect any Underwritten Shelf Takedown if a Demand Registration or Piggyback Registration was declared effective or an Underwritten Shelf Takedown was consummated within the preceding ninety (90) days (unless otherwise consented to by the Company).

Section 3.2.6. Priority of Securities Sold Pursuant to Shelf Takedowns . If the managing underwriter or underwriters of a proposed Underwritten Shelf Takedown pursuant to Section 3.2.5 advise the Company in writing that, in its or their opinion, the number of securities requested to be included in the proposed Underwritten Shelf Takedown exceeds the number that can be sold in such Underwritten Shelf Takedown without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the number of Registrable Securities to be included in such offering shall be (x) first, allocated to each Holder that has requested to participate in such Underwritten Shelf Takedown an amount equal to the lesser of (i) the number of such Registrable Securities requested to be registered or sold by such Holder, and (ii) a number of such shares equal to such Holder’s Pro Rata Portion, and (y) second, and only if all the securities referred to in clause (x) have been included, the number of other securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect.

Section 3.2.7. Resale Rights . In the event that an Investor elects to request a Shelf Registration pursuant to this Section 3.2 in connection with a distribution of Registrable Securities to its partners or members, the Shelf Registration shall provide for resale by such partners or members, if requested by such Investor.

 

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Section 3.3. Piggyback Registration .

Section 3.3.1. Participation . If the Company at any time proposes to file a Registration Statement under the Securities Act or to conduct a Public Offering with respect to any offering of its equity securities for its own account or for the account of any other Persons (other than (i) a Registration under Section 3.1 or Section 3.2, (ii) a Registration on Form S-4 or Form S-8 or any successor form to such forms or (iii) a Registration of securities solely relating to an offering and sale to employees or directors of the Company or its subsidiaries pursuant to any employee stock plan or other employee benefit plan arrangement), then, as soon as practicable (but in no event less than ten (10) Business Days prior to the proposed date of filing of such Registration Statement or, in the case of a Public Offering under a Shelf Registration Statement, the anticipated pricing or trade date), the Company shall give written notice (a “ Piggyback Notice ”) of such proposed filing or Public Offering to all Holders, and such Piggyback Notice shall offer the Holders the opportunity to register under such Registration Statement, or to sell in such Public Offering, such number of Registrable Securities as each such Holder may request in writing (any such Public Offering in which Holders participate, a “ Piggyback Registration ”). Subject to Section 3.3.2, the Company shall include in such Registration Statement or in such Public Offering, as applicable, all such Registrable Securities that are requested to be included therein within five (5) Business Days after the receipt by such Holder of any such notice; provided , however , that if at any time after giving written notice of its intention to register or sell any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, or the pricing or trade date of a Public Offering under a Shelf Registration Statement, the Company determines for any reason not to register or sell or to delay the Registration or sale of such securities, the Company shall give written notice of such determination to each Holder and, thereupon, (i) in the case of a determination not to register or sell, shall be relieved of its obligation to register or sell any Registrable Securities in connection with such Registration or Public Offering (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any Holders entitled to request that such Registration or sale be effected as a Demand Registration under Section 3.1 or an Underwritten Shelf Takedown under Section 3.2, as the case may be, and (ii) in the case of a determination to delay Registration or sale, in the absence of a request for a Demand Registration or an Underwritten Shelf Takedown, as the case may be, shall be permitted to delay registering or selling any Registrable Securities for the same period as the delay in registering or selling such other securities. Any Holder shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a Piggyback Registration by giving written notice to the Company of its request to withdraw.

Section 3.3.2. Priority of Piggyback Registration . If the managing underwriter or underwriters of any proposed offering of Registrable Securities included in a Piggyback Registration informs the Company and the participating Holders in writing that, in its or their opinion, marketing factors (including potential impact on the price, timing or distribution of the securities offered or the market for the securities offered) require a limitation on the number of shares to be underwritten, then the securities to be included in such Registration shall be (i) first, one hundred percent (100%) of the securities that the

 

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Company proposes to sell, and (ii) second, and only if all the securities referred to in clause (i) have been included, the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect, with such number to be allocated among the Holders that have requested to participate in such Registration based on an amount equal to the lesser of (x) the number of such Registrable Securities requested to be sold by such Holder, and (y) a number of such shares equal to such Holder’s Pro Rata Portion, and (iii) third, and only if all of the Registrable Securities referred to in clause (ii) have been included in such Registration, any other securities eligible for inclusion in such Registration. Notwithstanding the foregoing, no such reduction shall reduce the value of the Registrable Securities of the Holders included in such registration below twenty-five percent (25)% of the total value of securities included in such registration.

Section 3.3.3. No Effect on Other Registrations . No Registration of Registrable Securities effected pursuant to a request under this Section 3.3 shall be deemed to have been effected pursuant to Section 3.1 or Section 3.2 or shall relieve the Company of its obligations under Section 3.1 and Section 3.2 unless all Registrable Securities have been sold pursuant to such Registration Statement or another Registration Statement filed under the Securities Act.

Section 3.4. Lock-Up Agreements . In connection with each Registration or sale of Registrable Securities pursuant to Section 3.1, Section 3.2 or Section 3.3 conducted as an Underwritten Public Offering, each Holder selling Registrable Securities in such Underwritten Public Offering agrees, if requested, to become bound by and to execute and deliver a lock-up agreement with the underwriter(s) of such Underwritten Public Offering restricting such Holder’s right to (a) Transfer, directly or indirectly, any equity securities or securities convertible into or exercisable or exchangeable for equity securities of the Company held by such Holder or (b) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities during the period commencing on the date of the final Prospectus relating to the Underwritten Public Offering and ending on the date specified by the underwriters (such period not to exceed ninety (90) days). The terms of such lock-up agreements shall be negotiated among the Holders requested to execute and deliver such agreements, the Company and the underwriters and shall include customary carve-outs from the restrictions on Transfer set forth therein.

Section 3.5. Registration Procedures .

Section 3.5.1. Requirements . In connection with the Company’s obligations under Section 3.1, Section 3.2 and Section 3.3, the Company shall use its commercially reasonable efforts to effect such Registration and to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith the Company shall:

 

  (a) as promptly as practicable prepare the required Registration Statement, including all exhibits and financial statements required under the Securities Act to be filed therewith, and Prospectus, and, before filing a Registration Statement or Prospectus or any amendments or supplements

 

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  thereto, (x) furnish to the underwriters, if any, and to the Holders with Registrable Securities covered by such Registration Statement, copies of all documents prepared to be filed, which documents shall be subject to the reasonable review of such underwriters and such Holders and their respective counsel, (y) make such changes in such documents concerning the Holders prior to the filing thereof as such Holders, or their counsel, may reasonably request and (z) otherwise provide the Holders (to the extent participating in such registration) reasonable opportunity to comment on the registration statement, prospectus or any amendments or supplements thereto;

 

  (b) prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement and supplements to the Prospectus as may be (x) reasonably requested by any Holder with Registrable Securities covered by such Registration Statement (to the extent such request relates to information relating to such Holder), or (y) necessary to keep such Registration Statement effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;

 

  (c) notify the Holders with Registrable Securities covered by the applicable Registration Statement and the managing underwriter or underwriters, if any, and (if requested) confirm such notice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Company (a) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or any amendment or supplement thereto has been filed, (b) of any written comments by the SEC, or any request by the SEC or other federal or state governmental authority for amendments or supplements to such Registration Statement or such Prospectus, or for additional information (whether before or after the effective date of the Registration Statement) or any other correspondence with the SEC relating to, or which may affect, the Registration, (c) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order by the SEC or any other regulatory authority preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, and (d) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

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  (d) promptly notify each Holder with Registrable Securities covered by the applicable Registration Statement and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which it shall be necessary to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement or Prospectus, which shall effect such compliance;

 

  (e) to the extent the Company is eligible under the relevant provisions of Rule 430B under the Securities Act, if the Company files any Shelf Registration Statement and if requested by a Holder, the Company shall include in such Shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to such Holder) in order to ensure that such Holder may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment;

 

  (f) prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final Prospectus;

 

  (g) promptly incorporate in a Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment such information as the managing underwriter or underwriters and the participating Holders, or their respective counsel, agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment;

 

  (h) furnish to each Holder with Registrable Securities covered by the applicable Registration Statement and each underwriter, if any, without charge, as many conformed copies as such Holder or underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

 

  (i) deliver to each Holder with Registrable Securities covered by the applicable Registration Statement and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by

 

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  such Holder or underwriter (it being understood that the Company shall consent to the use of such Prospectus or any amendment or supplement thereto by each such Holder and underwriter in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto);

 

  (j) on or prior to the date on which the applicable Registration Statement becomes effective, use its commercially reasonable efforts to register or qualify, and cooperate with the Holders with Registrable Securities covered by such Registration Statement, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction as any such Holder or managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such Registration or qualification in effect for such period as required by Section 3.1 or Section 3.2, as applicable, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;

 

  (k) cooperate with the Holders with Registrable Securities covered by the applicable Registration Statement and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request prior to any sale of Registrable Securities to the underwriters;

 

  (l) cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;

 

  (m) make such representations and warranties to the Holders with Registrable Securities covered by the applicable Registration Statement and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken;

 

  (n) enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as the participating Holders or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities;

 

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  (o) obtain for delivery to the Holders with Registrable Securities covered by the applicable Registration Statement and to the underwriter or underwriters, if any, an opinion or opinions from counsel for the Company dated the most recent effective date of the Registration Statement or, in the event of an Underwritten Public Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance, which opinions shall be reasonably satisfactory to such Holders or underwriters, as the case may be, and their respective counsel;

 

  (p) in the case of an Underwritten Public Offering, obtain for delivery to the Company and the managing underwriter or underwriters, with copies to the Holders included in such Underwritten Public Offering, a comfort letter from the Company’s independent certified public accountants or independent auditors (and, if necessary, any other independent certified public accountants or independent auditors of any subsidiary of the Company or any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement;

 

  (q) cooperate with each Holder with Registrable Securities covered by the applicable Registration Statement and each underwriter, if any, participating in the disposition of Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

 

  (r) comply with all applicable securities laws and, if a Registration Statement was filed, make available, including through the SEC’s EDGAR filing system or any successor system, to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;

 

  (s) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement;

 

  (t) cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities exchange on which any of the Company’s equity securities are then listed or quoted and on each inter-dealer quotation system on which any of the Company’s equity securities are then quoted;

 

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  (u) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by a representative appointed by any underwriter participating in any disposition to be effected pursuant to a Registration Statement and by any attorney, accountant or other agent retained by such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Person in connection with such Registration Statement;

 

  (v) in the case of an Underwritten Public Offering, cause the appropriate senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such Underwritten Public Offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;

 

  (w) take no direct or indirect action prohibited by Regulation M under the Exchange Act;

 

  (x) take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any Registration complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

  (y) take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with the terms of this Agreement.

Section 3.5.2. Company Information Requests . The Company may require each Holder of Registrable Securities as to which any Registration or sale is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing and the Company may exclude from such Registration or sale the Registrable Securities of any such Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.

 

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Section 3.5.3. Discontinuing Registration . Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.5.1(d), such Holder will discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus, or any amendments or supplements thereto, and if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 3.5.1(d) or is advised in writing by the Company that the use of the Prospectus may be resumed.

Section 3.6.     Underwritten Offerings .

Section 3.6.1. Shelf and Demand Registrations . If requested by the underwriters for any Underwritten Public Offering, pursuant to a Registration or sale under Section 3.1 or Section 3.2, the Company shall enter into an underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to each of the Company, the participating Holders and the underwriters, and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 3.9. The Holders of the Registrable Securities proposed to be distributed by such underwriters shall cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof, and such Holders shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. Any such Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities, such Holder’s intended method of distribution and any other representations to be made by the Holder as are generally prevailing in agreements of that type, and the aggregate amount of the liability of such Holder under such agreement shall not exceed such Holder’s proceeds from the sale of its Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.

 

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Section 3.6.2. Piggyback Registrations . If the Company proposes to register or sell any of its securities under the Securities Act as contemplated by Section 3.3 and such securities are to be distributed through one or more underwriters, the Company shall, if requested by any Holder pursuant to Section 3.3 and, subject to the provisions of Section 3.3.2, use its commercially reasonable efforts to arrange for such underwriters to include on the same terms and conditions that apply to the other sellers in such Registration or sale all the Registrable Securities to be offered and sold by such Holder among the securities of the Company to be distributed by such underwriters in such Registration or sale. The Holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between the Company and such underwriters and shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. Any such Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities, such Holder’s intended method of distribution and any other representations to be made by the Holder as are generally prevailing in agreements of that type, and the aggregate amount of the liability of such Holder shall not exceed such Holder’s proceeds from the sale of its Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.

Section 3.6.3. Selection of Underwriters; Selection of Counsel . In the case of an Underwritten Public Offering under Section 3.1, Section 3.2 or Section 3.3, the managing underwriter or underwriters to administer the offering shall be selected by the Company and shall be reasonably acceptable to the Holders of a majority of the Registrable Securities proposed to be sold; provided , however , that if such Underwritten Public Offering is conducted as an underwritten “block trade” initiated by a Holder or Holders, the potential underwriters from whom indications of interest are solicited shall be mutually acceptable to the Company and the Holders of a majority of the Registrable Securities to be sold and the actual underwriter or underwriters shall be selected by the Holders of a majority of the Registrable Securities proposed to be sold. In the case of an Underwritten Public Offering under Section 3.1, Section 3.2 or Section 3.3, counsel to the Holders shall be selected by the Holders of a majority of the Registrable Securities proposed to be sold.

Section 3.7. No Inconsistent Agreements; Additional Rights . Neither the Company nor any of its subsidiaries shall hereafter enter into, and neither the Company nor any of its subsidiaries is currently a party to, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders by this Agreement, and that this Agreement supersedes and replaces the Existing Registration Rights Agreement. Without Requisite Investor Approval, neither the Company nor any of its subsidiaries shall enter into any agreement granting registration or similar rights to any Person, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other Person other than pursuant to this Agreement.

Section 3.8. Registration Expenses . All expenses incident to the Company’s performance of or compliance with this Agreement shall be paid by the Company, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws pursuant to Section 3.5.1(j) (including

 

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reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants or independent auditors of the Company and any subsidiaries of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (viii) all reasonable fees and disbursements for one legal counsel for the Holders with Registrable Securities covered by any Registration Statement (“ Selling Holders Counsel ”), (ix) any reasonable disbursements of underwriters customarily paid by issuers, (x) all fees and expenses of any special experts or other Persons retained by the Company in connection with any Registration or sale, (xi) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties) and (xii) all Company expenses related to the “road show” for any Underwritten Public Offering. All such expenses are referred to herein as “ Registration Expenses ”. The Company shall not be required to pay any fees and disbursements to underwriters not customarily paid by the issuers of securities in an offering similar to the applicable offering, including Selling Expenses.

Section 3.9. Indemnification .

Section 3.9.1. Indemnification by the Company . The Company shall indemnify and hold harmless, to the full extent permitted by law, each Holder, each shareholder, member, limited or general partner of such Holder, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each of their respective Representatives from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and legal expenses ) (each, a “ Loss ” and collectively “ Losses ”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Company or any of its subsidiaries including any report and other document filed under the Exchange Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading or (iii) any violation by the Company of the Securities Act, any state securities or “blue sky” laws or any rule or regulation thereunder in connection with such registration; provided , that no Holder shall be entitled to indemnification pursuant to this Section 3.9.1 in respect

 

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of any untrue statement or omission contained in any information relating to such Holder furnished in writing by such Holder to the Company specifically for inclusion in a Registration Statement and used by the Company in conformity therewith (such information “ Selling Stockholder Information ”). This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Transfer of such securities by such Holder and regardless of any indemnity agreed to in the underwriting agreement that is less favorable to the Holders. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above (with appropriate modification) with respect to the indemnification of the indemnified parties.

Section 3.9.2. Indemnification by the Selling Holders . Each Holder with Registrable Securities covered by any Registration Statement agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any Losses resulting from (i) any untrue statement of a material fact in any Registration Statement under which such Registrable Securities were registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission is contained in such Holder’s Selling Stockholder Information. In no event shall the liability of any Holder hereunder be greater in amount than the dollar amount of the proceeds from the sale of its Registrable Securities in the offering giving rise to such indemnification obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Holder pursuant to Section 3.9.4 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale.

Section 3.9.3. Conduct of Indemnification Proceedings . Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification ( provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided , however , that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or

 

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expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person (based upon advice of its counsel) a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action without the consent of the indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation without the prior written consent of such indemnified party. If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent may not be unreasonably withheld. It is understood that the indemnifying party or parties shall not, except as specifically set forth in this Section 3.9.3, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements or other charges of more than one separate firm admitted to practice in such jurisdiction at any one time unless (x) the employment of more than one counsel has been authorized in writing by the indemnifying party or parties, (y) an indemnified party has reasonably concluded (based on the advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or may exist (based upon advice of counsel to an indemnified party) between such indemnified party and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

Section 3.9.4. Contribution . If for any reason the indemnification provided for in Section 3.9.1 and Section 3.9.2 is unavailable to an indemnified party or insufficient in respect of any Losses referred to therein (other than as a result of exceptions or limitations on indemnification contained in Section 3.9.1 and Section 3.9.2), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. In connection with any Registration Statement filed with the SEC by the Company, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any 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 by the indemnified party and

 

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the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.9.4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 3.9.4. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Section 3.9.1 and Section 3.9.2 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 3.9.4, in connection with any Registration Statement filed by the Company, a Holder with Registrable Securities covered by any such Registration Statement shall not be required to contribute any amount in excess of the dollar amount of the proceeds from the sale of its Registrable Securities in the offering giving rise to such indemnification obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Holder pursuant to Section 3.9.2 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. If indemnification is available under this Section 3.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 3.9.1 and Section 3.9.2 without regard to the provisions of this Section 3.9.4. The remedies provided for in this Section 3.9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

Section 3.9.5. Indemnification Priority . The Company hereby acknowledges and agrees that any of the Persons entitled to indemnification pursuant to Section 3.9.1 (each, a “ Company Indemnitee ” and collectively, the “ Company Indemnitees ”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by other sources. The Company hereby acknowledges and agrees (i) that it is the indemnitor of first resort (i.e., its obligations to a Company Indemnitee are primary and any obligation of such other sources to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Company Indemnitee are secondary) and (ii) that it shall be required to advance the full amount of expenses incurred by a Company Indemnitee and shall be liable for the full amount of all expenses incurred by a Company Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement without regard to any rights a Company Indemnitee may have against such other sources. The Company further agrees that no advancement or payment by such other sources on behalf of a Company Indemnitee with respect to any claim for which such Company Indemnitee has sought indemnification, advancement of expenses or insurance from the Company shall affect the foregoing, and that such other sources shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Company Indemnitee against the Company.

 

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Section 3.10. SEC Filings; Rules 144 and 144A and Regulation  S . The Company shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Investor, make publicly available such necessary information for so long as necessary to permit sales that would otherwise be permitted by this Agreement pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time or any similar rule or regulation hereafter adopted by the SEC), and it will take such further action as any Investor may reasonably request, all to the extent required from time to time to enable such Investor to sell Registrable Securities pursuant to Form S-3 or without Registration under the Securities Act pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Investor, the Company will deliver to such Investor a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

Section 3.11. Existing Registration Statements . Notwithstanding anything herein to the contrary and subject to applicable law and regulation, the Company may satisfy any obligation hereunder to file a Registration Statement or to have a Registration Statement become effective by a specified date by designating, by notice to the Holders, a Registration Statement that previously has been filed with the SEC or become effective, as the case may be, as the relevant Registration Statement for purposes of satisfying such obligation, and all references to any such obligation shall be construed accordingly; provided that such previously filed Registration Statement may be, and is, amended or, subject to applicable securities laws, supplemented to add the number of Registrable Securities, and, to the extent necessary, to identify as selling stockholders those Holders demanding the filing of a Registration Statement pursuant to the terms of this Agreement. To the extent this Agreement refers to the filing or effectiveness of other Registration Statements, by or at a specified time and the Company has, in lieu of then filing such Registration Statements or having such Registration Statements become effective, designated a previously filed or effective Registration Statement as the relevant Registration Statement for such purposes, in accordance with the preceding sentence, such references shall be construed to refer to such designated Registration Statement, as amended or supplemented in the manner contemplated by the immediately preceding sentence.

ARTICLE IV

MISCELLANEOUS

Section 4.1. Authority ; Effect . Each party hereto represents and warrants to and agrees with each other party that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such party and do not violate any agreement or other instrument to which it is a party or by which its assets are bound. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a joint venture or other association. The Company and its subsidiaries shall be jointly and severally liable for all obligations of each such party pursuant to this Agreement.

Section 4.2. Notices . Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by facsimile or e-mail, or (iii) sent by overnight courier, in each case, addressed as follows:

 

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If to the Company to:

Dicerna Pharmaceuticals, Inc.

87 Cambridgepark Drive

Cambridge, MA 02140

Attention:            Douglas Fambrough, President and Chief Executive Officer

Facsimile:           (617) 612-6298

E-mail:                dfambrough@dicerna.com

and

Attention:            Jack Green, Chief Financial Officer

Facsimile:           (617) 612-6298

E-mail:                 jackgreen@dicerna.com

with a copy (which shall not constitute notice) to:

Sidley Austin LLP

1001 Page Mill Road

Building 1

Palo Alto, CA 94304

Attention:            Sam Zucker

Facsimile:           (650) 565-6001

E-mail:                 szucker@sidley.com

If to any Investor:

To the address set forth below such party’s signature hereto;

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:            Michael D. Beauvais

Facsimile:           (617) 235-0641

E-mail:                 michael.beauvais@ropesgray.com

Notice to the holder of record of any Registrable Securities shall be deemed to be notice to the holder of such securities for all purposes hereof.

Unless otherwise specified herein, such notices or other communications shall be deemed effective (i) on the date received, if personally delivered, (ii) on the date received if delivered by facsimile or e-mail on a Business Day, or if not delivered on a Business Day, on the first Business Day thereafter and (iii) two (2) Business Days after being sent by overnight courier. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.

 

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Section 4.3. Termination and Effect of Termination . This Agreement shall terminate, except for the provisions of Section 3.8, Section 3.9 and Section 3.10, which shall survive any such termination, upon the date that is the earliest to occur of (i) the date on which no Holder holds any Registrable Securities; and (ii) the date on which the Company is no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and is no longer otherwise required to report on an annual or quarterly basis on forms provided for such annual or quarterly reporting pursuant to the rules and regulations promulgated by the SEC. No termination under this Agreement shall relieve any Person of liability for breach or Registration Expenses incurred prior to termination. In the event this Agreement is terminated, each Person entitled to indemnification rights pursuant to Section 3.9 shall retain such indemnification rights with respect to any matter that (i) may be an indemnified liability thereunder and (ii) occurred prior to such termination.

Section 4.4. Permitted Transferees . The rights of a Holder hereunder may be assigned (but only with all related obligations as set forth below) in connection with a Transfer of Registrable Securities to a Permitted Transferee of that Holder. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 4.4 will be effective unless the Permitted Transferee to which the assignment is being made, if not a Holder, has delivered to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that the Permitted Transferee will be bound by, and will be a party to, this Agreement. A Permitted Transferee to whom rights are transferred pursuant to this Section 4.4 may not again transfer those rights to any other Permitted Transferee, other than as provided in this Section 4.4.

Section 4.5. Remedies . The parties to this Agreement shall have all remedies available at law, in equity or otherwise in the event of any breach or violation of this Agreement or any default hereunder. The parties acknowledge and agree that in the event of any breach of this Agreement, in addition to any other remedies that may be available, each of the parties hereto shall be entitled to specific performance of the obligations of the other parties hereto and, in addition, to such other equitable remedies (including preliminary or temporary relief) as may be appropriate in the circumstances. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission nor waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

Section 4.6. Amendments . This Agreement may not be orally amended, modified, extended or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and the Requisite Investors; provided , however , that any amendment, modification, extension or termination that disproportionately and adversely affects any Holder shall require the prior written consent of such Holder. Each such amendment, modification, extension or termination shall be binding upon each party hereto and such Holder’s Permitted Transferees. In addition, each party hereto may waive any right hereunder by an instrument in writing signed by such party.

 

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Section 4.7. Governing Law . This Agreement and all claims arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by and construed in accordance with the domestic substantive laws of the State of New York without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

Section 4.8. Consent to Jurisdiction . Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof or thereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by New York law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 4.2 is reasonably calculated to give actual notice.

Section 4.9. WAIVER OF JURY TRIAL . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO

 

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THAT THIS SECTION 4.9 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

Section 4.10. Merger; Binding Effect, Etc. This Agreement constitutes the entire agreement of the parties with respect to its subject matter, supersedes all prior or contemporaneous oral or written agreements or discussions with respect to such subject matter, and shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective heirs, representatives, successors and permitted assigns. Except as otherwise expressly provided herein, no Holder or other party hereto may assign any of its respective rights or delegate any of its respective obligations under this Agreement without the prior written consent of the other parties hereto, and any attempted assignment or delegation in violation of the foregoing shall be null and void.

Section 4.11. Counterparts . This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one instrument.

Section 4.12. Severability . In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.

Section 4.13. No Recourse . Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Holder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Holder or of any Affiliate or assignee thereof, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such, for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

[Signature pages follow]

 

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IN WITNESS WHEREOF , each of the undersigned has duly executed this Agreement as of the date first above written.

 

Company:

 

DICERNA PHARMACEUTICALS, INC.

  By:  

 

   

Name:

Title:

 

[Signature Page to Amended and Restated Registration Rights Agreement]


Investors:     Bain Capital Life Sciences Fund, L.P.
   

By: Bain Capital Life Sciences Partners, LP,

   

its general partner

   

By: Bain Capital Life Sciences Investors, LLC

   

its general partner

   

By:

 

 

   

Name:

   

Title:

   

Address:

   

200 Clarendon Street

   

Boston, MA 02116

    BCIP Life Sciences Associates, LP
   

By: Boylston Coinvestors, LLC

   

its general partner

   

By:

 

 

   

Name:

   

Title:

   

Address:

   

200 Clarendon Street

   

Boston, MA 02116

    Cormorant Private Healthcare Fund I, LP
   

By: Cormorant Private Healthcare GP, LLC,

   

its general partner

   

By:

 

 

   

Name:

   

Title:

   

Address:

   

200 Clarendon Street, 52 nd Floor

   

Boston, MA 02116

    Cormorant Global Healthcare Master Fund, LP
   

By: Cormorant Global Healthcare GP, LLC,

   

its general partner

   

By:

 

 

   

Name:

   

Title:

 

[Signature Page to Amended and Restated Registration Rights Agreement]


Address:
200 Clarendon Street, 52 nd Floor
Boston, MA 02116
CRMA SPV, L.P.

By: Cormorant Asset Management, LLC,

its Special Limited Partner

By:  

 

Name:
Title:
Address:
PO Box 309
Ugland House, Grand Cayman
KY1-1104, Cayman Islands
Domain Partners VIII, L.P.

By: One Palmer Square Associates VIII,

LLC its general partner

By:  

 

Name:
Title:
Address:
One Palmer Square, Suite 515
Princeton, NJ 08542
DP VIII Associates, L.P.

By: One Palmer Square Associates VIII,

LLC its general partner

By:  

 

Name:
Title:
Address:
One Palmer Square, Suite 515
Princeton, NJ 08542

 

[Signature Page to Amended and Restated Registration Rights Agreement]


EcoR1 Capital Fund, L.P.

By: EcoR1 Capital, LLC,
its general partner
By:  

 

Name:
Title:
Address:
409 Illinois Street
San Francisco, CA 94158
EcoR1 Capital Fund Qualified, L.P.
By: EcoR1 Capital, LLC,
its general partner
By:  

 

Name:
Title:
Address:
409 Illinois Street
San Francisco, CA 94158
RA Capital Healthcare Fund, L.P.
By: RA Capital Management, LLC,
its general partner
By:  

 

Name:
Title:
Address:
20 Park Plaza, Suite 1200
Boston, MA 02116

 

[Signature Page to Amended and Restated Registration Rights Agreement]


Blackwell Partners LLC – Series A

By:  

 

Name:
Title: Authorized Signatory
By:  

 

Name:
Title: Authorized Signatory
Address:
280 S. Mangum Street, Suite 210
Durham, NC 27701
RTW Master Fund, LTD
By:  

 

Name:
Title:
Address:
250 West 55 th Street, 16 th Floor, Suite A
New York, NY 10019
RTW Innovation Master Fund, LTD
By:  

 

Name:
Title:
Address:
250 West 55 th Street, 16 th Floor, Suite A
New York, NY 10019
Skyline Venture Partners V, L.P.
By: Skyline Venture Management V, LLC,
its general partner
By:  

 

Name:
Title:
Address:
525 University Avenue, Suite 1350
Palo Alto, CA 94301

 

[Signature Page to Amended and Restated Registration Rights Agreement]

Exhibit 10.3

, 2017

Dicerna Pharmaceuticals, Inc.

87 Cambridgepark Drive

Cambridge, MA 02140

 

  Re: Bain Director Side Letter Agreement

Reference is made to (i) that certain Redeemable Convertible Preferred Stock Purchase Agreement, dated as of March 30, 2017, by and among Dicerna Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”), certain investment funds advised by Bain Capital Life Sciences, LP (such funds, the “ Bain Investors ”) and the other investors party thereto (the “ Stock Purchase Agreement ”) pursuant to which, among other things, the Company agreed to expand the size of its board of directors (the “ Board ”) by one director and appoint an individual nominated by the Bain Investors to fill the resulting vacancy; (ii) the appointment, on the date hereof, and pursuant to the Stock Purchase Agreement, of Adam Koppel (the “ Bain Director ”) to the Board and (iii) that certain Indemnification Agreement, dated as of the date hereof (the “ Indemnification Agreement ”), by and between the Company and the Bain Director. The Company and the Bain Director are collectively referred to hereinafter as the “ Parties .”

In consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and with the intention to be legally bound hereby, the Parties agree as follows:

 

  1.

Indemnification Priority . Notwithstanding anything to the contrary in the Indemnification Agreement, the Company hereby agrees that (i) it is the indemnitor of first resort under the Indemnification Agreement, this letter agreement and any other agreement or undertaking (whether pursuant to contract, bylaws or charter) by the Company pursuant to which the Bain Director may assert a claim for indemnification or advancement; (ii) that the Company’s obligations to the Bain Director under the Indemnification Agreement, this letter agreement or any other agreement or undertaking (whether pursuant to contract, bylaws or charter) to provide advancement and/or indemnification to the Bain Director are primary, and that any obligation of any Related Stockholder to provide advancement or indemnification (whether pursuant to contract, bylaws or charter) are secondary; and (iii) any obligation of any insurer of any Related Stockholder to provide insurance coverage for any amounts indemnifiable or otherwise covered by the Indemnification Agreement, this letter agreement or any other agreement or undertaking (whether pursuant to contract, bylaws or charter) by the Company to provide advancement and/or indemnification to the Bain Director is secondary to those advancement and indemnification obligations. The Company hereby further agrees that if any Related Stockholder pays or causes to be paid, for any reason, any amounts otherwise properly indemnified or advanced under the Indemnification Agreement or under any other agreement or undertaking (whether pursuant to contract, bylaws or


  charter) of the Company, then (x) such Related Stockholder shall be fully subrogated to all rights of the Bain Director with respect to such payment and (y) the Company shall fully indemnify or otherwise reimburse such Related Stockholder for all such payments made by such Related Stockholder. For purposes of this Section 1, “ Related Stockholder ” shall mean the Bain Investors, including Bain Capital Life Sciences Fund, L.P. and BCIP Life Sciences Associates, LP, and any related investment adviser or management company, any investment fund, managing member or general partner that is an affiliate of any of the foregoing entities or that is advised by the same investment adviser as any of the foregoing entities or by an affiliate of such investment adviser (excluding, for the avoidance of doubt, the Company).

 

  2. Corporate Opportunity . The Parties agree that the provisions of Section 6.10 of the Stock Purchase Agreement shall apply to the Bain Director. The Parties agree that the Bain Director is an intended third-party beneficiary of such provisions and is entitled to rely upon and enforce the rights and obligations granted therein.

 

  3. Miscellaneous . This letter agreement is a supplement to the Indemnification Agreement and is in furtherance of the Company’s Amended and Restated Certificate of Incorporation, the Company’s Amended and Restated Bylaws, the laws of the State of Delaware and all other applicable law, and shall not be deemed a substitute thereof, nor to diminish or abrogate any rights of the Bain Director thereunder. The Parties agree that the provisions of this letter agreement shall not be construed for or against any party hereto based on authorship. Sections 16, 18, 22, 23 and 24 of the Indemnification Agreement are hereby incorporated by reference in, and made applicable to, this letter agreement, mutatis mutandis .

[Remainder of Page Intentionally Left Blank]

 

-2-


The parties hereto have executed this letter agreement as of the date first set forth above.

 

 

Adam Koppel
DICERNA PHARMACEUTICALS, INC.

By:

 

 

Name:

 

Title:

 

[Signature Page to Director Side Letter]

Exhibit 99.1

 

LOGO

Dicerna Secures $70 Million in Convertible Preferred Stock Financing

Provides Sufficient Cash into 2019

CAMBRIDGE, Mass., March 30, 2017 — Dicerna Pharmaceuticals, Inc. (NASDAQ: DRNA) (the “Company”), a leading developer of investigational ribonucleic acid interference (RNAi) therapeutics, today announced that it has signed a stock purchase agreement with a syndicate of current and new investors, led by Bain Capital Life Sciences, for the sale of redeemable convertible preferred stock (“Preferred Stock”) for gross proceeds of $70.0 million. Other participants in the financing include EcoR1 Capital, Cormorant Asset Management, RA Capital, Domain Associates and Skyline Ventures, among others.

Under the terms of the stock purchase agreement, upon closing of the Preferred Stock transaction, Adam M. Koppel, M.D., Ph.D., a managing director of Bain Capital Life Sciences, will be named to the Company’s Board of Directors, increasing the membership to nine.

The Company intends to use the proceeds from the offering to further develop its GalXC™ pipeline programs, including both pre-clinical and clinical work, as well as for general corporate purposes. The transaction is expected to close on or before April 11, 2017, subject to the satisfaction of customary closing conditions.

“We are pleased to announce this convertible preferred stock offering, led by new investor Bain Capital Life Sciences, who, together with a number of other new investors, are contributing more than half of this raise. We are also pleased with the continued support of our existing investors who chose to participate in this round,” said Douglas M. Fambrough, Ph.D., president and chief executive officer of Dicerna. “This financing will significantly strengthen our balance sheet and will provide the capital we need to continue to execute our business strategy and advance development of our RNAi therapeutic candidates through value-creating inflection points in 2018 and 2019.”

“With a committed and focused management team and a next generation platform for RNAi therapeutics, Dicerna is well-positioned to advance several projects in the coming years,” said Dr. Koppel. “We are pleased to join and partner with existing stockholders, the board and management to help the Company achieve its goals on behalf of patients and stockholders.”

The Preferred Stock will be convertible into common shares at a conversion price of $3.19 per share and the Company can require conversion if the price of its common stock exceeds $6.38 per share for 45 of 60 days after the achievement of specified business and clinical development milestones. Holders of the Preferred Stock will be entitled to a 12% cumulative annual dividend, which can be reduced to 4% upon the achievement of the same milestones. Dividends are compounded quarterly and payable in stock.


The Company has agreed to grant the investors certain registration rights with respect to the common stock underlying the Preferred Stock.

Please refer to the Company’s Form 8-K to be filed with the Securities and Exchange Commission for the complete terms of the convertible preferred stock offering.

THIS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THE SHARES OFFERED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR ANY STATE THEREOF ABSENT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS.

About Dicerna Pharmaceuticals, Inc.

Dicerna Pharmaceuticals, Inc., is a biopharmaceutical company focused on the discovery and development of innovative RNAi-based therapeutics for diseases involving the liver, including rare diseases, chronic liver diseases, cardiovascular diseases, and viral infectious diseases. The Company is leveraging its proprietary GalXC™ RNAi technology platform to build a broad pipeline in these core therapeutic areas, focusing on target genes where connections between target gene and diseases are well understood and documented. The Company intends to discover, develop and commercialize novel therapeutics either on its own or in collaboration with pharmaceutical partners. For more information, please visit www.dicerna.com .

Cautionary Note on Forward-Looking Statements

This press release includes forward-looking statements, including, for example, statements concerning the completion, timing and size of the offering, the anticipated use of proceeds from the offering and other statements that are other than statements of historical facts. These forward-looking statements involve significant risks and uncertainties. These statements reflect the Company’s current expectations concerning future events, actual events could differ materially from those anticipated as a result of many factors, including, but not limited to, the risks that the offering may be delayed or may not occur due to market or other conditions and the satisfaction of customary closing conditions related to the offering. Additional information concerning these and other factors that may cause actual events to differ materially from those anticipated is contained in the “Risk Factors” section of our most recent Form 10-Q filing and in other periodic reports and filings with the SEC. Investors should not place undue reliance on forward-looking statements contained in this Current Report or elsewhere. All forward-looking statements contained in this press release are based on information currently available to the Company, and the company undertakes no obligation to revise or update them to reflect events or circumstances after the date of this release.


Investor Contact:

Rx Communications Group

Melody Carey, 917-322-2571

mcarey@rxir.com

Media Contact:

SmithSolve

Alex Van Rees, 973-442-1555 ext. 111

alex.vanrees@smithsolve.com