Exhibit 10.3

INVESTOR AGREEMENT

BY AND BETWEEN

GENZYME CORPORATION

AND

ALNYLAM PHARMACEUTICALS, INC.

DATED AS OF FEBRUARY 27, 2014

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

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TABLE OF CONTENTS

 

     Page  

1. Definitions

     1   

2. Registration Rights

     9   

2.1 Required Registration

     9   

2.2 Company Registration

     10   

2.3 Underwritten Required Registration Required; Priority in Underwritten
Offering

     11   

2.4 Priority in Required Registration

     12   

2.5 Revocation of Required Registration

     13   

2.6 Effective Required Registrations

     13   

2.7 Continuous Effectiveness of Registration Statement

     13   

2.8 Obligations of the Company

     14   

2.9 Furnish Information

     17   

2.10 Expenses

     17   

2.11 Indemnification

     17   

2.12 SEC Reports

     19   

2.13 Assignment of Registration Rights

     20   

3. Restrictions on Beneficial Ownership

     20   

3.1 Standstill

     20   

3.2 Company Agreements

     22   

4. Restrictions on Dispositions

     24   

4.1 Lock-Up

     24   

4.2 Limitations Following Lock-Up Term

     25   

4.3 Certain Tender Offers

     25   

4.4 Offering Lock-Up

     26   

5. Voting Agreement

     26   

5.1 Voting of Securities

     26   

5.2 Certain Extraordinary Matters

     28   

6. Right of First Offer

     28   

6.1 Right of First Offer

     28   

6.2 Limitations

     28   

6.3 Expiration

     30   

7. Designated Director

     30   

7.1 Designated Director

     30   

7.2 Notice and Information Rights

     32   

7.3 Freedom to Pursue Opportunities

     32   

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

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8. Information Rights

     33   

8.1 Information Rights

     33   

8.2 Financial Information and Reporting

     33   

8.3 Confidentiality

     33   

9. Termination of Certain Rights and Obligations

     33   

9.1 Termination of Registration Rights

     33   

9.2 Termination of Standstill Agreement

     34   

9.3 Termination of Restrictions on Dispositions

     34   

9.4 Termination of Voting Agreement and Offering Lock-Up

     35   

9.5 Termination of Right of First Offer

     35   

9.6 Effect of Termination

     35   

10. Miscellaneous

     36   

10.1 Governing Law; Submission to Jurisdiction

     36   

10.2 Waiver

     36   

10.3 Notices

     36   

10.4 Entire Agreement

     37   

10.5 Amendments

     37   

10.6 Headings; Nouns and Pronouns; Section References

     37   

10.7 Severability

     37   

10.8 Assignment

     37   

10.9 Successors and Assigns

     37   

10.10 Counterparts

     37   

10.11 Third Party Beneficiaries

     37   

10.12 No Strict Construction

     38   

10.13 Remedies

     38   

10.14 Specific Performance

     38   

10.15 No Conflicting Agreements

     38   

10.16 Rule 16b-3

     38   

10.17[***]

     38   

Exhibit A – Form of Irrevocable Proxy

Exhibit B – Notices

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

ii

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INVESTOR AGREEMENT

THIS INVESTOR AGREEMENT (this “Agreement”) is made as of February 27, 2014, by
and among Genzyme Corporation (“Investor”), a Massachusetts corporation with its
principal place of business at 500 Kendall Street, Cambridge, MA 02142, and
Alnylam Pharmaceuticals, Inc. (the “Company”), a Delaware corporation with its
principal place of business at 300 Third Street, Cambridge, MA 02142.

WHEREAS, the Stock Purchase Agreement, dated as of January 11, 2014, by and
between the Investor and the Company (the “Purchase Agreement”) provides for the
issuance and sale by the Company to the Investor, and the purchase by the
Investor, of a number of shares of the Company’s common stock, par value $.01
per share (the “Common Stock”), equal to the Share Amount (as defined in the
Purchase Agreement) (the “Purchased Shares”); and

WHEREAS, as a condition to consummating the transactions contemplated by the
Purchase Agreement, the Investor and the Company have agreed upon certain rights
and restrictions as set forth herein with respect to the Purchased Shares and
other securities of the Company beneficially owned by the Investor and its
Affiliates, and it is a condition to the closing under the Purchase Agreement
that this Agreement be executed and delivered by the Investor and the Company.

NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

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

(a) “Acquisition Proposal” shall have the meaning set forth in Section 3.1(c).

(b) “Affiliate” shall mean, with respect to a Person, any other Person which
controls, is controlled by or is under common control with the applicable
Person. For purposes of this definition, “control” shall mean: (a) in the case
of corporate entities, direct or indirect ownership of at least fifty percent
(50%) of the stock or shares entitled to vote for the election of directors, or
otherwise having the power to control or direct the affairs of such Person; and
(b) in the case of non-corporate entities, direct or indirect ownership of at
least fifty percent (50%) of the equity interest or the power to direct the
management and policies of such non-corporate entities.

(c) “Affiliate Irrevocable Proxy” shall have the meaning set forth in
Section 5.1.

(d) “Agreement” shall have the meaning set forth in the Preamble to this
Agreement, including all Exhibits attached hereto.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(e) “ALN-TTRsc” shall have the meaning set forth in the Master Agreement.

(f) “beneficial owner,” “beneficially owns,” “beneficial ownership” and terms of
similar import used in this Agreement shall, with respect to a Person, have the
meaning set forth in Rule 13d-3 under the Exchange Act (i) assuming the full
conversion into, and exercise and exchange for, shares of Common Stock of all
Common Stock Equivalents beneficially owned by such Person and (ii) determined
without regard for the number of days in which such Person has the right to
acquire such beneficial ownership.

(g) “Business Day” shall mean a day on which commercial banking institutions in
New York, New York are open for business.

(h) “Change of Control” shall mean, with respect to the Company, any of the
following events: (i) any Person is or becomes the beneficial owner (except that
a Person shall be deemed to have beneficial ownership of all shares that any
such Person has the right to acquire, whether such right which may be exercised
immediately or only after the passage of time), directly or indirectly, of a
majority of the total voting power represented by all Shares of Then Outstanding
Common Stock; (ii) the Company consolidates with or merges into another
corporation or entity, or any corporation or entity consolidates with or merges
into the Company, other than (A) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof) a majority of the combined voting power of the voting securities
of the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, (B) a merger or consolidation
which would result in a majority of the board of directors of the combined
entity being comprised of members of the board of directors of the
pre-transaction Company and the chief executive officer of the combined entity
being the chief executive officer of the pre-transaction Company, in each case
immediately following the consummation of such merger or consolidation, or (C) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person becomes the beneficial owner,
directly or indirectly, of a majority of the total voting power of all Shares of
Then Outstanding Common Stock or (iii) the Company conveys, transfers or leases
all or substantially all of its assets to any Person other than a wholly owned
Affiliate of the Company.

(i) “Clinical Study” shall have the meaning set forth in the Master Agreement.

(j) “Closing Date” shall have the meaning set forth in the Purchase Agreement.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(k) “Co-Co License Terms” shall mean the Co-Commercialization License and
Collaboration Terms attached to the Master Agreement as Appendix C.

(l) “Collaboration Agreement” shall mean the Master Agreement, the Co-Co License
Terms, the Global License Terms and the Regional License Terms.

(m) “Common Stock” shall have the meaning set forth in the Preamble to this
Agreement.

(n) “Common Stock Equivalents” shall mean any options, warrants or other
securities or rights convertible into or exercisable or exchangeable for,
whether directly or following conversion into or exercise or exchange for other
options, warrants or other securities or rights, shares of Common Stock.

(o) “Company” shall have the meaning set forth in the Preamble to this
Agreement.

(p) “Demand Request” shall have the meaning set forth in Section 2.1.

(q) “Designated Director” shall have the meaning set forth in Section 7.1.

(r) “Dilutive Event” shall have the meaning set forth in Section 3.2(c).

(s) “Director Information” shall have the meaning set forth in Section 7.2.

(t) “Disposition” or “Dispose of” shall mean any (i) pledge, sale, contract to
sell, sale of any option or contract to purchase, purchase of any option or
contract to sell, grant of any option, right or warrant for the sale of, or
other disposition of or transfer of any shares of Common Stock, or any Common
Stock Equivalents, including, without limitation, any “short sale” or similar
arrangement, or (ii) swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of shares of Common Stock, whether any such swap or transaction is
to be settled by delivery of securities, in cash or otherwise.

(u) “Election Notice Date” shall have the meaning set forth in Section 3.2(c).

(v) “Excepted Compensatory Issuance” shall have the meaning set forth in
Section 6.2.

(w) “Excepted Transactional Issuance” shall have the meaning set forth in
Section 6.2.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

3

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(x) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

(y) “Exercise Period” shall have the meaning set forth in Section 6.1.

(z) “Extraordinary Matter” shall have the meaning set forth in Section 5.2.

(aa) “Filing Date” shall mean (i) with respect to any Registration Statement to
be filed on Form S-1 (or any applicable successor form), ninety (90) days after
receipt by the Company of a Demand Request for such Registration Statement and
(ii) with respect to any Registration Statement to be filed on Form S-3 (or any
applicable successor form), thirty (30) days after receipt by the Company of a
Demand Request for such Registration Statement.

(bb) “Funds” shall have the meaning set forth in Section 4.2.

(cc) “Global License Terms” shall mean the Global Product License and
Collaboration Terms attached to the Master Agreement as Appendix B.

(dd) “Global Licensed Product” shall have the meaning set forth in the Master
Agreement.

(ee) “Governmental Authority” shall mean any court, agency, authority,
department, regulatory body or other instrumentality of any government or
country or of any national, federal, state, provincial, regional, county, city
or other political subdivision of any such government or country or any
supranational organization of which any such country is a member.

(ff) “Holders” shall mean (but, in each case, only for so long as such Person
remains an Affiliate of the Investor) the Investor and any Permitted Transferee
thereof, if any, in accordance with Section 2.13.

(gg) “Initiating Holder” shall have the meaning set forth in Section 2.3.

(hh) “Interference” shall have the meaning set forth in Section 2.6.

(ii) “Investor” shall have the meaning set forth in the Preamble to this
Agreement.

(jj) “Irrevocable Proxy” shall have the meaning set forth in Section 5.1.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

4

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(kk) “Law” or “Laws” shall mean all laws, statutes, rules, regulations, orders,
judgments, injunctions and/or ordinances of any Governmental Authority.

(ll) “License Terms” shall mean the Regional License Terms, the Co-Co License
Terms and the Global License Terms.

(mm) “Lock-Up Term” shall have the meaning set forth in Section 4.1.

(nn) “Master Agreement” shall mean that certain Master Collaboration Agreement
between Investor and Company, dated as of January 11, 2014.

(oo) “Modified Clause” shall have the meaning set forth in Section 10.7.

(pp) “New Securities” shall have the meaning set forth in Section 6.1.

(qq) “Offer Notice” shall have the meaning set forth in Section 6.1.

(rr) “Offeror” shall have the meaning set forth in Section 3.1(c).

(ss) “Other Holders” shall mean any Person having rights to participate in a
registration of the Company’s securities.

(tt) “Ownership Threshold” shall have the meaning set forth in Section 7.1

(uu) “Permitted Transferee” shall mean (i) a controlled Affiliate of the
Investor that is wholly owned, directly or indirectly, by the Investor, or
(ii) a controlling Affiliate of the Investor (or any controlled Affiliate of
such controlling Affiliate) that wholly owns, directly or indirectly, the
Investor; it being understood that for purposes of this definition “wholly
owned” shall mean an Affiliate in which the Investor owns, directly or
indirectly, at least ninety-nine percent (99%) of the outstanding capital stock
of such Affiliate.

(vv) “Person” shall mean any individual, limited liability company, partnership,
firm, corporation, association, trust, unincorporated organization, government
or any department or agency thereof or other entity, as well as any syndicate or
group that would be deemed to be a Person under Section 13(d)(3) of the Exchange
Act.

(ww) “Potential Standstill Term Expiration Date” shall have the meaning set
forth in Section 3.2(c).

(xx) “Prospectus” shall mean the prospectus forming a part of any Registration
Statement, as supplemented by any and all prospectus supplements and as amended
by any and all amendments (including post-effective amendments) and including
all material incorporated by reference or explicitly deemed to be incorporated
by reference in such prospectus.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(yy) “Purchase Agreement” shall have the meaning set forth in the Preamble to
this Agreement, and shall include all Exhibits attached thereto.

(zz) “Purchased Shares” shall have the meaning set forth in the Preamble to this
Agreement, and shall be adjusted for (i) any stock split, stock dividend, share
exchange, merger, consolidation or similar recapitalization and (ii) any Common
Stock issued as (or issuable upon the exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange or in replacement of, the Purchased Shares.

(aaa) “Regional License Terms” shall mean the Regional Product License and
Collaboration Terms attached to the Master Agreement as Appendix A.

(bbb) “registers,” “registered,” and “registration” refer to a registration
effected by preparing and filing a Registration Statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such Registration Statement or document by the SEC.

(ccc) “Registrable Securities” shall mean (i) the Purchased Shares, together
with any shares of Common Stock issued in respect thereof as a result of any
stock split, stock dividend, share exchange, merger, consolidation or similar
recapitalization and (ii) any Common Stock issued as (or issuable upon the
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange or in replacement of, the
shares of Common Stock described in clause (i) of this definition, excluding in
all cases, however, (A) any Registrable Securities if and after they have been
transferred to a Permitted Transferee in a transaction in connection with which
registration rights granted hereunder are not assigned, or (B) any Registrable
Securities sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction.

(ddd) “Registration Expenses” shall mean all expenses incurred by the Company in
connection with any Required Registration pursuant to Section 2.1 or the
Company’s compliance with Section 2.8, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky Laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of any Registrable Securities), expenses
of printing (i) certificates for any Registrable Securities in a form eligible
for deposit with the Depository Trust Company or (ii) Prospectuses if the
printing of Prospectuses is requested by Holders, messenger and delivery
expenses, fees and disbursements of counsel for the Company and its independent
certified public accountants (including the expenses of any management review,
cold comfort letters or any special audits required by or incident to such
performance and compliance), Securities Act liability insurance (if the Company
elects to obtain such insurance), the reasonable fees and expenses of any
special experts retained

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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by the Company in connection with such registration, fees and expenses of other
Persons retained by the Company and the reasonable fees and expenses of one
(1) counsel for the Holders of Registrable Securities in each Required
Registration, selected by the Holders of a majority of the Registrable
Securities to be included in such Required Registration. In addition, the
Company will pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Purchased Shares to be registered
on each securities exchange, if any, on which equity securities issued by the
Company are then listed or the quotation of such securities on any national
securities exchange on which equity securities issued by the Company are then
quoted.

(eee) “Registration Rights Term” shall have the meaning set forth in
Section 2.1.

(fff) “Registration Statement” shall mean any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), and all exhibits and all materials incorporated by
reference or explicitly deemed to be incorporated by reference in such
Registration Statement.

(ggg) “Required Period” with respect to a Required Registration shall mean the
earlier of (i) the date on which all Registrable Securities covered by such
Required Registration are sold pursuant thereto and (ii) one hundred twenty
(120) days following the first day of effectiveness of the Registration
Statement for such Required Registration, in each case subject to extension as
set forth herein; provided, however, that in no event will the Required Period
expire prior to the expiration of the applicable period referred to in
Section 4(3) of the Securities Act and Rule 174 promulgated thereunder.

(hhh) “Required Registration” shall have the meaning set forth in Section 2.1.

(iii) “Rights Plan” shall have the meaning set forth in Section 3.2(a).

(jjj) “SEC” shall mean the United States Securities and Exchange Commission.

(kkk) “Securities Act” shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

(lll) “Selling Expenses” shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities pursuant to this
Agreement.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(mmm) “Shares of Then Outstanding Common Stock” shall mean, at any time, the
issued and outstanding shares of Common Stock at such time, as well as all
capital stock issued and outstanding as a result of any stock split, stock
dividend, or reclassification of Common Stock distributable, on a pro rata
basis, to all holders of Common Stock.

(nnn) “Standstill Limit” shall mean thirty percent (30%) of the Shares of Then
Outstanding Common Stock.

(ooo) “Standstill Parties” shall have the meaning set forth in Section 3.1.

(ppp) “Standstill Term” shall mean the period from and after the date of this
Agreement until the earlier of (i) the fifth (5th) anniversary of the earlier of
(a) the expiration of the Term and (b) the termination of the Collaboration
Agreement and (ii) the date on which (x) the beneficial ownership of the
Investor and its Affiliates no longer represents at least 5% of the Shares of
Then Outstanding Common Stock and (y) Investor delivers a written notice to the
Company electing to terminate Section 3.1 (provided, however, that if the
Investor and its Affiliates acquire beneficial ownership representing at least
5% of the Shares of Then Outstanding Common Stock at any time within one year
after the beneficial ownership of the Investor and its Affiliates ceasing to
represent at least 5% of the Shares of Then Outstanding Common Stock, the
Standstill Term shall be automatically reinstated).

(qqq) “Term” shall mean the period beginning on the Closing Date and ending on
the expiration of the last to expire of the Option Period (as defined in the
Master Agreement) or any Royalty Term (as defined in any of the following
License Terms) under the Regional License Terms, the Co-Co License Terms or the
Global License Terms.

(rrr) “Third Party” shall mean any Person other than the Investor, the Company
or any of their respective Affiliates.

(sss) “Underwritten Registration” or “Underwritten Offering” shall mean a
registration in which Registrable Securities are sold to an underwriter for
reoffering to the public.

(ttt) “Violation” shall have the meaning set forth in Section 2.11(a).

(uuu) “Voting-Restricted Shares” shall mean all shares of Common Stock held by
the Investor and its Affiliates; however, if the shares of Common Stock held by
the Investor and its Affiliates comprise or exceed twenty percent (20%) of the
Shares of Then Outstanding Common Stock, the term “Voting-Restricted Shares”
shall only apply to the number of shares of Common Stock held by the Investor
and its Affiliates that is equal to 19.99% of the Shares of Then Outstanding
Common Stock.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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2. Registration Rights.

2.1 Required Registration. If, at any time after the expiration of the Lock-Up
Term but no later than the tenth (10th) anniversary of such expiration (the
“Registration Rights Term”), the Company receives from any Holder or Holders a
written request or requests (each, a “Demand Request”) that the Company file a
Registration Statement under the Securities Act to effect the registration (a
“Required Registration”) of Registrable Securities, the Company shall use all
reasonable efforts to file a Registration Statement covering such Holders’
Registrable Securities as soon as practicable (and by the applicable Filing
Date) and shall use all reasonable efforts to, as soon as practicable
thereafter, effect the registration of the Registrable Securities to permit or
facilitate the sale and distribution in an Underwritten Offering of all or such
portion of such Holder’s or Holders’ Registrable Securities as are specified in
such Demand Request, subject however, to the conditions and limitations set
forth herein; provided, however, that the Company shall not be obligated to
effect any registration of Registrable Securities upon receipt of a Demand
Request pursuant to this Section 2.1 if:

(i) the Company has already completed three (3) Required Registrations;

(ii) (A) in the event that the market value of all Registrable Securities
outstanding is equal to or greater than fifty million dollars ($50,000,000), the
market value of the Registrable Securities proposed to be included in the
registration, based on the average closing price during the ten (10) consecutive
trading days period prior to the making of the Demand Request, is less than
fifty million dollars ($50,000,000) or (B) in the event that the market value of
all Registrable Securities outstanding is less than fifty million dollars
($50,000,000), the market value of the Registrable Securities proposed to be
included in the registration, based on the average closing price during the ten
(10) consecutive trading days period prior to the making of the Demand Request,
is less than the lesser of (x) twenty-five million dollars ($25,000,000) or
(y) the total market value of Registrable Securities outstanding.

(iii) the Company furnishes to the Holders a certificate signed by an authorized
officer of the Company stating that (A) within ninety (90) days after receipt of
the Demand Request under this Section 2.1, the Company will file a registration
statement for the public offering of securities for the account of the Company
(other than a registration of securities (x) issuable pursuant to an employee
stock option, stock purchase or similar plan, (y) issuable pursuant to a merger,
exchange offer or a transaction of the type specified in Rule 145(a) under the
Securities Act or (z) in which the only securities being registered are
securities issuable upon conversion of debt securities which are also being
registered), or (B) the Company is engaged in a material transaction or has an
undisclosed material corporate development, in either case, which would be
required to be disclosed in the Registration Statement, and in the good faith
judgment of the Company’s Board of Directors, such disclosure would be
materially detrimental to the Company and its stockholders at such time (in
which case, the Company shall disclose the matter as promptly as reasonably
practicable and thereafter

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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file the Registration Statement, and each Holder agrees not to disclose any
information about such material transaction to Third Parties until such
disclosure has occurred or such information has entered the public domain other
than through breach of this provision by such Holder), provided, however, that
the Company shall have the right to only defer the filing of the Registration
Statement pursuant to this subsection once in any twelve (12) month period and,
such deferral may not exceed a period of more than one-hundred twenty (120) days
after receipt of a Demand Request;

(iv) the Company has, within the twelve (12) month period preceding the date of
the Demand Request, already effected one (1) Required Registration for any
Holder pursuant to this Section 2.1; or

(v) at any time during the period between the Company’s receipt of the Demand
Request and the completion of the Required Registration, any Holder is in breach
of or has failed to cause its Affiliates to comply with the obligations and
restrictions of Sections 3, 4 or 5 of this Agreement, the Company has provided
notice of such breach to a Holder and such breach or failure is ongoing and has
not been remedied; it being understood that (A) a one-time, inadvertent and de
minimis breach of Section 4 shall not be deemed to be a breach of the
obligations and restrictions under Section 4 for purposes of this Section 2.1(v)
and (B) a de minimis breach of Section 3.1(a) hereof, or an inadvertent breach
of Section 3.1(g) hereof arising from informal discussions covering general
corporate or other business matters the purpose of which is not intended to
effectuate or lead to any of the actions referred to in paragraphs (a) through
(e) of Section 3.1, shall not be deemed to be a breach of the obligations and
restrictions under Section 3.1 for purposes of this Section 2.1(v).

2.2 Company Registration. Effective from the expiration of the Lock-Up Term
until the earlier of (a) the tenth (10th) anniversary of such expiration and
(b) the date on which the Holders no longer beneficially own at least five
percent (5%) of the Shares of Then Outstanding Common Stock, (provided, however,
if the Holders reacquire beneficial ownership representing at least 5% of the
Shares of Then Outstanding Common Stock at any time within ten (10) year period
set forth in clause (a) of this Section 2.2, the provisions of this Section 2.2
shall automatically again become applicable to the Holders) the Company shall
notify the Holders in writing at least ten (10) days prior to the filing of any
Registration Statement including shares of Common Stock by one or more selling
stockholders (other than the Holders) (“Registration Notice”) and will afford
each Holder an opportunity, subject to the terms and conditions of this
Agreement, to include in such Registration Statement the number of Registrable
Securities then held by such Holder that such Holder wishes to include in such
Registration Statement. Each Holder desiring to include in any such Registration
Statement all or any part of the Registrable Securities held by such Holder
shall, within five (5) days after receipt of the Registration Notice, so notify
the Company in writing, and in such notification, inform the Company of the
number of Registrable Securities such Holder wishes to include in such
Registration Statement. If a Holder decides not to include Registrable
Securities in any

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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Registration Statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include Registrable Securities in any
subsequent Registration Statement or Registration Statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein. Each Holder shall keep confidential and not
disclose to any third party (i) its receipt of any Registration Notice and
(ii) any information regarding the proposed offering as to which such notice is
delivered, except as required by law, regulation or as compelled by subpoena. If
a registration pursuant to this Section 2.2 is an Underwritten Offering, the
right of any such Holder to include Registrable Securities in such registration
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. The Company and all Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting. Notwithstanding any other provision
of this Section 2, if the managing underwriter for the Underwritten Offering
determines in good faith that marketing factors require a limitation of the
number of shares of Registrable Securities to be included in such Underwritten
Offering, then the managing underwriter may exclude shares (including up to 100%
of the Registrable Securities) from the registration and the underwriting, with
the number of Registrable Securities, if any, included in the registration and
the underwriting being allocated to each of the Holders requesting inclusion of
their Registrable Securities in such Registration Statement and all other
Persons selling shares of Common Stock pursuant to such Registration Statement
on a pro rata basis based on the total number of shares of Common Stock then
held by each such Holder or other stockholder. Notwithstanding the foregoing,
the Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 2.2 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such
registration.

2.3 Underwritten Required Registration Required; Priority in Underwritten
Offering. The underwriter for any Underwritten Offering requested pursuant to
Section 2.1 shall be selected by a majority in interest of the Holders
initiating the Required Registration hereunder (such Holder(s) initiating the
registration request, the “Initiating Holders”) and shall be acceptable to the
Company, such acceptance not to be unreasonably withheld, conditioned or
delayed. The right of any Holder to include its Registrable Securities in the
Underwritten Offering shall be conditioned upon such Holder’s participation in
such Underwritten Offering and the inclusion of such Holder’s Registrable
Securities to the extent provided herein. All Holders requesting the inclusion
of their Registrable Securities in such Underwritten Offering shall (together
with the Company as provided in Section 2.8(h)) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such Underwritten Offering. Notwithstanding any other provision of this
Section 2, if the managing underwriter for the Underwritten Offering determines
in good faith that marketing factors require a limitation of the number of
shares of Registrable Securities to be included in such Underwritten Offering,
then the Company shall so advise all Holders which requested inclusion of their
Registrable Securities in such Underwritten Offering, and the number of shares
of Registrable

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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Securities that may be included in such Underwritten Offering shall be allocated
among the Holders in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
Underwritten Offering shall not be reduced unless all other securities are first
entirely excluded from such Underwritten Offering. In the event the Company
advises the Holders of its intent to decrease the total number of Registrable
Securities that may be included by the Holders in such Required Registration
such that the number of Registrable Securities included in such Required
Registration would be less than seventy-five percent (75%) of all Registrable
Securities which the Holders requested be included in such Required
Registration, then Holders representing a majority of the Registrable Securities
requested to be included in such Required Registration will have the right to
withdraw, on behalf of all Holders of all Registrable Securities requested to be
so included, such Required Registration, in which case, such Required
Registration will not count as a Required Registration for the purposes of
Section 2.1(i), and the Company shall bear all Registration Expenses in
connection therewith; provided, that, the right to withdraw a registration and
have it not count as a Required Registration may only be exercised once by the
Holders (taken collectively).

2.4 Priority in Required Registration. With respect to any Required Registration
of Registrable Securities requested pursuant to Section 2.1, the Company may
also (i) propose to sell shares of Common Stock on its own behalf and
(ii) provide written notice of such Required Registration to Other Holders and
permit all such Other Holders who request to be included in the Required
Registration to include any or all Company securities held by such Other Holders
in such Required Registration on the same terms and conditions as the
Registrable Securities. Notwithstanding the foregoing, if the managing
underwriter or underwriters of the Underwritten Offering to which any Required
Registration relates advise the Company and the Holders of Registrable
Securities that, in its good faith determination, the total amount of securities
that such Holders, Other Holders, and the Company intend to include in such
Required Registration is in an amount in the aggregate which would adversely
affect the success of such Underwritten Offering, then such Required
Registration shall include (i) first, all Registrable Securities of the Holders
allocated, if the amount is less than all the Registrable Securities requested
to be sold, pro rata on the basis of the total number of Registrable Securities
held by such Holders; and (ii) second, as many other securities proposed to be
included in the Required Registration by the Company and any Other Holders,
allocated pro rata among the Company and such Other Holders, on the basis of the
amount of securities requested to be included therein by the Company and each
such Other Holder so that the total amount of securities to be included in such
Underwritten Offering is the full amount that, in the written opinion of such
managing underwriter, can be sold without materially and adversely affecting the
success of such Underwritten Offering.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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2.5 Revocation of Required Registration. With respect to one (1) Required
Registration only, the Holders of at least a majority of the Registrable
Securities to be included in a Registration Statement with respect to such
Required Registration may, at any time prior to the effective date of such
Registration Statement, on behalf of all Holders of all Registrable Securities
requested to be included therein, revoke the request to have Registrable
Securities included therein and revoke the request for such Required
Registration by providing a written notice to the Company, in which case such
Required Registration that has been revoked will be deemed not to have been
effected and will not count as a Required Registration for purposes of
Section 2.1(i) if, and only if, the Holders of Registrable Securities which had
requested inclusion of Registrable Securities in such Required Registration
promptly reimburse the Company for all Registration Expenses incurred by the
Company in connection with such Required Registration. Notwithstanding the
foregoing sentence, the parties agree and acknowledge that the Holders may
revoke any Required Registration (without any obligation to reimburse the
Company for Registration Expenses incurred in connection therewith) if such
revocation is based on (i) a material adverse change in circumstances with
respect to the Company and its subsidiaries, taken as a whole, caused by an act
or failure to act by the Company or any of its subsidiaries and not known to any
Holder at the time the Required Registration was first made or (ii) the
Company’s failure to comply in any material respect with its obligations
hereunder, and any such revocation based on an event described in (i) or
(ii) above shall be exercisable at any time and shall not be counted as the one
(1) revocation of a Required Registration permitted by the first sentence of
this Section 2.5.

2.6 Effective Required Registrations. A Required Registration will not be deemed
to be effected for purposes of Section 2.1(i) if the Registration Statement for
such Required Registration has (a) not been declared effective by the SEC or
(b) become effective in accordance with the Securities Act and the rules and
regulations thereunder and not been kept effective for the Required Period. In
addition, if after such Registration Statement has been declared or becomes
effective, (i) the offering of Registrable Securities pursuant to such
Registration Statement is interfered with by any stop order, injunction, or
other order or requirement of the SEC or other governmental agency or court such
that the continued offer and sale of Registrable Securities being offered
pursuant to such Registration Statement would violate applicable Law and such
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court does not result from any act or omission of any
Holder whose Registrable Securities are registered pursuant to such Registration
Statement (an “Interference”) and (ii) any such Interference is not cured within
sixty (60) days thereof, such Required Registration will be deemed not to have
been effected and will not count as a Required Registration. In the event such
Interference occurs and is cured, the Required Period relating to such
Registration Statement will be extended by the number of days of such
Interference, including the date such Interference is cured.

2.7 Continuous Effectiveness of Registration Statement. The Company will use all
reasonable efforts to cause each Registration Statement filed pursuant to this
Section 2 to be declared effective by the SEC or to become effective under the
Securities Act as promptly as practicable and to keep each such Registration
Statement that has been declared or becomes effective continuously effective for
the Required Period.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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2.8 Obligations of the Company. Whenever required under Section 2.1 to effect
the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

(a) prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities sought to be included therein; provided that at least
five (5) Business Days prior to filing any Registration Statement or Prospectus
or any amendments or supplements thereto, the Company shall furnish to the
Holders of the Registrable Securities covered by such Registration Statement,
their counsel and the managing underwriter copies of all such documents proposed
to be filed, and any such Holder shall have the opportunity to comment on any
information pertaining solely to such Holder and its plan of distribution that
is contained therein and the Company shall make the corrections reasonably
requested by such Holder or the managing underwriter with respect to such
information prior to filing any such Registration Statement or amendment;

(b) prepare and file with the SEC such amendments and post-effective amendments
to any Registration Statement and any Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the Required
Period, and cause the Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such registration
statement for the Required Period; provided that at least five (5) Business Days
prior to filing any such amendments and post effective amendments or supplements
thereto, the Company shall furnish to the Holders of the Registrable Securities
covered by such Registration Statement, their counsel and the managing
underwriter copies of all such documents proposed to be filed, and any such
Holder or managing underwriter shall have the opportunity to comment on any
information pertaining solely to such Holder and its plan of distribution that
is contained therein and the Company shall make the corrections reasonably
requested by such Holder and the managing underwriter with respect to such
information prior to filing any such Registration Statement or amendment;

(c) furnish to the Holders of Registrable Securities covered by such
Registration Statement and the managing underwriter such numbers of copies of
such Registration Statement, each amendment and supplement thereto, the
Prospectus included in such Registration Statement (including each preliminary
prospectus or free writing prospectus) in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by them;

(d) notify the Holders of Registrable Securities covered by such Registration
Statement, promptly after the Company shall receive notice thereof, of the time
when such Registration Statement becomes or is declared effective or when any
amendment or supplement or any Prospectus forming a part of such Registration
Statement has been filed;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(e) notify the Holders of Registrable Securities covered by such Registration
Statement promptly of any request by the SEC for the amending or supplementing
of such Registration Statement or Prospectus or for additional information and
promptly deliver to such Holders copies of any comments received from the SEC;

(f) notify the Holders promptly of any stop order suspending the effectiveness
of such Registration Statement or Prospectus or the initiation of any
proceedings for that purpose, and use all reasonable efforts to obtain the
withdrawal of any such order or the termination of such proceedings;

(g) use all reasonable efforts to register and qualify the Registrable
Securities covered by such Registration Statement under such other securities or
blue sky Laws of such jurisdictions as shall be reasonably requested by the
Holders, use all reasonable efforts to keep each such registration or
qualification effective, including through new filings, or amendments or
renewals, during the Required Period, and notify the Holders of Registrable
Securities covered by such Registration Statement of the receipt of any written
notification with respect to any suspension of any such qualification; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;

(h) enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of the Underwritten
Offering pursuant to which such Registrable Securities are being offered;

(i) use all reasonable efforts to obtain: (A) at the time of effectiveness of
the Registration Statement covering such Registrable Securities, a “cold comfort
letter” from the Company’s independent certified public accountants covering
such matters of the type customarily covered by “cold comfort letters” as the
underwriters may reasonably request; and (B) at the time of any underwritten
sale pursuant to such Registration Statement, a “bring-down comfort letter,”
dated as of the date of such sale, from the Company’s independent certified
public accountants covering such matters of the type customarily covered by
“bring-down comfort letters” as the underwriters may reasonably request.

(j) promptly notify each Holder of Registrable Securities covered by such
Registration Statement at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the Prospectus included in such Registration Statement or
any offering memorandum or other offering document includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly prepare a supplement or
amendment to such Prospectus or file any other required document so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus will not contain an untrue statement of material fact or omit to
state any fact necessary to make the statements therein not misleading;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(k) permit any Holder of Registrable Securities covered by such Registration
Statement, which Holder in its reasonable judgment could reasonably be deemed to
be an underwriter with respect to the Underwritten Offering pursuant to which
such Registrable Securities are being offered, or to be a controlling Person of
the Company, to reasonably participate in the preparation of such Registration
Statement and to require the insertion therein of information to the extent
concerning such Holder, furnished to the Company in writing, which in the
reasonable judgment of such Holder and its counsel should be included;

(l) in connection with any Underwritten Offering, use all reasonable efforts to
obtain an opinion or opinions addressed to the underwriter or underwriters in
customary form and scope from counsel for the Company;

(m) upon reasonable notice and during normal business hours, subject to the
Company receiving customary confidentiality undertakings or agreements from any
Holder of Registrable Securities covered by such Registration Statement or other
person obtaining access to Company records, documents, properties or other
information pursuant to this subsection (m), make available for inspection by a
representative of such Holder and any underwriter participating in any
disposition of such Registrable Securities and any attorneys or accountants
retained by any such Holder or underwriter, relevant financial and other
records, pertinent corporate documents and properties of the Company, and use
all reasonable efforts to cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, underwriter, attorneys or accountants in connection with the
Registration Statement;

(n) with respect to one (1) Required Registration which includes Registrable
Securities the market value of which is at least one hundred million United
States dollars ($100,000,000), participate, to the extent requested by the
managing underwriter, in efforts extending for no more than three (3) days
scheduled by such managing underwriter and reasonably acceptable to the
Company’s senior management, to sell the Registrable Securities being offered
pursuant to such Required Registration (including participating during such
period in customary “roadshow” meetings with prospective investors);

(o) use all reasonable efforts to comply with all applicable rules and
regulations of the SEC relating to such registration and make generally
available to its security holders earning statements satisfying the provisions
of Section 11(a) of the Securities Act, provided that the Company will be deemed
to have complied with this Section 2.8(o) with respect to such earning
statements if it has satisfied the provisions of Rule 158;

(p) if requested by the managing underwriter or any selling Holder, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or any selling Holder reasonably
requests to be included therein, with respect to the Registrable Securities
being sold by such selling Holder, including, without limitation, the purchase
price being paid therefor by the underwriters and with respect to any other
terms of the Underwritten Offering of Registrable Securities to be sold in such
offering, and promptly make all required filings of such prospectus supplement
or post-effective amendment;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(q) cause the Registrable Securities covered by such Registration Statement to
be listed on each securities exchange, if any, on which equity securities issued
by the Company are then listed; and

(r) reasonably cooperate with each selling Holder and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with filings required to be made with the
Financial Industry Regulatory Authority, Inc., if any.

2.9 Furnish Information. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 2 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself and the Registrable Securities
held by it as shall be reasonably necessary to effect the registration of such
Holder’s Registrable Securities.

2.10 Expenses. Except as specifically provided herein, all Registration Expenses
shall be borne by the Company. All Selling Expenses incurred in connection with
any registration hereunder shall be borne by the Holders of Registrable
Securities covered by a Registration Statement, pro rata on the basis of the
number of Registrable Securities registered on their behalf in such Registration
Statement.

2.11 Indemnification. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:

(a) The Company shall indemnify and hold harmless each Holder including
Registrable Securities in any such Registration Statement, any underwriter (as
defined in the Securities Act) for such Holder and each Person, if any, who
controls such Holder or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and the officers, directors,
owners, agents and employees of such controlling Persons, against any and all
losses, claims, damages or liabilities (joint or several) to which they may
become subject under any securities Laws including, without limitation, the
Securities Act, the Exchange Act, or any other statute or common law of the
United States or any other country or political subdivision thereof, or
otherwise, including the amount paid in settlement of any litigation commenced
or threatened (including any amounts paid pursuant to or in settlement of claims
made under the indemnification or contribution provisions of any underwriting or
similar agreement entered into by such Holder in connection with any offering or
sale of securities covered by this Agreement), and shall promptly reimburse
them, as and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
any such losses, claims, damages or liabilities (or actions in

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (each, a “Violation”): (i) any untrue statement or
alleged untrue statement of a material fact contained in or incorporated by
reference into such Registration Statement, including any preliminary prospectus
or final prospectus contained therein or any free writing prospectus or any
amendments or supplements thereto, or in any offering memorandum or other
offering document relating to the offering and sale of such securities or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; provided, however, the Company shall not be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
(A) arises out of or is based upon a Violation which occurs solely in reliance
upon and in conformity with written information furnished expressly for use in
connection with such registration by such Holder; or (B) is caused by such
Holder’s disposition of Registrable Shares during any period during which such
Holder is obligated to discontinue any disposition of Registrable Shares as a
result of any stop order suspending the effectiveness of any registration
statement or prospectus with respect to Registrable Securities of which such
Holder has received written notice.

(b) Each Holder including Registrable Securities in a registration statement
shall indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and the officers, directors, owners, agents and
employees of such controlling Persons, any underwriter, any other Holder selling
securities in such registration statement and any controlling Person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing Persons may become subject,
under liabilities (or actions in respect thereto) which arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation: (i) arises out of or is based upon a Violation which occurs
solely in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder; or
(ii) is caused by such Holder’s disposition of Registrable Shares during any
period during which such Holder is obligated to discontinue any disposition of
Registrable Shares as a result of any stop order suspending the effectiveness of
any registration statement or prospectus with respect to Registrable Securities
of which such Holder has received written notice. Each such Holder shall pay, as
incurred, any legal or other expenses reasonably incurred by any Person intended
to be indemnified pursuant to this Section 2.11(b), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this
Section 2.11(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without
consent of the Holder, which consent shall not be unreasonably withheld.

(c) Promptly after receipt by an indemnified party under this Section 2.11 of
notice of the commencement of any action (including any action by a Governmental
Authority), such indemnified party shall, if a claim in respect thereof is to be
made against any

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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indemnifying party under this Section 2.11, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.11, but the omission so to deliver written notice to the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.11.

(d) In order to provide for just and equitable contribution to joint liability
in any case in which a claim for indemnification is made pursuant to this
Section 2.11 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 2.11
provided for indemnification in such case, the Company and each Holder of
Registrable Securities shall contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from others) in
proportion to the relative fault of the Company, on the one hand, and such
Holder, severally, on the other hand; provided, however, that in any such case,
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; provided
further, however, that in no event shall any contribution under this
Section 2.11(d) on the part of any Holder exceed the net proceeds received by
such Holder from the sale of Registrable Securities giving rise to such
contribution obligation, except in the case of willful misconduct or fraud by
such Holder.

(e) The obligations of the Company and the Holders under this Section 2.11 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement and otherwise.

2.12 SEC Reports. With a view to making available to the Holders the benefits of
Rule 144 under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell Registrable Securities of the
Company to the public without registration, the Company agrees to at any time
that it is a reporting company under Section 13 or 15(d) of the Exchange Act:

(a) file with the SEC in a timely manner all reports and other documents
required of the Company under the Exchange Act; and

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(b) furnish to any Holder, so long as such Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC (exclusive of Rule 144A) which permits the selling of any Registrable
Securities without registration.

2.13 Assignment of Registration Rights. The rights to cause the Company to
register any Registrable Securities pursuant to this Agreement may be assigned
in whole or in part (but only with all restrictions and obligations set forth in
this Agreement) by a Holder to a Permitted Transferee which acquires Registrable
Securities from such Holder; provided, however, (a) such Holder shall, within
five (5) days prior to such transfer, furnish to the Company written notice of
the name and address of such Permitted Transferee, details of its status as a
Permitted Transferee and details of the Registrable Securities with respect to
which such registration rights are being assigned, (b) the Permitted Transferee,
prior to or simultaneously with such transfer or assignment, shall agree in
writing to be subject to and bound by all restrictions and obligations set forth
in this Agreement, (c) the Investor shall continue to be bound by all
restrictions and obligations set forth in this Agreement and (d) such transfer
or assignment shall be effective only if immediately following such transfer or
assignment the further disposition of such Registrable Securities by the
Permitted Transferee is restricted under the Securities Act and other applicable
securities Law.

3. Restrictions on Beneficial Ownership.

3.1 Standstill. During the Standstill Term, neither the Investor nor any of its
Affiliates (collectively, the “Standstill Parties”) shall (and the Investor
shall cause its Affiliates not to), except as expressly approved or invited in
writing by the Company:

(a) directly or indirectly, acquire beneficial ownership of Shares of Then
Outstanding Common Stock and/or Common Stock Equivalents, or make a tender,
exchange or other offer to acquire Shares of Then Outstanding Common Stock
and/or Common Stock Equivalents, if after giving effect to such acquisition, the
Standstill Parties would beneficially own more than the Standstill Limit;
provided, however, that notwithstanding the provisions of this Section 3.1(a),
if the number of shares constituting Shares of Then Outstanding Common Stock is
reduced or if the aggregate ownership of the Standstill Parties is increased as
a result of a repurchase by the Company of Shares of Then Outstanding Common
Stock, stock split, stock dividend or a recapitalization of the Company, the
Standstill Parties shall not be required to dispose of any of their holdings of
Shares of Then Outstanding Common Stock even though such action resulted in the
Standstill Parties’ beneficial ownership totaling more than the Standstill
Limit;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(b) directly or indirectly, (i) seek to have called any meeting of the
stockholders of the Company, (ii) propose or nominate for election to the
Company’s Board of Directors any person whose nomination has not been approved
by a majority of the Company’s Board of Directors (excluding the Designated
Director, if any) or (iii) unless a person referred to in the foregoing clause
(ii) is nominated by a third party in connection with such party’s publicly
announced and not withdrawn Acquisition Proposal (in which case the provisions
of Section 5.1 shall apply to permit the Standstill Parties to either vote in
accordance with the recommendation of the Company’s Board of Directors or in the
same proportion as the votes cast by all other holders of all classes of voting
securities of the Company), fail to cause to be voted in accordance with the
recommendation of the Company’s Board of Directors with respect to such person
for election to the Company’s Board of Directors any Shares of Then Outstanding
Common Stock;

(c) directly or indirectly, encourage or support a tender, exchange or other
offer or proposal by any other Person or group (an “Offeror”) the consummation
of which would result in a Change of Control of the Company (an “Acquisition
Proposal”); provided, however, that from and after the filing of a Schedule
14D-9 (or successor form of Tender Offer Solicitation/Recommendation Statement
under Rule 14d-9 of the Exchange Act) by the Company recommending that
stockholders accept any such offer, Investor shall not be prohibited from taking
any of the actions otherwise prohibited by this Section 3.1(c) for so long as
the Company maintains and does not withdraw such recommendation;

(d) directly or indirectly, solicit proxies or consents or become a participant
in a solicitation (as such terms are defined in Regulation 14A under the
Exchange Act) in opposition to the recommendation of a majority of the Company’s
Board of Directors with respect to any matter, or seek to advise or influence
any Person, with respect to voting of any Shares of Then Outstanding Common
Stock of the Company;

(e) deposit any Shares of Then Outstanding Common Stock in a voting trust or
subject any Shares of Then Outstanding Common Stock to any arrangement or
agreement with respect to the voting of such Shares of Then Outstanding Common
Stock;

(f) propose (i) any merger, consolidation, business combination, tender or
exchange offer, purchase of the Company’s assets or businesses, or similar
transaction involving the Company or (ii) any recapitalization, restructuring,
liquidation or other extraordinary transaction with respect to the Company;

(g) act in concert with any Third Party to take any action in clauses
(a) through (f) above, or form, join or in any way participate in a
“partnership, limited partnership, syndicate, or other group” within the meaning
of Section 13(d)(3) of the Exchange Act;

(h) enter into discussions, negotiations, arrangements or agreements with any
Person relating to the foregoing actions referred to in (a) through (g) above;
or

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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(i) request or propose to the Company’s Board of Directors, any member(s)
thereof or any officer of the Company that the Company amend, waive, or consider
the amendment or waiver of, any provisions set forth in this Section 3.1
(including this clause (i));

provided, however, that (A) nothing contained in this Section 3.1 shall prohibit
the Investor from making confidential, non-public proposals to, or entering into
confidential, non-public discussions, negotiations, arrangements or agreements
with, the Company and with third parties with the express authorization of the
Company, which the Investor or any Affiliate may request in a confidential,
non-public manner, regarding a transaction or matter of the type described in
the foregoing clauses (a) and (f), (B) the mere voting in accordance with
Section 5 hereof of any voting securities of the Company held by the Investor or
its Affiliates shall not constitute a violation of any of clauses (a) through
(h) above, and (C) nothing in the foregoing clause (b) shall prohibit the
Investor from proposing to the Company’s Nominating and Corporate Governance
Committee (and not pursuant to the advance notice provisions set forth in the
Company’s bylaws), in a confidential, non public manner, potential director
candidates for consideration by the Company’s Nominating and Corporate
Governance Committee, which candidates the Investor believes would be in the
best interest of the Company and its stockholders.

3.2 Company Agreements.

(a) During the Standstill Term, the Company shall not take any action or omit to
take any action that would prevent or impede the Investor or its Affiliates from
acquiring beneficial ownership of Shares of Then Outstanding Common Stock and/or
Common Stock Equivalents to the extent that, after giving effect to such
acquisition, the Standstill Parties would beneficially own less than the
Standstill Limit, including by adopting a shareholder rights plan applicable to
the Standstill Parties that contains a threshold below the Standstill Limit if
such shareholder rights plan does not otherwise permit the Investor to
beneficially own up to the Standstill Limit, provided, however, that nothing
contained in this Section 3.2(a) or elsewhere in this Agreement shall affect the
Company’s ability to (i) take and disclose a position in accordance with Rule
14d-9, Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated under the
Exchange Act or (ii) make any disclosure to the Company’s stockholders, in each
case if, in the good faith judgment of the Company’s Board of Directors, the
failure to take such position and/or make such disclosure would be inconsistent
with the directors’ fiduciary duties under applicable law or any disclosure
requirements under applicable law. During the Standstill Term and
notwithstanding the provisions of Section 5.1, Investor shall, and shall cause
its Affiliates to, not take any action or omit to take any action that would
prevent or impede the Company or its Affiliates from maintaining and enforcing
the provisions of the Rights Agreement, dated July 13, 2005, by and between the
Company and EquiServe Trust Company, N.A. (the “Rights Plan”) as in effect on
the date hereof, as amended as contemplated by the Purchase Agreement, including
without limitation, by voting (or, if applicable, by executing a written consent
with respect to) all of its and their Shares of Then Outstanding Common Stock in
favor of any renewal of such shareholder rights plan or adoption of a
replacement shareholder

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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rights plan in each case that is materially consistent with the Rights Plan as
in effect on the date hereof, as amended as contemplated by the Purchase
Agreement, should the Company submit such renewal or adoption to the
stockholders of the Company for their approval.

(b) Following expiration of the Standstill Term, the Company shall not take any
action or omit to take any action that would force the Investor to dispose of
any of its holdings of Shares of Then Outstanding Common Stock.

(c) Upon the expiration of the Standstill Term (the “Potential Standstill Term
Expiration Date”), in the event that the Standstill Parties beneficially own, in
the aggregate, at least twenty percent (20%) of the Shares of Then Outstanding
Common Stock, the Investor may deliver to the Company not later than five
(5) business days following a Potential Standstill Term Expiration Date a
written notice electing to reinstate the provisions of Section 3 and Section 5
and continue the Standstill Term as provided in this Section 3.2(c) (the
“Election Notice Date”). If such election is made, the provisions of Section 3
and Section 5 shall be reinstated and the provisions of such sections, including
the Standstill Term, shall be deemed to have remained in effect at all times
without interruption or tolling notwithstanding the occurrence of a Potential
Standstill Term Expiration Date; provided, however, that the “Standstill Limit”
shall instead be the percentage of Shares of Then Outstanding Common Stock
beneficially owned, in the aggregate, by the Standstill Parties as of the
Potential Standstill Term Expiration Date. Following the Election Notice Date,
the “Standstill Term” shall terminate on the date on which the Standstill
Parties beneficially own, in the aggregate, less than twenty percent (20%) of
the Shares of Then Outstanding Common Stock; provided, however, that if the
beneficial ownership of the Investor and its Affiliates in the aggregate is
reduced below such threshold as a direct result of dilution suffered upon an
issuance of securities by the Company pursuant to an Excepted Transactional
Issuance (a “Dilutive Event”), the Standstill Term shall instead terminate upon
the earliest of (x) Investor’s failure to provide written notice to the Company
of its election to purchase additional securities within the five (5) business
day period set forth in Section 6.2 related to the applicable Dilutive Event,
(y) Investor’s failure to consummate such purchase of additional securities of
the Company pursuant to Section 6.2 within the time period set forth therein
related to the applicable Dilutive Event or (z) the date of Investor’s purchase
of additional securities of the Company pursuant to Section 6.2 related to the
applicable Dilutive Event if, immediately following the consummation of such
purchase, the Investor and its Affiliates beneficially own, in the aggregate,
less than twenty percent (20%) of the Shares of Then Outstanding Common Stock.

(d) If the Company (i) permits any other Person or group to own Shares of Then
Outstanding Common Stock and/or Common Stock Equivalents in the aggregate
exceeding the Standstill Limit or (ii) executes a transaction with any other
Person or group that (i) results in said Person or group becoming the beneficial
owner of Shares of Then Outstanding Common Stock and/or Common Stock Equivalents
in an amount equal to or greater than the percentage ownership represented by
the Purchased Shares on the date hereof and (ii) is a collaboration or other
license agreement with the Company, the Company shall offer to the

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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Investor an opportunity to amend Sections 3 and 5 of this Agreement in a manner
such that such provisions would be consistent with the “standstill” terms and
conditions upon which the Company permitted such other Person or group to own
and act (or fail to act) with respect to the Company and the Company’s Shares of
Then Outstanding Common Stock and/or Common Stock Equivalents. This
Section 3.2(d) shall terminate and be of no further force or effect on the date
on which the Investor and its Affiliates beneficially own, in the aggregate,
less than seven and a half percent (7.5%) of the Shares of Then Outstanding
Common Stock; provided, however, that if the beneficial ownership of the
Investor and its Affiliates in the aggregate is reduced below such threshold as
a direct result of dilution suffered upon a Dilutive Event, this Section 3.2(d)
shall instead terminate upon the earliest of (x) Investor’s failure to provide
written notice to the Company of its election to purchase additional securities
within the five (5) business day period set forth in Section 6.2 related to the
applicable Dilutive Event, (y) Investor’s failure to consummate the purchase of
additional securities of the Company pursuant to Section 6.2 within the time
period set forth therein related to the applicable Dilutive Event or (z) the
date of Investor’s purchase of additional securities of the Company pursuant to
Section 6.2 related to the applicable Dilutive Event if, immediately following
the consummation of such purchase, the Investor and its Affiliates beneficially
own, in the aggregate, less than seven and a half percent (7.5%) of the Shares
of Then Outstanding Common Stock.

4. Restrictions on Dispositions.

4.1 Lock-Up. From and after the date of this Agreement and until the earlier of
(i) December 31, 2019, plus the amount of time by which either the Regional
Option Outside Date (as defined in the Master Agreement) or the Global Option
Outside Date (as defined in the Master Agreement) is extended beyond
December 31, 2019 and (ii) six (6) months after the earlier of (a) the
expiration of the Term and (b) the termination of the Collaboration Agreement
(the “Lock-Up Term”), without the prior approval of the Company, the Investor
shall not, and shall cause its Affiliates not to, Dispose of (x) any of the
Purchased Shares or any shares of Common Stock beneficially owned by any
Standstill Party as of the date of this Agreement, together with any shares of
Common Stock issued in respect thereof as a result of any stock split, stock
dividend, share exchange, merger, consolidation or similar recapitalization, and
(y) any Common Stock issued as (or issuable upon the exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with
respect to, or in exchange or in replacement of, the shares of Common Stock
described in clause (x) of this sentence; provided, however, that the foregoing
shall not prohibit the Investor from (A) transferring any of the foregoing to a
Permitted Transferee, (B) Disposing of any of the foregoing in order to reduce
the beneficial ownership of the Standstill Parties to 19.9% or other level, as
advised in good faith and in writing by Sanofi’s certified public accountants,
that would not require the Investor to include in its financial statements its
portion of the Company’s financial results, of the Shares of Then Outstanding
Common Stock, provided that any Disposition referred to in this clause (B) shall
be subject to the restrictions and requirements set forth in Section 4.2, and
(C) effective on or after the second anniversary of the date hereof, Disposing
of up to twenty-five percent (25%)

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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of the foregoing if the market value of the Common Stock, based on the average
closing price during the ten (10) consecutive trading days period prior to the
Investor’s election to exercise this clause (C), is at least one-hundred percent
(100%) higher than the market value of the Common Stock, based on the average
closing price during the ten (10) consecutive trading days period prior to the
date hereof, provided that any Disposition referred to in this clause (C) shall
be subject to the restrictions and requirements set forth in Section 4.2.

4.2 Limitations Following Lock-Up Term. Except for any transfer of Registrable
Securities by the Investor to a Permitted Transferee, the Investor shall not,
and shall cause its Affiliates not to, Dispose of any Purchased Shares at any
time after the expiration of the Lock-Up Term except (i) pursuant to a
registered underwritten public offering in accordance with Section 2, (ii) in a
manner consistent with the volume limitations set forth in Rule 144 under the
Securities Act (whether or not such limitations would by their terms apply to
such sales), (iii) pursuant to privately negotiated sales in transactions exempt
from the registration requirements under the Securities Act to mutual funds or
pension funds, each of which will not be required, based on its ownership of
Shares of Then Outstanding Common Stock immediately following the contemplated
transaction, to file a Schedule 13D with respect to its ownership of the Shares
of Then Outstanding Common Stock disclosing in response to Item 4 of such filing
any plans or proposals described in clauses (a) through (j) of such Item (the
“Funds”), or to which the Company has no reasonable objection with respect to
(x) the nature of the transferee or (y) the ability of the transferee to
subsequently sell such Shares of Then Outstanding Common Stock and/or Common
Stock Equivalents into the market without having a material and adverse impact
on the market price of the Company’s Common Stock; provided that, in the case of
this clause (iii), other than with respect to the Funds, any transferee that
acquires more than five percent (5%) of the Shares of Then Outstanding Common
Stock shall agree to be bound by the transfer limitations set forth in this
Section 4.2 and the standstill limitations set forth in Section 3.1, or (iv) in
any transaction approved by the Company; provided, however, that in any
Underwritten Offering in accordance with Section 2.1, the Holders whose
Registrable Securities are included in such Underwritten Offering shall request
that the underwriter for such Underwritten Offering, and shall require that the
underwriter for such Underwritten Offering shall agree in writing to, use all
reasonable efforts to make as broad a distribution as reasonably practical and
to prevent any Person, or Affiliates of such Person, other than the Funds, from
purchasing in such offering Registrable Securities which would constitute, or
result in such Person, together with such Person’s Affiliates, having beneficial
ownership of, five percent (5%) or more of the total shares of Common Stock then
outstanding.

4.3 Certain Tender Offers. Notwithstanding any other provision of this
Section 4, this Section 4 shall not prohibit or restrict any Disposition of
Purchased Shares by the Standstill Parties into (a) a tender offer by a Third
Party which is not opposed by the Company’s Board of Directors (but only after
the Company’s filing of a Schedule 14D-9, or any amendment thereto, with the SEC
disclosing the recommendation of the Company’s Board of Directors with respect
to such tender offer), unless Investor is then in breach of its obligations
pursuant to Section 3.1 with respect to the tender offer or (b) an issuer tender
offer by the Company.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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4.4 Offering Lock-Up. If the Holders together beneficially own at least five
percent (5%) of the Shares of Then Outstanding Common Stock, the Holders shall,
if requested by the Company and an underwriter of Common Stock of the Company,
agree not to Dispose of any Purchased Shares for a specified period of time,
such period of time not to exceed ninety (90) days. Such agreement shall be in
writing in a form satisfactory to the Company, the underwriter(s) in such
offering and shall contain customary exceptions to the restrictions set forth
therein. The Company may impose stop transfer instructions with respect to the
Purchased Shares to the extent consistent with any such agreement until the end
of the specified period of time. The foregoing provisions of this Section 4.4
shall apply to the Holders only if the Company’s directors, officers and any
holders of an equal or greater number of Shares of Then Outstanding Common Stock
that are party to a collaboration, license or similar agreement with the Company
are subject to similar lock-up restrictions. Any discretionary waiver or
termination of the restrictions of any or all of such agreements by the Company
or the underwriters shall apply pro rata to all Holders subject to such
agreements, based on the number of shares subject to such agreements.

5. Voting Agreement.

5.1 Voting of Securities. From and after the date of this Agreement, other than
as permitted by Section 5.2 with respect to Extraordinary Matters or as required
by Section 3.1(b) or 3.2(a), in any vote or action by written consent of the
stockholders of the Company (including, without limitation, with respect to the
election of directors), the Investor shall, and shall cause its respective
Affiliates to, vote or execute a written consent with respect to the
Voting-Restricted Shares, in the sole discretion of the Investor, either (a) in
accordance with the recommendation of the Company’s Board of Directors or (b) in
the case of a meeting of stockholders, if the Investor or an Affiliate of the
Investor has delivered written notice to the Company at any time prior to the
vote on any given matter (but in any event not less than five (5) Business Days
prior to such vote), setting forth its intent to vote pursuant to this
Section 5.1(b), in the same proportion as the votes cast by all other holders of
all classes of voting securities of the Company (as estimated by the inspector
of election immediately prior to the closing of the polls with respect to the
vote on any given matter, subject to adjustment for the inspector of election’s
final tabulation of votes cast). In the event that the Investor or an Affiliate
of the Investor does not deliver timely written notice to the Company as
provided in Section 5.1(b), such Person shall be deemed to have elected to vote
the Voting-Restricted Shares of the Company as to which it is entitled to vote
as provided in Section 5.1(a). In furtherance of this Section 5.1, the Investor
hereby irrevocably appoints the Company and any individuals designated by the
Company, and each of them individually, as the attorneys, agents and proxies,
with full power of substitution and re-substitution in each of them, for the
Investor, and in the name, place and stead of the Investor, to vote (or cause to
be voted) in such manner as set forth in this Section 5.1 (but in any case,
(i) in accordance with any written instruction from the

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

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Investor, properly delivered under this Section 5.1, to vote as contemplated by
clause (b) above, and (ii) excluding any matter that is an Extraordinary Matter
described in Section 5.2) with respect to the Voting-Restricted Shares, and
Section 3.1(b) and Section 3.2(a) with respect to all Shares of Then Outstanding
Common Stock beneficially owned by Investor and its Affiliates, with respect to
which the Investor is or may be entitled to vote at any meeting of the Company
held after the date hereof, whether annual or special and whether or not an
adjourned meeting (the “Irrevocable Proxy”). This Irrevocable Proxy is coupled
with an interest, shall be irrevocable and binding on any successor in interest
of the Investor and shall not be terminated by operation of law upon the
occurrence of any event. This Irrevocable Proxy shall operate to revoke and
render void any prior proxy as to any securities of the Company heretofore
granted by the Investor which is inconsistent herewith. Notwithstanding the
foregoing, the Irrevocable Proxy shall be effective if, at any annual or special
meeting of the stockholders of the Company and at any adjournments or
postponements of any such meetings, the Investor (A) fails to appear or
otherwise fails to cause the Voting-Restricted Shares (in the case of matters
referred to in this Section 5.1) and any securities of the Company (in the case
of the matters referred to in Section 3) to be counted as present for purposes
of calculating a quorum, or (B) fails to vote such securities of the Company in
accordance with this Section 5.1, Section 3.1(b) and Section 3.2(a), in each
case at least five (5) business days prior to the date of such stockholders’
meeting. The Irrevocable Proxy shall terminate upon the earlier of the
expiration or termination of the voting agreement set forth in this
Section 5.1. The Investor shall cause any Affiliate of the Investor that may
from time to time own of record (or the record holder holding on behalf of such
Affiliate if owned beneficially) Voting-Restricted Shares (in the case of
matters referred to in this Section 5.1) and any securities of the Company (in
the case of the matters referred to in Section 3.1(b) and 3.2(a)), if and when
requested by the Company from time to time, to promptly execute and deliver to
the Company an irrevocable proxy, substantially in the form of Exhibit A
attached hereto, and irrevocably appoint the Company and any individuals
designated by the Company, and each of them individually, with full power of
substitution and resubstitution, as its attorney, agent and proxy to vote (or
cause to be voted) such securities of the Company as to which such Affiliate is
entitled to vote, in such manner as each such attorney, agent and proxy or his
substitute shall in its, his or her sole discretion deem appropriate or
desirable with respect to the matters set forth in this Section 5.1,
Section 3.1(b) and Section 3.2(a) (the “Affiliate Irrevocable Proxy”). The
Investor acknowledges, and shall cause its Affiliates to acknowledge, that any
such proxy executed and delivered shall be coupled with an interest, shall
constitute, among other things, an inducement for the Company to enter into this
Agreement, shall be irrevocable and binding on any successor in interest of such
Affiliate and shall not be terminated by operation of Law upon the occurrence of
any event. Such proxy shall operate to revoke and render void any prior proxy as
to any securities of the Company heretofore granted by such Affiliate, to the
extent it is inconsistent herewith. The Investor acknowledges and agrees that it
shall be a condition to any proposed transfer of any securities of the Company
by the Investor to such Affiliate that such Affiliate execute and deliver to the
Company an Affiliate Irrevocable Proxy, and that any purported transfer shall be
void and of no force or effect if such Affiliate Irrevocable Proxy is not so
executed and delivered at the closing of such transfer. Such proxy

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

27

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shall terminate upon the earlier of the expiration or termination of this
Section 5.1. For the avoidance of doubt, this Section 5 does not apply to any
Shares of Then Outstanding Common Stock other than the Voting-Restricted Shares,
except as otherwise expressly contemplated by Section 3.1(b) and Section 3.2(a).
In the event the Company’s stockholders are permitted to act by written consent,
the Company and the Investor shall each negotiate in good faith with the other
provisions as consistent as possible with the foregoing to govern the voting of
the Investor’s and its Affiliates’ Voting-Restricted Shares and Shares of Then
Outstanding Common Stock as closely as practicable to the foregoing.

5.2 Certain Extraordinary Matters. The Investor and its Affiliates may vote, or
execute a written consent with respect to, any or all of the Voting-Restricted
Shares of the Company as to which they are entitled to vote or execute a written
consent, as they may determine in their sole discretion, with respect to the
following matters (each such matter being an “Extraordinary Matter”):

(a) any transaction which would result in a Change of Control; and

(b) any liquidation or dissolution of the Company

6. Right of First Offer.

6.1 Right of First Offer. Subject to the terms and conditions of this Section 6
and applicable securities laws, if the Company proposes to offer or sell any
shares of Common Stock or any Common Stock Equivalents (the “New Securities”),
the Company shall give written notice (the “Offer Notice”) to the Investor
stating (a) its bona fide intention to offer such New Securities, (b) the number
of such New Securities to be offered, and (c) the structure of the proposed
offering or sale. By written notification to the Company within five (5) days
after the date of the Offer Notice (the “Exercise Period”, the Investor may
elect to purchase, upon the same terms and conditions as other purchasers in the
offering or sale of the New Securities, up to that portion of such New
Securities that would allow the Investor to maintain its percentage ownership of
Shares of Then Outstanding Common Stock after the offering or sale of the New
Securities. The Investor shall be entitled to apportion the right of first offer
hereby granted to it in such proportions as it deems appropriate, among itself
and its Permitted Transferees that are “accredited investors” within the meaning
of Rule 501(a) under the Securities Act.

6.2 Limitations. The right of first offer in Section 6.1 shall not be applicable
to:

(a) securities issued or issuable in exchange and as consideration for the bona
fide acquisition of another corporation or entity by the Company by
consolidation, merger, purchase of all or substantially all of the assets, or
other bona fide reorganization in which the Company acquires, in a single
transaction or series of related transactions, all or substantially all of the
assets of such other corporation or entity or fifty percent (50%) or more of the
voting power of such other corporation or entity or fifty percent (50%) or more
of the equity ownership of such other entity;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

28

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(b) securities issued or issuable in exchange and as consideration for the
rights obtained in research, collaboration, license, development, strategic
alliance or other similar agreements or strategic partnerships;

(c) securities issuable upon conversion of or with respect to any then
previously-issued or outstanding securities;

(d) securities issued pursuant to arms’ length bank financings;

(e) shares of Common Stock and/or Common Stock Equivalents issued or issuable
for compensatory purposes to employees, officers, directors, contractors,
vendors, advisors or consultants of the Company or any of its subsidiaries
(whether or not issued pursuant to a Company equity incentive plan);

(f) securities issued as a dividend, stock split or distribution on the Common
Stock; and

(g) any right, option or warrant to acquire any securities set forth in
Section 6.2(a)-(f) above.

provided, however, in the event the Company issues New Securities in a
transaction to which the right of first offer in Section 6.1 shall not apply
pursuant to Sections 6.2(a), 6.2(b) or 6.2(d) (an “Excepted Transactional
Issuance”) or Section 6.2(e) (an “Excepted Compensatory Issuance”), the Company
shall grant the Investor the right, upon the terms and conditions set forth in
this paragraph, (i) to purchase a number of securities of the same type as the
New Securities issued in the Excepted Transactional Issuance (except that
securities purchased by the Investor in connection with an Excepted
Transactional Issuance involving a public offering shall be registered under the
Securities Act only to the extent permitted by applicable law) such that the
percentage of Common Stock or any Common Stock Equivalents of the Company held
by the Investor immediately after giving effect to the issuance of such New
Securities and the issuance and purchase by the Investor of such securities
pursuant to this Section 6.2 shall equal the percentage of Common Stock or any
Common Stock Equivalents of the Company held by the Investor immediately prior
to the Excepted Transactional Issuance and (ii) to purchase a number of
securities of the same type as the New Securities issued in Excepted
Compensatory Issuances during the previous calendar year such that the
percentage of Common Stock or any Common Stock Equivalents of the Company held
by the Investor immediately after giving effect to the issuance of such New
Securities in such Excepted Compensatory Issuances and the issuance and purchase
by the Investor of such securities pursuant to this Section 6.2 shall equal the
percentage of Common Stock or any Common Stock Equivalents of the Company that
would have been held by the Investor had the applicable Excepted Compensatory
Issuances not been

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

29

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made. The Company shall, within five (5) business days after the consummation of
an Excepted Transactional Issuance and within ten (10) business days after the
end of each calendar year in respect of Excepted Compensatory Issuances, provide
written notice to the Investor of the offer described in this clause. The
Investor shall have five (5) business days from the date of such notice to
provide the Company with written notice of its election to exercise all or a
portion of its purchase right under this clause, and such purchase shall be
consummated within five (5) business days after the date of the Investor’s
written election. The price per security for the offer related to an Excepted
Transactional Issuance shall be the greater of (x) the per security price of the
New Securities issued in the Excepted Transactional Issuance and (y) the closing
price, if any, of the New Securities on the date of purchase by the Investor
pursuant to this Section 6.2; provided, however, that if the price per security
of the New Securities issued in the Excepted Transactional Issuance is greater
than the closing market price of the New Securities on the date of the
definitive agreement for such Excepted Transactional Issuance, the foregoing
price formula shall not apply, and the price per security shall be the closing
market price of the New Securities on the date of purchase by the Investor
pursuant to this Section 6.2. The price per security for the offer related to
Excepted Compensatory Issuances shall be the closing market price of the New
Securities on the date of purchase by the Investor pursuant to this Section 6.2.

6.3 Expiration. In the event the Investor fails to exercise its right of first
refusal within the Exercise Period for the entire amount of New Securities
offered pursuant to Section 6.1 above, the Company shall have forty-five
(45) days thereafter to it to sell or enter into an agreement (pursuant to which
the sale of New Securities covered thereby shall be closed, if at all, within
thirty (30) days from the date of such agreement) to sell the New Securities
respecting which the Investor’s right of first refusal set forth in Section 6.1
was not exercised, at a price and upon terms no more favorable to the purchasers
thereof than specified in the Offer Notice. In the event the Company has not
sold within such forty-five (45) day period or entered into an agreement to sell
the New Securities in accordance with the foregoing within such thirty
(30) days, the Company shall not thereafter issue or sell any New Securities
without first again offering such securities to the Investor in the manner
provided in this Section 6. If the Investor fails to exercise its right to
purchase New Securities within the Exercise Period for the entire amount of New
Securities offered pursuant to Section 6.1 above, but nevertheless expresses
thereafter an interest in participating in such offering prior to such offering
having been effected, the Company will use commercially reasonable efforts to
include the Investor in such offering if the Company, in its reasonable
discretion, determines that the inclusion of the Investor at such later time
will not adversely affect the success of such offering.

7. Designated Director.

7.1 Designated Director. In the event the Investor and its Affiliates acquire
beneficial ownership, in the aggregate, of at least twenty percent (20%) of the
Shares of Then Outstanding Common Stock (the “Ownership Threshold”), the
Investor may, upon written notice to the Company elect to cause, and the Company
shall cause, one individual selected by the Investor (the “Designated Director”)
to be appointed as a member of the Company’s Board

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

30

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of Directors within thirty (30) days after the Company’s receipt of such written
notice. The Company will not require the Designated Director to personally enter
into any non-disclosure agreement, and to the extent other directors of the
Company enter into such agreements, the Company agrees that it will accept the
Investor’s non-disclosure covenant in lieu of any such covenant from the
Designated Director. In connection with each subsequent meeting of the
stockholders of the Company at which the Designated Director’s term of service
as a director is expiring, the Company shall cause the Designated Director to be
nominated for re-election at such meeting and included within the slate of
directors contained in the Company’s proxy statement, accompanied by a
recommendation by the Company’s Board of Directors that such individual be
elected as a director. In the event the Designated Director is nominated for
re-election at a meeting of the stockholders of the Company but is not
re-elected by the stockholders, the Company’s obligations pursuant to this
Section 7 shall terminate with respect to such individual. Notwithstanding the
foregoing sentence, in the event a Designated Director is not re-elected by the
stockholders, the Investor retains the right to appoint a new Designated
Director in accordance with this Section 7, and the Company’s obligations
pursuant to this Section 7 remain in effect with respect to such new Designated
Director. In the event a vacancy is created at any time by the death,
disability, retirement, resignation or removal of a Designated Director, the
Investor shall appoint a new Designated Director to fill the resulting vacancy.
In the event a Designated Director is serving on the Company’s Board of
Directors and the aggregate beneficial ownership of the Shares of Then
Outstanding Common Stock held by the Investor and its Affiliates decreases below
the Ownership Threshold, the Investor shall cause, at the request of the
Company, the Designated Director to resign from the Company’s Board of Directors
at such time as is deemed advisable by the Company’s Board of Directors
(excluding the Designated Director), but in no event later than the next meeting
of the stockholders of the Company at which members of the Company’s Board of
Directors are elected; provided, however, that if the beneficial ownership of
the Investor and its Affiliates in the aggregate is reduced below the Ownership
Threshold as a direct result of dilution suffered upon an issuance of securities
by the Company pursuant to a Dilutive Event, the Investor’s obligations under
clauses (a) and (b) of this sentence shall instead be triggered if the
beneficial ownership of the Investor and its Affiliates remains below the
Ownership Threshold for the ensuing six (6) months and fifteen (15) days
following the date on which the aggregate beneficial ownership of the Shares of
Then Outstanding Common Stock held by the Investor and its Affiliates decreases
below the Ownership Threshold. Notwithstanding the foregoing, this Section 7.1
shall terminate, and the Investor shall cause, upon delivery of written notice
by the Company to the Investor within ten (10) business days after the
occurrence of the applicable event (or, for purposes of clause (iii) below,
within ten (10) business days after the Company’s knowledge of such event), the
Designated Director to resign from the Company’s Board of Directors no later
than at such time as is deemed advisable by the Company’s Board of Directors
(excluding the Designated Director) and set forth in the notice referenced
above, upon the earliest of (i) the date of termination of the Master Agreement
by the Company pursuant to Section 12.2.3 (Termination of this Master Agreement
for Cause) or Section 12.2.4 (Challenges of Patent Rights) of the Master
Agreement, (ii) the date of termination of the Master Agreement by the Investor
pursuant to Section 12.2.1 (Termination for Convenience) of the Master Agreement
and (iii) material breach by the Investor or any of its Affiliates of
Section 3.1 of this Agreement.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

31

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7.2 Notice and Information Rights. The Company shall notify the Designated
Director of all regular and special meetings of the Company’s Board of Directors
or any committee thereof of which the Designated Director is a member. Subject
to the following sentence, the Company shall provide the Designated Director
with copies of all notices, minutes, consents and other materials provided to
all other directors (the “Director Information”) concurrently as such materials
are provided to the other directors. The Designated Director will be afforded no
less favorable treatment than any other member of the Company’s Board of
Directors with respect to all matters, including, without limitation, expense
reimbursement and indemnification consistent with those offered to all other
members of the Company’s Board of Directors (including with respect to expense
reimbursement and domestic travel unless and until the Company invites a
non-U.S. person to join the Company’s Board of Directors) and reasonable access
to Company information and management, except that (i) the Designated Director
may be excluded from participation or deliberation by the Company’s Board of
Directors or committees thereof in connection with issues involving: (a) the
Collaboration Agreement or any other agreements between the Company and the
Investor (as reasonably determined by the Company’s Board of Directors or
relevant committee thereof), (b) matters of conflict or dispute between the
Company and the Investor, or (c) any other matter which is confidential and in
the reasonable determination of the Company’s Board of Directors, would be
compromised by the presence of the Designated Director due to such Designated
Director’s affiliation with the Investor and (ii) the Designated Director shall
not have the right to receive Director Information with respect to the matters
noted in clause (i) of this sentence.

7.3 Freedom to Pursue Opportunities. Each of the parties hereto expressly
acknowledges and agrees that: (i) the Investor, its Affiliates and any
Designated Director that is an employee of the Investor or any of its Affiliates
have the right to, and shall have no duty (contractual or otherwise) not to,
directly or indirectly engage in the same or similar business activities or
lines of business as the Company or any of its subsidiaries, including those
deemed to be competing with the Company or any of its subsidiaries; and (ii) in
the event that the Investor, its Affiliates or any Designated Director that is
an employee of the Investor or any of its Affiliates acquire knowledge of a
potential transaction or matter (other than in the case of a Designated Director
where knowledge of such transaction or matter was acquired by the Designated
Director solely in his or her capacity as a Designated Director) that may be a
corporate opportunity for each of the Company and the Investor, such Person
shall have no duty (contractual or otherwise) to communicate or present such
corporate opportunity to the Company or any of its subsidiaries, as the case may
be, and, notwithstanding any provision of this Agreement to the contrary, shall
not be liable to the Company or its Affiliates for any breach of any duty
(contractual or otherwise) by reason of the fact that the Investor, its
Affiliates or any Designated Director, directly or indirectly, pursues or
acquires such opportunity for itself or another Person, directs such opportunity
to another Person, or does not present such opportunity to the Company. Each
Designated Director is an intended third party beneficiary of this provision,
entitled to enforce it directly against the Company.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

32

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8. Information Rights.

8.1 Information Rights. During such time that a Designated Director is a member
of the Company’s Board of Directors, the Investor and its Affiliates will be
entitled to receive any information which the Designated Director receives or is
entitled to receive; provided, however, that the Investor and its Affiliates may
make such information available only to individuals who have a need to know such
information for purposes of the Collaboration Agreement or the Investor’s or any
Affiliate’s investment in the Company, including any outside service providers
subject to a duty of confidentiality to the Investor or any Affiliate, such as
auditors and legal counsel.

8.2 Financial Information and Reporting. The Company will provide to Investor or
its designated Affiliate the financial information described in this Section 8.2
as well as any financial information reasonably requested by Investor so that
Investor can manage and account for its investment in the Company, including to
determine the fair value of the Company’s investment or assess whether the
Company needs to account for the investment using the equity method of
accounting or otherwise, including making its management available to Investor
for reasonable inquiries regarding its financial statements and performance. If
the Investor or its Affiliate (a) determines in good faith that such financial
information is reasonably likely to be necessary with respect to the financial
reporting of the Investor or its Affiliates and (b) provides the Company with
written notice to such effect, then beginning as promptly as reasonably
practicable but in no event later than the 120th day following such notice, the
Company will deliver via overnight delivery and electronic mail to the Investor
or its Affiliate the information described in Exhibit C hereto by the dates
indicated on Exhibit C (as such Exhibit C may be updated by the Investor from
time to time to reflect changes in the financial reporting requirements of the
Investor or its Affiliates).

8.3 Confidentiality. All confidential or proprietary information and data
relating to the Company and its subsidiaries provided by the Company to either
the Investor pursuant to this Section 8 or the Designated Director pursuant to
Section 7 shall be deemed “Confidential Information” under the Master Agreement
and accordingly shall be subject to the terms and conditions of the Master
Agreement governing “Confidential Information.”

9. Termination of Certain Rights and Obligations.

9.1 Termination of Registration Rights. Except for Section 2.11, which shall
survive until the expiration of any applicable statutes of limitation, Section 2
shall terminate automatically and have no further force or effect upon the
earliest to occur of:

(a) the expiration of the Registration Rights Term;

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

33

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(b) the date on which the Common Stock ceases to be registered pursuant to
Section 12 of the Exchange Act; and

(c) a liquidation or dissolution of the Company.

9.2 Termination of Standstill Agreement. Section 3, other than Sections 3.2(b)
and (c), shall terminate and have no further force or effect, upon the earliest
to occur of:

(a) provided that none of the Standstill Parties has violated Section 3.1(c),
(d) or (f) with respect to the Offeror referred to in this clause (a), the
public announcement by the Company or any Offeror of any definitive agreement
between the Company and such Offeror and/or any of its Affiliates providing for
a Change of Control of the Company;

(b) the expiration of the Standstill Term (subject to revival as set forth in
the definition of such term);

(c) the date on which the Common Stock ceases to be registered pursuant to
Section 12 of the Exchange Act; and

(d) a liquidation or dissolution of the Company;

provided, however, that if Section 3 terminates due to clause (a) above and such
agreement is abandoned and no other similar transaction has been announced and
not abandoned or terminated within ninety (90) days thereafter, the restrictions
contained in Section 3 shall again be applicable until otherwise terminated
pursuant to this Section 9.2.

9.3 Termination of Restrictions on Dispositions. Section 4 (other than
Section 4.4) shall terminate and have no further force or effect upon the
earliest to occur of:

(a) the consummation by an Offeror of a Change of Control of the Company;

(b) a liquidation or dissolution of the Company;

(c) the date on which the Common Stock ceases to be registered pursuant to
Section 12 of the Exchange Act; and

(d) if there has been a period of at least [***] months during which [***], the
date that is the first day after the end of such [***] month period.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

34

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9.4 Termination of Voting Agreement and Offering Lock-Up. Section 5 and
Section 4.4 shall terminate and have no further force or effect upon the
earliest to occur of:

(a) the consummation by an Offeror of a Change of Control of the Company;

(b) a liquidation or dissolution of the Company;

(c) the date on which the Common Stock ceases to be registered pursuant to
Section 12 of the Exchange Act; and

(d) the expiration or termination of the Standstill Term.

9.5 Termination of Right of First Offer. Section 6 shall terminate and have no
further force or effect upon the earliest to occur of:

(a) the date on which the Investor and its Affiliates beneficially own, in the
aggregate, less than seven and a half percent (7.5%) of the Shares of Then
Outstanding Common Stock; provided, however, that if the beneficial ownership of
the Investor and its Affiliates in the aggregate is reduced below such threshold
as a direct result of dilution suffered upon a Dilutive Event, Section 6 shall
instead terminate upon the earliest of (x) Investor’s failure to provide written
notice to the Company of its election to purchase additional securities within
the five (5) business day period set forth in Section 6.2 related to the
applicable Dilutive Event, (y) Investor’s failure to consummate the purchase of
additional securities of the Company pursuant to Section 6.2 within the time
period set forth therein related to the applicable Dilutive Event or (z) the
date of Investor’s purchase of additional securities of the Company pursuant to
Section 6.2 related to the applicable Dilutive Event if, immediately following
the consummation of such purchase, the Investor and its Affiliates beneficially
own, in the aggregate, less than seven and a half percent (7.5%) of the Shares
of Then Outstanding Common Stock.

(b) the consummation by an Offeror of a Change of Control of the Company;

(c) a liquidation or dissolution of the Company; and

(d) the date on which the Common Stock ceases to be registered pursuant to
Section 12 of the Exchange Act.

9.6 Effect of Termination. No termination pursuant to any of Sections 9.1, 9.2,
9.3, 9.4 or 9.5 shall relieve any of the parties (or the Permitted Transferee,
if any) for liability for breach of or default under any of their respective
obligations or restrictions under any terminated provision of this Agreement,
which breach or default arose out of events or circumstances occurring or
existing prior to the date of such termination.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

35

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10. Miscellaneous.

10.1 Governing Law; Submission to Jurisdiction. This Agreement shall be governed
by and construed in accordance with the Laws of the State of Delaware, without
regard to the conflict of laws principles thereof that would require the
application of the Law of any other jurisdiction. Any action brought, arising
out of, or relating to this Agreement shall be brought in the Court of Chancery
of the State of Delaware. Each party hereby irrevocably submits to the exclusive
jurisdiction of said Court in respect of any claim relating to the validity,
interpretation and enforcement of this Agreement, and hereby waives, and agrees
not to assert, as a defense in any action, suit or proceeding in which any such
claim is made that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts, or that the
venue thereof may not be appropriate or that this agreement may not be enforced
in or by such courts. The parties hereby consent to and grant the Court of
Chancery of the State of Delaware jurisdiction over such parties and over the
subject matter of any such claim and agree that mailing of process or other
papers in connection with any such action, suit or proceeding in the manner
provided in Section 10.3 or in such other manner as may be permitted by law,
shall be valid and sufficient thereof.

10.2 Waiver. Waiver by a party of a breach hereunder by another party shall not
be construed as a waiver of any subsequent breach of the same or any other
provision. No delay or omission by a party in exercising or availing itself of
any right, power or privilege hereunder shall preclude the later exercise of any
such right, power or privilege by such party. No waiver shall be effective
unless made in writing with specific reference to the relevant provision(s) of
this Agreement and signed by a duly authorized representative of the party
granting the waiver.

10.3 Notices. All notices, instructions and other communications hereunder or in
connection herewith shall be in writing, shall be sent to the address of the
relevant party set forth on Exhibit B attached hereto and shall be (a) delivered
personally, (b) sent by registered or certified mail, return receipt requested,
postage prepaid, (c) sent via a reputable nationwide overnight courier service
or (d) sent by facsimile transmission, with a confirmation copy to be sent by
registered or certified mail, return receipt requested, postage prepaid. Any
such notice, instruction or communication shall be deemed to have been delivered
upon receipt if delivered by hand, three (3) Business Days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, one
(1) Business Day after it is sent via a reputable nationwide overnight courier
service or when transmitted with electronic confirmation of receipt, if
transmitted by facsimile (if such transmission is made during regular business
hours of the recipient on a Business Day; or otherwise, on the next Business Day
following such transmission). Any party may change its address by giving notice
to the other parties in the manner provided above.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

36

--------------------------------------------------------------------------------

10.4 Entire Agreement. This Agreement and the Purchase Agreement contain the
entire agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous arrangements or
understandings, whether written or oral, with respect hereto and thereto.

10.5 Amendments. No provision in this Agreement shall be supplemented, deleted
or amended except in a writing executed by an authorized representative of each
of the parties hereto.

10.6 Headings; Nouns and Pronouns; Section References. Headings in this
Agreement are for convenience of reference only and shall not be considered in
construing this Agreement. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of names and pronouns shall include the plural and vice-versa.
References in this Agreement to a section or subsection shall be deemed to refer
to a section or subsection of this Agreement unless otherwise expressly stated.

10.7 Severability. If, under applicable Laws, any provision hereof is invalid or
unenforceable, or otherwise directly or indirectly affects the validity of any
other material provision(s) of this Agreement in any jurisdiction (“Modified
Clause”), then, it is mutually agreed that this Agreement shall endure and that
the Modified Clause shall be enforced in such jurisdiction to the maximum extent
permitted under applicable Laws in such jurisdiction; provided that the parties
shall consult and use all reasonable efforts to agree upon, and hereby consent
to, any valid and enforceable modification of this Agreement as may be necessary
to avoid any unjust enrichment of either party and to match the intent of this
Agreement as closely as possible, including the economic benefits and rights
contemplated herein.

10.8 Assignment. Neither this Agreement nor any rights or duties of a party
hereto may be assigned by such party, in whole or in part, without (a) the prior
written consent of the Company in the case of any assignment by the Investor,
except as provided by Section 2.13 with respect to the Investor’s assignment to
a Permitted Transferee; or (b) the prior written consent of the Investor in the
case of an assignment by the Company.

10.9 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.

10.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.

10.11 Third Party Beneficiaries. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any Third Party other than a Designated
Director and any Affiliate of the Investor. No Third Party with the exception of
any Designated Director and any Affiliate of the Investor shall obtain any right
under any provision of this Agreement or shall by reason of any such provision
make any claim in respect of any debt, liability or obligation (or otherwise)
against any party hereto.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

37

--------------------------------------------------------------------------------

10.12 No Strict Construction. This Agreement has been prepared jointly and will
not be construed against any party.

10.13 Remedies. The rights, powers and remedies of the parties under this
Agreement are cumulative and not exclusive of any other right, power or remedy
which such parties may have under any other agreement or Law. No single or
partial assertion or exercise of any right, power or remedy of a party hereunder
shall preclude any other or further assertion or exercise thereof.

10.14 Specific Performance. The Company and the Investor hereby acknowledge and
agree that the rights of the parties hereunder are special, unique and of
extraordinary character, and that if any party refuses or otherwise fails to
act, or to cause its Affiliates to act, in accordance with the provisions of
this Agreement, such refusal or failure would result in irreparable injury to
the Company or the Investor, as the case may be, the exact amount of which would
be difficult to ascertain or estimate and the remedies at law for which would
not be reasonable or adequate compensation. Accordingly, if any party refuses or
otherwise fails to act, or to cause its Affiliates to act, in accordance with
the provisions of this Agreement, then, in addition to any other remedy which
may be available to any damaged party at law or in equity, such damaged party
will be entitled to seek specific performance and injunctive relief, without
posting bond or other security, and without the necessity of proving actual or
threatened damages, which remedy such damaged party will be entitled to seek in
any court of competent jurisdiction.

10.15 No Conflicting Agreements. The Investor hereby represents and warrants to
the Company that neither it nor any of its Affiliates is, as of the date of this
Agreement, a party to, and agrees that neither it nor any of its Affiliates
shall, on or after the date of this Agreement, enter into any agreement that
conflicts with the rights granted to the Company in this Agreement. The Company
hereby represents and warrants to each Holder that it is not, as of the date of
this Agreement, a party to, and agrees that it shall not, on or after the date
of this Agreement, enter into, any agreement or approve any amendment to its
Organizational Documents (as defined in the Purchase Agreement) with respect to
its securities that conflicts with the rights granted to the Holders in this
Agreement. The Company further represents and warrants that the rights granted
to the Holders hereunder do not in any way conflict with the rights granted to
any other holder of the Company’s securities under any other agreements.

10.16 Rule 16b-3. If at any time in the future the Investor determines that Rule
16b-3 promulgated under the Exchange Act may be available to exempt from
Section 16(b) of the Exchange Act a transaction between the Investor and the
Company, the Company shall cooperate and use commercially reasonable efforts to
take such actions, including by adopting appropriate resolutions of the Board of
Directors of the Company, to permit the Investor to rely on such exemption.

10.17 [***]. [***].

(Signature Page Follows)

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

38

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

 

GENZYME CORPORATION By:   /s/ David Meeker   Name: David Meeker, M.D.   Title:
President and Chief Executive Officer ALNYLAM PHARMACEUTICALS, INC. By:   /s/
John M. Maraganore   Name: John M. Maraganore, Ph.D.   Title: Chief Executive
Officer

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

 

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF IRREVOCABLE PROXY

In order to secure the performance of the duties of the undersigned pursuant to
Section 5.1 of the Investor Agreement, dated as of February 27, 2014 (the
“Agreement”), by and between Genzyme Corporation and Alnylam Pharmaceuticals,
Inc. (the “Company”), the undersigned hereby irrevocably appoints the Company
and any individual designated by the Company, and each of them individually, as
the attorneys, agents and proxies, with full power of substitution and
resubstitution in each of them, for the undersigned, and in the name, place and
stead of the undersigned, to vote (or cause to be voted) in such manner as set
forth in Section 5.1 of the Agreement (but in any case, (i) in accordance with
any written instruction from the undersigned, properly delivered under
Section 5.1 of the Agreement, to vote as contemplated by Section 5.1(b) of the
Agreement and (ii) excluding any matter that is an Extraordinary Matter
described in Section 5.2) with respect to all Voting-Restricted Shares (in the
case of matters referred to in Section 5.1) and all securities of the Company
(in the case of the matters referred to in Section 3.1(b) and Section 3.2(a)),
which the undersigned is or may be entitled to vote at any meeting of the
Company held after the date hereof, whether annual or special and whether or not
an adjourned meeting. This proxy is coupled with an interest, shall be
irrevocable and binding on any successor in interest of the undersigned and
shall not be terminated by operation of law upon the occurrence of any event.
This proxy shall operate to revoke and render void any prior proxy as to
securities of the Company heretofore granted by the undersigned which is
inconsistent herewith. Notwithstanding the foregoing, this irrevocable proxy
shall be effective if, at any annual or special meeting of the stockholders of
the Company (or any consent in lieu thereof) and at any adjournments or
postponements of any such meetings, the undersigned (A) fails to appear or
otherwise fails to cause its voting securities of the Company to be counted as
present for purposes of calculating a quorum, or (B) fails to vote such voting
securities in accordance with Sections 3.1(b), 3.2(a) or 5.1 of the Agreement,
in each case at least five (5) business days prior to the date of such
stockholders’ meeting. This proxy shall terminate upon the earlier of the
expiration or termination of the voting agreement set forth in Section 5.1 of
the Agreement.

 

[                                                                 ] By:      
Name:  

Title:

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

A-1

--------------------------------------------------------------------------------

EXHIBIT B

NOTICES

 

(a) If to Genzyme Corporation:

Genzyme Corporation

500 Kendall Street

Cambridge, MA 02142

Attention: President of Rare Disease

Facsimile No.: (617) 374-2424

with a copy to:

Genzyme Corporation

500 Kendall Street

Cambridge, MA 02142

Attention: General Counsel

Facsimile: (617) 252-7553

and to:

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199-3600

Attention: Christopher D. Comeau, Esq.

Facsimile: (617) 235-0507

 

(b) If to the Company:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, MA 02142

Attention: Vice President – Legal

Facsimile: (617) 551-8101

with a copy to:

Goodwin Procter LLP

53 State Street

Boston, MA 02109

Attention: Mitchell S. Bloom, Esq,

Facsimile: (617) 523-1231

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

B-1

--------------------------------------------------------------------------------

EXHIBIT C

The below chart summarizes the type of information needed to apply the at equity
method for an associate that is disclosing its financial statements under
another referential than IFRS.

 

INFORMATION

  

Ref

  

PERIOD

  

TIMING

  

COMMENT

Issued and outstanding shares by classes

(Common, Preferred...)

      Quarter    D+5    Rights attached to each class of shares is also needed
in order to determine the appropriate ownership interest

Outstanding potential rights

(Options, Convertible rights)

      Quarter    D+5   

YTD consolidated income statement

(USGAAP)

   A    Month    D+7    Estimate could be used at this deadline – (final numbers
required at D+11)

YTD statement of comprehensive income

(USGAAP)

   B    Quarter    D+7    Same

Equity Roll forward including detail of equity transactions

(USGAAP)

   C    Quarter    D+7    Same Summarized balance sheet (USGAAP)    D    Quarter
   D+7    Same Main USGAAP/IFRS differences    E    Quarter    D+7    >5M$
Transactions between Sanofi & the Company    F    Quarter    D+7    P&L, OCI and
Balance Sheet Transactions between Sanofi & the Company       Half-year    D+7
   Off balance sheet List of the Company’s subsidiaries       Annual    D+7   

Other information needed as part of a first application of the equity method:

- Detailed programs of share based payment awards as of 31 December 20Y-2,
31 December 20Y-1 and equity method date

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-1

--------------------------------------------------------------------------------

The financial reporting schedules (referenced from A to F) to be obtained from
the Company are presented below:

A/ YTD CONSOLIDATED INCOME STATEMENT (USGAAP)

 

Amounts in K$ (1)

   YTD as of XX           Total    Transactions
with Sanofi

Net Sales

     

Other Revenue

     

Cost of goods sold

     

Gross profit

     

Research and development expense

     

Selling and general expenses

     

Other operating income & expense

     

Amortization of intangible assets

     

Impairment of intangible assets

     

Fair value re-measurement of contingent consideration liabilities

     

Operating income

     

Financial expense

     

Financial income

     

Income before tax and associates & JV

     

Income tax expense

     

Share of profit/(loss) of associates and JV

     

Net income

     

Attributable to non-controlling interests

     

Net income attributable to equity holders of the Company

     

 

(1) Positive amount = income

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-2

--------------------------------------------------------------------------------

B/ YTD CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS (USGAAP)

 

Amounts in K$ (1)

   Beginning
period as
of XX    Change in
the period    Ending
period as
of XX

Net income

        

Other comprehensive income:

        

Actuarial gains (losses)

        

Tax effect on actuarial gains and losses

        

Unrealized gains & losses on available-for-sale financial assets

        

Tax effect on unrealized gains & losses on AFS

        

Cash flow hedge

        

Tax effect on cash flow hedge

        

Net investment hedge

        

Tax effect on net investment hedge

        

Change in currency translation difference

        

Other comprehensive income for the period, net of taxes

        

Total comprehensive income

        

Of which attributable to non-controlling interests

        

 

(1) Positive amount = income

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-3

--------------------------------------------------------------------------------

C/ EQUITY ROLL FORWARD (USGAAP)

 

Amounts in K$ (1)

   Number
of
Shares    Capital    Additional
Paid in
Capital    Accumulated
retained
earnings    Other
Comprehensive
income (loss)    Non-controlling
interests    Total
Equity

Beginning balance as of XX

                    

Net income for the period

                    

Other comprehensive income for the period

                    

Payment of dividends

                    

Increase in capital (2)

                    

Decrease in capital

                    

Repurchase of Shares

                    

Equity component of convertible notes

                    

Purchase of convertible note

                    

Warrants in connection of convertible notes

                    

Share-based payments:

                    

Increase in capital in connection with exercise of stock options

                    

Increase in capital in connection with restricted shares

                    

Share-based payment expense

                    

Excess tax benefit from share-based payment expense

                    

Other changes (3)

                    

Ending balance as of XX

                    

 

(1) Positive amount = credit

(2) Other than share-based payments

(3) To be detailed

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-4

--------------------------------------------------------------------------------

D/ SUMMARIZED BALANCE SHEET (USGAAP)

 

Amounts in K$ (1)

   YTD as of XX             Total    Transactions
with Sanofi  

ASSETS

     

Non-current assets

        (2 ) 

Accounts receivable

     

Deferred tax assets – current portion

     

Other current assets

        (2 ) 

TOTAL ASSETS

     

 

(1) Positive amount = debit balance

(2) To be detailed

 

Amounts in K$ (1)

   YTD as of XX             Total    Transactions
with Sanofi  

LIABILITIES AND EQUITY

     

Equity

     

Deferred revenue non-current portion

     

Other non-current liabilities

        (2 ) 

Accounts payable

     

Deferred revenue current portion

     

Other current liabilities

        (2 ) 

TOTAL LIABILITIES AND EQUITY

     

 

(1) Positive amount = credit balance

(2) To be detailed

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-5

--------------------------------------------------------------------------------

E/IFRS-USGAAP differences

 

Amounts in K$

   Note     Beginning
period as
of XX    Net
income    OCI    Other
Equity    Ending
period
as of
XX    Income
Statement
line
affected

R&D expense resulting from payments of rights to a product or technology (before
regulatory approval)

     (1 )                  

Amortization expense related to acquired R&D previously capitalized

     (1 )                  

Impairment loss related to acquired R&D previously capitalized

     (1 )                  

Lease classification including land

     (2 )                  

Asset retirement obligations

     (3 )                  

Inventory capitalized prior regulatory approval

     (4 )                  

Reversal of inventory written off upon regulatory approval

     (5 )                  

Inventory samples

     (6 )                  

Deferred tax on intragroup inventory margin

     (7 )                  

Executive Stock Purchase Plan

     (8 )                  

Share based payments (Income tax)

     (9 )                  

Actuarial gains & losses on postretirement benefits

     (10 )                  

Prior service costs on postretirement employee benefits

     (11 )                  

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-6

--------------------------------------------------------------------------------

Expected return on plan asset

     (12 )                  

Asset ceiling (net pension asset)

     (13 )                  

Provision recognition – measurement

     (14 )                  

Long term provision discounting

     (15 )                  

Revenue recognition (TBD)

                   

TOTAL

                   

 

(1) Capitalized under IFRS

(2) Classification Operating versus Finance lease depending on criteria
(IFRS/USGAAP)

(3) Recognition criteria & measurement differences between IFRS and USGAAP

(4) Fully written down under Sanofi’s accounting policy

(5) Reversal permitted under IFRS

(6) Net Residual Value is zero under Sanofi’s accounting policy

(7) Based on the buyer’s rate under IFRS versus seller’s rate under USGAAP

(8) Compensation expense under IFRS

(9) Deferred tax based on intrinsic value at each balance sheet date under IFRS
– Only tax expected above tax effect of cumulative expense is recognized through
equity

(10) Recognized immediately in OCI under IFRS

(11) Recognized as expense in the period of plan amendments under IFRS

(12) Expected return on plan assets determined by applying the discount rate
under IFRS (market yields on high quality corporate bonds)

(13) Limitation required under IFRS

(14) Present obligation exists under IFRS and best estimate approach

(15) Discounted required under IFRS when the effect is material (>5M€)

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-7

--------------------------------------------------------------------------------

F/ TRANSACTIONS WITH SANOFI –

UPFRONT AND MILESTONE PAYMENTS:

 

Upfronts &
Milestones paid

by Sanofi

   Amount in K$    Payment date    Deferred Revenue
Beginning period
as of XX(1)    Payment during
the period    Amount
recognized
as Revenue
during the
period (1)    Deferred
Revenue
Ending
period as
of XX (1)

 

(1) Positive amount = credit amount in the balance sheet and income statement

OTHER ITEMS WITH P&L IMPACT:

 

     Amount in K$
(1)    Line impacted
in the
consolidated
P&L

Product sales to Sanofi

     

Royalties paid by Sanofi

     

R&D expense incurred by the Company funded by Sanofi

     

 

(1) Positive amount = income; Negative amount = expense

OTHER GAINS & LOSSES RELATING TO TRANSACTIONS WITH SANOFI

(Amounts >5M$) – to be detailed

Example: Gain or loss on non-current asset disposals to Sanofi.

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
“[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934.

C-8