Exhibit 10.2


Execution
Copy


Novartis Pharma AG


AND


Momenta Pharmaceuticals,
Inc.


INVESTOR RIGHTS AGREEMENT
















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Company Registration

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Obligations of the Company

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Furnish Information

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Underwriting Requirements; Company Registration

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Company Registration Expenses

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Demand Registrations

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Underwriting Requirements; Demand Registrations

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Expenses of Demand Registration

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Indemnification

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Transfer of Registration Rights

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Mergers, Etc.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Future Events

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Termination

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Stand-Off Agreement

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Other Registration Rights Agreements

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Inspection

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Standstill

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  No Required Sale

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Legends

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Notices

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Miscellaneous

  	
   

  	
  19

  



 



 i














 


INVESTOR RIGHTS AGREEMENT


THIS INVESTOR RIGHTS AGREEMENT
(this “Agreement”) is made as of July 25, 2006, by and between Novartis
Pharma AG (the “Investor”), a corporation organized under the laws of
Switzerland, with its principal place of business at Lichtstraße 35, CH 4058
Basel BS, and Momenta Pharmaceuticals, Inc. (the “Company”), a Delaware
corporation with its principal place of business at 675 West Kendall Street, Cambridge, Massachusetts 02142.


WHEREAS, the Company proposes to issue and sell to the
Investor shares of its Common Stock, par value $0.0001 per share (the “Common
Stock”), pursuant to the Stock Purchase Agreement dated as of July 25,
2006 (the “Purchase Agreement”); and


WHEREAS, as a condition to consummating the
transactions contemplated by the Purchase Agreement, the Investor and the
Company have agreed upon registration rights and certain other rights and
restrictions as set forth herein.


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)  The
term “Affiliate” means, with respect to any Person, any other Person
that directly or indirectly, controls, is controlled by or is under common
control with such Person.  For the
purposes of this definition, “control” (including with correlative meanings,
the terms “controlled by” and “under common control with”) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.


(b)  The
term “Agreement” shall have the meaning set forth in the Preamble to
this Agreement.


(c)  The
term “Collaboration and License Agreement” means that certain
Collaboration and License Agreement to be entered into between the Company and
the Investor contemplated by the memorandum of understanding among the Company
and the Investor (or an affiliate of the Investor) dated the date hereof.


(d)  The
term “Common Stock” shall have the meaning set forth in the recitals to
this Agreement.


(e)  The
term “Demand Registration Request” has the meaning set forth in Section
7.


(f)  The
term “Effectiveness Period” has the meaning set forth in
Section 3(a).









 



(g)  The
term “Exchange Act” means the Securities Exchange Act of 1934, as
amended.


(h)  The
term “Existing Registration Rights Agreement” means the Second Amended
and Restated Investors’ Rights Agreement, dated as of February 27, 2004,
by and among the Purchasers listed therein, the Founders listed therein and the
Company, as amended by Amendment No. 1 to such Agreement dated June 10,
2004.


(i)  The
term “Holder” means the Investor for so long as it owns Registrable
Shares and any Person to whom the Investor transfers Registrable Shares in
accordance with the terms and conditions of this Agreement.  If Registrable Shares are held by a nominee
for the beneficial owner thereof, the beneficial owner thereof may, at its
option, be treated as the Holder of such Registrable Shares for purposes of any
request or other action by any Holder or Holders of Registrable Shares pursuant
to this Agreement (or any determination of any number or percentage of shares
constituting Registrable Shares held by any Holder or Holders of Registrable
Shares contemplated by this Agreement), provided that the Company shall have received
assurances reasonably satisfactory to it of such beneficial ownership.


(j)  The
term “Notices” has the meaning set forth in Section 21.


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


(l)  The
term “Person” means any individual, corporation, association,
partnership, joint venture, entity, trust, estate, limited liability company,
limited partnership, joint stock company, unincorporated organization or
government or any agency or political subdivision.


(m)  The
term “Purchase Agreement” shall have the meaning set forth in the
recitals to this Agreement.


(n)  The
terms “register,” “registered,” and “registration” refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement.


(o)  The
term “Registrable Shares” means (i) the Common Stock purchased by
the Investor pursuant to the Purchase Agreement and (ii) any Common Stock
of the Company issued as a dividend or other distribution with respect to, or
in exchange or in replacement of, such Common Stock after the date hereof; provided, however,
that shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares (A) upon any sale pursuant to a registration statement
under the Securities Act or (B) upon any sale or transfer in any manner to
a Person or entity which is not entitled, pursuant to Section 11, to the
rights under this Agreement.


(p)  The
term “Rule 144” means Rule 144 promulgated under the Securities Act.


(q)  The
term “SEC” means the Securities and Exchange Commission.


(r)  The
term “Securities Act” means the Securities Act of 1933, as amended.



 2
 






 



(s)  The
term “Similarly Situated Person” means any third party that (i) has
entered into a collaboration agreement with the Company or one of its
subsidiaries that is required to be filed by the Company in accordance with
Item 601 of Regulation S-K of the Securities Act and (ii) in connection with
such collaboration, acquires equity securities of the Company equal to ten
percent (10%) or more of the then outstanding equity securities of the Company.


(t)  The
term “Subsequent Registration” has the meaning set forth in
Section 7(c).


(u)  The
term “Termination Date” means the earliest of (a) the date on which the
Company (i) enters into a definitive agreement with an unaffiliated third party
or parties to merge, consolidate or otherwise combine, with such third party or
parties in a transaction where the holders of the Company’s outstanding shares
immediately prior to such merger or consolidation would hold, in the aggregate,
securities possessing less than fifty percent (50%) of the total combined
voting power of the combined or surviving entity immediately after such merger
or consolidation, or to sell all or substantially all of the Company’s business
or assets or securities representing a majority of the then outstanding voting
power of the Company’s securities, (ii) makes a public announcement that it is
negotiating a transaction with an unaffiliated third party or parties covered
by the foregoing clause (a)(i), or (iii) consummates a transaction with an
unaffiliated third party or parties covered by the foregoing clause (a)(i); or
(b) the date a third party or group (as defined above) (i) acquires beneficial
ownership of voting securities (including those convertible or exchangeable
into such voting securities) of the Company representing twenty percent (20%)
or more of the then outstanding voting securities of the Company; or (ii)
announces or commences a tender or exchange offer to acquire voting securities
of the Company which, if successful, would result in such Person or group
owning, when combined with any other voting securities of the Company owned by such
Person or group, twenty percent (20%) or more of the then outstanding voting
securities of the Company.


(v)  The
term “Valid Business Reason” has the meaning set forth in Section 7.


2.             Company Registration.  If (but without any obligation to do so) the
Company proposes to register any of its stock or other securities under the
Securities Act in connection with the public offering of such securities solely
for cash, other than (a) a registration relating solely to the sale of
securities to participants in a stock plan, or (b) a registration on Form
S-4 (or any successor form) relating solely to a transaction pursuant to the
SEC’s Rule 145, the Company shall, at such time, promptly give each Holder
written notice of such registration. 
Upon the written request of each Holder given within fifteen
(15) days after receipt by such Holder of such notice by the Company in
accordance with Section 21, the Company shall, subject to the provisions
of Section 5, cause to be registered under the Securities Act all of the
Registrable Shares that each such Holder has requested to be registered;
provided, that the Company shall have the right to postpone or withdraw any
registration statement relating to an offering in which the Holders are
eligible to participate under this Section 2 without any liability or
obligation to the Holders under this Section 2.  Any Holder shall have the right to withdraw
its request for inclusion of its Registrable Shares in any registration statement
pursuant to this Section 2 by giving written notice to the Company of its
request to withdraw; provided, however, that (i) such request
must be made in writing prior to the earlier of the execution of the
underwriting agreement or the execution of the custody agreement with respect
to such registration and (ii) such withdrawal shall be irrevocable and,
after making such withdrawal, a 



 3
 






 



Holder shall no longer have any right to include
Registrable Shares in the registration as to which such withdrawal was made.


3.             Obligations of the
Company.  Whenever required under
Section 2 or Section 7 to use its reasonable best efforts to effect
the registration of any Registrable Shares, the Company shall, as expeditiously
as reasonably possible:


(a)  Prepare
and file with the SEC a registration statement with respect to such Registrable
Shares and use its reasonable best efforts to cause such registration statement
to become and remain effective for twelve (12) months from the effective
date or such lesser period until the distribution thereof has been completed (the
“Effectiveness Period”).


(b)  Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.


(c)  Furnish,
without charge, to the selling Holders at least one photocopy of a signed copy,
of the registration statement and any post-effective amendments thereto,
including financial statements and schedules, all documents incorporated
therein by reference, all exhibits (including those incorporated by reference)
and any free writing prospectus utilized in connection therewith and such
reasonable numbers of copies of the registration statement, each amendment and
supplement thereto, each prospectus, related there to including a preliminary
prospectus, related thereto in conformity with the requirements of the
Securities Act, each free writing prospectus utilized in connection therewith,
and such other documents as they may reasonably request in order to facilitate
the disposition of such Registrable Shares owned by them.


(d)  Use
its reasonable best efforts to register and qualify the Registrable Shares
covered by such registration statement under such other securities or “blue sky”
laws of such states as shall be reasonably appropriate for the distribution of
the securities covered by the registration statement and do any and all other
acts and things which may be reasonably necessary or advisable to enable the
selling Holders or underwriter, if any, to consummate the disposition of the
Registrable Shares in such jurisdictions, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business, to amend its certificate of incorporation or by-laws in a manner that
the Board of Directors of the Company determines is inadvisable or to file a
general consent to service of process in any such states or jurisdictions, and
further provided that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that jurisdiction be
borne by selling stockholders, then such expenses shall be payable by selling
stockholders on a pro rata basis, to the extent required by such jurisdiction.


(e)  Provide
a transfer agent and registrar for the Common Stock no later than the effective
date of the first registration of any Registrable Shares.



 4
 






 



(f)  Otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC.


(g)  Use
its reasonable best efforts to cause all such Registrable Shares to be listed
on a national securities exchange (if such securities are not already so
listed) and on each additional national securities exchange on which similar
securities issued by the Company are then listed, if the listing of such
securities is then permitted under the rules of such exchange.


(h)  Enter
into such customary agreements (including an underwriting agreement in
customary form) and take such other actions as the selling Holders of
Registrable Shares shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Shares.


(i)  (x) Make
generally available to its security holders, as soon as reasonably practicable
after the effective date of the registration statement (and in any event within
90 days after the end of such twelve month period described hereafter), an
earnings statement (which need not be audited) covering the period of at least
twelve consecutive months beginning with the first day of the Company’s first
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder and (y) make available for
inspection by any selling Holder of Registrable Shares, by any managing
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such selling Holder or any such underwriter, all pertinent financial and
other records and pertinent corporate documents and properties of the Company,
and cause all of the Company’s officers, directors and employees to supply all
information reasonably requested by any such selling Holder, underwriter,
attorney, accountant or agent in connection with such registration statement.


(j)  Use
reasonable best efforts to prevent the issuance of any stop order suspending
the effectiveness of such registration statement or of any order preventing or
suspending the use of any preliminary prospectus and, if any such order is
issued, to obtain the lifting thereof at the earliest reasonable time.


(k)  In
the case of an underwritten offering, use its reasonable best efforts to obtain
an opinion from the Company’s counsel and a “cold comfort” letter from the
Company’s independent public accountants in customary form and covering such
matters as are customarily covered by such opinions and “cold comfort” letters
delivered to underwriters in underwritten public offerings, which opinion and
letter shall be reasonably satisfactory to the underwriter, if any, and furnish
to each Holder participating in the offering to the extent possible and to each
underwriter, if any, a copy of such opinion and letter addressed to such Holder
or underwriter;


(l)  Deliver
promptly to each Holder participating in the offering and each underwriter, if
any, copies of all correspondence between the SEC and the Company, its counsel
or auditors and all memoranda relating to discussions with the SEC or its staff
with respect to the registration statement, other than those portions of any
such memoranda which contain information subject to attorney-client privilege
with respect to the Company.


(m)  Cooperate
with the sellers of Registrable Shares and the managing underwriter, if any, to
facilitate the timely preparation and delivery of certificates not bearing any 



 5
 






 



restrictive legends representing the Registrable Shares to be sold, and
cause such Registrable Shares to be issued in such denominations and registered
in such names in accordance with the underwriting agreement prior to any sale
of Registrable Shares to the underwriters or, if not an underwritten offering,
in accordance with the instructions of the sellers of Registrable Shares at
least three business days prior to any sale of Registrable Shares and instruct
any transfer agent and registrar of Registrable Shares to release any stop
transfer orders in respect thereof.


(n)  Take
all such other commercially reasonable actions as are necessary or advisable in
order to expedite or facilitate the disposition of such Registrable Shares.


(o)  (A) Include
in such registration statement and prospectus any information or disclosure
related to a Holder as a selling stockholder thereunder reasonably requested by
such Holder as may be necessary in the opinion of counsel to such Holder to
ensure compliance with applicable securities laws and (B) consider in good
faith whether or not to include in such registration statement and prospectus
any information or disclosure not related to a Holder as a selling stockholder
thereunder reasonably requested by such Holder as may be necessary in the
opinion of counsel to such Holder to ensure compliance with applicable
securities laws.


(p)  Take
all reasonable action to ensure that any free writing prospectus prepared,
authorized or approved by the Company and utilized in connection with any
registration complies in all material respects with the Securities Act, is
filed in accordance with the Securities Act to the extent required thereby, and
is retained in accordance with the Securities Act to the extent required
thereby.


If the Company has delivered a prospectus to the
selling Holders of Registrable Shares and after having done so such prospectus
is amended to comply with the requirements of the Securities Act, the Company
shall promptly notify the selling Holders of Registrable Shares and, if
requested, the selling Holders of Registrable Shares shall immediately cease
making offers of Registrable Shares and return all prospectuses to the
Company.  The Company shall promptly
provide the selling Holders of Registrable Shares with revised prospectuses
and, following receipt of the revised prospectuses, the selling Holders of
Registrable Shares shall be free to resume making offers of the Registrable
Shares.


No Holder shall have any right to take any action to
restrain, enjoin, or otherwise delay any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.


4.             Furnish Information.


(a)  It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Agreement with respect to the registration of any
Holder’s Registrable Shares that such Holder shall take such actions and furnish
to the Company such information regarding itself, the Registrable Shares held
by it, and the intended method of disposition of such securities, as may then
be customarily provided by selling stockholders as the Company shall reasonably
request and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement, including, without
limitation (i) in connection with an underwritten offering, enter into an
appropriate underwriting agreement containing terms and provisions then
customary in agreements of that nature (it being understood that the Holders of




 6
 






 



the Registrable Shares which are to be distributed by any underwriters
may, at their option, require that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall be
conditions precedent to the obligations of such Holder), (ii) enter into
such custody agreements, powers of attorney and related documents at such time
and on such terms and conditions as may then be customarily required in
connection with such offering and (iii) distribute the Registrable Shares
only in accordance with and in the manner of the distribution contemplated by
the applicable registration statement and prospectus.  In addition, the Holders shall promptly
notify the Company of any request by the SEC or any state securities commission
or agency for additional information or for such registration statement or
prospectus to be amended or supplemented.


(b)  If
any such registration statement or comparable statement under “blue sky” laws
refers to any Holder by name or otherwise as the Holder of any securities of
the Company, then such Holder shall have the right to require (i) the
insertion therein of language, in form and substance reasonably satisfactory to
such Holder and the Company, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of
the investment quality of the Company’s securities covered thereby and that
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such
reference to such Holder by name or otherwise is not in the judgment of the
Company, as advised by counsel, required by the Securities Act or any similar
federal statute or any state “blue sky” or securities law then in force, the
deletion of the reference to such Holder.


(c)  The
Company covenants that (i)  so long as it remains subject to the reporting
provisions of the Exchange Act, it will timely file the reports required to be
filed by it under the Securities Act or the Exchange Act (including, but not
limited to, the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c)(1) of Rule 144 under the Securities
Act), and (ii) will take such further action as any Holder of Registrable
Shares may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by
(A) Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or (B) any similar rule or regulation hereafter adopted by
the SEC.  Upon the request of any Holder
of Registrable Shares, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.


5.             Underwriting
Requirements; Company Registration.


(a)  In
connection with any offering under Section 2 involving an underwriting of
shares being issued by the Company, the Company shall not be required to
include any Holder’s Registrable Shares in such underwriting unless such Holder
accepts the terms of the underwriting as agreed upon between the Company and
the underwriters selected by it (and enters into an underwriting agreement with
the underwriters on customary terms) (it being understood that the Holders of
the Registrable Shares which are to be distributed by any underwriters may, at
their option, require that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall be
conditions precedent to the obligations of such Holder), and then only in such
quantity as will not, in the reasonable opinion of the underwriters, jeopardize
the success of the offering by the Company. 
If the total amount of securities, including Registrable Shares,
requested by stockholders to be included in such offering exceeds 



 7
 






 



the amount of securities to be sold (other than by the Company) that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Shares,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering; provided, however, there shall first be excluded
from such registration statement all shares of Common Stock sought to be
included therein by (i) any director, consultant, officer, or employee of
the Company or any subsidiary of the Company other than Ram Sasisekharan,
Robert S. Langer, Jr., Ganesh Venkataraman and Alan L. Crane,
(ii) stockholders exercising any contractual or incidental registration
rights subordinate and junior to the rights of the Preferred Holders of
Registrable Securities (each as defined in the Existing Registration Rights
Agreement) and the Holders and (iii) stockholders who do not have
contractual registration rights.  If after
such shares are excluded and any Registrable Shares remain to be included in
the offering, the underwriters shall determine in their sole discretion that
the number of securities which remain to be included in the offering exceeds
the amount of securities to be sold that the underwriters determine is
compatible with the success of the offering, then (a) in the context of a
Section 2 offering, prior to excluding any shares for the account of one or
more securityholders party to the Existing Registration Rights Agreement, the
Company shall first exclude, on a pro rata basis, that number of Registrable
Shares and securities to be registered for the account of holders of
registration rights granted after the date hereof which the underwriters
determine in their sole discretion will jeopardize the success of the offering
and (b) in the context of a Section 7 offering, prior to excluding any shares
for the account of any Holder, all securities to be registered for the account
of holders of registration rights granted after the date hereof shall be
excluded from such registration statement. 
Any Registrable Shares to be included in the offering shall be
apportioned pro rata among the Holders providing notice of their desire to
participate in the offering according to the total amount of securities
entitled to be included therein owned by each selling Holder or in such other
proportions as shall mutually be agreed to by such Holders.  For purposes of the preceding two sentences
and the last sentence of the following paragraph concerning apportionment, for
any selling Holder or other stockholder which is a partnership, limited
liability company or corporation, the partners, members, retired members,
retired partners, and stockholders of such Holder or stockholder, or the
estates and family members of any such partners, members, retired members and
retired partners and any trusts for the benefit of any of the foregoing Persons
shall be deemed to be a single “selling Holder” or “selling stockholder” and
any pro rata reduction with respect to such “selling Holder” or “selling
stockholder” shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such “selling
Holder” or “selling stockholder,” as defined in this sentence.


(b)  If
the total amount of securities requested by stockholders to be included in an
offering for the account of one or more securityholders party to the Existing
Registration Rights Agreement, including Registrable Shares so requested to be
included in such offering, exceeds the amount of securities to be sold that the
underwriters determine in their sole discretion is compatible with the success
of the offering, then all Registrable Shares shall be excluded from such
registration statement.  Any Registrable
Shares to be included in the offering shall be apportioned pro rata among the
Holders providing notice of their desire to participate in the offering
according to the total amount of securities entitled to be included therein
owned by each selling Holder or in such other proportions as shall mutually be
agreed to by such Holders.



 8
 






 



(c)  If,
as a result of the proration provisions of this Section, any Holder shall not
be entitled to include all Registrable Shares in a registration that such
Holder has requested be included, such Holder may elect to withdraw its request
to include Registrable Shares in such registration or may reduce the number
requested to be included; provided, however, that (x) such request must be
made in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to such
registration and (y) such withdrawal shall be irrevocable and, after
making such withdrawal, such Holder shall no longer have any right to include
Registrable Shares in the registration as to which such withdrawal was made.


(d)  In
connection with any underwritings of shares to be registered under
Section 2, the Company shall have the right to designate the managing
underwriter or underwriters.


6.             Company Registration
Expenses.  All expenses incurred in
connection with any registration pursuant to Section 2, including, without
limitation, any additional registration and qualification fees and any
additional fees and disbursements of counsel to the Company that result from
the inclusion of securities held by the selling Holders in such registration,
shall be borne by the Company. 
Notwithstanding the foregoing, expenses to be borne by the Company in
connection with any registration pursuant to Section 2 shall exclude
underwriters’ discounts and commissions and the fees and disbursements of
attorneys (other than the reasonable fees and disbursements of one special
counsel for the selling Holders collectively in an amount not to exceed $25,000),
accountants and other agents of the Holders and those expenses set forth in
Section 3(d) incurred in connection with the qualification of securities
in certain jurisdictions that are required to be borne by selling stockholders.


7.             Demand Registrations.


(a)  If
(i) the Company shall receive a written request (specifying that it is
being made pursuant to this Section 7) from one or more Holders that the
Company file a registration statement on Form S-3 (or any successor form
to Form S-3 regardless of its designation) (or, if the Company is not then
a registrant entitled at such time to use Form S-3 (or any form to Form S-3
regardless of its designation) to register such shares, a Form S-1 (or any
successor form to Form S-1 regardless of designation) for a public offering of
Registrable Shares (whether by underwriting or otherwise) the reasonable
anticipated aggregate price to the public of which would equal or exceed
$3,000,000 (a “Demand Registration Request”), then the Company shall
promptly notify all other Holders of such request and shall use its reasonable
best efforts to cause all Registrable Shares that Holders, within fifteen
(15) days after receipt of any such written notice, have requested be
registered to be registered as soon as reasonably practicable thereafter.


(b)  Notwithstanding
the foregoing, (i) the Company shall not be obligated to effect a
registration pursuant to Section 7(a) during the period starting with the
date ninety (90) days prior to the Company’s estimated date of filing of,
and ending on a date ninety (90) days following the effective date of, a
registration statement pertaining to an underwritten public offering of
securities for the account of the Company, provided, that the Company is
actively employing in good faith its commercially reasonable efforts to cause
such registration statement to become effective and that the Company’s estimate
of the date of filing such registration statement is made in good faith;
provided, however, that the Company shall file a 



 9
 






 



registration statement upon the request of one or more Holders pursuant
to Section 7(a) after ninety (90) days have elapsed after the
estimated date of filing of such registration statement pertaining to an
underwritten public offering of securities for the account of the Company; and
provided, further, that the Company shall only be permitted to delay pursuant
to this Section 7(b)(i) the filing of a registration statement requested
to be filed by one or more Holders pursuant to Section 7(a) once in any 12-month
period; (ii) the Company shall not be obligated to effect (x) more
than three registrations pursuant to Section 7(a) on Form S-1 (or any
successor form) and (y) more than two registrations pursuant to
Section 7(a) in any twelve month period, and (iii) if the Company
shall furnish to the Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company or its stockholders for a
registration statement to be filed (a “Valid Business Reason”) in the
near future, then the Company’s obligation to use its reasonable best efforts
to file a registration statement shall be deferred until such Valid Business
Reason no longer exists; provided that Company may exercise its right to delay
filing a registration statement pursuant to this Section 7(b)(iii) or to
suspend the use of a prospectus included in an effective registration statement
pursuant to Section 13(f) for an aggregate period not to exceed ninety
(90) days in any 12-month period. 
The Company shall give notice of its determination to delay or suspend a
registration statement and of the fact that the Valid Business Reason for such
delay or suspension no longer exists, in each case, promptly after the occurrence
thereof.


(c)  If
any registration statement pursuant to this Section 7 or any Subsequent
Registration (as defined below) ceases to be effective for any reason at any
time during the Effectiveness Period, the Company shall use reasonable best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within forty-five (45) days
of such cessation of effectiveness amend such registration statement in a
manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional registration statement, covering all of the
Registrable Shares covered by such prior registration statement (a “Subsequent
Registration”).  If a Subsequent
Registration is filed, the Company shall use reasonable best efforts to cause
the Subsequent Registration to be declared effective under the Securities Act
as soon as practicable after such filing and to keep such Subsequent
Registration continuously effective for the remainder of the Effectiveness Period
plus the number of days during which the registration statement replaced by the
Subsequent Registration ceased to be effective. 
Notwithstanding anything to the contrary contained herein the filing by
the Company of a Subsequent Registration shall not be counted for purposes of
limitations on the number of registration statements the Company is required to
effect pursuant to this Section 7.


(d)  If
the Company files any shelf registration statement for the benefit of the
holders of any of its securities other than the Holders, the Company agrees
that it shall include in such registration statement such disclosures as may be
required by Rule 430B (referring to the unnamed selling security holders
in a generic manner by identifying the initial offering of the securities to
the Holders) in order to ensure that the Holders may be added to such shelf
registration statement, if the Company so elects, at a later time through the
filing of a prospectus supplement rather than a post-effective amendment.


(e)  The
Holders’ rights to registration under this Section 7 are in addition to,
and not in lieu of, their rights to registration under Section 2 of this
Agreement.



 10
 






 



8.             Underwriting
Requirements; Demand Registrations.


(a)  If
the Holders intend to distribute the Registrable Shares covered by their
request by means of an underwriting, they shall so advise the Company as a part
of their request made pursuant to Section 7(a), and the Company shall
include such information in its written notice referred to in Section 7(a).  In such event, (i) the right of any
other Holder to include its Registrable Shares in such registration pursuant to
Section 2 or 7(a), as the case may be, shall be conditioned upon such
other Holder’s participation in such underwriting on the terms set forth
herein, and (ii) all Holders including Registrable Shares in such
registration shall enter into an underwriting agreement upon customary terms
with the underwriter or underwriters managing the offering on the terms set
forth herein.  In connection with any
offering under Section 7(a) involving an underwritten registration, if the
managing underwriter determines that the total amount of Registrable Shares
requested by the Holders, together with other securities requested by
stockholders to be included in such offering, exceeds the amount of securities
that the managing underwriter determines in its reasonable judgment is
compatible with the success of the offering, then the number of Registrable
Shares to be included in such offering shall be allocated in accordance with
the provisions of Section 5.


(b)  In
connection with any underwritings of shares to be registered under
Section 7(a), a majority in interest of the Holders participating in such
registration shall have the right to designate the managing underwriter or
underwriters (such managing underwriter or underwriters to be reasonably
acceptable to the Company).


9.             Expenses of Demand
Registration.  All expenses incurred
in connection with any registration pursuant to Section 7, including,
without limitation, all registration and qualification fees, printers’ and
accounting fees, fees and disbursements of counsel for the Company, shall be
borne by the Company.  Notwithstanding
the foregoing, expenses to be borne by the Company in connection with any
registration pursuant to Section 7 shall exclude underwriters’ discounts
and commissions and the fees and disbursements of attorneys (other than the
reasonable fees and disbursements of one special counsel for the selling
Holders collectively in an amount not to exceed $25,000), accountants and other
agents of the Holders.


10.          Indemnification.  In the event any Registrable Shares are
included in a registration statement under this Agreement:


(a)  To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder owning Registrable Shares included in a registration statement pursuant
to this Agreement, any underwriter (as defined in the Securities Act) for a
Holder, and each Person, if any, who controls any such Holder or underwriter within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, and expenses (including reasonable fees of
counsel and any amounts paid in any settlement effected with the Company’s
consent) to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based on (i) any untrue or alleged
untrue statement of any material fact contained in any registration statement,
including, without limitation, any preliminary prospectus, “issuer free writing
prospectus” (as defined in the Securities Act) or final prospectus contained
therein or any amendments or supplements thereto, together with the documents incorporated
by reference therein, (ii) the omission or alleged omission to state
therein a material fact required to be stated 



 11
 






 



therein, or necessary to make the statements therein not misleading, or
(iii) any violation by the Company of the Securities Act, the Exchange
Act, any state securities laws or any rule or regulation promulgated under any
thereof relating to action or inaction by the Company in connection with any
such registration; and will promptly reimburse each such Holder, underwriter,
or controlling Person or other Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action as such expenses are incurred,
provided, however, that the indemnity agreement contained in this
Section 10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement does not include a
release of the Company from all liability in respect of such claim and is effected
without the consent of the Company (which consent shall not be unreasonably
withheld or delayed) nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it
(i) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with such
registration statement, preliminary prospectus, issuer free writing prospectus,
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished to the Company expressly for use
in connection with such registration by or on behalf of any such Holder,
underwriter or controlling Person, (ii) is caused by the failure of a
Holder to deliver, at or prior to written confirmation of the sale of such
securities to such Person, a copy of the preliminary prospectus, as then
amended or supplemented, relating to such Registrable Shares, in connection
with a purchase, if the Company had previously furnished copies thereof to such
Holder or (iii) 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 under Section 13.  Such indemnity and reimbursement of expenses
shall remain in full force and effect regardless of any investigation made by
or on behalf of such indemnified party and shall survive the transfer of such
securities by such Holder.


(b)  To
the extent permitted by law, each Holder owning Registrable Shares included in
a registration statement pursuant to this Agreement will, severally and not
jointly, indemnify and hold harmless the Company, each of its directors and
officers, each underwriter (within the meaning of the Securities Act), if any,
for the Company, and each Person, if any, who controls the Company or any
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, controlling Person or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based on
(i) any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus,
issuer free writing prospectus or final prospectus contained therein or any
amendments or supplements thereto 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, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information relating to and furnished to the Company by such Holder
expressly for use in connection with such registration; and will promptly
reimburse the Company or any such director, officer, controlling Person or
underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 10(b) shall not apply to amounts paid in 



 12
 






 



settlement of any such loss, claim, damage, liability or action if such
settlement does not include a release of such Holder from all liability in
respect of such claim and is effected without the consent of such Holder (which
consent shall not be unreasonably withheld or delayed) and, provided, further,
that no Holder shall have any liability under this Section 10(b) in excess
of the net proceeds actually received by such Holder in the relevant public
offering.  Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the transfer of such securities by such Holder.


(c)  Promptly
after receipt by an indemnified party under this Section 10 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 10, notify the indemnifying party in writing 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 indemnified parties (which consent shall not be
unreasonably withheld), provided, that if in the reasonable opinion of outside
counsel to any indemnified party a conflict of interest between any indemnified
and indemnifying parties may exist in respect of such claim, the indemnified
party shall have the right to continue its own defense of such claim and retain
one firm of counsel in connection therewith and the indemnifying party shall be
liable for any expenses therefor.  The
failure to notify an indemnifying party promptly of the commencement of any
such action, if materially prejudicial to such party’s ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 10 to the extent of such material
prejudice, but the omission so to notify the indemnifying party will not
relieve an indemnifying party of any liability that such party may have to any
indemnified party otherwise than under this Section 10.


(d)  If
the indemnification provided for in this Section 10 is required by its
terms but is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party under Section 10(a) or
Section 10(b) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein
(i) in such proportion as is appropriate to reflect the relative faults of
the Company and the selling Holders in connection with the statements or
omissions described in such Section 10(a) or Section 10(b) which
resulted in such losses, claims, damages, liabilities or expenses, or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative faults referred to in clause (i) above but also the relative benefits
received by the Company and the selling Holders from the offering of securities
as well as any other relevant equitable considerations.  The respective relative benefits received by
the Company and the selling Holders shall be deemed to be in the same
proportion as the total price paid to the Company and the selling Holders,
respectively, for the securities sold by them in the offering.  The relative fault of the Company and the
selling Holders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the selling Holders and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.  The amount paid or payable 



 13
 






 



by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in this Section 10, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.  The
provisions set forth in Section 10(c) with respect to notice of
commencement of any action shall apply if a claim for contribution is to be
made under this Section 10(d); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under Section 10(c) for purposes of indemnification.  The Company and the selling Holders agree
that it would not be just and equitable if contribution pursuant to this
Section 10 were determined solely by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in this Section. 
Notwithstanding the provisions of this Section 10(d), no Holder
shall be required to contribute an amount in excess of the net proceeds
actually received by such Holder in the relevant public offering, less the
amount of any indemnification payment made by such indemnifying party pursuant
to Section 10.  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.


(e)  Notwithstanding
the foregoing, to the extent that the provisions on indemnification contained
in the underwriting agreements entered into among the Holders, the Company and
the underwriters in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling as to the Registrable Shares included in the
public offering.


(f)  The
indemnity and contribution agreements contained herein shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made or omitted by or on
behalf of any indemnified party and shall survive the transfer of the
Registrable Shares by any such party.


(g)  The
indemnification and contribution required by this Section 10 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.


11.          Transfer of Registration
Rights.  The registration rights and
obligations of the Investor under this Agreement with respect to any
Registrable Shares may be transferred only to one or more Affiliates of the
Investor; provided, however, that (a) the Company shall be given written
notice by the Investor at the time of any permitted transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights and obligations under this Agreement are being assigned and
(b) the transferee shall execute an agreement to be bound by the terms of
this Agreement.  For the avoidance of
doubt, this Section 11 shall not restrict the Holders ability to sell or
otherwise transfer any Registrable Shares.


12.          Mergers, Etc.  The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement to
register Registrable Shares (but not any other obligations hereunder), and for
that purpose references hereunder to “Registrable Shares” shall be deemed to be
references to the 



 14
 






 



securities which the Holders would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation
or reorganization; provided, however, that the provisions of this Agreement
shall not apply in the event of any merger, consolidation or reorganization in
which the Company is not the surviving corporation if the holders of Registrable
Shares are entitled to receive in exchange therefor (i) cash or
(ii) securities of the acquiring corporation which may be immediately sold
to the public without registration under the Securities Act.


13.          Future Events.  The Company will notify each Holder
participating in a registration of the occurrence of any of the following
events of which the Company is actually aware, and (in the case of clauses (c)
through (f) below) when so notified, each Holder will immediately discontinue
any disposition of Registrable Shares until notified by the Company that such
event is no longer applicable:


(a)  when
the registration statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto, any post-effective amendment to the registration
statement or any free writing prospectus has been filed and, with respect to
the registration statement or any post-effective amendment, when the same has
become effective;


(b)  of
any request by the SEC or state securities authority for amendments or
supplements to the registration statement or the prospectus related thereto or
for additional information;


(c)  if
at any time the representations and warranties contemplated by any underwriting
agreement, securities sale agreement or other similar agreement relating to the
offering shall cease to be true and correct in all material respects;


(d)  the
issuance by the SEC or any state securities commission or agency of any stop
order suspending the effectiveness of the registration statement or the initiation
of any proceedings for that purpose (in which case the Company will use its
reasonable best efforts to obtain the withdrawal of any such order or the
cessation of any such proceedings);


(e)  the
existence of any fact which makes untrue any material statement made in the
registration statement or prospectus or any document incorporated therein by
reference or any free writing prospectus or the information conveyed to any
purchaser at the time of sale to such purchaser or which requires the making of
any changes in the registration statement or prospectus or any document
incorporated therein by reference or any free writing prospectus or the
information conveyed to any purchaser at the time of sale to such purchaser in
order to make the statements therein not misleading (in which case the Company
will use its reasonable best efforts to amend the applicable document to
correct the deficiency); or


(f)  in
the event that, in the judgment of the Company, it is advisable to suspend use
of a prospectus included in a registration statement due to pending material
developments or other events that have not yet been publicly disclosed and as
to which the Company believes public disclosure would be detrimental to the
Company; provided, however, that Company may exercise its right to suspend the
use of a prospectus included in an effective registration statement pursuant to
this Section 13(f) or to delay filing a registration statement pursuant to
Section 7(b)(iii) for an aggregate period not to exceed ninety (90) days
in any 12-month period.



 15
 






 



14.          Termination.  Sections 2 through 13 and Sections 15 through
17 of this Agreement shall terminate on the date on which no Holder holds any
Registrable Shares.  All other provisions
of this Agreement shall terminate in accordance with their respective terms.


15.          Stand-Off Agreement.  Each Holder agrees that in the event the
Company proposes to file a registration statement for an underwritten public
offering of its securities, upon the request of the underwriters managing such
public offering, such Holder will execute a customary lock-up agreement,
whereby such Holder shall agree not to sell or otherwise dispose the
Registrable Shares or other securities of the Company held by such Holder
(other than as part of such registration) without the prior written consent of
the underwriters for a period not to exceed ninety (90) days from the
effective date of the registration; provided, however, that all officers and
directors of the Company and stockholders holding in excess of 5% of the Common
Stock enter into similar agreements.  Any
Holder receiving any written notice from the Company regarding the Company’s
plans to file a registration statement shall treat such notice confidentially
and shall not disclose such information to any Person.


16.          Other Registration
Rights Agreements.  The Company
agrees that if any other registration rights agreement entered into after the
date of this Agreement with respect to any of its securities contains terms
which are more favorable to, or less restrictive on, the other party thereto
than the terms and conditions contained in Sections 2 through 10, Section 12,
Section 13 and Section 15 of this Agreement are to the Holders, then the
Company shall provide the Holders the option to replace the terms and
conditions contained in Sections 2 through 10, Section 12, Section 13 and
Section 15 of this Agreement in their entirety with the terms and conditions of
such other registration right agreement relating to registration.


17.          Inspection.  The Company shall, upon reasonable prior
notice to the Company, permit authorized representatives of the Holders (x) to
visit and inspect any of the properties of the Company including its books of
accounts (and to make copies thereof and take extracts therefrom), and to
discuss the affairs, finances and accounts of the Company with its officers,
administrative employees and independent accountants and (y) at least twice per
year, to meet with the Chairman of the Company’s Board of Directors and other
Directors of the Company all at the expense of the Holders and at such
reasonable times and as often as may be reasonably. Investor’s right to receive
the information described herein shall not apply to, and the Company have the
right to omit certain information, if the Company’s Board of Directors
determines that such exclusion or omission is necessary: (i) in order to
preserve the Company’s attorney-client privilege; (ii) in order to fulfill the
Company’s obligations with respect to confidential or proprietary information
of third parties (provided that the Company shall use its commercially
reasonable efforts to obtain waivers or implement requisite procedures to
enable reasonable access to such information without violating such
confidentiality); or (iii) because such information relates to any particular
matter in which the Investor or its Affiliates have an interest that conflicts
with the business of the Company. 
Investor agrees not to (A) use such information for any purpose other
than monitoring its investment in the Company, or (B) reveal to any Person
outside of Investor and its advisors any confidential information learned as a
result of the rights granted by this Section 17.


18.          Standstill.  Except as permitted by the terms of this
Agreement, the Purchase Agreement or the Collaboration and License Agreement or
any other collaboration agreement between the Company or any of its
subsidiaries and the Investor or any of its 



 16
 






 



Affiliates, for a period commencing with the date of
this Agreement and ending on the earliest of (a) the termination of the MOU
(or, if later entered into, the Collaboration and License Agreement), (b) the
Termination Date and (c) 24 months from the date of the Closing (as defined the
Purchase Agreement), Investor shall not, without the prior written consent of
the Company or the Company’s Board of Directors:  (i) acquire, offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, voting securities or
direct or indirect rights to acquire any voting securities of the Company (A)
during such time that Investor beneficially owns (for purposes of Section 13(d)
of the Exchange Act) 13.5% or more of the voting power of the Company, or (B)
which when added to the Common Stock then owned by Investor and its Affiliates,
would result in Investor and its Affiliates beneficially owning (for purposes
of Section 13(d) of the Exchange Act) more than 13.5% of the voting power of
the Company (it being understood, for the avoidance of doubt, that for purposes
of this clause (i) that the Investor shall not be deemed to have acquired any
such securities of the Company as the result of an acquisition of voting
securities by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by the Investor
or its Affiliates to 13.5% or more of the shares of the voting securities of
the Company then outstanding); (ii) make, or in any way participate, directly
or indirectly, in any “solicitation” of “proxies” to vote (as such terms are used
in the Exchange Act), or seek to advise or influence any Person or entity with
respect to the voting of any voting securities of the Company; (iii) make any
public announcement with respect to, or make any public proposal for, or public
offer of (with or without conditions) any merger, business combination,
recapitalization, restructuring or other extraordinary transaction involving
the Company or any of its securities or material assets (it being understood
that the Company’s Board of Directors may reject in its sole discretion any non
public proposal or offer); (iv) form, join or in any way participate in a “group”
as defined in Section 13(d)(3) of the Exchange Act in connection with any of
the foregoing; (v) otherwise act or seek to control or influence the
management, Board of Directors or policies of the Company (other than as
contemplated by the Collaboration and License Agreement or any other
collaboration agreement or undertaking, whether or not in writing, among the
Company or any o its subsidiaries and the Investor or any of its Affiliates);
(vi) take any action that could reasonably be expected to require the Company
to make a public announcement regarding the possibility of any of the events
described in clauses (i) through (v) above; or (vii) request the Company,
directly or indirectly, to amend or waive any provision of this Section;
provided, that the restrictions imposed by this Section 18 shall not apply to
passive investments by the Investor or any of its Affiliates, or by an
affiliated pension or employee benefit plan or trust, in publicly traded
securities of the Company or its subsidiaries, or to interest in such
securities comprising part of a broad based, publicly traded market basket or
index of stock approved for any such a plan or trust in which such plan or
trust invests, so long as such investments or interests (together with any
securities of the Company or its subsidiaries into which such investments or
interests are convertible or exchangeable) do not, in the aggregate, exceed 2%
of then outstanding publicly traded securities of the Company and its
subsidiaries.  The Company agrees that
upon publicly disclosing or filing (a) any “standstill” restrictions in respect
of the Company entered into after the date of this Agreement binding upon any
Similarly Situated Person or (b) any amendment to any “standstill” restrictions
in respect of the Company binding upon any Similarly Situated Person, in each
case, that contains terms which are more favorable to, or less restrictive on,
the Similarly Situated Person than the terms and conditions contained in this
Section are to the Investor, then the Company will promptly (but in any event
within 4 business days) provide to the Investor an amendment to this Section 18
reflecting any 



 17
 






 



such more favorable or less restrictive terms or
conditions, which upon the written concurrence of the Investor shall be deemed
to constitute an amendment hereof.


19.          No Required Sale.  Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Holder to sell any
Registrable Shares pursuant to any effective registration statement.


20.          Legends.  Investor agrees and consents to (a) the
entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of, and/or (b) the placement of legends on
certificates representing Investor’s Securities held by the Investor, if
necessary, with respect to the restrictions set forth in Section 11.


21.          Notices.  Unless otherwise provided, all notices,
requests, consents and other communications hereunder (“Notices”) to any
party shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified or five business days after
being duly sent by first class registered or certified mail, or other courier
service, postage prepaid, or the following business day after being faxed with
a confirmation copy by regular mail, and addressed or faxed to the party to be
notified at the address or fax number indicated for such party, as the case may
be, set forth below or such other address or fax number, as the case may be, as
may hereafter be designated in writing by the addressees to the addressor
listing all parties:


To the
Company:


Momenta Pharmaceuticals,
Inc. 

675 West Kendall Street

Cambridge, Massachusetts 02142

Attention:  Chief Executive Officer

Fax:  (617) 621-0431


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


Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Attention:   Steven D. Singer, Esq.

Fax:  (617) 526-5000


To the
Investor:


Novartis Pharma AG


Lichtstraße 35


CH 4058 Basel BS


Attention Peter Rupprecht


Fax:  +41
61 3245372



 18
 






 



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


Cravath, Swaine &
Moore LLP

Worldwide Plaza

825 Eight Avenue

New York, New York, 10019

Attention:  Philip A. Gelston, Esq.

Fax:  (212) 474-3700


 


22.          Miscellaneous.


(a)  This
Agreement and the other writings referred to herein or delivered pursuant
hereto which form a part hereof 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 thereto.


(b)  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.


(c)  This
Agreement may be amended, and compliance with any provision of this Agreement
may be omitted or waived, only by the written agreement of the Company and the
holders of a majority of the Registrable Shares, provided that
Sections 11, 17 and 18 may be amended, and compliance thereof may be
omitted or waived, only by the written agreement of the Company and the
Investor.


(d)  This
Agreement shall be governed by and construed under the laws of the State of New
York (without regard to the conflict of law principles thereof).  Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Federal and state courts of the State of New York in any
action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally
(i) agrees not to commence any such action or proceeding except in such
courts, (ii) agrees that any claim in respect of any such action or
proceeding may be heard and determined in such courts, (iii) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or
proceeding in such courts, and (iv) waives, to the fullest extent
permitted by laws, the defense of an inconvenient forum to the maintenance of
such action or proceeding in such courts. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
laws.  Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 21.  Nothing in this
Agreement shall affect the right of any party to this Agreement to serve
process in any other manner permitted by laws.


(e)  EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT MAY INVOLVE 



 19
 






 



COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) IT UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (II) IT MAKES SUCH
WAIVERS VOLUNTARILY, AND (III) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 22.


(f)  This
Agreement may be executed in any number of counterparts, each such counterpart
shall be deemed to be an original instrument, and all such counterparts
together shall constitute but one agreement. 
Any such counterpart may contain one or more signature pages.  This Agreement may be executed by facsimile
signature pages.


(g)  The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.


(h)  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.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”, unless the
context expressly provides otherwise. 
All references herein to Sections, paragraphs, subparagraphs, clauses,
Exhibits or Schedules shall be deemed references to Sections, paragraphs,
subparagraphs or clauses of, or Exhibits or Schedules to this Agreement, unless
the context requires otherwise.  Unless
otherwise specified, the words “herein”, “hereof”, “hereto” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement. 
The term “or” is not exclusive. 
The word “extent” in the phrase “to the extent” shall mean the degree to
which a subject or other thing extends, and such phrase shall not mean simply “if”.  The phrase “date hereof” or “date of this
Agreement” shall be deemed to refer to July 25, 2006.  Any contract, instrument or law defined or
referred to herein or in any contract or instrument that is referred to herein
means such contract, instrument or law as from time to time amended, modified
or supplemented, including (in the case of contracts or instruments) by waiver
or consent and (in the case of laws) by succession of comparable successor laws
and references to all attachments thereto and instruments incorporated
therein.  References to a Person are also
to its permitted successors and assigns.


(i)  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, in any jurisdiction, such provision shall be ineffective, as to
such jurisdiction, and the balance of the Agreement shall be interpreted as if
such provision were so excluded, without invalidating the remaining provisions
of this Agreement and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


(j)  Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement (except as specifically provided in Section 11 of this
Agreement) may be 



 20
 






 



assigned or delegated, in whole or in part, by operation of law or
otherwise by the Investor or any Holder without the prior written consent of
the Company, and any such assignment without such prior written consent shall
be null and void.  Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns.


(k) 
The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or was otherwise breached.  In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, the
parties shall be entitled to specific performance of the agreements and
obligations hereunder and to such other injunctive or other equitable relief as
may be granted by a court of competent jurisdiction.  Each party
further agrees that, in the event of any action for an injunction or other
equitable remedy in respect of such breach or enforcement of specific
performance, it will not assert the defense that a remedy at law would be
adequate.


(l)  The
Company hereby represents that the rights granted to the Holders of Registrable
Shares hereunder do not in any way conflict with and are not inconsistent with
any other agreements to which the Company is a party or by which it is bound
relating to the subject matter hereof.


(Signature Page Follows)



 21














 


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


	
   

  	
  NOVARTIS PHARMA AG,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Peter Rupprecht

  	
  /s/ Dr. Thomas Werlen

  
	
   

  	
   

  	
    Name: Peter Rupprecht

    Title: Authorized Signatory

  	
   

  	
  Dr. Thomas Werlen

  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MOMENTA PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Alan Crane

  	
   

  
	
   

  	
   

  	
    Name: Alan Crane 

    Title: President & CEO

  
							



 


Signature
Page Investor Rights Agreement