Document:

Exhibit 10.3

 

Execution Version

 

ADDEX THERAPEUTICS LTD. 

REGISTRATION RIGHTS AGREEMENT

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Registration Rights
    	
6
    
	
 
    	
2.1
    	
Demand Registration
    	
6
    
	
 
    	
2.2
    	
Company Registration
    	
11
    
	
 
    	
2.3
    	
Underwriting   Requirements
    	
11
    
	
 
    	
2.4
    	
Reserved
    	
13
    
	
 
    	
2.5
    	
Obligations of the   Company
    	
13
    
	
 
    	
2.6
    	
Furnish Information
    	
16
    
	
 
    	
2.7
    	
Expenses of   Registration
    	
16
    
	
 
    	
2.8
    	
Indemnification
    	
17
    
	
 
    	
2.9
    	
Reports Under Exchange   Act
    	
19
    
	
 
    	
2.10
    	
Limitations on   Subsequent Registration Rights
    	
19
    
	
 
    	
2.11
    	
“Market Stand-off”   Agreement
    	
19
    
	
 
    	
2.12
    	
Termination of   Registration Rights
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Additional Covenants
    	
21
    
	
 
    	
3.1
    	
Successor   Indemnification
    	
21
    
	
 
    	
3.2
    	
Right to Conduct   Activities
    	
21
    
	
 
    	
3.3
    	
Termination of   Covenants
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Miscellaneous
    	
21
    
	
 
    	
4.1
    	
Successors and Assigns
    	
21
    
	
 
    	
4.2
    	
Governing Law
    	
22
    
	
 
    	
4.3
    	
Counterparts
    	
22
    
	
 
    	
4.4
    	
Titles and Subtitles
    	
22
    
	
 
    	
4.5
    	
Notices
    	
22
    
	
 
    	
4.6
    	
Amendments and Waivers
    	
22
    
	
 
    	
4.7
    	
Severability
    	
23
    
	
 
    	
4.8
    	
Aggregation of Stock
    	
23
    
	
 
    	
4.9
    	
Additional Investors
    	
23
    
	
 
    	
4.10
    	
Entire Agreement
    	
23
    
	
 
    	
4.11
    	
Dispute Resolution
    	
23
    
	
 
    	
4.12
    	
Delays or Omissions
    	
24
    
	
 
    	
4.13
    	
Acknowledgment
    	
24
    

 

	
Schedule A
    	
-
    	
Schedule of Investors
    
	
Annex A
    	
-
    	
Plan of Distribution
    

 

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REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made as of the 22 day of March 2018, by and among Addex Therapeutics Ltd., a corporation organized under the laws of Switzerland (the “Company”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor.”

 

RECITALS

 

WHEREAS, the Company, Growth Equity Opportunities Fund IV, LLC (“NEA”) and New Leaf Biopharma Opportunities I, L.P. (“New Leaf”) are parties to the Investment Agreement dated February 14, 2018 (the “Investment Agreement”); and

 

WHEREAS, in order to induce the Company to enter into the Investment Agreement and to induce the Investors to invest funds in the Company pursuant to the Investment Agreement or a separate agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issuable to the Investors, and shall govern certain other matters as set forth in this Agreement;

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each of the Investors agree as follows:

 

1.                                      Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Investment Agreement shall have the meanings given such terms in the Investment Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

1.1                               “ADR” means American Depository Receipts representing the Common Stock.

 

1.2                               “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

1.3                               “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

1.4                               “Change of Control” means either: (a) any sale or transfer of all or substantially all of the assets of the Company to another Person; (b) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation or stock transfer, but excluding any such transaction effected primarily for the purpose of changing the domicile of the Company), unless such the Company’s stockholders of record immediately prior to such

 

 

transaction or series of related transactions hold, immediately after such transaction or series of related transactions, at least fifty percent (50%) of the voting power of the surviving or acquiring entity (provided that the sale by the Company of its securities for the purposes of raising additional funds shall not constitute a Change of Control hereunder); or (c) a disclosure that any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation thereto under the Exchange Act) of securities representing fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Company.

 

1.5                                    “Commission” means the Securities and Exchange Commission.

 

1.6                                    “Common Stock” means the registered common shares, nominal value CHF 1.00 per share, issued or issuable to the Investors pursuant to the Investment Agreement and any securities into which such common shares may hereinafter be reclassified.

 

1.7                                    “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary Prospectus or final Prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.8                                    “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly),  Common Stock, including options and warrants.

 

1.9                                    “Effective Date” means the date that a Registration Statement filed pursuant to this Agreement is first declared effective by the Commission.

 

1.10                           “Effectiveness Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, ninety (90) calendar days after the filing date of such Registration Statement (or, in the event the Commission reviews and has written comments to the Initial Registration Statement or the New Registration Statement, no later than one hundred eighty (180) calendar days from the filing date of such Registration Statement provided, however, that if the Company is notified by the Commission that the Initial Registration Statement or the New Registration Statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline as to such Registration Statement shall be the tenth (10th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above; provided, further, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed

 

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for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business.

 

1.11          “Event Date Investment Amount” means the number of Registrable Securities held by the applicable Holder on the Event Date.

 

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

 

1.13          “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan (including equity incentives, such as equity sharing certificates, under Swiss law); (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

1.14          “Form F-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.15          “Form F-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.16          “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.17          “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.

 

1.18          “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.19          “Investment Agreement” has the meaning set forth in the Recitals.

 

1.20          “Investor” or “Investors” has the meaning set forth in the Preamble.

 

1.21          “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

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1.22          “NEA” means Growth Equity Opportunities Fund IV, LLC.

 

1.23          “New Leaf” means New Leaf Biopharma Opportunities I, L.P.

 

1.24          “NYSE” means the New York Stock Exchange, the NYSE Alternext and/or NYSE MKT (formerly the American Stock Exchange), as may be applicable.

 

1.25          “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.26          “Principal Market” means the Trading Market on which the Shares are primarily listed on and quoted for trading, which, as of the Closing Date, shall be the SIX.

 

1.27          “Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

1.28          “Registrable Securities” means (i) the Common Stock; (ii) any Common Stock issued or issuable upon exercise of the Warrants (disregarding for this purpose any and all limitations of any kind on exercise of any Warrants); (iii) ADRs, if any, and (iv) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) through (iii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 4.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.12 of this Agreement.

 

1.29          “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

1.30          “Registration Expenses” means (i) all expenses incurred by the Company incident to the Company’s performance of and compliance with this Agreement, including, without limitation, all stock exchange, Commission, FINRA and, to the extent applicable, state securities registration, listing and filing fees, printing expenses, fees, expenses and disbursements of counsel for the Company and one counsel for all of the Investors, “blue sky” fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall

 

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be paid in any event by the Company) and (ii) the reasonable and documented fees and expenses of one legal counsel to the Investors, subject to an aggregate limit of fifty thousand dollars ($50,000).

 

1.31          “Registration Statements” means any one or more registration statements of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement (including without limitation the Initial Registration Statement, the New Registration Statement, any Remainder Registration Statements and any Piggyback Registration), amendments and supplements to such Registration Statements, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statements.

 

1.32          “SEC” means the Securities and Exchange Commission.

 

1.33          “SEC Guidance” means (i) any publicly-available written or oral guidance, comments requirements or requests of the Commission staff and (ii) the Securities Act.

 

1.34          “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.35          “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.36          “SEC Rule 415” means Rule 415 promulgated by the SEC under the Securities Act.

 

1.37          “SEC Rule 424” means Rule 424 promulgated by the SEC under the Securities Act.

 

1.38          “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.39          “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.7.

 

1.40          “Selling Stockholder Questionnaire” means a questionnaire in the form attached as Annex B hereto, or such other form of questionnaire as may reasonably be adopted by the Company from time to time.

 

1.41          “SIX” means the SIX Swiss Exchange Ltd.

 

1.42          “Trading Day” means (i) a day on which the shares of Common Stock are listed or quoted and traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if the shares of Common Stock are not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the shares of Common Stock are traded in the over-the-

 

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counter market, as reported by the OTC Bulletin Board, or (iii) if the shares of Common Stock are not quoted on any Trading Market, a day on which the shares of Common Stock are quoted in the over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the shares of Common Stock are not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

 

1.43          “Trading Market” means whichever of the SIX, NYSE, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Shares are listed or quoted for trading on the date in question.

 

1.44          “U.S. Trading Market” means any of the NYSE, Nasdaq Global Market or Nasdaq Capital Market, as applicable.

 

1.45          “Warrants” means the warrants issued to the Investors pursuant to the Investment Agreement.

 

2.                                 Registration Rights. The Company covenants and agrees as follows:

 

2.1                               Demand Registration.

 

(a)                                 Form F-1 Demand. If (A) at any time after the earlier of (i) three (3) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the Registration Statement for the IPO, the Company receives a request from Holders of at least ten percent (10%) of the Common Stock then outstanding that the Company effect an underwritten public offering (a “Demand Offering”) of Common Stock held by the Initiating Holders and any other participating Holders (the “Selling Holders”) (and, if the Company has not effected an IPO, of the Common Stock (or ADRs) of the Company in an IPO that includes the resale of the Common Stock of the Selling Holders) on a U.S. Trading Market and in connection therewith file a Form F-1 Registration Statement with the Commission with respect to at least thirty percent (30%) of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of Selling Expenses, would exceed fifteen million ($15 million)), and (B) a major, “bulge bracket” U.S. investment bank selected by the Initiating Holder (and reasonably acceptable to the Company) is prepared to effect a firm commitment underwritten registered public offering of the Common Stock held by the Selling Holders on a U.S. Trading Market (the “U.S. Listing”), then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within ninety (90) days after the date such request is given by the Initiating Holders, file a Form F-1 Registration Statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given. The Company shall also exercise commercially reasonable efforts to take all actions necessary to register such class of securities under the Exchange Act, as well as (X) pay all Registration Expenses (exclusive of Selling Expenses), and (Y) to the extent applicable, to cause the

 

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registration of the issuance of such Common Stock or ADRs, if applicable, and obtain all required approvals for the listing of the Shares or ADRs representing the Shares with the applicable U.S. Trading Market. The Company shall also exercise commercially reasonable efforts to continue the U.S. Listing and trading of its Shares on the applicable U.S. Trading Market and, in accordance, therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations applicable to issuers whose securities are listed on such U.S. Trading Market. The Company also agrees that the Investors shall have the rights set forth in this Agreement with respect to the registration for resale of the Registrable Securities of the Investors in the event of and immediately effective upon such U.S. Listing.

 

(b)                                      Shelf Registration. No later than the Lockup Termination Date of the earlier to occur of (i) an IPO of the Company, or (ii) a Demand Offering (and in the case of a Demand Offering, if no Company lock-up exists, then ninety (90) calendar days following the Effective Date of such Demand Offering) (such date, the “Filing Deadline”), the Company shall prepare and file with the Commission a Registration Statement covering the resale of all outstanding Registrable Securities not already covered by an effective Registration Statement for an offering to be made on a delayed or continuous basis pursuant to SEC Rule 415 or, if SEC Rule 415 is not available for offers and sales of the Registrable Securities, by such other means of distribution of the Registrable Securities as the Holders may reasonably specify (the “Initial Registration Statement”). The Initial Registration Statement shall be on Form F-3 (except if the Company is then ineligible to register for resale the Registrable Securities on Form F-3, in which case such registration shall be on Form F-1 or such other form available to register for resale the Registrable Securities as a secondary offering), subject to the provisions of Subsection 2.1(e), and shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” section attached hereto as Annex A (which may be modified to respond to comments, if any, provided by the Commission). Notwithstanding the registration obligations set forth in this Section 2, in the event the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of SEC Rule 415, be registered for resale as a secondary offering on a single Registration Statement, the Company agrees to promptly (i) inform each of the Holders and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration Statement and file a new Registration Statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form F-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, the Manual of Publicly Available Telephone Interpretations D.29. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable

 

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Securities, the number of Registrable Securities to be registered on such Registration Statement will first be reduced by Registrable Securities not acquired pursuant to the Investment Agreement (whether pursuant to registration rights or otherwise) and second by Registrable Securities represented by shares of Common Stock (applied, in the case that some shares of Common Stock may be registered, to the Holders on a pro rata basis based on the total number of unregistered shares of Common Stock held by such Holders, subject to a determination by the Commission that certain Holders must be reduced first based on the number of shares of Common Stock held by such Holders). In the event the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more Registration Statements on Form F-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). The Company shall cause each Registration Statement required to be filed by the Filing Deadline and to be declared effective by the Commission no later than the Effectiveness Deadline (including filing with the Commission a request for acceleration of effectiveness in accordance with Rule 461 promulgated under the Securities Act), and shall use its reasonable best efforts to keep each Registration Statement continuously effective under the Securities Act for so long as Registrable Securities remain outstanding (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 P.M. New York City time on a Trading Day. The Company shall promptly notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which date of confirmation shall initially be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 A.M. New York City time on the first Trading Day after the Effective Date, file a final Prospectus with the Commission, as required by Rule 424(b). Failure to so notify the Holders on or before the second Trading Day after such notification or effectiveness or failure to file a final Prospectus as aforesaid shall be deemed an Event under Subsection 2.1(c).

 

(c)                                       If: in respect of any Registration Statement filed pursuant to Subsection 2.1(b), (i) the Initial Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, is not declared effective by the Commission (or otherwise does not become effective) on or prior to the Effectiveness Deadline or (iii) after its Effective Date, (A) such Registration Statement ceases (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities included in such Registration Statement or (B) the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities for any reason for more than an aggregate of either thirty (30) consecutive calendar days or sixty (60) calendar days in the aggregate (which need not be consecutive days) during any twelve (12) month period, or (iv) the Company fails to satisfy the current public information requirement pursuant to Rule 144(c)(1) as a result of which the Holders who are not affiliates are unable to sell Registrable Securities without restriction under Rule 144 (or any successor thereto), (any such

 

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failure or breach in clauses (i) through (iv) above being referred to as an “Event,” and, for purposes of clauses (i), (ii) or (iv), the date on which such Event occurs, or for purposes of clause (iii), the date on which either such thirty (30) or sixty (60) calendar day period is exceeded, being referred to as an “Event Date”), then in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each additional thirty (30) consecutive day or sixty (60) day aggregate period, as may be applicable, following such Event Date until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty (“Liquidated Damages”), equal to four tenths of one percent (0.4%) of the aggregate purchase price paid by such Holder pursuant to the Investment Agreement for any unregistered Registrable Securities then held by such Holder (the “Liquidated Damages Amount”). The parties agree that notwithstanding anything to the contrary herein or in the Investment Agreement, (1) no Liquidated Damages shall be payable with respect to any period after the expiration of the Effectiveness Period (except in respect of an Event described in Subsection 2.1(c)(iv) hereof), (it being understood that this sentence shall not relieve the Company of any Liquidated Damages accruing prior to the Effectiveness Deadline), (2) the Liquidated Damages Amount for any Holder in any twelve (12) month period following an Event Date shall not exceed a cap of four and eight tenths percent (4.8%) of the Event Date Investment Amount (e.g., for purposes of illustration and to avoid ambiguity, assuming twenty-five million dollars ($25,000,000) of unregistered Registrable Securities are outstanding on an Event Date, the applicable cap on the Liquidated Damages Amount would be one million two hundred thousand dollars ($1,200,000) in any twelve (12) month period assuming continuous, uncured breach during such period), and (3) no Liquidated Damages shall accrue during any period covered by the exercise of the Company’s rights in accordance with Subsection 2.1(e) hereof. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of an applicable period prior to the cure of an Event, except in the case of the first Event Date. The Company shall not be liable for Liquidated Damages under this Agreement as to any Registrable Securities which are not permitted by the Commission to be included in a Registration Statement due solely to SEC Guidance from the time that it is determined that such Registrable Securities are not permitted to be registered until such time as the provisions of this Agreement as to the Remainder Registration Statements required to be filed hereunder are triggered, in which case the provisions of this Subsection 2.1(c) shall once again apply, if applicable. In such case, the Liquidated Damages shall be calculated to only apply to the percentage of Registrable Securities which are permitted in accordance with SEC Guidance to be included in such Registration Statement. The Effectiveness Deadline for a Registration Statement shall be extended without default or Liquidated Damages hereunder in the event that the Company’s failure to obtain the effectiveness of the Registration Statement on a timely basis results from the failure of an Investor to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of the Securities Act (in which the Effectiveness Deadline would be extended with respect to Registrable Securities held by such Investor).

 

(d)                                      In the event that Form F-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Holders and (ii) undertake to register the Registrable Securities on Form F-3 promptly after such

 

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form becomes available to the Company, provided, that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form F-3 covering the resale of the Registrable Securities has been declared effective by the Commission.

 

(e)                                  Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such Registration Statement to either become effective or remain effective for as long as such Registration Statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing or suspend the right of Holder to use a Prospectus in connection with the resale of Common Stock pursuant to Subsection 2.1(e) hereof, as may be applicable, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given or the date the Company notifies Holders of the suspension of a Registration Statement filed under Subsection 2.1(b), as may be applicable (such period, the “Blackout Period”); provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided  further that the Company shall not register any securities for its own account or that of any other stockholder during such ninety (90) day period other than an Excluded Registration. Neither the delivery of a certificate described herein nor the passage of such ninety (90) day period shall be considered an Event and neither shall trigger the Company’s obligations to pay to the Holders Liquidated Damages hereunder. Notwithstanding any of the foregoing to the contrary, the Company shall not be entitled to exercise its rights pursuant to this Subsection 2.1(e) for the period of ninety (90) days immediately following the Lockup Termination Date if (x) the basis for such exercise is the Company’s intent to effect a registered public offering (a “Secondary Offering”) for the account of the Company and/or other stockholders of the Company and (y) the Company has not included all of the shares of Common Stock requested by the Holders for resale in the IPO, unless the Company includes all shares of Common Stock requested by the Holders for registration in such Secondary Offering.

 

(f)                                   The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such Registration Statement to become effective; (ii) after the Company has effected two registrations pursuant to Subsection 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form F-3 pursuant to the obligations of Subsection 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(b) during the period

 

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that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated IPO, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such Registration Statement to become effective in connection to such IPO. A registration shall not be counted as “effected” for purposes of this Subsection 2.1(f) until such time as the applicable Registration Statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand Registration Statement pursuant to Subsection 2.7, in which case such withdrawn Registration Statement shall be counted as “effected” for purposes of this Subsection 2.1(f).

 

2.2                            Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration) (a “Piggyback Registration”), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.7. Notwithstanding the foregoing, assuming a Requesting Investor has given notice of its desire to participate in such registration, if, at any time after giving a Notice of Piggyback Registration and prior to the effective date of the Registration Statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such Requesting Investor and, thereupon, (a) in the case of a determination not to register the Company’s securities for its own account, shall be relieved of its obligation to register any Registrable Securities in connection with such registration, and (b) in the case of a determination to delay registering the Company’s securities for its own account, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering such other securities to be sold for the account of the Company. No registration effected under this Subsection 2.2 shall (i) relieve the Company of its obligations to effect any Registration under Subsections 2.1(a) or 2.1(b) herein, or (ii) entitle the Company to treat Registrable Securities differently in any such decision not to register or to delay pursuant to this Subsection 2.2(a). Subject to Subsection 2.1(e), the failure to register or to delay registration of securities under this Subsection 2.2 shall not obligate the Company to pay any Liquidated Damages pursuant to Subsection 2.1(c).

 

2.3                            Underwriting Requirements.

 

(a)                            If, pursuant to Subsection 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1, and

 

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the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders; provided; however, in the event of a Demand Offering (other than an IPO) the underwriter(s) shall be selected by the Initiating Holders and shall be reasonably acceptable to the Company. In such event, the right of any Holder to include such Holder’s 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. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.5(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

 

(b)                                      In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine 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 Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, (ii) subject to Subsection 2.1(e), the number of Registrable Securities included in the

 

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offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering, and (iii) notwithstanding (ii) above, in the event that an Event has occurred and so long as such Event shall continue without being cured by the Company, the Company shall include in the Registration Statement all Registrable Securities which have been requested to be included by the Holders. For purposes of the provision in this Subsection 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

(c)                             For purposes of Subsection 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such Registration Statement are actually included.

 

2.4                            Reserved.

 

2.5                            Obligations of the Company. Whenever required under this Section 2 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 and use its commercially reasonable efforts to cause such Registration Statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such Registration Statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities covered by a Registration Statement filed pursuant to Subsection 2.1(b) hereof that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended indefinitely, if necessary, to keep the Registration Statement effective until all such Registrable Securities are sold and use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (x) any order suspending the effectiveness of a Registration Statement, or (y) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as practicable;

 

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(b)                                 (i) 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 Securities Act in order to enable the disposition of all securities covered by such Registration Statement, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to SEC Rule 424, (iii) respond as promptly as reasonably practicable to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible, provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Stockholders” but not any comments that would result in the disclosure to the Holders of material and non-public information concerning the Company, and (iv) comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement until such time as all of such Registrable Securities shall have been disposed of (subject to the terms of this Agreement) in accordance with the intended methods of disposition by the Holders thereof as set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; provided, however, that each Investor shall be responsible for the delivery of the Prospectus to the Persons to whom such Investor sells any of the shares of Common Stock (including in accordance with Rule 172 under the Securities Act), and each Investor agrees to dispose of Registrable Securities in compliance with the “Plan of Distribution” described in the Registration Statement and otherwise in compliance with applicable federal and state securities laws;

 

(c)                                  furnish to the selling Holders such numbers of copies of such Registration Statements and a Prospectus, including a preliminary Prospectus, amendments or supplements, and all exhibits and attachments thereto, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)                                 use its commercially reasonable efforts to register and qualify the securities covered by such Registration Statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders and keep such registration and qualification effective until all such Registrable Securities are sold; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)                                  in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)                                   use its commercially reasonable efforts to cause all such Registrable Securities covered by such Registration Statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

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(g)                                  provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h)                                 promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such Registration Statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such Registration Statement and to conduct appropriate due diligence in connection therewith;

 

(i)                                     notify each selling Holder, promptly after the Company receives notice thereof, (1) of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed, (2) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information that pertains to the Holders as “Selling Stockholders” or the “Plan of Distribution”, (3) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (4) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (5) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, form of prospectus or supplement thereto, in light of the circumstances under which they were made), not misleading and (6) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided that, any and all such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; and provided, further, that notwithstanding each Holder’s agreement to keep such information confidential, each such Holder makes no acknowledgement that any such information is material, non-public information. In the event of an occurrence of any event contemplated by this Subsection 2.5(i), as promptly as reasonably practicable (taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event), the Company shall prepare a

 

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supplement or amendment, including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, form of prospectus or supplement thereto, in light of the circumstances under which they were made), not misleading. Subject to Subsection 2.1(e), the Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Subsection 2.5(i), and if applicable, under Subsection 2.1(e), to suspend the availability of a Registration Statement and Prospectus, and shall be liable for the payment of Liquidated Damages only in accordance with the provisions and time periods of Subsections 2.1(c)(iii)(A) and (B), except no such Liquidated Damages shall accrue during any Blackout Period permitted under Subsection 2.1(e); and

 

(j)                               after such Registration Statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such Registration Statement or Prospectus.

 

In addition, the Company shall ensure that, at all times after any Registration Statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

2.6                            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, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.7                            Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to this Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed fifty thousand dollars ($50,000), of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Subsection 2.1(a); provided  further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable

 

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promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Subsection 2.1(a). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.8                               Indemnification. If any Registrable Securities are included in a Registration Statement under this Section 2:

 

(a)                                 To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

(b)                                 To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and 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 the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such Registration Statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided  further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

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(c)                                  Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the 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 action.

 

(d)                                 To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 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 Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such Registration Statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided  further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)                                  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered

 

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into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)                              Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

2.9                               Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form F-3, the Company shall:

 

(a)                                 make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the Registration Statement filed by the Company for the IPO;

 

(b)                                 use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

(c)                                  furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the Registration Statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 (at any time after the Company so qualifies); and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form F-3 (at any time after the Company so qualifies to use such form).

 

2.10          Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would provide to such holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Subsection 4.9.

 

2.11          “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period

 

19

 

commencing on the date of the final Prospectus relating to the registration by the Company for its own behalf of shares of its Common Stock or any other equity securities under the Securities Act on a Registration Statement on Form F-1 or Form F-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days in the case of the IPO, or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports, and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto) (the applicable termination date of each such period, the “Lockup Termination Date”), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 shall apply only to an IPO, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided  further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock. The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. 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.

 

2.12          Termination of Registration Rights. The rights of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsections 2.1 or 2.2 shall terminate only at such time as SEC Rule 144 or other similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without any restriction including volume or any other limitations.

 

20

 

3.                                      Additional Covenants.

 

3.1          Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.

 

3.2          Right to Conduct Activities. The Company hereby agrees and acknowledges that NEA and New Leaf (together with their respective affiliates) are a professional investment funds, and as such invests in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently propose to be conducted). The Company hereby agrees that, to the extent permitted under applicable law, NEA and New Leaf shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by NEA or New Leaf in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative of NEA and New Leaf to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Investors from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

 

3.3          Termination of Covenants. The covenants set forth in this Section 3, except for Subsection 3.1, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO or (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Change of Control.

 

4.             Miscellaneous.

 

4.1          Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least ten percent (10%) of the Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s

 

21

 

Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided  further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

4.2          Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the internal law of the State of Delaware.

 

4.3          Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

4.4          Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

4.5          Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Subsection 4.5. If notice is given to the Company, a copy shall also be sent to Dr.iur. Frank Gerhard, LL.M., Homburger AG, Prime Tower, Hardstrasse 201, CH-8005 Zurich, Switzerland.

 

4.6          Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that any provision hereof may be waived by any waiving party on such party’s own

 

22

 

behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 4.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

4.7          Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

4.8          Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

4.9          Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Common Stock after the date hereof, pursuant to the Investment Agreement, any purchaser of such shares of Common Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

4.10          Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

4.11          Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that

 

23

 

the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE INVESTMENT AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

4.12          Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

4.13          Acknowledgment. The Company acknowledges that the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

[Remainder of Page Intentionally Left Blank]

 

24

 

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

 

	
 
    	
ADDEX THERAPEUTICS LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ T.M. Dyer
    
	
 
    	
Name:
    	
T.M. Dyer
    
	
 
    	
Title: 
    	
CEO
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
Growth Equity Opportunities   Fund IV, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
New Leaf Biopharma   Opportunities I, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:New Leaf BPO   Associates I, L.P. 
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:New Leaf Venture   Management III, L.L.C. 
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig L. Slutzkin
    
	
 
    	
 
    	
Craig L. Slutzkin
    
	
 
    	
 
    	
Chief Financial Officer
    

 

SIGNATURE PAGE REGISTRATION RIGHTS AGREEMENT

 

 

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

 

	
 
    	
ADDEX THERAPEUTICS LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
Growth Equity Opportunities   Fund IV, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louis s. Citron
    
	
 
    	
Name: 
    	
Louis s. Citron
    
	
 
    	
Title:
    	
Chief legal officer
    
	
 
    	
 
    	
 
    
	
 
    	
New Leaf Biopharma   Opportunities I, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:New Leaf BPO   Associates I, L.P. 
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    
	
 
    	
By:New Leaf Venture   Management III, L.L.C. 
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Craig L. Slutzkin
    
	
 
    	
 
    	
Chief Financial Officer
    

 

SIGNATURE PAGE REGISTRATION RIGHTS AGREEMENT

 

 

	
 
    	
CDK Associates. L.L.C
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Cross
    
	
 
    	
Name: 
    	
Karen Cross
    
	
 
    	
Title:
    	
Treasurer
    

 

SIGNATURE PAGE REGISTRATION RIGHTS AGREEMENT

 

 

SCHEDULE A

 

Investors

 

1)             Growth Equity Opportunities Fund IV, LLC

c/o New Enterprise Associates 16, L.P.

Attn.: Louis S. Citron

1954 Greenspring Drive, Suite 600

Timonium, MD 21093

Email: LCitron@NEA.com

Fax: +1 410 842 4115

 

With copy, which copy shall not constitute notice, to:

 

Greenberg Traurig, LLP 
 Attn.: Trevor Chaplick 
 2101 L St. NW, Suite 1000 
 Washington, DC 20037 
 Email: 

Fax: 

 

2)             New Leaf Biopharma Opportunities I, L.P.

Attn: Craig L. Slutzkin

7 Times Square, Suite 3502

New York, NY 10036

Email: 

Fax: 

 

3)             CDK Associates. L.L.C

Attn: Heath N. Weisberg

CAM Capital

731 Alexander Road

Bldg. 2, Suite 500

Princeton, NJ 08540

Email: 

Fax: 

 

 

ANNEX A

 

PLAN OF DISTRIBUTION

 

We are registering the shares of Common Stock issued to the selling stockholders and issuable upon the exercise of the warrants issued to the selling stockholders to permit the resale of these shares of Common Stock by the holders of the shares of Common Stock and warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.

 

The selling stockholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of Common Stock may be sold on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale, in the over-the-counter market or in transactions otherwise than on these exchanges or systems or in the over-the-counter market and in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions. The selling stockholders may use any one or more of the following methods when selling shares:

 

·                  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

·                  block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

·                  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

·                  an exchange distribution in accordance with the rules of the applicable exchange;

 

·                  privately negotiated transactions;

 

·                  settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

 

·                  broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

·                  through the writing or settlement of options or other hedging transactions, whether such options are listed on an options exchange or otherwise;

 

·                  a combination of any such methods of sale; and

 

·                  any other method permitted pursuant to applicable law.

 

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, as permitted by that rule, or Section 4(1) under the Securities Act, if available, rather than under this prospectus, provided that they meet the criteria and conform to the requirements of those provisions.

 

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. If the selling stockholders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such underwriters, broker-

 

 

dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction will not be in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with sales of the shares of Common Stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of Common Stock short and if such short sale shall take place after the date that this Registration Statement is declared effective by the Commission, the selling stockholders may deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares, to the extent permitted by applicable law. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Notwithstanding the foregoing, the selling stockholders have been advised that they may not use shares registered on this registration statement to cover short sales of our shares of Common Stock made prior to the date the registration statement, of which this prospectus forms a part, has been declared effective by the SEC.

 

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The selling stockholders and any broker-dealer or agents participating in the distribution of the shares of Common Stock may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act in connection with such sales. In such event, any commissions paid, or any discounts or concessions allowed to, any such broker-dealer or agent and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Selling Stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the applicable prospectus delivery requirements of the Securities Act including Rule 172 thereunder and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

 

Each selling stockholder has informed the Company that it is not a registered broker-dealer and does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the shares of Common Stock. Upon the Company being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s),

 

 

(ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In no event shall any broker-dealer receive fees, commissions and markups, which, in the aggregate, would exceed eight percent (8.0%).

 

Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance that any selling stockholder will sell any or all of the shares of Common Stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

 

Each selling stockholder and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling stockholder and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock.

 

We will pay all expenses of the registration of the shares of Common Stock pursuant to the registration rights agreement, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that each selling stockholder will pay all underwriting discounts and selling commissions, if any and any related legal expenses incurred by it. We will indemnify the selling stockholders against certain liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreement, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution.Exhibit 10.4

 

ADDEX THERAPEUTICS LTD

SHARE OPTION PLAN

 

Effective date: [DATE]

 

1

 

TABLE OF CONTENTS

 

	
INTRODUCTION
    	
3
    
	
General Information
    	
3
    
	
THE PLAN
    	
3
    
	
A.
    	
General Terms and Definitions
    	
3
    
	
Article 1 Purpose
    	
3
    
	
Article 2 Definitions
    	
3
    
	
Article 3 Shares subject to the Plan
    	
5
    
	
B.
    	
Administration
    	
5
    
	
Article 4 Board of Directors
    	
6
    
	
C.
    	
Grant of Options
    	
6
    
	
Article 5   Eligibility and Conditions of Participation
    	
6
    
	
Article 6 Procedure
    	
6
    
	
Article 7 Option Agreement
    	
7
    
	
Article 8 Vesting period
    	
7
    
	
Article 9 Exercise Period
    	
8
    
	
Article 10 Exercise of Options
    	
8
    
	
D.
    	
Limitations on transfer
    	
8
    
	
Article 11 Transferability of Options and   Shares
    	
8
    
	
E.
    	
Forfeiture of Rights
    	
9
    
	
Article 12 Termination of   Employment/Breaches
    	
9
    
	
Article 13 Transfer / Leave of Absence
    	
10
    
	
F.
    	
General Provisions
    	
10
    
	
Article 14 No (Continued) Employment or   Contractual Relationship
    	
10
    
	
Article 15 No Segregation of Cash or   Shares
    	
11
    
	
Article 16 Adjustment due to Corporate   Events
    	
11
    
	
Article 17 Amendment and Termination
    	
11
    
	
Article 18 Indemnification
    	
11
    
	
Article 19 Taxes Indemnification
    	
12
    
	
Article 20 Applicable law and arbitration
    	
12
    
	
Article 21 Effective Date
    	
13
    

 

2

 

INTRODUCTION

 

GENERAL INFORMATION

 

Addex Therapeutics Ltd is a Swiss corporation (“société anonyme” / “Aktiengesellschaft”) pursuant to Articles 620 et seq. of the Swiss Code of Obligations with unlimited duration and seat in Plan-les-Ouates, Canton of Geneva, Switzerland.

 

THE PLAN

 

A.                          GENERAL TERMS AND DEFINITIONS

 

Article 1
 PURPOSE

 

1.1                              The purpose of the Plan is to provide certain Employees, Directors and Consultants with an opportunity to obtain Options on Shares, thus providing an increased incentive for these Employees, Directors and Consultants to contribute to the future success and long-term business value of the Group, enhancing the value of the Shares and increasing the ability of the Company and its Subsidiaries to attract and retain individuals of exceptional skills.

 

1.2                              The Plan rules the conditions and modalities of the purchase and disposal of such Options.

 

Article 2
 DEFINITIONS

 

2.1                              In the Plan, the following terms shall have the meanings set forth below:

 

	
“Articles of Association”
    	
 
    	
shall mean the articles of association of the Company.
    
	
 
    	
 
    	
 
    
	
“Board of Directors”
    	
 
    	
shall mean the board of directors of the Company.
    
	
 
    	
 
    	
 
    
	
“Change of Control”
    	
 
    	
shall mean (i) an event which triggers a mandatory offer on the   Shares under the rules applying to SIX Swiss Exchange listed companies   or any other applicable rules, the event being deemed a qualifying event if   any one set of such rules considers it an event triggering a mandatory   offer or (ii) the acquisition by any person or entity, alone or jointly,   of more than 50% of the Shares or of the voting rights of the Company.
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
shall mean Addex Therapeutics Ltd, c/o Addex Pharma SA, 12, chemin des   Aulx, 1228 Plan-les-Ouates,
    

 

3

 

	
 
    	
 
    	
Switzerland.
    
	
 
    	
 
    	
 
    
	
“Compensation Committee”
    	
 
    	
shall mean the compensation committee appointed by the general meeting of   Shareholders with the rights and duties as defined in the Organizational   Rules of the Company.
    
	
 
    	
 
    	
 
    
	
“Consultant”
    	
 
    	
shall mean any person who is engaged by the Company or a Subsidiary to   render consulting or advisory services and is compensated for such services.
    
	
 
    	
 
    	
 
    
	
“Continuous Service”
    	
 
    	
shall mean that the Participant’s service with the Company or a   Subsidiary, whether as an Employee, Director or Consultant, is not   interrupted or terminated and Participant remains in such service as defined   in the Plan. 
    
	
 
    	
 
    	
 
    
	
“Director”
    	
 
    	
shall mean a member of the board of directors of the Company or of the   board of directors of a Subsidiary.
    
	
 
    	
 
    	
 
    
	
“Disability”
    	
 
    	
shall mean the inability to engage in any   substantial gainful activity by reason of any medically determinable physical   or mental impairment that can be expected to result in death or that has   lasted or can be expected to last for a continuous period of not less than   twelve (12) months, and will be determined by the Board of Directors on the basis of such   medical evidence as the Board of   Directors deems warranted under the circumstances.
    
	
 
    	
 
    	
 
    
	
“Employee”
    	
 
    	
shall mean any executive or employee of the Company or of a Subsidiary.
    
	
 
    	
 
    	
 
    
	
“Exercise Period”
    	
 
    	
shall mean the period during which Options can be exercised, such period   starting on the Grant Date and ending on the Option Term.
    
	
 
    	
 
    	
 
    
	
“Grant Date”
    	
 
    	
shall mean the date on which Options are granted.
    
	
 
    	
 
    	
 
    
	
“Group”
    	
 
    	
shall mean the Company and its Subsidiaries.
    
	
 
    	
 
    	
 
    
	
“Option”
    	
 
    	
shall mean a share option, that is a right to acquire Shares pursuant to   the Plan, in accordance with any Option Agreement or as the Board of   Directors shall otherwise determine.
    
	
 
    	
 
    	
 
    
	
“Option Agreement”
    	
 
    	
shall mean the agreement specifying the terms and conditions of the   granting of Options and executed by the Company and a Participant in substantially   the form attached as Appendix I hereto.
    
	
 
    	
 
    	
 
    
	
“Option Exercise Notice”
    	
 
    	
shall mean the notice that needs to be given by a Participant when   Options are exercised in substantially the form attached as Appendix II   hereto or any other form decided by the Board of Directors.
    
	
 
    	
 
    	
 
    
	
“Options Grant”
    	
 
    	
shall mean the number of Options granted to a Participant
    

 

4

 

	
 
    	
 
    	
pursuant to an Option Agreement.
    
	
 
    	
 
    	
 
    
	
“Option Term”
    	
 
    	
shall mean the term of an Option.
    
	
 
    	
 
    	
 
    
	
“Participant”
    	
 
    	
shall mean an Employee, a Director or a Consultant to whom Options are   granted hereunder.
    
	
 
    	
 
    	
 
    
	
“Plan”
    	
 
    	
shall mean this share option plan in its present form or as amended from   time to time.
    
	
 
    	
 
    	
 
    
	
“Shareholders”
    	
 
    	
shall mean the holders of any Shares of the Company.
    
	
 
    	
 
    	
 
    
	
“Shares”
    	
 
    	
shall mean the registered shares with a par value of CHF 1 issued by the   Company.
    
	
 
    	
 
    	
 
    
	
“Share Option Plan Administrator”
    	
 
    	
shall mean the person or company appointed by the Board of Directors   responsible for receiving and executing Option Exercise Notices.
    
	
 
    	
 
    	
 
    
	
“Strike Price”
    	
 
    	
shall mean the price at which Shares may be purchased by exercising   Options.
    
	
 
    	
 
    	
 
    
	
“Subsidiary”
    	
 
    	
shall mean a corporation, whether now or hereafter existing, in an   unbroken chain of corporations beginning with the Company, if each   corporation other than the Company owns shares possessing 50% or more of the   total combined voting power of all classes of shares in one of the other   corporations in such chain.
    
	
 
    	
 
    	
 
    
	
“Vested Option”
    	
 
    	
shall mean an Option that has vested in accordance with the   rules set forth hereunder.
    
	
 
    	
 
    	
 
    
	
“Vesting Date”
    	
 
    	
shall mean the date upon which an Option vests in accordance with the   rules set forth hereunder.
    

 

2.2                              References to any statutory provision are to that provision as amended or re-enacted from time to time and, unless the context otherwise requires, words or expressions denoting the singular shall include the plural (and vice versa) and words and expressions denoting the masculine shall include the feminine (and vice versa).

 

2.3                              The Plan is valid for the Participants in its entirety only. No statement made in any part of the Plan shall be construed without reference to the Plan as a whole.

 

Article 3
 SHARES SUBJECT TO THE PLAN

 

Shares may be made available from an increase of the share capital of the Company, whether such increase is based on ordinary, authorized or conditional share capital, or from Shares otherwise owned by, or made available to, the Company.

 

5

 

B.                          ADMINISTRATION

 

Article 4
 BOARD OF DIRECTORS

 

4.1                              Unless otherwise provided in the Plan, the Board of Directors administers and has full power to construe and interpret the Plan, establish and amend rules and regulations for the administration of the Plan, and perform all other actions relating to the Plan, including the delegation of administrative responsibilities. The Board of Directors may in particular delegate the administration of the Plan to the Compensation Committee or any other duly authorized committee of the Board of Directors, in which case references to the Board of Directors in the Plan shall be construed as referring to the Compensation Committee or to the relevant committee of the Board of Directors. The Board of Directors shall also appoint a Share Option Plan Administrator who shall be responsible for giving, receiving and executing the notices set forth in the Plan.

 

4.2                              All decisions made by the Board of Directors pursuant to the provisions of the Plan and related orders or resolutions of the Board of Directors shall be final, conclusive and binding on all persons, including the Company, Shareholders, Participants, Employees, Directors and Consultants.

 

4.3                              The costs of introducing and administrating the Plan shall be borne by the Company.

 

C.                          GRANT OF OPTIONS

 

Article 5
  ELIGIBILITY AND CONDITIONS OF PARTICIPATION

 

5.1                              Those eligible to be granted Options under the Plan are Employees, Directors and Consultants.

 

5.2                              The Board of Directors shall, at its absolute discretion, select from Employees, Directors and Consultants those eligible to be granted Options, the Options Grant, the Strike Price, the Grant Date, the Exercise Date and any other conditions and/or constraints related to the Options.

 

5.3                              When exercising its discretionary power, the Board of Directors shall follow market practice and Options shall be granted to the Participant free of charge, all individual taxes, such as income taxes, and the Participant’s part, if any, of any social security contributions, shall be borne by the Participant.

 

5.4                              Neither the establishment of the Plan, nor the granting of Options, nor the payment of any benefits, nor any action of the Company or of the Board of Directors shall be held or construed to confer upon any Employee, Director or Consultants any legal right to further receive Options. Participation to the Plan in any given year gives no right to participate in any subsequent year.

 

6

 

Article 6
 PROCEDURE

 

6.1                              The Board of Directors may adopt any procedures as it thinks fit for the granting of Options.

 

6.2                              The Board of Directors may, among others: (i) require a Participant to make such declarations or take such other action as may be required for the purpose of any securities, exchange control, taxation laws, regulations, practice or other laws of any territory which may be applicable to him at the Grant Date, the Exercise Date or on exercise; (ii) determine that any Option under the Plan shall be subject to additional and/or modified terms and conditions with respect to the granting and terms of exercise as may be necessary to comply with or take account of any securities, exchange control or taxation laws, regulations or practice of any territory which may have application to the relevant Employees, Directors, Consultants, Participants, Company or Subsidiary; (iii) adopt any supplemental rules or procedures governing the grant or exercise of Options as may be required for the purpose of any securities, tax or other laws of any territory which may be applicable to an Employee, a Director, a Consultant or a Participant.

 

Article 7
 OPTION AGREEMENT

 

7.1                              The contemplated granting of Option(s) hereunder and the terms thereof shall be subject to the execution of an Option Agreement between the Company and the Participant in substantially the form attached as Appendix I hereto, or in such form as the Board of Directors shall from time to time determine.

 

7.2                              Each Option granted by an Option Agreement shall entitle the Participant to purchase one Share at the Strike Price subject to the conditions specified in such Option Agreement, pursuant to the Plan.

 

7.3                              The Option Agreement shall include the vesting provisions of individual Options, such as details of the Options Grant, the Strike Price, the Grant Date, the Exercise Date and any other conditions.

 

Article 8
 VESTING PERIOD

 

8.1                              Subject in particular to the limitations which may be determined from time to time by the Board of Directors, an Options Grant shall vest gradually on a straight line basis over a period of 4 years from the Grant Date until exhaustion of such Options Grant, provided however that the Participant may not exercise any Options of such Options Grant during the first year starting from the Grant Date where the Grant Date falls within the first year of employment or contractual relationship of the Participant with the Company or any of its Subsidiaries.

 

8.2                              Notwithstanding the above, in the event of a Change of Control, all Options held by Participants shall vest immediately.

 

7

 

Article 9
 EXERCISE PERIOD

 

9.1                              Without prejudice to Article 8.2, Vested Options may be exercised at any time within the Exercise Period subject to limitations of applicable securities law provisions and subject to the limitations which may be determined by the Board of Directors from time to time.

 

9.2                              Subject to Article 12, the Option Term shall be the tenth anniversary of the Grant Date of such Option or such shorter period specified in the Option Agreement.

 

9.3                              Past the Option Term, all unexercised Options shall expire without value.

 

Article 10
 EXERCISE OF OPTIONS

 

10.1                       During the Exercise Period and subject to the provisions of the Plan, notably Article 12, and of any Option Agreement, the Participant may exercise Vested Options in whole or in part, and at one or more times.

 

10.2                       The exercising Participant shall receive within 5 business days after receipt by the Share Option Plan Administrator of an Option Exercise Notice, the number of Shares for which Options are exercised.

 

10.3                       The Company shall not deliver any Shares, respectively register the acquisition of Shares pursuant to the exercise of Options, until full payment of the Strike Price by the Participant.

 

D.                          LIMITATIONS ON TRANSFER

 

Article 11
 TRANSFERABILITY OF OPTIONS AND SHARES

 

11.1                       A Participant may only transfer an Option if permitted by the Board of Directors or a duly authorized officer of the Company at the time of the transfer. The Board may only permit transfer of the Option in a manner that is permitted by the Plan. The Board of Directors, in its sole discretion, may impose such limitations on the transferability of Options as the Board of Directors will determine. In the absence of such a determination by the Board of Directors to the contrary, the following restrictions on the transferability of Options will apply:

 

i)                               An Option will not be transferable except by will or by the laws of descent and distribution and will be exercisable during the lifetime of the Participant only by the Participant. An Option may not be transferred for consideration.

 

ii)                            Subject to the approval of the Board of Directors or a duly authorized officer of the Company, a Participant may, by delivering written notice to the Company, in a form approved by the Company, designate a third party who, on the death of the Participant, will thereafter be entitled to exercise the Option and receive the Shares or other consideration resulting from such exercise. In the absence of such a designation, upon the death of 

 

8

 

the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option and receive the Shares or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

11.2                       Any purported sale, assignment or transfer of such Options in violation of this provision shall be void.

 

11.3                       Shares purchased upon exercise of Options may be subject to sales restrictions according to applicable securities law provisions and according to the limitations which may be determined by the Board of Directors from time to time with reference to the Company’s Securities Trading Policies, provided however that all such limitations by the Board of Directors shall automatically be lifted in the case of a Change of Control.

 

E.                          FORFEITURE OF RIGHTS

 

Article 12
 TERMINATION OF EMPLOYMENT/BREACHES

 

12.1                       Unless otherwise agreed upon by the Board of Directors and the Participant:

 

i)                               Upon termination of employment or contractual relationship by the Company or any of its Subsidiaries for cause (e.g., in the case of employment, according to Article 337 of the Swiss Code of Obligations or similar grounds) or in case of termination by the Participant of a contractual relationship (other than an employment relationship) at an improper time; or

 

ii)                            Upon breach by the Participant of any material obligations set out in any agreement dealing with the Participant’s contractual relationship with the Company or any of its Subsidiaries, as entered into or amended from time to time and/or any provisions of the laws of Switzerland as a consequence of which the Company may not be expected in good faith to continue the existing contractual relationship with the Participant,

 

all Options (including, for the avoidance of doubt, Vested Options) held by the Participant shall be immediately forfeited without value.

 

12.2                       Upon termination of the employment or contractual relationship with the Company or any of its Subsidiaries as a result of a Participant’s Disability, all Options that are not Vested Options held by such Participant shall be immediately forfeited without value, while Vested Options may be exercised by the Participant pursuant to the Plan during the Option Term, after which they shall be forfeited without value.

 

9

 

12.3                       Upon the death of a Participant, all Options that are not Vested Options held by such Participant shall be immediately forfeited without value, while Vested Options may be exercised by the Participant’s estate, or by a person who acquired the right to exercise the Option(s) by bequest or inheritance, pursuant to the Plan during the Option Term, after which they shall be forfeited without value.

 

12.4                       Upon termination of the employment or contractual relationship by the Company or any of its Subsidiaries or by a Participant prior to the first anniversary of entering the employment or contractual relationship, all Options shall be immediately forfeited without value.

 

12.5                       Upon termination of the employment or contractual relationship by the Company or any of its Subsidiaries or by a Participant for any reason other than as aforesaid, all Options that are not Vested Options held by the Participant shall be immediately forfeited without value, while Vested Options may be exercised by the Participant pursuant to the Plan during the Option Term, after which they shall be forfeited without value.

 

Article 13
 TRANSFER / LEAVE OF ABSENCE

 

13.1                       A change in the capacity in which the Participant renders service to the Company or a Subsidiary as an Employee, Director or Consultant or a change in the entity for which the Participant renders such service, will not cause the Participant to cease to be an eligible participant provided that there is no interruption or termination of the Participant’s service with the Company or a Subsidiary. To the extent permitted by law, the Board of Directors, in its sole discretion, may determine whether Continuous Service will be considered interrupted in the case of any leave of absence approved by the Board of Directors, including sick leave, military leave or any other personal leave.

 

13.2                       If employment is terminated prior to the reemployment of the Employee, the provisions of Article 12 shall be applicable.

 

F.                           GENERAL PROVISIONS

 

Article 14
 NO (CONTINUED) EMPLOYMENT OR CONTRACTUAL RELATIONSHIP

 

14.1                       Neither the establishment of the Plan, nor the granting of Options, nor the payment of any benefits, nor any action of the Company, the Board of Directors or a Subsidiary shall be held or construed to confer upon any Participant any legal right to continue to be employed by the Company or any of its Subsidiaries or to remain in a contractual relationship with said, each of which expressly reserves the right to discharge any Employee or Director whenever the interest of any such company in its sole discretion may so require without liability to such company or to the Board of Directors, except as to any rights which may be expressly conferred upon such Participant under the Plan.

 

10

 

14.2                       The mere fact of participating to the Plan shall in no circumstances whatsoever be construed as an employment agreement, or any similar agreement, between the Participant and the Company.

 

Article 15
 NO SEGREGATION OF CASH OR SHARES

 

The Company shall not be required to segregate any cash or Shares in order to fulfill its obligations hereunder.

 

Article 16
 ADJUSTMENT DUE TO CORPORATE EVENTS

 

In events such as stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, options or rights offering to purchase Shares at a price substantially below fair market value, or other similar corporate event, affects the Shares underlying the Options such that an adjustment is required in order to preserve the benefits intended to be made available under this Plan, then the Option shall be adjusted and/or, if deemed appropriate, a cash payment to Participants or persons having outstanding Options shall be made. Such adjustment shall take into consideration the acquired rights of the Participants and the objectives of the Plan, and it shall be final and binding.

 

Article 17
 AMENDMENT AND TERMINATION

 

17.1                       Subject, as the case may be, to the prior approval of the Shareholders (as provided for by the law, or in the Articles of Association), the Board of Directors may amend, suspend or discontinue the Plan.

 

17.2                       The Options granted hereunder shall be subject to such further rules and regulations as the Company may adopt with respect to its equity incentive plans, and the Participant agrees to enter into such further documents, not inconsistent with the terms hereof, as the Company may require. The Company may also require the Participant to enter into such further documents with respect to the holding and transfer of any Shares subject to the Options described herein as may be necessary or appropriate in the sole discretion of the Company to ensure compliance with applicable law with respect to such holding and transfer.

 

17.3                       Amendment, suspension or discontinuity of the Plan shall be communicated by the Board of Directors to all Participants.

 

Article 18
 INDEMNIFICATION

 

In addition to other rights of indemnification available to them, the members of the Board of Directors shall be indemnified by the Company against all costs and expenses reasonably 

 

11

 

incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Options granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgement in any such action, suit or proceeding, except a judgement based upon the finding of bad faith, provided that upon the institution of any such action, suit or proceeding, members of the Board of Directors shall, in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such member of the Board of Directors undertakes to handle and defend it on such member’s own behalf.

 

Article 19
 TAXES INDEMNIFICATION

 

19.1                       The Participant shall indemnify the Company against any tax, including employment and social security taxes, arising in respect of the granting or the exercise of Options which is a liability of the Participant but for which the Company is required to account under the laws of any relevant territory.

 

19.2                       The Company may recover the tax from the Participant in such manner as the Board of Directors thinks fit including (but without prejudice to the generality of the foregoing): (i) withholding portion of the Options and selling the same; (ii) deducting the necessary amount from the Participant’s remuneration; or (iii) requiring the Participant to account directly to the Company for such tax.

 

Article 20
 APPLICABLE LAW AND ARBITRATION

 

20.1                       The Plan and any related document shall be governed by and construed in accordance with Swiss law, excluding principles of conflict of laws.

 

20.2                       Any dispute, controversy or claim arising out of or in relation with the Plan including the validity, invalidity, breach or termination thereof, shall be finally decided by three arbitrators in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the notice of arbitration is submitted in accordance with said rules. The seat of the arbitration shall be Geneva, Switzerland. The language of arbitration shall be English.

 

20.3                       The acceptance of any Option or any related right implies the consent to the choice of law and jurisdiction set in this Article.

 

20.4                       By executing an Option Agreement, the Participant expressly acknowledges and accepts the terms and conditions of the Plan and all its related documents, as well as the powers of the Board of Directors to complete, interpret and implement it through further documents which it may from time to time determine necessary or relevant. Any disagreement regarding the interpretation shall be resolved by the Company, whose determination shall be binding.

 

12

 

Article 21
 EFFECTIVE DATE

 

The Plan shall be effective on [DATE] and applicable to all outstanding Option grants.

 

13

 

APPENDIX I

 

FORM OF OPTION AGREEMENT

 

ADDEX THERAPEUTICS LTD SHARE OPTION PLAN

 

This OPTION AGREEMENT is made on [date], by and between Addex Therapeutics Ltd, a Swiss corporation, with its seat in Plan-les-Ouates, Switzerland (the “Company”) and                     (the “Participant”).

 

In consideration of the mutual covenants and agreements herein contained and pursuant to the Company’s Share Option Plan of 1 January 2019 (the “Plan”), the Company and the Participant agree as follows:

 

The Company grants to the Participant the following number of Options according to the terms and conditions contained in the Plan and in this Option Agreement:

 

	
Number of Options:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Date:
    	
In accordance with Article 8 of the Plan and the table below
    
	
 
    	
 
    	
 
    
	
Exercise Period:
    	
Ten years from the Grant Date
    	
 
    
	
 
    	
 
    	
 
    
	
Special Conditions:
    	
 
    	
 
    

 

The signature of this Option Agreement by the Participant implies his express and complete acceptance of the terms set forth in the Plan, in this Option Agreement or in any other document related hereto. Furthermore, the Participant hereby accepts the powers of the Board of Directors to administer the Plan at its absolute discretion, to complete, interpret and implement the documents herein referred through further documentation to the extent necessary or relevant and to decide on all issues in absolute discretion. The Participant agrees to be bound by the decisions of the Board of Directors.

 

All notices to the Company shall be delivered to Addex Therapeutics Ltd, c/o Addex Pharma, 14, chemin des Aulx, Plan-les-Ouates, Switzerland, attn Share Option Plan Administrator, and all notices to the Participant may be given to the Participant personally or may be mailed to the Participant c/o Addex Therapeutics Ltd or at such other address as the Participant may designate by written notice to the Company.

 

This Option Agreement and any related document shall be governed by Swiss law, excluding principles of conflict of laws.

 

Any dispute, controversy or claim arising out of or in relation with the Plan including the validity, invalidity, breach or termination thereof, shall be finally decided by three arbitrators in accordance with the Swiss Rules of International Arbitration of the Swiss 

 

14

 

Chambers of Commerce in force on the date when the notice of arbitration is submitted in accordance with said rules. The seat of the arbitration shall be Geneva, Switzerland. The language of arbitration shall be English.

 

IN WITNESS THEREOF, the parties have executed this Option Agreement in duplicate as of the time and place first above written.

 

	
 
    	
 
    	
 
    
	
Addex Therapeutics Ltd
    	
 
    	
Participant
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Date
    

 

15

 

APPENDIX II

 

FORM OF OPTION EXERCISE NOTICE

 

ADDEX THERAPEUTICS LTD SHARE OPTION PLAN

 

[date of notice]

 

Share Option Plan Administrator

[address]

 

Reference: [Name of Participant]: Share Option Plan.

 

I hereby exercise my Option(s) according to and under the terms and conditions of the Addex Therapeutics Ltd Share Option Plan    [DATE]      (the “Plan”) and the Option Agreement of              , as follows:

 

	
Grant Date of the Options:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Options exercised:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Participant]
    	
 
    

 

16

 

Addex Therapeutics Ltd
 Stock Option Plan

 

ADDENDUM FOR U.S. PARTICIPANTS

 

1.                                      Purpose and Applicability.

 

(a)                                 This Addendum for U.S. Participants (the “U.S. Addendum”) applies to participants in the Plan who are either U.S. residents or U.S. taxpayers (each such participant, a “U.S. Participant”). The purpose of the U.S. Addendum is to facilitate compliance with U.S. tax, securities and other applicable laws, and to permit the Company to issue Options to eligible U.S. Participants.

 

(b)                                 Except as otherwise provided by the U.S. Addendum, all Option grants made to U.S. Participants will be governed by the terms of the Plan, when read together with the U.S. Addendum. In any case of an irreconcilable contradiction (as determined by the Board of Directors) between the provisions of the U.S. Addendum and the Plan, the provisions of the U.S. Addendum will govern.

 

(c)                                  This Addendum is effective as of [     ], 2019 (the “Effective Date”).

 

2.                                      Definitions.

 

Capitalized terms contained herein have the same meanings given to them in the Plan, unless otherwise provided by the U.S. Addendum. In the U.S. Addendum, the following words will have the meaning as defined below:

 

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

 

“Fair Market Value” means as of any date, the value of the Shares determined by the Board of Directors in compliance with Section 409A of the Code and, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.

 

“Incentive Stock Option” or “ISO” means a stock option that is intended to be, and qualifies as, an incentive stock option within the meaning of Section 422 of the Code.

 

“Nonstatutory Stock Option” or “NSO” means a stock option that does not qualify as an Incentive Stock Option.

 

“Plan” means Addex Therapeutics Ltd Share Option Plan.

 

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

 

“U.S.” means the United States of America.

 

3.                                      Additional Terms and Conditions Applicable to All Options Granted to U.S. Participants.

 

(a)                                 Form of Grant Notice. The Grant Notice for U.S. Participants shall be in substantially the form attached as Schedule 1 to the U.S. Addendum, as may be amended from time to time by the Board of Directors. The Grant Notice shall indicate if all or a portion of the Option is designated as an Incentive Stock Option.

 

(b)                                 Exercise Price. Subject to the provisions of Section 4(d) below regarding Incentive Stock Options granted to certain major stockholders, the exercise price of each Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares subject to the Option on the date the Option is granted.

 

1

 

(c)                                  Domestic Relations Orders.  Subject to the approval of the Board of Directors or a duly authorized officer of the Company, an Option may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2).  If an Option is an Incentive Stock Option, such Option will be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

4.                                      Provisions Applicable to Incentive Stock Options.

 

(a)                                 Eligible Recipients of ISOs.  Incentive Stock Options may be granted only to Employees.

 

(b)                                 Designation of ISO Status.  The Board of Directors action approving the grant of an Option to a U.S. Participant, and the Grant Notice, must specify that the Option is intended to be an Incentive Stock Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option.

 

(c)                                  Maximum Shares Issuable On Exercise of ISOs. Subject to the adjustment provisions of Section 16 of the Plan, the maximum aggregate number of Shares that may be issued upon the exercise of Incentive Stock Options is [         ] Shares.

 

(d)                                 Limits for 10% Stockholders.  A person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any affiliate, will not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

(e)                                  No Transfer.  As provided by Section 422(b)(5) of the Code, an Incentive Stock Option will not be transferable except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the U.S. Participant only by the U.S. Participant.  If the Board of Directors elects to allow the transfer of an Option by a U.S. Participant that is designated as an Incentive Stock Option, such transferred Option will automatically become a Nonstatutory Stock Option.

 

(f)                                   US $100,000 Limit.  As provided by Section 422(d) of the Code and applicable regulations thereunder, to the extent that the aggregate Fair Market Value (determined at the time of grant) of Shares with respect to which Incentive Stock Options are exercisable for the first time by any U.S. Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds US$100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Grant Agreement(s).

 

(g)                                  Post-Termination Exercise Period.  To obtain the U.S. federal income tax advantages associated with an Incentive Stock Option, the U.S. Internal Revenue Code requires that at all times beginning on the date of grant and ending on the day three (3) months before the date of exercise of the Option, the U.S. Participant must be an employee of the Company or a Subsidiary (except in the event of the U.S. Participant’s death or Disability, in which case a 12-month period applies)). The Company cannot guarantee that the Option will be treated as an Incentive Stock Option if the U.S. Participant continues to provide services to the Company or a Subsidiary after such U.S. Participant’s

 

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employment terminates or if the U.S. Participant otherwise exercises the Option more than three (3) months (or twelve (12) months, as the case may be) after the date his or her employment terminates, or the Option otherwise fails to qualify as an Incentive Stock Option.

 

5.                                      Tax Matters

 

(a)                                 Tax Withholding Requirement. Prior to the delivery of any Shares pursuant to the exercise of an Option, the Company will have the power and the right to deduct or withhold, or require a U.S. Participant to remit to the Company, an amount sufficient to satisfy U.S. federal, state, local, foreign or other taxes (including the U.S. Participant’s FICA obligation) required to be withheld with respect to such Option.

 

(b)                                 Withholding Arrangements.  The Company may, in its sole discretion, satisfy any U.S. federal, state, local, foreign or other tax withholding obligation relating to an Option by any of the following means or by a combination of such means: (i) causing the U.S. Participant to tender a cash payment; (ii) withholding Shares issued or otherwise issuable to the U.S. Participant in connection with the Option; provided, however, that no Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Option as a liability for financial accounting purposes); or (iii) withholding payment from any amounts otherwise payable to the U.S. Participant.

 

(c)                                  No Obligation to Notify or Minimize Taxes.  The Company will have no duty or obligation to the U.S. Participant to advise such holder as to the time or manner of exercising the Option.  Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Option or a possible period in which the Option may not be exercised.  The Company has no duty or obligation to minimize the tax consequences of an Option to the U.S. Participant.

 

(d)                                 Section 409A of the Code. Unless otherwise expressly provided for in an Grant Agreement, the terms applicable to Options granted under the U.S. Addendum will be interpreted to the greatest extent possible in a manner that makes the Options exempt from Section 409A of the Code, and, to the extent not so exempt, that brings the Options into compliance with Section 409A of the Code. Notwithstanding anything to the contrary in the Plan (and unless the Grant Agreement or other written contract with the U.S. Participant specifically provides otherwise), if the Shares are publicly traded, and if a U.S. Participant of an Option that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” under Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six (6) months following the date of such U.S. Participant’s “separation from service” or, if earlier, the date of the U.S. Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six (6) month period elapses, with the balance paid thereafter on the original schedule.

 

6.                                      Term, Amendment and Termination of the U.S. Addendum.

 

(a)                                 The Board of Directors may amend, suspend or terminate this U.S. Addendum at any time. Unless terminated sooner by the Board of Directors, the U.S. Addendum will terminate automatically upon the earlier of (i) 10 years after the Effective Date and (ii) the termination of the Plan. No Options may be granted under the U.S. Addendum while either the Plan or the U.S. Addendum is suspended or after the Plan or the U.S. Addendum is terminated.

 

(b)                                 If this U.S. Addendum is terminated, the provisions of this U.S. Addendum and any administrative guidelines, and other rules adopted by the Board of Directors and in force at the time of

 

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suspension or termination of this U.S. Addendum, will continue to apply to any outstanding Options as long as an Option issued pursuant to the U.S. Addendum remain outstanding.

 

(c)                                  No amendment, suspension or termination of the U.S. Addendum may materially adversely affect any Options granted previously to any U.S. Participant without the consent of the U.S. Participant.

 

4

 

SCHEDULE 1

 

STOCK OPTION GRANT NOTICE
  (for U.S. Participants)

 

Addex Therapeutics Ltd (the “Company”), pursuant to its Incentive Plan (the “Plan”), hereby grants to the U.S. Participant options to purchase the number of Shares set forth below (the “Options”).  The Options are subject to all of the terms and conditions as set forth in this stock option grant notice (the “Grant Notice”), the attached U.S. Addendum and the Plan, all of which are attached hereto and incorporated herein in their entirety.  Capitalized terms not explicitly defined herein but defined in the Plan or the U.S. Addendum will have the same definitions as in the Plan or the U.S. Addendum.  If there is any conflict between the terms herein, the U.S. Addendum and the Plan, the terms of the U.S. Addendum, and then the terms of the Plan, will control.

 

	
U.S. Participant:
    	
 
    
	
 
    	
 
    
	
Date of Grant:
    	
 
    
	
 
    	
 
    
	
Vesting Commencement Date:
    	
 
    
	
 
    	
 
    
	
Number of Shares Subject to Options:
    	
 
    
	
 
    	
 
    
	
Exercise Price (Per Share):
    	
 
    
	
 
    	
 
    
	
Total Exercise Price:
    	
 
    
	
 
    	
 
    
	
Expiration Date:
    	
 
    
	
 
    	
 
    
	
Purchase Price per Option:
    	
 
    
	
 
    	
 
    
	
Total Purchase Price for the Options:
    	
 
    

 

	
Type of Grant:
    	
o Incentive   Stock Options(1)              o    Nonstatutory Stock Options
    
	
 
    	
 
    
	
Vesting Schedule:
    	
The Options will vest and become exercisable   as to [one third (1/3) of the original number of Options on each of the first   three anniversaries of the Vesting Commencement Date](2), subject to the U.S.   Participant’s Continuous Service on each applicable vesting date.
    
	
 
    	
 
    
	
Payment:
    	
By cash, check, bank draft or money order   payable to the Company
    

 

Additional Terms/Acknowledgements:  The U.S. Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the U.S. Addendum and the Plan. The U.S. Participant acknowledges

 

(1)  If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year.  Any excess over $100,000 is a Nonstatutory Stock Option.

(2)  Note to client — the vesting schedule can be customized; this typical provision is a placeholder.

 

 

and agrees that this Grant Notice, the U.S. Addendum and the Plan may not be modified, amended or revised except as provided in the Plan. The U.S. Participant further acknowledges that as of the Date of Grant, this Grant Notice, the U.S. Addendum and the Plan set forth the entire understanding between the U.S. Participant and the Company regarding the Options and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to the U.S. Participant, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of the Options upon the terms and conditions set forth therein.

 

By accepting the Options, the U.S. Participant consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

In addition, by accepting the Options, the U.S. Participant consents that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the U.S. Participant’s tax liabilities.  The U.S. Participant agrees that the U.S. Participant will not make any claim against the Company, or any of its officers, directors, employees or affiliates related to tax liabilities arising from the Option or other compensation. In particular, the U.S. Participant acknowledges that the Option is exempt from Section 409A of the Code only if the exercise price per share specified in this Grant Notice is at least equal to the “fair market value” per Share on the Date of Grant and there is no other impermissible deferral of compensation associated with the Option. Because the Shares are not traded on an established securities market, the Fair Market Value is determined by the Board of Directors. The U.S. Participant acknowledges that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board.

 

	
ADDEX THERAPEUTICS LTD
    	
 
    	
U.S. PARTICIPANT:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Signature
    	
 
    	
Signature
    
	
Title:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
						

 

ATTACHMENTS:

 

1.              U.S. Addendum

2.              Rules of the Addex Therapeutics Ltd Share Option Plan

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