Document:

ex10-4.htm

 

Exhibit 10.4

 

 

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT dated as of December 22, 2014 (herein referred to as the “Guaranty Agreement”) is from TECHPRECISION CORPORATION, a Delaware corporation having an  address of 3477 Corporate Parkway, Suite 140, Center Valley, Pennsylvania 18034 (herein, together with heirs, administrators, representatives, executors, successors and assigns, referred to as “Guarantor”) to REVERE HIGH YIELD FUND, LP, a Delaware limited partnership (herein, together with its successors and assigns, referred to as “Lender”).

 

PRELIMINARY STATEMENT

 

 

	
  

	
A.

	
Ranor, Inc., a Delaware corporation (the “Borrower”) entered into that certain Term Loan and Security Agreement dated the date hereof with the Lender (as amended from time to time, the “Loan Agreement”), pursuant to which the Lender has agreed to make a loan in the maximum principal amount of $1,500,000.00 affecting certain real estate and improvements held by Borrower located in Westminster, Massachusetts (the “Premises”), and a loan in the maximum principal amount of $750,000.00 (collectively, the “Loan”), which Loan is evidenced by a Term Note of even date herewith from Borrower to Lender, in the face amount of $1,500,000.00 and a Term Note of even date herewith  from Borrower to Lender in the face amount of $750,000.00 (as may from time to time be amended, extended, renewed and supplemented, collectively, the “Note”).

 

	
  

	
B.

	
The indebtedness evidenced by the Note is secured by, inter alia, the Loan Agreement and a Mortgage Deed, Assignment of Leases  and Rents, Security Agreement and Fixture Filing of even date herewith from Borrower to Lender (as may be amended and supplemented, the “Mortgage”).

	
  

	
C.

	
As further security for the payment of the indebtedness evidenced by the Note and in order to induce Lender to make the Loan, Guarantor is willing to enter into and deliver this Guaranty Agreement. Guarantor acknowledges that Lender has refused to make the Loan without this Guaranty Agreement.

 

	
  

	
D.

	
This Guaranty Agreement, the Note, the Mortgage, and any other documents or instruments evidencing or securing the Note shall be herein referred to as the “Loan Documents.”

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is  hereby acknowledged, Guarantor does hereby, jointly and severally, covenant and agree with Lender as follows:

ARTICLE I

REPRESENTATIONS AND WARRANTIES OF GUARANTOR

 

 

SECTION 1.1.                                REPRESENTATIONS AND WARRANTIES.

 

  

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Guarantor does hereby represent and warrant as follows:

	
  

	
(a)

	
This Guaranty Agreement has been duly authorized, executed and delivered by Guarantor;

	
  

	
(b)

	
There are no undisclosed actions, suits, or proceedings pending or, to the best of Guarantor’s knowledge, threatened against Guarantor in any court or before any Federal, state, municipal or other governmental department or commission, board, bureau, agency or instrumentality which if adversely determined will affect the transactions contemplated by this Guaranty Agreement or materially adversely affect Guarantor’s ability to perform Guarantor’s obligations hereunder;

 

	
  

	
(c)

	
The Loan will result in a direct financial benefit to Borrower and to Guarantor;

 

	
  

	
(d)

	
With regard to any and all balance sheets, net worth statements and other financial statements and data which have heretofore been given to Lender with respect to Guarantor, Guarantor affirms that such statement fairly and accurately represents the financial condition of Guarantor as of the date of such statements, and, since such date, there has been no material adverse change in the financial condition of Guarantor; and

 

	
  

	
(e)

	
(i) there are no undisclosed material claims or demands pending against, or to the knowledge of Guarantor threatened against Guarantor or any of Guarantor’s assets which, if adversely decided, would affect the Guarantor’s ability to perform the obligations hereunder, (ii) Guarantor is not in breach or default of any obligation to pay money that would affect the Guarantor's ability to perform the obligations hereunder, and (iii) no event (including specifically Guarantor’s execution and delivery of this Guaranty Agreement) has occurred that would affect the Guarantor's ability to perform the obligations hereunder, and which, with or without the lapse of time or action by a third party, constitutes or could constitute a material breach or material default under any document evidencing or securing any obligation to pay money or under any other contract or agreement to which Guarantor is a party.

 

ARTICLE II

PAYMENT AND PERFORMANCE GUARANTY

 

 

SECTION 2.1.                                 GUARANTY.

 

Guarantor hereby irrevocably, unconditionally and absolutely guarantees to Lender, and Lender’s successors and assigns, the due and prompt payment, and not just the collectability, of the principal of, and interest and late charges, escrow payments and all other indebtedness and indemnification, if any, under any of the Loan Documents when due, whether at  maturity, pursuant to mandatory or optional prepayments, by acceleration, indemnification or otherwise all

 

  

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at the times and places and at the rates described in, and otherwise according to the terms of, the Note and the other Loan Documents.

 

Guarantor further hereby irrevocably, unconditionally and absolutely guarantees to Lender the due and prompt performance by Borrower of all duties, agreements and obligations of Borrower contained in the Note and the other Loan Documents, and the due and prompt payment of all costs incurred, including reasonable attorneys’ and paralegals’ fees and costs (including, without limitation, fees and costs incurred in litigation, mediation, arbitration, administrative and bankruptcy proceedings, and appeals therefrom), in enforcing the payment and performance of the Note and the other Loan Documents and this Guaranty Agreement.

 

The payment and performance of the items set forth in this Section 2.1 are hereinafter collectively referred to as the “Indebtedness Guaranteed”.

 

The liability of Guarantor under this Section 2.1 shall survive any release, termination, satisfaction or foreclosure of the Mortgage or the Borrower Collateral (as defined in the Loan Agreement) or the acceptance of title to the Premises or the Borrower Collateral by a deed in lieu of foreclosure.

In case any covenant and agreement made by Borrower under any Loan Documents has not been performed or any obligation under the Note or other Loan Document shall not have been paid by Borrower when due, Guarantor will, not later than fifteen (15) days after written notice by Lender, perform the same and pay the same, to the amount and to the extent required hereunder. Overdue amounts hereunder shall bear interest at the Default Rate as defined in the Note.

 

SECTION 2.2.                                 ABSOLUTE OBLIGATIONS.

 

The obligations of Guarantor under this Guaranty Agreement shall be binding upon Guarantor and Guarantor’s heirs, administrators, representatives, executors, successors and assigns, and shall remain in full force and effect irrespective of any obligations of Borrower on the Note or under the Mortgage or other Loan Documents. The obligations of Guarantor shall not be discharged or impaired by acts, failures or omissions on the part of any holder or holders of the Note whether or not Guarantor has notice, or has agreed to such acts, failures or omissions which might otherwise have the effect of releasing Guarantor, including but not limited to the following acts, failures or omissions:

 

	
  

	
(a)

	
any failure to present the Note for payment or to demand payment thereof, or to give Borrower notice of dishonor for nonpayment of the Note or the interest thereon, when and as the same may become due and payable, or notice of any failure on the part of Borrower and/or Guarantor to do any act or thing or to perform or keep any covenant or agreement by it to be done, kept and performed under the terms of the Note or the Mortgage or the other Loan Documents;

 

  

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(b)

	
the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustments of, or other similar proceedings affecting Borrower and/or Guarantor or any of their respective assets, or any contest of the validity of this Guaranty Agreement in any such proceeding;

 

	
  

	
(c)

	
any release, limitation, discharge, or cessation of the liability of Borrower or any other person for all or any portion of the obligations under any of the Loan Documents or of Guarantor under this Guaranty Agreement due to any statute, regulation or rule of law, or any invalidity or unenforceability in whole or in part of this Guaranty Agreement or of any provision of any Loan Document or any term or provision hereof or thereof;

 

	
  

	
(d)

	
any defense, setoff, counterclaim, or claim of recoupment, reduction, diminution, discharge, or exoneration, or any other defense of any kind or nature, other than that of prior performance, that Borrower or Guarantor may have or assert, including, but not limited to, any defense of incapacity or lack of authority to enter into  this Guaranty Agreement or any of the other Loan Documents or to perform or pay the liabilities and obligations contained herein or therein, or any defense based on any omission, statute of limitations, failure of consideration, accord and satisfaction, delay or inadequacy, whether entire or partial, respectively, under this Guaranty Agreement or any of the other Loan Documents or the existence of any defense to the enforcement of the Loan Documents;

 

	
  

	
(e)

	
any failure or delay in exercising Lender’s rights and/or remedies against Borrower or Guarantor, hereunder or under any of the other Loan Documents. Lender’s release of or refusal to enforce any provision of the Loan Documents, or agreement not to sue Borrower, any suspension of the right to enforce against Borrower its obligations under the Loan Documents or any security interest in or lien upon any collateral granted to Lender under the Loan Documents or any transfer, waiver, subordination, exchange, substitute, recovery, abandonment, compromise, settlement, modification, surrender or release of any security granted to Lender, or any agreement or undertaking of Borrower, Guarantor or any other person; any compromise, extension, renewal of, or settlement of duration or time for payment, discharge, or performance of all or any part of the liabilities or the obligations hereunder, whether made with or without the knowledge or consent of Borrower or Guarantor; any amendment to or modification of, alteration, increase, reduction, compromise of, renewal, extension, refinance of, any of the Loan Documents, any amendment or modification of any documents or agreement relating thereto or any release, surrender, exchange, realization, or compromise of Lender’s rights and remedies with respect to any lien upon or security interest in the collateral granted to Lender under any of the Loan Documents, whether or not any promise by Lender is for any cause void or voidable by Lender at its option;

  

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(f)

	
the addition of, or release of, any and all other endorsers, guarantors, obligors and other persons liable under the Loan Documents and/or release of the security or any portion thereof or acceptance of additional security for the performance of the obligations under the Loan Documents;

 

	
  

	
(g)

	
any agreement by Lender with Borrower or any other person to supplement, modify, amend, extend, renew, accelerate or otherwise change the time for payment of Borrower’s obligations under the Loan Documents or any part thereof, including any increase or decrease of the rate(s) of interest thereon;

 

	
  

	
(h)

	
any agreement by Lender with Borrower or any other person to supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to the Loan Documents or any of Borrower’s other obligations under the Loan Documents or any part thereof, or any of the Loan Documents, or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder;

 

	
  

	
(i)

	
acceptance of new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or any of Borrower’s other obligations under the Loan Documents or any part thereof;

 

	
  

	
(j)

	
acceptance of partial payments on Borrower’s obligations under the Loan Documents;

	
  

	
(k)

	
any agreement to settle, release on terms satisfactory to Lender or by operation of applicable laws or otherwise to liquidate or enforce any obligations of Borrower under the Loan Documents, or any security in any manner, or any consent to the transfer of any security and bid and purchase at any sale;

 

	
  

	
(l)

	
to the extent permitted by law, any failure of Lender to give notice of sale or other disposition of any collateral to Borrower or Guarantor or any other person or any defect in any notice that may be given in connection with any sale or disposition of collateral; and/or

	
  

	
(m)

	
to the extent permitted by law, any failure of Lender to comply with applicable laws in connection with the sale or other disposition of any collateral or other security granted to Lender under the Loan Documents, including, without  limitation,  any failure of Lender to conduct a commercially reasonable sale or other disposition of any collateral or other security.

 

Provided that the specific enumeration of the above-mentioned acts, failures or omissions shall not be deemed to exclude any other acts, failures or omissions, though not specifically mentioned above, it being the purpose and intent of this paragraph that the obligations of Guarantor shall be absolute and unconditional to the extent herein specified and shall not be discharged, impaired or varied except by the payment of the principal of, prepayment fee (as defined in the Note), if any, and interest on the Note and any other payments due under the Note,

 

  

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the Mortgage and the Loan Documents in accordance with the terms thereof, and then only to the extent of such payment. Without limiting any of the other terms or provisions hereof, it is understood and agreed that in order to hold Guarantor liable hereunder, there shall be no obligation on the part of Lender or any other holder of the Note to resort in any manner or form for payment to Borrower, to any other person, firm or corporation, their properties or estates. All rights of Lender or any other holder of the Note hereunder may be transferred or assigned at any time or from time to time and shall be considered to be transferred or assigned at any time or from time to time upon the transfer of the Note, whether with or without the consent of or notice to Guarantor or to Borrower.

 

Guarantor also agrees that to the extent Borrower makes any payment on the Note or any of the other Loan Documents, which payment or any part thereof is subsequently invalidated, voided, declared to be fraudulent or preferential, set aside, or is required to be repaid to a trustee, receiver, or any other person under any bankruptcy code, common law, or equitable cause, then and to the extent of such payment, Borrower’s obligation or the part thereof intended to be satisfied shall be revived and continued in full force and effect with respect to Guarantor’s obligations hereunder, as if said payment had not been made. The liability of  Guarantor hereunder shall not be reduced or discharged, in whole or in part, by any payment to Lender from any source, that Lender thereafter pays, returns or refunds in whole or in part by reason of the assertion of a claim of any kind relating thereto, including, but not limited to, any claim for breach of contract, breach of warranty, preference, illegality, invalidity, or fraud asserted by any account debtor or by any other person.

 

To the extent permitted by law,  Lender may, at its election, exercise any right or remedy it may have against Borrower, Guarantor or any other person or any security held by Lender, including, without limitation, the right to foreclose upon any such security by one or more foreclosure sales, whether or not every aspect of any such sale is commercially reasonable, without affecting or impairing in any way the liability of Guarantor hereunder, except to the extent the indebtedness has been paid, and Guarantor hereby waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or subrogation or any other right or remedy of Guarantor against Borrower or any other person or any such security whether resulting from such election by Lender or otherwise. Guarantor hereby waives any defense arising by reason of any disability or other defense of Borrower or any other person or by reason of the cessation from any cause whatsoever (including without limitation any intervention or omission by Lender) of any obligation or liability, either in whole or in part, of Borrower to Lender. Guarantor understands and agrees that if all or any part of any obligation or liability of Borrower to Lender is secured by real property, Guarantor shall be obligated and liable for the full amount of Guarantor’s obligations hereunder notwithstanding foreclosure of such real property by trustee sale, judicial sale or any other reason impairing the right of Guarantor to proceed against Borrower.

 

SECTION 2.3.                                 ADDITIONAL WAIVERS OF GUARANTOR.

 

	
  

	
(a)

	
Financial Condition of Borrower.   Guarantor acknowledges that this is a continuing Guaranty Agreement and that Guarantor expressly promises to pay and perform each

 

 

  

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and every one of Guarantor’s obligations hereunder. Guarantor is fully aware of the operating history of the Premises and the status of the Borrower Collateral. Guarantor delivers this Guaranty Agreement based solely upon Guarantor’s independent investigation of Borrower’s financial condition, and Guarantor assumes full responsibility for obtaining any further information concerning Borrower’s financial condition. Guarantor agrees that Guarantor is now and, during the term of  this Guaranty Agreement, will be responsible for being fully aware of the financial condition of Borrower, the Borrower Collateral and the Premises. Guarantor knowingly accepts the full range of risk encompassed in a contract of continuing guaranty, which risk includes, but is not limited to, the possibility that Borrower’s financial condition or its ability to pay its debts as they mature has deteriorated.

 

	
  

	
(b)

	
Waiver of Notice. Guarantor hereby waives: (i) presentment and protest, and waives notice of presentment, protest, dishonor, non-payment, non-performance and any similar notice, and waives any delay thereto, with respect to the Loan Documents or any instruments or documents at any time held by Lender in connection with this Guaranty Agreement or the other Loan Documents; (ii) notice of extension, modification, refunding, amendment, addition or supplement to, deletion or departure from, or breach of any of the terms of the Loan Documents (other than this Guaranty Agreement) or the other Loan Documents or any other agreement that may be made relating hereto or thereto; (iii) notice of the occurrence of any default hereunder or the occurrence of any default or Event of Default under any of the Loan Documents, any compromise, release, consent, or other action or inaction with respect to the collateral granted to Lender under any of the Loan Documents or any of the terms and provisions of the Loan Documents; (iv) notice with respect to any exercise or non- exercise by Lender, or any right, power, or remedy under or in respect of the Loan Documents or any security, lien, deposit, pledge, or guaranty held in connection with the liabilities of Borrower under the Loan Documents; (v) notice of acceptance of this Guaranty Agreement and notice that credit has been extended by Lender  in reliance on Guarantor’s guaranty of the obligations of Borrower; (vi) any defense based upon an election of remedies by Lender whether or not the right of Guarantor to proceed against Borrower for reimbursement is affected; (vii) to the extent Guarantor may lawfully do so, any defense based upon any statute or rule which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; and (viii) all defenses which Borrower may now or hereafter have to the payment of the obligations under the Loan Documents which could otherwise be asserted by Guarantor in any defense (other than payment) of any kind which  Guarantor may now or hereafter have with respect to any of the Loan Documents, any other guaranty, or any other collateral securing the obligations under the Loan Documents.

 

	
  

	
(c)

	
Waiver of Rights of Subrogation. Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document, Guarantor until one year and one day from the payment and full satisfaction of all amounts due Lender under the Loan Documents and the performance and payment of the Indebtedness Guaranteed, hereby

 

 

  

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expressly waives with respect to Borrower and any other person, any and all rights at law or in equity to subrogation, to reimbursement, to exoneration, to contribution, to indemnification, to setoff or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to  an  accommodation  party against the party accommodated, or to a holder or transferee against a maker, and which Guarantor may have or hereafter acquire against Borrower or any other person in connection with or as a result of Guarantor’s execution, delivery and/or performance of this Guaranty Agreement or any other Loan Document. Guarantor agrees that Guarantor shall not have or assert any such rights against Borrower or its successors and assigns or any other person (including any surety), either directly or as an attempted setoff  to any action commenced against Guarantor by Borrower (as borrower or in any other capacity) or by Lender or by any other person.

 

	
  

	
Guarantor agrees that to the extent that such claims are not subordinated, by operation of law or otherwise, such claims of Guarantor are hereby subordinated as a claim against Borrower or any of its assets, whether such claim be in the ordinary course of business or in the event of voluntary or involuntary liquidation, dissolution, insolvency or bankruptcy, so that no payment with respect to any such indebtedness, claim or liability will be made or received while any portion of the obligations under the Loan Documents remains due and unpaid, and if any such payment is received by Guarantor, it shall be held in trust for the benefit of Lender and then promptly paid over to Lender for application to the payment  of the obligations under the Loan Documents.

 

	
  

	
(d)

	
Independent Obligations, and Waivers. The obligations of Guarantor hereunder are independent of and are not co-extensive with the obligations of Borrower under the Loan Documents. A separate action or actions may be brought and prosecuted by Lender against Guarantor whether or not an action is brought against Borrower or Borrower is joined in any such action or actions and Guarantor’s liability hereunder may be enforced regardless of the existence, validity, enforcement  or  non- enforcement of any such other guaranties or other obligations. Any cause of action that Lender may have against Guarantor shall accrue upon the date Lender makes demand on Guarantor for payment of Guarantor’s obligations hereunder. Without limiting the generality of the foregoing, Guarantor expressly waives the benefit of any statute of limitations, any moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now provided, or which may hereafter be provided, by the Constitution or laws of the United States of America or the Commonwealth of Massachusetts, both as to itself and to all of its property, real and personal, affecting the liabilities under the Loan Documents or otherwise and expressly agrees that the running of a period of limitation on, or any delay or omission in, Lender’s action against Borrower or in Lender’s enforcement of remedies against Borrower, the collateral granted to Lender under any of the Loan Documents, or any security interest or lien held for  the liabilities under the Loan Documents shall not exonerate or affect Guarantor’s absolute obligation to pay and perform in full Guarantor’s obligations hereunder.

	
  

	
 

  

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(e)

	
Bankruptcy and Related Waivers. Guarantor hereby waives to the fullest extent permitted by law, (i) any defense arising as a result of Lender’s election, in any proceeding instituted under the United States Bankruptcy Code, of the application of Section 1111(b)(2) of the United States Bankruptcy Code, (ii) any defense based on any borrowing or grant or a security interest under Section 364 of the United States Bankruptcy Code, (iii) any use of cash collateral under Section 363 of the United States Bankruptcy Code, (iv) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any person, (v) the avoidance of any lien in favor of Lender for any reason, and (vi) any objection to or defense arising as a result of bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against Borrower or any other person, including any discharge of, or bar or stay against collecting, all or any of the liabilities hereunder or under any of the Loan Documents.

 

	
  

	
(f)

	
Understandings With Respect to Waivers and Consents. Guarantor warrants  and agrees that each of the waivers and consents of Guarantor set forth in this Guaranty Agreement are made after consultation with legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to any defense or right waived may diminish, destroy or otherwise adversely affect rights which Guarantor otherwise may have against Borrower, Lender or any other person or against the Premises or the Borrower Collateral, and that, under the circumstances, the waivers and consents herein given are reasonable and not contrary to public policy or law. If any of the waivers or consents herein is determined to be contrary to any applicable law or public policy, such waivers and consents shall be effective to the maximum extent permitted by law.

 

ARTICLE III

TERM OF GUARANTY

 

SECTION 3.1.                                 GUARANTY TERM.

 

The obligations and liabilities of Guarantor under this Guaranty Agreement shall remain in full force and effect, notwithstanding the release of the Note, the Mortgage or the other Loan Documents, until such time as the Note has been paid in full and the principal, prepayment fee (as defined in the Note), if any, and interest on the Note and all other amounts due and owing Lender under the Loan Documents  have been paid in full and all  obligations of Borrower have been performed in full.

 

ARTICLE IV

MISCELLANEOUS

 

SECTION 4.1.                                 NO TRANSFER.

 

  

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Guarantor covenants that Guarantor will not transfer any of its assets for the purpose of preventing Lender from satisfying any judgment rendered under this Guaranty Agreement therefrom, either before or after the entry of any such judgment.

 

SECTION 4.2.                                 FINANCIAL STATEMENTS.

 

Guarantor shall submit such financial and other information as provided in Section 5.06 of the Loan Agreement.

 

SECTION 4.3.                                 UNCONDITIONAL OBLIGATIONS.

 

The obligations of Guarantor hereunder shall arise absolutely and unconditionally when the Note shall have been delivered to Lender.

 

SECTION 4.4.                                 AMENDMENTS.

 

This Guaranty Agreement may be amended and the observance of any term of this Guaranty Agreement may be waived with (and only with) the written consent of Guarantor and Lender (or the holder or holders of the Note).

SECTION 4.5.                                 ENTIRE AGREEMENT.

 

This Guaranty Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

SECTION 4.6.                                 SEVERABILITY.

 

In case any one or more of the provisions contained in this Guaranty Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby.

SECTION 4.7.                                 SUCCESSORS AND ASSIGNS.

 

This Guaranty Agreement shall be binding upon Guarantor and Guarantor’s heirs, administrators, representatives, executors, successors and assigns and shall inure to the benefit of Lender and its successors and assigns as holder of the Note.

 

SECTION 4.8.                                 GOVERNING LAW.

 

This Guaranty Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without regard to principles of conflicts of laws.

 

SECTION 4.9.                                 JURISDICTION AND NOTICES.

  

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The Guarantors submit and consent to personal jurisdiction in the Commonwealth of Massachusetts for the enforcement of this Guaranty Agreement and waive any and all personal rights under the laws of any state or the United States of America to object to jurisdiction in the Commonwealth of Massachusetts for the purposes of litigation to enforce this Guaranty Agreement. Litigation may be commenced either in the court of general jurisdiction of such state or the United States District Court for the district in that state, at the election of the Lender. In the event that such litigation is commenced in lieu of personal service, service of process may be made, and personal jurisdiction over the Guarantors obtained, by the mailing of a copy of any summons and complaint, U.S. Mail, Certified Mail, Return Receipt Requested, or any other method provided under the laws of the jurisdiction for service of process in a civil action, to the Guarantors at the addresses shown below, or the last address of which Lender has received notice. Nothing contained herein shall prevent Lender from bringing any action or exercising any rights against any security given to Lender by the Guarantors, or against the Guarantors personally, or against any property of the Guarantors, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of the agreement as to the laws of the state which shall govern the rights and obligations of the Guarantors and Lender hereunder or of the submission made by the Guarantors to personal jurisdiction with the Commonwealth of Massachusetts. The aforesaid means of obtaining personal jurisdiction and perfecting service of process are not intended to be exclusive but are cumulative and in addition to all other means of obtaining personal jurisdiction and perfecting service of process  now or hereafter provided by the laws of the state where an action on this Guaranty Agreement is commenced.

 

	
Address:

	
TechPrecision Corporation

	  	
Saucon Valley Plaza

	  	
3477 Corporate Parkway, Suite 140

	  	
Center Valley, Pennsylvania 18034

	  	
Attention:  Richard F. Fitzgerald, CFO

	
Telephone:

	
484.693.1702

	
Fax:

	
267.373.1640

	
Email:

	
fitzgeraldr@techprecision.com

SECTION 4.10.                                           ENFORCEMENT COSTS.

 

If (i) this Guaranty Agreement is delivered to an attorney for the purpose of enforcing the obligations hereunder or any of them through any legal proceeding; (ii) an attorney is retained to represent Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving a claim under this Guaranty Agreement; or (iii) an attorney is retained to represent Lender in any other proceedings whatsoever in connection with this Guaranty Agreement, then Guarantor shall pay to Lender all reasonable attorneys’ and paralegals’ fees and costs,  including without limitation fees and costs incurred in litigation, mediation, arbitration, administrative, and bankruptcy proceedings and appeals therefrom, court costs, filing fees, recording costs, expenses for telephone calls and facsimile transmissions, travel expenses, photocopies, expenses of sale of foreclosure, title insurance premiums, accountant’s fees, appraisal fees, environmental investigation costs, out of court settlement fees and expenses

 

 

  

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and all other costs and expenses incurred in connection therewith, in addition  to  all  other amounts due hereunder. Such costs shall be paid Lender whether or not an action is actually commenced against Guarantor by reason of any breach of Guaranty Agreement.

 

SECTION 4.11.                                           PREJUDGMENT REMEDY WAIVER .

 

GUARANTOR HEREBY REPRESENTS, COVENANTS AND AGREES THAT THE TRANSACTION TO WHICH THE LOAN DOCUMENTS RELATE IS A "COMMERCIAL TRANSACTION" AS DEFINED BY THE GENERAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER THE GENERAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, AS AMENDED, OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES BORROWER OR LENDER MAY EMPLOY TO ENFORCE ITS  RIGHTS  AND  REMEDIES  HEREUNDER. GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY BY BORROWER’S OR LENDER’S ATTORNEY, AND BORROWER AND LENDER ACKNOWLEDGE GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. GUARANTOR FURTHER HEREBY WAIVES ANY REQUIREMENT OR OBLIGATION OF BORROWER OR LENDER TO POST A BOND OR OTHER SECURITY IN CONNECTION WITH ANY PREJUDGMENT REMEDY OBTAINED BY BORROWER OR LENDER AND WAIVES ANY OBJECTIONS TO ANY PREJUDGMENT REMEDY OBTAINED BY BORROWER OR LENDER BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS OF GUARANTOR OR ANY OTHER OBLIGATED PARTY  TO ANY ACTION BROUGHT BY BORROWER OR LENDER.

 

SECTION 4.12.                                           JURY TRIAL.

 

NEITHER BORROWER, LENDER, GUARANTOR OR ANY OTHER PERSON OR ENTITY LIABLE FOR THE INDEBTEDNESS EVIDENCED BY THE NOTE, OR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF LENDER, BORROWER, GUARANTOR OR ANY OTHER PERSON OR ENTITY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS GUARANTY AGREEMENT, THE MORTGAGE, THE NOTE OR ANY INSTRUMENT SECURING THE NOTE, ANY COLLATERAL FOR THE PAYMENT HEREOF OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ENTITIES, OR ANY OF THEM. NEITHER LENDER, BORROWER, GUARANTOR OR ANY OTHER PERSON OR ENTITY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS HEREOF

 

  

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SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. GUARANTOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY LENDER THAT THE PROVISIONS OF THIS PARAGRAPH CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH LENDER HAS RELIED,  IS  RELYING AND WILL RELY IN MAKING THE LOAN. BORROWER ACKNOWLEDGES THAT IT HAS CONSULTED WITH AN ATTORNEY AND FULLY UNDERSTANDS THE LEGAL EFFECT OF THE PROVISIONS OF THIS PARAGRAPH.

 

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IN  WITNESS  WHEREOF,  Guarantor  has  caused  this  Guaranty  Agreement  to  be executed as of the day and year first above written.

 

	  	
TECHPRECISION CORPORATION

	  	
a Delaware corporation

	  	  	  	  
	  	
By:

	/s/ Richard F. Fitzgerald
	  	  	
Name:

	
Richard F. Fitzgerald 

	  	  	
Its:

	
Chief Financial Officer

 

 

	
THE COMMONWEALTH OF PENNSYLVANIA 

	
§

	  	  	
§ ss.

	COUNTY OF CHESTER	
§

 

On this 18th day of December, 2014, personally appeared Richard F. Fitzgerald, Chief Financial Officer of TECHPRECISION CORPORATION, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed in his capacity as such Chief Financial Officer, and the free act and deed of TECHPRECISION CORPORATION before me.

	  	/s/ Diane V. DiFulvio
	  	
Name: Diane V. Difulvio

	  	
Commissioner of the Superior Court/

	  	
Notary Public,

	  	
My Commission Expires:

 

 

[Signature Page to Guaranty Agreement]Exhibit 4.2

 

Execution Version

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

This AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT is made as of the 23rd day of July, 2014, by and among FLEX PHARMA, INC., a Delaware corporation (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor,” any Additional Purchaser (as defined in the Purchase Agreement) that becomes a party to this Agreement in accordance with Section 6.9 hereof, and the stockholders listed on Schedule B hereto, each of whom is referred to as a “Key Holder”.

 

RECITALS

 

WHEREAS, the Company and certain of the Investors are parties to that certain Amended and Restated Investors’ Rights Agreement, dated April 10, 2014 (the “Prior Agreement”);

 

WHEREAS, concurrently with the execution of this agreement, the Company and the Investors are entering into that certain Series B Preferred Stock Purchase Agreement dated as of July 23, 2014 (the “Purchase Agreement”); and

 

WHEREAS, the Key Holders, the existing Investors and the Company desire to induce certain Investors to purchase the Company’s Series B Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”) pursuant to the Purchase Agreement, as amended, by entering into this Agreement pursuant to which the Prior Agreement is hereby amended and restated in its entirety as set forth herein.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.                                      Definitions.  For purposes of this Agreement:

 

1.1                               “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.

 

1.2                               “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.

 

1.3                               “Damages” means any loss, damage, 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, 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,

 

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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.

 

1.4                               “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.

 

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

 

1.6                               “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; (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.

 

1.7                               “Form S-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.

 

1.8                               “Form S-3” 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 that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.9                               “GAAP” means generally accepted accounting principles in the United States.

 

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

 

1.11                        “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.

 

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

 

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

 

1.14                        “Key Employee” means any executive-level employee (including vice president-level positions) as well as any employee who, either alone or in concert with others,

 

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develops, invents, programs, or designs any Company Intellectual Property (as defined in the Purchase Agreement).

 

1.15                        “Key Holder Registrable Securities” means (i) the shares of Common Stock held by the Key Holders, and (ii) 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 such shares.

 

1.16                        “National Securities Exchange” means a national securities exchange, including, for example, the NASDAQ Capital Market and the NASDAQ Global Market.

 

1.17                        “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

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

 

1.19            “Preferred Directors” means any director of the Company that the holders of record of the Preferred Stock are entitled to elect pursuant to the Company’s Certificate of Incorporation.

 

1.20            “Preferred Stock” means, collectively, all shares of Series A Preferred Stock and Series B Preferred Stock and shares of any other series of preferred stock of the Company issued from time to time.

 

1.21            “Qualified Form 10 Transaction” means a transaction, approved by the Requisite Investors, contemplating a private placement financing in which the Company sells Common Stock for aggregate gross proceeds (excluding expenses and fees) of $25 million at a price of at least $2.00 per share (subject to appropriate adjustment for stock splits, stock dividends, combinations and other similar recapitalizations affecting the number of such shares issued and outstanding), in connection with which the Company is contractually required to (i) consummate, within 180 days of such private placement financing, a reverse merger transaction with a “blank check company” as defined in Rule 419 promulgated under the Securities Act that has filed a Form 10 Registration Statement and is registered under the Securities Exchange Act of 1934, as amended (a “34 Act Company”), or (ii) file a Form 10 Registration Statement with a purpose of becoming a 34 Act Company.

 

1.22            “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock, excluding any Common Stock issued upon conversion of the Preferred Stock pursuant to the “Special Mandatory Conversion” provisions of the Company’s Certificate of Incorporation; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; (iii) the Key Holder Registrable Securities, provided, however, that such Key holder Registrable Securities shall not be deemed Registrable Securities and the Key holders shall not be deemed Holders for the purposes of Subsections 2.1, 2.10, 3.1 and 3.2; and (iv) any Common Stock issued as (or issuable upon the

 

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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) and (ii) 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 Section 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement.

 

1.23            “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.

 

1.24            “Requisite Investors” means holders of a majority of the shares of Common Stock issued or issuable upon conversion of the shares of Series A Preferred Stock and Series B Preferred Stock held by the Investors (voting as a single class and on an as-converted basis).

 

1.25            “Restricted Securities” means the securities of the Company required to bear the legend set forth in Section 2.12(b) hereof.

 

1.20            “SEC” means the Securities and Exchange Commission.

 

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

 

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

 

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

 

1.24            “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 Section 2.6.

 

1.25            “Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.0001 per share.

 

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

 

2.1                               Demand Registration.

 

(a)                                 Form S-1 Demand.  If 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 twenty percent (20%) of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to outstanding Registrable Securities of such

 

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Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $10 million, then the Company shall (i) 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 (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-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, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

 

(b)                                 Form S-3 Demand.  If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $3 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all 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, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

 

(c)                                  Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 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, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than thirty (30) days after the request of the Initiating Holders is given; 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 thirty (30) day period other than pursuant to 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; 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 a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

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(d)                                 The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) 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 Section 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b).  The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b) (i) during the period 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 registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two registrations pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request.  A registration shall not be counted as “effected” for purposes of this Section 2.1(d) 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 Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d).

 

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), 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 Section 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 Section 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 Section 2.6.

 

2.3                               Underwriting Requirements.

 

(a)                                 If, pursuant to Section 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 Section 2.1, and 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.  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 Section 2.4(e)) enter into an

 

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underwriting agreement in customary form with the underwriter(s) selected for such underwriting.  Notwithstanding any other provision of this Section 2.3, if the 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; and provided, further, that any Registrable Securities which are not Key Holder Registrable Securities shall not be excluded from such underwriting unless all Key Holder Registrable Securities are first excluded from such offering.  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 100 shares.

 

(b)                                 In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 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 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) the number of Registrable Securities included in the 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 or (iii) notwithstanding (ii) above, any Registrable Securities which are not Key Holder Registrable Securities be excluded from such underwriting unless all Key Holder Registrable Securities are first excluded from such offering.  For purposes of the provision in this Section 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,

 

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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.

 

2.4                               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 on Form S-3 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 for up to one hundred eighty (180) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

(b)                                 prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)                                  furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, 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; 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;

 

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(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;

 

(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 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, 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; 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.

 

2.5                               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.

 

2.6                               Expenses of Registration.  All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to 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 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 Section 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 Section 2.1(a) or Section 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in

 

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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 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 Section 2.1(a) or Section 2.1(b).  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.

 

2.7                               Delay of Registration.  No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

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 Section 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 Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if

 

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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 Sections 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.

 

(c)                                  Promptly after receipt by an indemnified party under this Section 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 Section 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 Section 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 Section 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 Section 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 Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of 

 

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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 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 Section 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 S-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 S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC 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 S-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 at least 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 (i) would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of 

 

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such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 6.9.

 

2.11                        “Market Stand-off” Agreement.

 

(a)                                 Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period 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 S-1 or Form S-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), (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 held immediately before the effective date of the registration statement for such offering 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.

 

(b)                                 Each Holder hereby agrees that it will not, without the prior written consent of the Company, during the period commencing on consummation of a Qualified Form 10 Transaction and ending on the date that is one hundred eighty (180) days after shares of the Company’s Common Stock (or the shares of common stock of any parent of the Company) are listed on a National Securities Exchange (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 the shares of common stock of any parent of the Company) or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (or the shares of common stock of any parent of the Company) held immediately before the effective date of the registration statement for such offering 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 the shares of common stock of any parent of the Company) or other securities, in cash, or otherwise.

 

(c)                                  This Subsection 2.11 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 

 

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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.  The underwriters in connection with such registration are intended third party beneficiaries of Subsection 2.11(a) and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  The lead placement agent and/or lead bookrunning underwriter are intended third party beneficiaries of Subsection 2.11(b) 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 Subsection 2.11(a) or that are necessary to give further effect thereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the lead placement agent and/or lead bookrunning underwriter that are consistent with Subsection 2.11(b) or that are necessary to give further effect thereto.

 

2.12                        Restrictions on Transfer.

 

(a)                                 The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act.  A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)                                 Each certificate or instrument representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be stamped or otherwise imprinted with a legend substantially in the following form:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN INVESTORS’ RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE 

 

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STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

(c)                                  The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2.  Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer.  Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company.  The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.12.  Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13                        Termination of Registration Rights.  The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or Section 2.2 shall terminate upon the earliest to occur of:

 

(a)                                 the closing of a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation;

 

(b)                                 such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and

 

(c)                                  the fifth anniversary of the IPO.

 

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3.                                      Information and Observer Rights.

 

3.1                               Delivery of Financial Statements.  If requested, the Company shall deliver to each Investor:

 

(a)                                 as soon as practicable, but in any event within one hundred eighty (180) days after the end of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Section 3.1(d)) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants of nationally recognized standing selected by the Company;

 

(b)                                 as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(c)                                  as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Investors to calculate their respective percentage equity ownership in the Company, and certified by the chief financial officer or chief executive officer of the Company as being true, complete, and correct;

 

(d)                                 as soon as practicable, but in any event within thirty (30) days of the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board of Directors and prepared on a quarterly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company; and

 

(e)                                  with respect to the financial statements called for in Section 3.1(a) and Section 3.1(b), an instrument executed by the chief financial officer and chief executive officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Section 3.1(b)) and fairly present the financial condition of the Company and its results of operation for the periods specified therein.

 

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If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

3.2                               Observer Rights.  As long as EcoR1 Capital Fund, L.P. owns not less than twenty-five percent (25%) of the shares of the Preferred Stock originally purchased by it (or an equivalent amount of Common Stock issued upon conversion thereof), the Company shall invite a representative of EcoR1 Capital Fund, L.P. to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if such Investor or its representative is a competitor of the Company.

 

3.3                               Inspection.  The Company shall permit each Investor (provided that the Board of Directors has not reasonably determined that such Investor is a competitor of the Company), at such Investor’s expense, to visit and inspect the Company’s properties and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.3 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.4                               Termination of Information and Observer Rights.  The covenants set forth in Section 3.1, Section 3.2 and Section 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first, or (iv) immediately before the consummation of the Qualified Form 10 Transaction.

 

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3.5                               Confidentiality.  Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.4 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3.4; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

4.                                      Rights to Future Stock Issuances.

 

4.1                               Right of First Offer.  Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Investor.  An Investor shall be entitled to apportion the right of first offer hereby granted to it among itself and its Affiliates in such proportions as it deems appropriate.

 

(a)                                 The Company shall give notice (the “Offer Notice”) to each Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)                                 By notification to the Company within twenty (20) days after the Offer Notice is given, each Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by such Investor bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities).  At the expiration of such twenty (20) day period, the Company shall promptly notify each Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Investor’s failure to do likewise.  During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Investors were entitled to subscribe but that were not subscribed for by the Investors which is equal to the 

 

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proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares.  The closing of any sale pursuant to this Section 4.1(b) shall occur within the later of one hundred and twenty (120) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.1(c).

 

(c)                                  If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.  If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance with this Section 4.1.

 

(d)                                 The right of first offer in this Section 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Company’s Certificate of Incorporation); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Series B Preferred Stock pursuant to the Purchase Agreement.

 

(e)                                  Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Section 4.1, the Company may elect to give notice to the Investors within thirty (30) days after the issuance of New Securities.  Such notice shall describe the type, price, and terms of the New Securities.  Each Investor shall have twenty (20) days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by such Investor, maintain such Investor’s percentage-ownership position, calculated as set forth in Subsection 4.1(b) before giving effect to the issuance of such New Securities. The closing of such sale shall occur within sixty (60) days of the date notice is given to the Investors.

 

4.2                               Termination.  The covenants set forth in Section 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, or (iv) immediately before the consummation of the Qualified Form 10 Transaction, whichever event occurs first.

 

5.                                      Additional Covenants.

 

5.1                               Employee Agreements.  The Company will cause (i) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key 

 

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Employee to enter into a one (1) year noncompetition and nonsolicitation agreement. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without the prior approval of the Board of Directors including at least one of the Preferred Directors.

 

5.2                               Employee Stock.  Unless otherwise approved by the Board of Directors, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 2.11.  In addition, unless otherwise approved by the Board of Directors, the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

 

5.3                               Matters Requiring Investor Director Approval.  So long as the holders of Preferred Stock are entitled to elect the Preferred Directors, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include the affirmative vote of at least one of the Preferred Directors (except with respect to clause (e) below, which shall require the affirmative vote of both Preferred Directors):

 

(a)                                 make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;

 

(b)                                 make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors;

 

(c)                                  guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

 

(d)                                 make any investment other than investments in prime commercial paper, money market funds, certificates of deposit in any United States bank having a net worth in excess of $100,000,000 or obligations issued or guaranteed by the United States of America, in each case having a maturity not in excess of two years;

 

(e)                                  otherwise enter into or be a party to any transaction with any director, officer, employee or stockholders of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person;

 

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(f)                                   hire, terminate, or change the compensation of the executive officers, including approving an option grants; or

 

(g)                                  sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business; or

 

(h)                                 enter into any corporate strategic relationship involving the payment, contribution or assignment by the Company or to the Company of assets greater than $500,000.

 

5.4                               Board Matters.  Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule.  The Company shall reimburse the directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors.  The Company will maintain, an audit and compensation committee.

 

5.5                               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.

 

5.6                               Insurance. The Company shall use its commercially reasonable efforts to obtain, within thirty (30) days of the date hereof, from financially sound and reputable insurers Directors and Officers liability insurance in an amount and on terms and conditions satisfactory to the Board of Directors, and will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board of Directors determines that such insurance should be discontinued. The Directors and Officers liability insurance shall not be cancelable by the Company without prior approval by the Board of Directors including both Preferred Directors.

 

5.7                               Indemnification Matters.  The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board of Directors by the Investors (each a “Fund Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Fund Indemnitors”).  The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Fund Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Fund Director to the extent legally permitted and as required by the

 

21

 

Company’s Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Fund Director), without regard to any rights such Fund Director may have against the Fund Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such Fund Director with respect to any claim for which such Fund Director has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Fund Director against the Company.

 

5.8                               Right to Conduct Activities.  The Company hereby agrees and acknowledges that the Investors together with their affiliates are professional investment funds, and as such invest 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, the Investors shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by the Investors in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative of the Investors 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.

 

5.9                               Qualified Small Business Stock.  The Company shall use commercially reasonable efforts to cause the shares of Preferred Stock, as well as any shares into which such shares are converted, within the meaning of Section 1202(f) of the Internal Revenue Code (the “Code”), to constitute “qualified small business stock” as defined in Section 1202(c) of the Code; provided, however, that such requirement shall not be applicable if the Board of Directors of the Company determines, in its good-faith business judgment, that such qualification is inconsistent with the best interests of the Company.  The Company shall submit to its stockholders (including the Investors) and to the Internal Revenue Service any reports that may be required under Section 1202(d)(1)(C) of the Code and the regulations promulgated thereunder.  In addition, within twenty (20) business days after any Investor’s written request therefor, the Company shall, at its option, either (i) deliver to such Investor a written statement indicating whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code or (ii) deliver to such Investor such factual information in the Company’s possession as is reasonably necessary to enable such Investor to determine whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code.

 

5.10                        Market Stand-off.  The Company shall include a “Market Stand off” provision containing terms substantially similar to those set forth in Section 2.11 in each option agreement entered into pursuant to any equity incentive plan of the Company.

 

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5.11                        Termination of Covenants.  The covenants set forth in this Section 5, except for Section 5.5, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, (iv) immediately before the consummation of the Qualified Form 10 Transaction, whichever event occurs first.

 

6.                                      Miscellaneous.

 

6.1                               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 five percent (5%) of such Holder’s Registrable Securities; 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 Section 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 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.

 

6.2                               Governing Law.  This Agreement and any controversy arising out of or relating to this Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

6.3                               Counterparts; Facsimile.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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6.4                               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.

 

6.5                               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 or Schedule B (as applicable) 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 Section 6.5.  If notice is given to the Company, a copy shall also be sent Cooley LLP, 500 Boylston Street, Boston, MA 02116, Attn: Lester J. Fagen, Esq., and if notice is given to the Investors, a copy shall also be given to each of Sills Cummis & Gross PC, One Riverfront Plaza, Newark, NJ 07102, Attn: Steven Kamen, Esq. and Lowenstein Sandler LLP, 1251 Avenue of the Americas, New York, NY 10020, Attn: Anthony O. Pergola.

 

6.6                               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 by a written instrument executed by (a) the Company, (b) holders of sixty-two percent (62%) shares of Common Stock issued or issuable upon conversion of the shares of Series A Preferred Stock held by the Investors (voting as a single class and on an as-converted basis), (c) holders of sixty percent (60%) shares of Common Stock issued or issuable upon conversion of the shares of Series B Preferred Stock held by the Investors (voting as a single class and on an as-converted basis), and (d) Key Holders holding a majority of the Common Stock then held by the Key Holders; provided that the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party provided, further that Section 3.2 shall not be amended without the prior written consent of EcoR1 Capital Fund, L.P.  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 (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction). Any amendment, termination, or waiver effected in accordance with this Section 6.6 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.

 

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6.7                               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.

 

6.8                               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.

 

6.9                               Additional Investors.  Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Preferred Stock after the date hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares of Preferred 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.

 

6.10                        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.

 

6.11                        Dispute Resolution.  The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Massachusetts 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 federal and state courts located within the geographic boundaries of the United States District Court for the District of Massachusetts, 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 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.

 

6.12                        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.

 

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6.13                        Amendment and Restatement.  Effective upon the execution of this Agreement by the (a) the Company, (b) the holders of at least sixty-two percent (62%) of the shares of Common Stock issued or issuable upon conversion of the shares of Series A Preferred Stock held by the Investors (voting as a single class and on an as-converted basis), and (c) Key Holders holding a majority of the Common Stock then held by the Key Holders, the parties completely and irrevocably waive any and all application of the Prior Agreement, and acknowledge that the Prior Agreement is hereby amended and restated to read in its entirety as set forth in this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

	
 
    	
FLEX PHARMA, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KEY HOLDERS:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signature:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
				

 

27

 

SCHEDULE A

 

INVESTORS

 

Name and Address

 

Longwood Fund II, L.P.

800 Boylston St, Suite 1555

Boston, MA 02199

 

EcoR1 Capital Fund, L.P.

EcoR1 Capital Fund Qualified, L.P.c/o EcoR1 Capital, LLC

409 Illinois Street

San Francisco, CA 94158

 

Bessemer Venture Partners VIII L.P.

Bessemer Venture Partners VIII Institutional L.P.

c/o Bessemer Venture Partners

1865 Palmer Avenue

Suite 104

Larchmont, NY 10538

Tel. 914-833-5300

Transactions@bvp.com

 

Dan Gold

c/o QVT Financial LP

1177 Avenue of the Americas

9th Floor

New York, NY, 10036

 

Sculley Gibbs I, LLC

903 Captains Way

Jupiter, FL 33477

 

Todd A. Dagres 1999 Revocable Trust

c/o Spark Capital

137 Newbury St, 8th Floor

Boston, MA 02116

 

Roger Tung

c/o Concert Pharmaceuticals, Inc.

99 Hayden Avenue, Suite 500

Lexington, MA 02421

 

1

 

John Maraganore

c/o Alnylam Pharmaceuticals

300 Third Street, 3rd Floor

Cambridge, MA 02142

 

Wyc Grousbeck

41 Skating Pond Road

Weston, MA 02493

 

Michael Lafkas

217 Covina Ave

Long Beach, CA 90803

 

Paul Fuhrman

c/o ColonyCapital, LLC

2450 Broadway, 6th Floor

Santa Monica, CA 90404

 

Peter Barton Hutt

c/o Covington & Burling LLP

1201 Pennsylvania Avenue, NW

Washington, DC 20004

 

Christopher Walsh

c/o Hemenway & Barnes LLP

Attn: Brian C. Broderick

60 State Street

Boston, MA 02109

 

Mark Wan

c/o Three Arch Partners

3200 Alpine Road

Portola Valley, CA 94028

 

PagsGroup LLC

29 Webster Road

Weston, MA 02493

 

City Hill Venture Partners I, LLC

11575 Sorrento Valley Road, Suite 200

San Diego, CA 92121

 

Richard Gibbs

5 Old Woods Drive 

Harrison, NY 10528

 

2

 

Jennison Global Healthcare Master Fund, Ltd.

c/o Jennison Associates LLC

466 Lexington Avenue

New York, New York 10017

ATTN:   Legal Department

 

Alexandria Equities, LLC

385 E. Colorado Blvd.

Suite 299

Pasadena, CA 91101

 

CD-Venture GmbH

Bergheimer Straße 45

69115 Heidelberg, Germany

 

Double J Capital LLC

26 Peirce Road

Wellesley, MA 02481

 

William A. Sahlman

c/o Harvard Business School

Soldiers Field Station

Rock Center 318

Boston, MA 02163

 

Jonathan Seelig Revocable Trust

6 Longfellow Park

Cambridge, MA 02138

 

SB Vermoegensverwaltungs KG

c/o Harald F. Stock, PhD., SB

Vermögensverwaltungs KG

Philosophenweg 11, D-69120

Heidelberg, Germany

 

Lawrence Summers

207 Fisher Avenue

Brookline, MA 02445

 

Robert Steven Kaplan

6 Arlington Street, Apt. #4

Boston, MA 02116

 

3

 

The Lynch Foundation

c/o Peter S. Lynch

Fidelity Investments

82 Devonshire Street

Mail Zone S4A

Boston, MA 02109

 

Peter S. and Carolyn A. Lynch, JTWROS

c/o Peter S. Lynch

Fidelity Investments

82 Devonshire Street

Mail Zone S4A

Boston, MA 02109

 

Richard Beleson and Kim Lam Beleson October 1999 Living Trust

c/o Richard Beleson

1750 Taylor Street, Unit 302

San Francisco, CA 94133

 

Richard Y. Woo

7 Mead Circle

Lexington, MA 02420

 

Lightstone Ventures, L.P.

Lightstone Ventures (A), L.P.

500 Boylston Street

Suite 1380

Boston, MA 02116

 

KPC Venture Capital LLC

c/o The Kraft Group

1 Patriot Place

Foxborough, MA 02035

Attn: William Scalzulli

 

The Stephen J. Hoffman 2009 Revocable Trust

Attn: Stephen Hoffman

c/o PDL BioPharma

303 Wyman Street, Suite 300

Waltham, MA 02451

 

Bindley Capital Investors, LLC

8909 Purdue Road, Suite 500

Indianapolis, IN 46268

 

4

 

Paul D. Enderle

c/o BayCross Capital Group, LLC

75 Arlington Street, 5th Floor

Boston, MA 02116

 

Correlation Ventures, L.P.

9255 Towne Centre Drive, Suite 350

San Diego, CA 92121

Attn: Grace Chui-Miller, CFO

 

5

 

SCHEDULE B

 

KEY HOLDERS

 

Name and Address

 

Christoph Westphal

17 Hawes Street

Brookline, MA 02446

 

Rich Aldrich

26 Beech Rd.

Brookline, MA 02446

 

Michelle Dipp

505 Tremont St., Unit 702

Boston, MA 02116

 

Bruce Bean

20 Locke Road

Waban, MA 02468

 

Donald MacKinnon

305 East 85th St. Apt 17A

New York, NY 10028

 

Roderick MacKinnon

504 East 63rd Street, Apt 33M

New York, NY 10065

 

6

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