Document:

grtx-ex42_6.htm

Exhibit 4.2

DESCRIPTION OF THE REGISTRANT’S SECURITIES 

REGISTERED PURSUANT TO SECTION 12 OF THE 

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

As of December 31, 2020, Galera Therapeutics, Inc. had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). References herein to “we,” “us,” “our” and the “Company” refer to Galera Therapeutics, Inc. and not to any of its subsidiaries.

 

DESCRIPTION OF CAPITAL STOCK 

Capital Structure 

The following description of our capital stock and certain provisions of our restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference to our restated certificate of incorporation and our amended and restated bylaws, each of which has been publicly filed with the Securities and Exchange Commission (“SEC”). 

General 

Our authorized capital stock consists of 210,000,000 shares, all with a par value of $0.001 per share, of which: 

 

				
	
 
	
•
	
 
	
200,000,000 shares are designated as common stock; and 

 

				
	
 
	
•
	
 
	
10,000,000 shares are designated as preferred stock. 

Common Stock 

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of any series of preferred stock that we may designate and issue in the future. 

In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately our net assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. Our outstanding shares of common stock are validly issued, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. 

Preferred Stock 

Under the terms of our restated certificate of incorporation, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. 

 

The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from seeking to acquire, a majority of our outstanding voting stock. 

Registration Rights 

The second amended and restated investors’ rights agreement by and among us and certain of our stockholders (the “Investors’ Rights Agreement”) grants the parties thereto certain registration rights in respect of the “Registrable Securities” held by them, which securities include (1) the shares of our common stock issuable or issued upon the conversion of shares of our redeemable convertible preferred stock, (2) any shares of our common stock, or any common stock issued or issuable 

 

Exhibit 4.2

upon conversion and/or exercise of any of our securities acquired by the parties after the date of the Investors’ Rights Agreement, and (3) any shares of our common stock issued as a dividend or other distribution with respect to the shares described in the foregoing clauses (1) and (2). The registration of shares of our common stock pursuant to the exercise of these registration rights would enable the holders thereof to sell such shares without restriction under the Securities Act of 1933, as amended (the “Securities Act”), when the applicable registration statement is declared effective. Under the Investors’ Rights Agreement, we will pay all expenses relating to such registrations, including the reasonable fees of one special counsel for the participating holders, and the holders will pay all underwriting discounts and commissions relating to the sale of their shares. The Investors’ Rights Agreement also includes customary indemnification and procedural terms. 

These registration rights will expire on the earlier of (1) November 12, 2024, (2) with respect to each stockholder, at such time as such stockholder can sell all of its shares pursuant to Rule 144 of the Securities Act or another similar exemption under the Securities Act during any three month period without registration, and (3) the closing of a deemed liquidation event, as defined in the Investors’ Rights Agreement. 

Demand Registration Rights 

At any time after May 4, 2020, the holders of not less than 30% of the Registrable Securities then outstanding may, on not more than two occasions, request that we prepare, file and maintain a registration statement on Form S-1 to register the Registrable Securities of such holders if the anticipated aggregate offering price, net of underwriting discounts and commissions, would be at least $10.0 million. The stockholders party to the Investors’ Rights Agreement may, on not more than two occasions in any 12-month period, request that we prepare, file and maintain a registration statement on Form S-3 covering the sale of their Registrable Securities, but only if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $1.0 million. 

Piggyback Registration Rights 

In the event that we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders, the stockholders party to the Investors’ Rights Agreement will be entitled to certain “piggyback” registration rights allowing them to include their Registrable Securities in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act other than with respect to a demand registration or a registration statement on Form S-4 or S-8 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, these holders will be entitled to notice of the registration and will have the right to include their Registrable Securities in the registration subject to certain limitations. 

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws 

Some provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions which provide for payment of a premium over the market price for our shares. 

These provisions, summarized below, are intended to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms. 

Undesignated Preferred Stock 

The ability of our board of directors, without action by the stockholders, to issue up to 10,000,000 shares of undesignated preferred stock with voting or other rights or preferences as designated by our board of directors could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company. 

 

Exhibit 4.2

Stockholder Meetings 

Our amended and restated bylaws provide that a special meeting of stockholders may be called only by our chairman of the board, chief executive officer or president (in the absence of a chief executive officer), or by a resolution adopted by a majority of our board of directors. 

Requirements for Advance Notification of Stockholder Nominations and Proposals 

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. 

Elimination of Stockholder Action by Written Consent 

Our restated certificate of incorporation eliminates the right of stockholders to act by written consent without a meeting. 

Staggered Board 

Our board of directors is divided into three classes. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors. 

Removal of Directors 

Our restated certificate of incorporation provides that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of the holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote in the election of directors. 

Stockholders Not Entitled to Cumulative Voting 

Our restated certificate of incorporation will not permit stockholders to cumulate their votes in the election of directors. Accordingly, the holders of a majority of the outstanding shares of our common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they choose, other than any directors that holders of our preferred stock may be entitled to elect. 

Delaware Anti-Takeover Statute 

We are subject to Section 203 of the General Corporation Law of the State of Delaware, which prohibits persons deemed to be “interested stockholders” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors. 

Choice of Forum 

Our restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative form, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or stockholders to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware or our certificate of incorporation or bylaws; or (4) any action asserting a claim governed by the internal affairs doctrine. Under our restated certificate of incorporation, this exclusive forum provision will not apply to claims which are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of 

 

Exhibit 4.2

Delaware does not have subject matter jurisdiction. For instance, the provision would not apply to actions arising under federal securities laws, including suits brought to enforce any liability or duty created by the Securities Act, Exchange Act, or the rules and regulations thereunder. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. In addition, our bylaws provide that the federal district courts of the United States are the exclusive forum for any complaint raising a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to these choice of forum provisions. It is possible that a court of law could find the choice of forum provisions contained in our restated certificate of incorporation or bylaws to be inapplicable or unenforceable if challenged in a proceeding or otherwise. 

 

Amendment of Charter Provisions 

The amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue preferred stock and the provision prohibiting cumulative voting, would require approval by holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote thereon. The provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests. 

Limitations on Liability and Indemnification Matters 

Our restated certificate of incorporation and amended and restated bylaws provides that we will indemnify each of our directors and executive officers to the fullest extent permitted by the DGCL. We have entered into indemnification agreements with each of our directors and executive officers that may, in some cases, be broader than the specific indemnification provisions contained under Delaware law. Further, we agreed to indemnify each of our directors and executive officers against certain liabilities, costs and expenses, and we have purchased a policy of directors’ and officers’ liability insurance that insures our directors and executive officers against the cost of defense, settlement or payment of a judgment under certain circumstances. In addition, as permitted by Delaware law, our restated certificate of incorporation will include provisions that eliminate the personal liability of our directors for monetary damages resulting from breaches of certain fiduciary duties as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of fiduciary duties as a director. 

These provisions may be held not to be enforceable for violations of the federal securities laws of the United States. 

Listing 

Our common stock has been approved for listing on The Nasdaq Global Market under the symbol “GRTX.” 

Transfer Agent and Registrar 

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.grtx-ex1010_8.htm

Exhibit 10.10

Galera Therapeutics, Inc.

 

Non-Employee Director Compensation Program

 

(effective as of February 11, 2021)

 

Non-employee members of the board of directors (the “Board”) of Galera Therapeutics, Inc. (the “Company”) shall receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this “Program”). The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) who is entitled to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company.  This Program shall remain in effect until it is revised or rescinded by further action of the Board.  This Program may be amended, modified or terminated by the Board at any time in its sole discretion.  As of its effectiveness, the terms and conditions of this Program shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors, except for equity compensation previously granted to a Non-Employee Director.   

I.Cash Compensation

Each Non-Employee Director shall receive an annual retainer for service on the Board (the “Base Retainer”) and additional annual retainers for service as Chairman of the Board or Lead Independent Director or for service on a committee of the Board (each, a “Committee Member Retainer” and together with the Base Retainer, the “Annual Retainers”) as follows:

		
	
Position
	
Amount

	
Base Board Fee 
	
$35,000

	
Chair of the Board or Lead Independent Director
	
$25,000

	
Chair of Audit Committee
	
$15,000

	
Chair of Compensation Committee
	
$10,000

	
Chair of Nominating and Corporate Governance Committee
	
$8,000

	
Member of Audit Committee (non-Chair)
	
$7,500

	
Member of Compensation Committee (non-Chair)
	
$5,000

	
Member of Nominating and Corporate Governance Committee (non-Chair)
	
$4,000

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Exhibit 10.10

 

 

A.Payment of Retainers. For the avoidance of doubt, the Annual Retainers in the table above are additive and a Non-Employee Director shall be eligible to earn an Annual Retainer for each position in which he or she serves. The Annual Retainers shall be earned on a quarterly basis based on a calendar quarter and, except as otherwise provided in Section I(B), shall be paid in cash by the Company in arrears not later than the fifteenth day following the end of each calendar quarter.  In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable position, for an entire calendar quarter, the Annual Retainer paid to such Non-Employee Director pursuant to this Section I(A) shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such position, as applicable.  

 

B.Annual Retainer Election. 

 

1.Election. Prior to 5:00 p.m. Eastern time on the final business day preceding June 1 of a given calendar year or, for a Non-Employee Director whose service as a Non-Employee Director commences in such given calendar year, such later date on which the Non-Employee Director’s service as a Non-Employee Director commences and that occurs prior to July 1 of such given calendar year (in any case, the “Election Deadline”), by delivery to the Company of a written election in a form provided by the Company (an “Election”), a Non-Employee Director may elect to receive payment of the entire Annual Retainer payable to the Non-Employee Director under this Program for services performed during the period beginning on July 1 occurring after the Election Deadline and ending on June 30 of the following calendar year (each such period, a “Service Year”) in the form of one or more options (each, an “Elective Option”) to purchase shares of the Company’s common stock (“Shares”) as set forth in this Section I(B) and Section II(D) rather than in cash in accordance with Section I(A).  A Non-Employee Director who makes an Election will be granted a separate Elective Option for the Base Retainer (a “Base Retainer Elective Option”) and for each Committee Member Retainer (a “Committee Member Retainer Elective Option”) that such Non-Employee Director would, as of the applicable Issue Date, otherwise have been entitled to receive under this Program in cash for service on the Board and its committees during the applicable Service Year.  If a Non-Employee Director commences service on a committee of the Board following the Issue Date for a given Service Year, the Non-Employee Director will receive the Committee Member Retainer for such committee service during the corresponding Service Year in cash pursuant to Section I(A) and not in the form of a Committee Member Retainer Elective Option under this Section II(B). 

 

2.Terms of Elective Option.Each Elective Option will be granted automatically, without further action of the Board, on July 1 occurring after the Election Deadline (such date, the “Issue Date”), under and subject to the terms of the Company’s 2019 Incentive Award Plan or any other applicable Company equity incentive plan then maintained by the Company (the “Equity Plan”) and an 

2

 

 

 

 

 

Exhibit 10.10

award agreement, including attached exhibits, in substantially the form previously approved by the Board.  The number of Shares subject to an Elective Option granted to a Non-Employee Director on the Issue Date will be determined by dividing (i) the cash amount of the Base Retainer or Committee Member Retainer, as applicable, that, absent the Non-Employee Director’s Election, would have otherwise been payable under this Program (as in effect on the Issue Date) to the Non-Employee Director for the applicable Service Year by (ii) the Elective Option’s Black-Scholes Value (as defined below) on the Issue Date, rounded down to the nearest whole Share.  

 

3.Withdrawal and Service.A Non-Employee Director may withdraw his or her Election at any time prior to the Election Deadline for a given Service Year, and thereafter, any Elections delivered to the Company and not previously withdrawn will become irrevocable with respect to the Service Year.  Notwithstanding anything in this Section I(B) or any Election to the contrary, if a Non-Employee Director is not serving as a Non-Employee Director on the Issue Date or if the grant of an Elective Option described in this Section I(B) is otherwise prohibited under applicable laws, exchange listing rules or the terms of the Equity Plan, the Non-Employee Director’s Annual Retainer, to the extent earned, shall be paid in cash under and subject to the terms of Section I(A). Any Non-Employee Director whose service as a Non-Employee Director on the Board commences during a given Service Year shall not be eligible to make an Election under this Program until the first Election Deadline that occurs following the date such Non-Employee Director commences service on the Board, and any Annual Retainer for such partial year of service shall be paid in cash under and subject to the terms of Section I(A).

 

4.Black-Scholes Value.For purposes of this Section I(B), “Black-Scholes Value” means, with respect to an Elective Option, the per share fair value of the Elective Option determined as of the applicable Issue Date using the Black-Scholes or other option pricing model that the Company most recently applied when valuing grants of options with service-based vesting conditions for purposes of preparing its (audited or unaudited) consolidated financial statements that have been filed with the Securities Exchange Commission and using as inputs to such model (i) the Fair Market Value (as defined in the Equity Plan) of a Share on the applicable Issue Date (or, if the Issue Date is not a trading day, the last trading day preceding the Issue Date) and (ii) such other assumptions as determined by the Company’s Chief Accounting Officer on or before the Issue Date.

 

II.Equity Compensation 

In addition to any Elective Options, each Non-Employee Director shall be granted options to purchase Shares (each, an “Option”) as set forth in the following table. Each Option shall be granted under and subject to the terms and provisions of the Equity Plan and shall be subject to an award agreement, including attached exhibits, in substantially the form previously approved by the Board.  

		
	
Option
	
Number of Shares

	
Initial Option
	
19,776

	
Subsequent Option 

Chair of the Board or Lead Independent Director

Non-Employee Director (other than Chair or Lead)
	
 

13,179

9,888

 

A.Initial Options.  Each Non-Employee Director who is initially elected or appointed to the Board shall receive the Initial Option on the date of such initial election or appointment.  No Non-Employee Director shall be granted more than one Initial Option. 

B.Subsequent Options.  A Non-Employee Director who (i) has been serving as a Non-Employee Director on the Board for at least six months as of the date of any annual meeting of the Company’s stockholders and (ii) will continue to serve as a Non-Employee Director immediately following such meeting, shall be automatically granted a Subsequent Option on the date of such annual meeting.  For the avoidance of doubt, a Non-Employee Director elected for the first time to the Board at an annual meeting of the Company’s stockholders shall only receive the Initial Option in connection with such election, and shall not receive a Subsequent Option on the date of such meeting as well.  

 

C.Termination of Employment of Employee Directors.  Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive an Initial Option, but to the extent that they are otherwise entitled, will receive, after termination of employment with the Company and any parent or subsidiary of the Company, a Subsequent Option.  

D.Terms of Options Granted to Non-Employee Directors.

1.Exercise Price.  The per-share exercise price of each Option granted to a Non-Employee Director shall equal the Fair Market Value (as defined in the Equity Plan) of a Share on the date the Option is granted. 

2.Vesting.  

a)Initial Options.  Each Initial Option shall vest and become exercisable in thirty-six (36) substantially equal monthly installments following the date of grant, such that the Initial Option shall be fully vested on the third anniversary of the date of grant, subject to the Non-Employee Director continuing in service as a Non-Employee Director through each such vesting date.  

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Exhibit 10.10

b)Subsequent Options.  Each Subsequent Option shall vest and become exercisable on the earlier of the first anniversary of the date of grant or the day immediately prior to the date of the next annual meeting of the Company’s stockholders occurring after the date of grant, in either case, subject to the Non-Employee Director continuing in service as a Non-Employee Director through such vesting date.   

c)Elective Options. Each Elective Option shall vest and become exercisable as to 25% of the Shares subject to the Elective Option (each, a “Tranche”) upon the Non-Employee Director completing three months of continuous service as a Non-Employee Director, or in the applicable position, following the Issue Date, provided that the fourth and final Tranche of each Elective Option will vest and become exercisable on the earlier of the first anniversary of the Issue Date or the day immediately prior to the date of the next annual meeting of the Company’s stockholders occurring after the Issue Date. By way of example, if, during a given Service Year, a Non-Employee Director ceases to serve on a committee of the Board for which such Non-Employee Director was granted a Committee Member Retainer Elective Option but continues to serve on the Board as a Non-Employee Director, such Non-Employee Director’s Base Retainer Elective Option will continue to vest and become exercisable while such Non-Employee Director continues to serve as a Non-Employee Director and any portion of such Non-Employee Director’s Committee Member Retainer Elective Option that has not become vested and exercisable on or prior to the date such Non-Employee Director ceases to serve on such committee shall be immediately forfeited on the date such Non-Employee Director ceases to serve on such committee.

d)Forfeiture of Options.  Unless the Board otherwise determines, any portion of an Initial Option, Subsequent Option or Elective Option which is unvested or unexercisable at the time of a Non-Employee Director’s termination of service on the Board as a Non-Employee Director, or in the applicable position, shall be immediately forfeited upon such termination of service and shall not thereafter become vested and exercisable.  All of a Non-Employee Director’s Initial Options and Subsequent Options shall vest in full immediately prior to the occurrence of a Change in Control (as defined in the Equity Plan), to the extent outstanding at such time.

3.Term.  The maximum term of each Option granted to a Non-Employee Director hereunder shall be ten (10) years from the date the Option is granted. 

* * * * *

 

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