EXECUTION COPY
CO-SALE AGREEMENT
This Co-Sale Agreement is made as of the 28th day of October, 1996 by and
among Acute Therapeutics, Inc. (the "Company") and the shareholders set forth
on Schedule A attached hereto (the "Shareholders").
In consideration of the mutual covenants set forth herein, the parties
agree as follows:
1. Definitions.
(a) "Stock" shall mean all shares of capital stock of the Company held
by the Shareholders, whether now owned or hereafter acquired. For purposes of
the co-sale right granted to the Shareholders pursuant to this Agreement, all
shares of Preferred Stock of the Company shall be deemed to have been converted
into Common Stock of the Company.
(b) "Common Stock" shall mean the Company's Common Stock, $0.001 par
value.
(c) "Preferred Stock" shall mean the Company's Series A Convertible
Preferred Stock, $0.001 par value.
2. Right of Co-Sale.
(a) If any Shareholder of the Company proposes to sell any shares of
Stock of the Company, then such Shareholder (the "Selling Shareholder") shall
promptly give written notice (the "Notice") to the other Shareholders (the
"Non-Selling Shareholders") at least twenty (20) days prior to the closing of
such sale or transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the number and class
of shares of Stock to be sold or transferred, the nature of such sale or
transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee.
(b) Each Non-Selling Shareholder shall have the right, exercisable upon
written notice to the Selling Shareholder within ten (10) days after receipt of
the Notice, to participate in such sale of Stock on the same terms and
conditions set forth in the Notice.
(c) Each Non-Selling Shareholder may sell all or any part of that
number of shares of Stock equal to the product obtained by multiplying
(i) the aggregate number of shares of Stock covered by the Notice by (ii) a
fraction the numerator of which is the number of shares of Stock owned by
such Non-Selling Shareholder at the time of the sale or transfer and the
denominator of which is the total number of shares of Stock owned by the
Selling Shareholder and the Non-Selling Shareholders at the time of the sale
or transfer (treating all shares of Preferred Stock as if they had been
converted into Common Stock).
(d) If any Non-Selling Shareholder elects to participate in the Selling
Shareholder's sale pursuant to this Section 2, the Non-Selling Shareholder shall
effect its participation in the sale by promptly delivering to the Selling
Shareholder for transfer to the prospective purchaser one or more certificates,
properly endorsed for transfer, which represent the type and number of shares of
Stock which the Non-Selling Shareholder elects to sell.
(e) The stock certificate or certificates that the Non-Selling
Shareholder delivers to the Selling Shareholder pursuant to paragraph 2(d)
shall be transferred to the prospective purchaser in consummation of the sale
of the Stock pursuant to the terms and conditions specified in the Notice, and
the Selling Shareholder shall concurrently therewith remit to the Non-Selling
Shareholder that portion of the sale proceeds to which the Non-Selling
Shareholder is entitled by reason of its participation in such sale. To the
extent that any prospective purchaser or purchasers prohibits such assignment
or otherwise refuses to purchase shares or other securities from the Non-Selling
Shareholder, the Selling Shareholder shall not sell to such prospective
purchaser or purchasers any Stock unless and until, simultaneously with such
sale, the Selling Shareholder shall purchase such shares or other securities
from the Non-Selling Shareholder for the same consideration and on the same
terms and conditions as the proposed transfer described in the Notice.
(f) The exercise or non-exercise of the rights of the Shareholders
hereunder to participate in one or more sales of Stock made by a Shareholder
shall not adversely affect their rights to participate in subsequent sales of
Stock subject to paragraph 2(a).
(g) If any Non-Selling Shareholder does not elect to participate in
the sale of the Stock subject to the Notice, the Selling Shareholder may, not
later than thirty (30) days following delivery to the Company and the
Non-Selling Shareholders of the Notice, conclude a transfer of not less than
all of the Stock covered by the Notice on terms and conditions not more
favorable to the transferor than those described in the Notice. Any proposed
transfer on terms and conditions more favorable than those described in the
Notice, as well as any subsequent proposed transfer of any of the Stock by a
Shareholder, shall again be subject to the co-sale rights of the Shareholders
and shall require compliance by the Shareholders with the procedures described
in this Section 2.
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3. Exempt Transfers.
(a) Notwithstanding the foregoing, the co-sale rights of the
Shareholders shall not apply to (i) any pledge of Stock made pursuant to a
bona fide loan transaction that creates a mere security interest, (ii) any
transfer of Stock by a Shareholder to an affiliate of that Shareholder, where
"affiliate" refers to any person or entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with the Shareholder, (iii) any transfer of Stock pursuant to those
certain Stock Transfer Agreements between The Scripps Research Institute and
each of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, each dated the date hereof,
attached hereto as Exhibit A (iv) any transfer of Stock in connection with the
sale of all or substantially all of the assets or Stock of the Company, by
merger, sale of assets or otherwise, (v) any transfer to the ancestors,
descendants or spouse of the Shareholder or to trusts for the benefit of such
persons or (vi) any bona fide gift; provided that, in any such case, (A) the
transferring Shareholder shall inform the other Shareholders of such pledge,
transfer or gift prior to effecting it and (B) the pledgee, transferee or
donee shall furnish the other Shareholders with a written agreement to be bound
by and comply with all provisions of this Agreement. Such transferred Stock
shall remain "Stock" hereunder, and such pledgee, transferee or donee shall be
treated as a "Shareholder" for purposes of this Agreement.
(b) Notwithstanding the foregoing, the provisions of Sections 2 shall
not apply to the sale of any Stock (i) to the public pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act")
or (ii) to the Company.
4. Prohibited Transfers.
(a) In the event a Shareholder (a "Transferring Shareholder") should
sell any Stock in contravention of the co-sale rights of the Shareholders under
this agreement (a "Prohibited Transfer"), the other Shareholders (the
Non-Transferring Shareholders"), in addition to such other remedies as may be
available at law, in equity or hereunder, shall have the put option provided
below, and the Transferring Shareholder shall be bound by the applicable
provisions of such option.
(b) In the event of a Prohibited Transfer, any Non-Transferring
Shareholder shall have the right to sell to the Transferring Shareholder the
type and number of shares of Stock equal to the number of shares the
Non-Transferring Shareholders would have been entitled to transfer to the
purchaser under Section 2(c) hereof had the Prohibited Transfer been effected
pursuant to and in compliance with the terms hereof. Such sale shall be made on
the following terms and conditions:
(i) The price per share at which the shares are to be sold to the
Transferring Shareholder shall be equal to the price per share paid by the
purchaser to the Transferring Shareholder in the Prohibited Transfer. The
Transferring Shareholder shall also reimburse the Non-Transferring Shareholders
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for any and all fees and expenses, including legal fees and expenses, incurred
pursuant to the exercise or the attempted exercise of the Non-Transferring
Shareholder's rights under Section 2.
(ii) Within ninety (90) days after the later of the dates on which
any Non-Transferring Shareholder (A) received notice of the Prohibited Transfer
or (B) otherwise become aware of the Prohibited Transfer, the Non-Transferring
Shareholder shall, if exercising the option created hereby, deliver to the
Transferring Shareholder the certificate or certificates representing shares to
be sold, each certificate to be properly endorsed for transfer.
(iii) The Transferring Shareholder shall, upon receipt of the
certificate or certificates for the shares to be sold by any Non-Transferring
Shareholder, pursuant to this subparagraph 4(b), pay the aggregate purchase
price therefor and the amount of reimbursable fees and expenses, as specified
in subparagraph 4(b)(i), in cash or by other means acceptable to the
Non-Transferring Shareholder.
5. Legend.
(a) Each certificate representing shares of Stock now or hereafter
owned by the Shareholders shall be endorsed with the following legend:
"THE SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS AND CONDITIONS OF A CO-SALE AGREEMENT
BY AND BETWEEN THE CORPORATION AND CERTAIN HOLDERS OF STOCK
OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(b) Each Shareholder agrees that the Company may instruct its transfer
agent to impose transfer restrictions on the shares represented by certificates
bearing the legend referred to in Section 5(a) above to enforce the provisions
of this Agreement and the Company agrees to promptly do so. The legend shall be
removed upon termination of this Agreement.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York.
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6.2 Amendment. Any provision may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of (i) the
Company and (ii) a majority in interest of the Shareholders, provided that any
Shareholder may waive any of its rights hereunder without obtaining the consent
of any other Shareholder. Any amendment or waiver effected in accordance with
clauses (i) and (ii) of this paragraph shall be binding upon the Company and
each Shareholder.
6.3 Assignment of Rights. This Agreement and the rights and obligations
of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives. The rights of
the Shareholders hereunder are not assignable without the express, written
consent of the Company.
6.4 Liability of Third Parties. Any claim for liability which arises
out of this Agreement shall attach solely to the parties to this Agreement and
their successors. No party shall have a claim against any third party with
respect to this Agreement.
6.5 Term. This Agreement shall terminate immediately prior to the
earlier of (i) the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of the Company's Common Stock (ii) the
closing of the Company's sale of all or substantially all of its assets or the
acquisition of the Company by another entity by means of merger or consolidation
resulting in the exchange of the outstanding shares of the Company's Stock for
securities or consideration issued, or caused to be issued, by the acquiring
entity or its subsidiary or (iii) the execution by the Company of a general
assignment for the benefit of creditors or the appointment of a receiver or
trustee to take possession of the property and assets of the Company.
6.6 Ownership. Each Shareholder represents and warrants that such
Shareholder is the sole legal and beneficial owner of the shares of stock
subject to this Agreement and that no other person has any interest (other
than a community property interest) in such shares.
6.7 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five (5) days after deposit in the United States mail,
by registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties hereto.
6.8 Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
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shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.9 Attorney Fees. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.10 Counterparts. 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.
6.11 Stock Split. All references to numbers of shares in this Agreement
shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
6.12 Aggregation of Stock. All shares of Stock held or acquired by
affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Co-Sale Agreement as
of the date first above written.
ACUTE THERAPEUTICS, INC.
By: (Signature of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Ph.D. appears here)
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.
Title: President
IN WITNESS WHEREOF, the parties have executed this Co-Sale Agreement
as of the date first above written.
SHAREHOLDERS:
(Signature of ▇▇▇▇▇ ▇. ▇▇▇, M.D.
appears here)
Discovery Laboratories, Inc.
By: ▇▇▇▇▇ ▇. ▇▇▇, M.D.
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(Signature of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
appears here)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
(Signature of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
appears here)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address:
(Signature of ▇▇▇▇▇ ▇▇▇▇▇
appears here)
▇▇▇▇▇ ▇▇▇▇▇
Address:
(Signature of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
appears here)
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Development Corporation
By:
Address:
(Signature of ▇▇▇▇▇▇▇ ▇. Power
appears here)
Sage Partners
By:
Address:
(Signature appears here)
The Scripps Research Institute
By:
Address:
SCHEDULE A
Discovery Laboratories, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Development Corporation
The Scripps Research Institute
Sage Partners