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Exhibit 10.4
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of
this
29th day of March, 2005, by and among Molecular Insight
Pharmaceuticals, Inc., a
Massachusetts corporation (the "Company"), and the investors
identified on the
signature pages hereto (each an "Investor" and collectively the
"Investors").
RECITALS:
A. Pursuant to the terms of a certain Stock Purchase Agreement,
of
even date herewith, by and among the Company and the Investors
(as amended,
restated, supplemented or otherwise modified from time to time,
the "Purchase
Agreement"), the Company is issuing to the Investors an
aggregate of 148,515
shares of a newly created series of the Company's preferred
stock, par value
$0.01 per share, designated as "Series C Convertible Preferred
Stock" (the
"Series C Preferred Stock"); and
B. The parties hereto desire to enter into this Agreement to,
among
other things, set forth the rights of the Investors with respect
to: (i) the
registration of shares of Common Stock issuable to the Investors
upon conversion
of the Series C Preferred Stock; (ii) the receipt of certain
information from
the Company; and (iii) the participation in future issuances and
transfers of
securities of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
respective
covenants hereinafter set forth, and for other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged,
the Company and
each Investor, severally and not jointly, hereby agree as
follows:
ARTICLE I DEFINITIONS.
1.1 General Definitions. All capitalized terms not otherwise
defined in
this Agreement shall have the meanings ascribed thereto in the
Purchase
Agreement. As used in this Agreement, unless the context
otherwise requires, the
following terms shall have the respective meanings set forth
below:
"Agreement" shall have the meaning ascribed to it in the
preamble to
this Agreement.
"Board" means the Board of Directors of the Company.
"Cerberus" means Cerberus Capital Management, L.P., for
itself
and/or one or more of its Affiliates and/or accounts managed by
Cerberus Capital
Management, L.P., including, without limitation, Cerberus
Partners, L.P.
"Commission" means the U.S. Securities and Exchange Commission
or
any other successor federal agency then administering the
Securities Act of
1933, as amended, and other federal securities laws.
"Common Stock" means the common stock, par value $.01 per share,
of
the Company, and any other securities into which or for which
such Common Stock
may be converted or exchanged pursuant to a plan of
recapitalization,
reorganization, merger, consolidation, sale of assets or other
similar
transaction.
"Company" shall have the meaning ascribed to it in the preamble
to
this Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and
regulations of the
Commission issued under such Act, as they each may, from time to
time, be in
effect.
"Investor(s)" shall have the meaning ascribed to it in the
preamble
to this Agreement.
"Preferred Stock" means the Series A Preferred Stock, the Series
B
Preferred Stock and the Series C Preferred Stock.
"Purchase Agreement" shall have the meaning ascribed to it in
the
recitals to this Agreement.
"Qualified Public Offering" means a firm commitment
underwritten
public offering of shares of the Common Stock in which the
aggregate gross
proceeds thereof to the Company shall be no less than
$30,000,000 and having a
per share offering price of at least $5.00.
"Requisite Investors" means Cerberus and Investors holding at
least
a majority of the Common Stock issuable upon conversion of the
then issued and
outstanding shares of Series C Preferred Stock.
"Series C Preferred Stock" shall have the meaning ascribed to it
in
the recitals to this Agreement.
"Shares" shall have the meaning ascribed to it in Section
3.1.
ARTICLE II INTENTIONALLY OMITTED.
ARTICLE III TRANSFER OBLIGATIONS.
3.1 Transfers Prohibited. David Barlow, currently the Company's
CEO
("Barlow"), shall not sell, assign, transfer, exchange, give,
devise, pledge,
hypothecate, encumber or otherwise alienate or dispose of any
shares of capital
stock of the Company (the "Shares") owned by him, or any right
or interest
therein, whether voluntarily or involuntarily, by operation of
law or otherwise,
except in accordance with this Agreement. Notwithstanding the
foregoing or
Section 3.2 below, Barlow may transfer any or all of the Shares
(i) to his
spouse or children or to a trust or partnership established for
the benefit of
him, his spouse, his ex-spouse or his children, (ii) by will, or
(iii) to his
Affiliates, provided that such Shares shall remain subject to
this Agreement and
such permitted transferee shall, as a condition to such
transfer, deliver to the
Company a written instrument confirming that such transferee
shall be bound by
all of the terms and conditions of this Agreement. Except to the
extent
otherwise required by applicable law, any transfer of title of
any interest in
any of the Shares upon default, foreclosure, forfeit, or
otherwise than by a
voluntary decision on the part of Barlow, other than any
transfer upon death
(each, other than any transfer upon death, an "Involuntary
Transfer"), shall be
void unless Barlow complies with this Article III and enables
the Investors to
exercise in full their rights hereunder. Upon any Involuntary
Transfer, the
Investors shall have the right to purchase such Shares pursuant
to this Article
III and the Person to whom such Shares have been transferred
(the "Involuntary
Transferee") shall have the obligation to sell such Shares in
accordance with
this Article III. Upon the Involuntary Transfer of any Shares,
Barlow shall
promptly (but in no event later than ten (10) days after such
Involuntary
Transfer) furnish written notice to the Company and the
Investors indicating
that the Involuntary Transfer has occurred, specifying the name
of the
Involuntary Transferee, giving a description of the
circumstances giving rise
to, and stating the legal basis for, the Involuntary Transfer.
The Investors
shall have the right
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to purchase, and the Involuntary Transferee shall have the
obligation to
sell, all (but not less than all) of the Shares acquired by the
Involuntary
Transferee for a purchase price per share equal to the fair
market value per
Share as determined in good faith by the Board and otherwise in
accordance with
the provisions of Section 3.2 below. The number of Shares which
each Investor
shall have the right to purchase shall be determined in the same
manner as set
forth below in Section 3.2 with respect to the exercise of the
Investors' right
of first refusal.
3.2. Rights of First Refusal on Voluntary Transfers.
(a) Subject to Section 3.2(c), if Barlow intends to sell,
assign,
transfer or otherwise voluntarily alienate or dispose of any
Shares in one
transaction or a series of related transactions (the "Selling
Stockholder"),
then the Selling Stockholder shall, prior to any such transfer,
give written
notice (the "Selling Stockholder's Notice") of such intention to
the Company and
the Investors. The Selling Stockholder's Notice shall include
the name of the
proposed transferee, the proposed purchase price per Share, the
terms of payment
of such purchase price and all other matters relating to such
sale and shall be
accompanied by a copy of a binding written agreement of the
proposed transferee
to purchase such Shares from the Selling Stockholder. If the
Selling Stockholder
is to receive non-cash consideration from the proposed
transferee named in the
Selling Stockholder's Notice, the Selling Stockholder's Notice
shall specify the
"Fair Market Value" (as defined in the Articles of Amendment) of
such non-cash
consideration as part of the purchase price to be paid for the
Offered Shares by
the Investors. The Selling Stockholder's Notice shall constitute
a binding offer
by the Selling Stockholder to sell to the Investors all or any
part of such
number of such Shares (the "Offered Shares") then owned by the
Selling
Stockholder as are proposed to be sold in the Selling
Stockholder's Notice at
the monetary price per Share designated in the Selling
Stockholder's Notice,
payable as provided in Section 3.2(b). Each Investor shall have
the right to
purchase all or any part of its Series C Proportionate
Percentage (as defined
below) of the Offered Shares at the monetary price per Share
designated in the
Selling Stockholder's Notice, payable as provided in Section
3.2(b). Not later
than twenty (20) days after delivery of the Selling
Stockholders' Notice, each
holder of Series C Preferred Stock shall deliver to the Company,
the other
holders of Series C Preferred Stock and the Selling Stockholder
a written notice
(the "Investor Notice") stating whether such holder of Series C
Preferred Stock
has accepted the offer stated in the Selling Stockholder's
Notice with respect
to its Series C Proportionate Percentage of the Shares. If one
or more of such
holders of Series C Preferred Stock elects not to purchase all
of the Shares
which it is entitled to purchase pursuant to this Section 3.2,
the other such
holders of Series C Preferred Stock, by written notice to the
Selling
Stockholder within seven (7) days after the end of the twenty
(20) day period
set forth above, may elect to purchase all or a part of such
unpurchased Shares
without the consent of any non-purchasing holders of Series C
Preferred Stock,
pro rata between or among them or in such other manner as they
may agree. The
closing of any purchase of the Offered Shares by the holders of
Series C
Preferred Stock shall take place no later than fifteen (15) days
after the end
of the twenty (20) day period set forth above. As used herein,
"Series C
Proportionate Percentage" shall mean with respect to each holder
of Series C
Preferred Stock a fraction, the numerator of which is the number
of shares of
Series C Preferred Stock owned by such holder, and the
denominator of which is
the total number of shares of Series C Preferred Stock owned by
all holders of
Series C Preferred Stock. Each Investor shall be entitled to
apportion shares
purchased under this Section 3.2(a) among its partners and
Affiliates.
(b) Closing. The place for the closing of any purchase and
sale
described in Section 3.2(a) shall be the principal office of the
Company or at
such other place as the parties shall agree in writing. At the
closing, the
Selling Stockholder shall accept payment on the terms (including
price) offered
by the proposed transferee named in the Selling Stockholder's
Notice, provided,
however, that the Investors shall not be required to meet any
non-monetary terms
of the proposed transfer, including, without limitation,
delivery of
consideration in the form of other securities in exchange for
the Shares
proposed to be sold, but shall be required to pay, in cash, the
Fair Market
Value of such non-monetary
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consideration. At the closing, the Selling Stockholder shall
deliver
to the Investors in exchange for Shares purchased and sold at
the closing,
certificates for the number of Shares stated in the Selling
Stockholder's
Notice, accompanied by duly executed instruments of
transfer.
(c) Transfers to Third Parties. If the Investors fail to accept
the
offer stated in the Selling Stockholder's Notice with respect to
all of the
Offered Shares, they shall not have the right to purchase any
Offered Shares,
and the Selling Stockholder shall be free, subject to compliance
with Section
3.3, to sell all, but not less than all, of the Offered Shares
to the designated
transferee at a price and on terms no less favorable to the
Selling Stockholder
than described in the Selling Stockholder's Notice, provided,
however, that such
sale is consummated within ninety (90) days after the giving of
the Selling
Stockholder's Notice pursuant to Section 3.2(a). As a condition
precedent to the
effectiveness of a transfer pursuant to this Section 3.2(c), the
proposed
transferee(s) shall agree in writing prior to such transfer to
become a party to
this Agreement and shall thereafter be permitted to transfer
Shares only in
accordance with this Agreement; provided, however, that if such
proposed
transferee(s) is a bona fide third party, the transfer of Shares
by such
transferee shall not thereafter be subject to this Section
3.2.
3.3 Participation in Sales.
(a) Co-Sale Right. To the extent that the Investors do not
exercise
their respective rights of refusal as to all of the Offered
Shares pursuant to
Section 3.2, then each Investor shall have the right to
participate in such sale
of securities, at the same price per Share and on the same terms
and conditions
as stated in the Selling Stockholder Notice (including any
non-cash
consideration), up to the number of Shares equal to the
aggregate number of
Offered Shares multiplied by a fraction, the numerator of which
is the aggregate
number of Shares held by such Investor (calculated on an as
converted basis) and
the denominator of which is the aggregate number of Shares held
by the Selling
Stockholder and all participating Investors (calculated on an as
converted
basis). To the extent one or more of the Investors exercise such
right of
participation in accordance with the terms and conditions of
this Section 3.3,
the number of Shares that the Selling Stockholder may sell in
the transfer shall
be correspondingly reduced.
(b) Notices of Offer and Intent to Participate. If an
Investor
wishes to participate in any sale pursuant to Section 3.3(a), it
shall notify
the Selling Stockholder in writing of such intention and the
number of Shares it
wishes to sell pursuant to this Section 3.3 not later than the
end of the 20-day
period described in Section 3.2(a) above. If the Selling
Stockholder does not
receive such notice from an Investor within such 20-day period,
the Selling
Stockholder shall be free to consummate the proposed transaction
without any
obligation to include such Investor's Shares in such
transaction.
(c) Closing. Each participating Investor shall effect its
participation in a sale contemplated by Section 3.3(a) by
promptly delivering to
the Selling Stockholder for transfer to the prospective
purchaser one or more
certificates, properly endorsed for transfer, which represent
the type and
number of Shares which such Investor elects to sell, or that
number of shares of
Series C Preferred Stock which are at such time convertible into
the number of
shares of Common Stock which such Investor elects to sell. The
stock certificate
or certificates that the Investor delivers to the Selling
Stockholder pursuant
to this Section 3.3(c) shall be transferred to the prospective
purchaser in
consummation of the sale of the securities pursuant to the terms
and conditions
specified in the Selling Stockholder Notice, and the Selling
Stockholder shall
concurrently therewith remit to such participating Investor that
portion of the
sale proceeds to which such participating Investor 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 an Investor exercising its rights of
co-sale hereunder,
the Selling Stockholder shall not sell to such prospective
purchaser or
purchasers any securities unless and until, simultaneously with
such sale, the
Selling Stockholder shall
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purchase such Shares or other securities from such participating
Investor for
the same consideration and on the same terms and conditions as
the proposed
transfer described in the Selling Stockholder Notice.
3.4 Legend; Termination.
(a) Each certificate representing the shares of capital stock
now or
hereafter held of record or beneficially owned by Barlow shall
bear a legend in
substantially the following form, until such time as the shares
of capital stock
represented thereby are no longer subject to the provisions
hereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE
TERMS AND CONDITIONS OF AN INVESTOR RIGHTS AGREEMENT AMONG
THE
COMPANY AND CERTAIN OF ITS STOCKHOLDERS DATED AS OF MARCH ___,
2005,
AS THE SAME MAY BE AMENDED OR AMENDED AND RESTATED FROM TIME
TO
TIME, WHICH, AMONG OTHER THINGS, RESTRICTS THE TRANSFER OF
SUCH
SECURITIES. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION
AT
THE OFFICES OF THE COMPANY OR MAY BE OBTAINED AT NO COST BY
WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY.
Upon execution of this Agreement, certificates for any shares of
capital stock
of the Company now or hereafter held of record or beneficially
owned by Barlow
shall be surrendered to the Company for endorsement with the
above legend and
then returned to Barlow, and hereafter the Company shall cause
the above legend
to be placed on all certificates issued by it to or for the
benefit of Barlow
which represent any additional shares of capital stock of the
Company.
(b) The respective rights and obligations of the parties under
this
Article III shall terminate upon the earlier to occur of (i) the
consummation of
a Qualified Public Offering and (ii) the consummation of a
Liquidation Event. At
any time after termination of the rights and obligations under
this Article III,
the Company shall, upon Barlow's request, promptly re-issue
certificate(s)
without the legend required by Section 3.4(a) representing the
securities held
of record beneficially owned by Barlow evidenced by such
certificate(s) as are
surrendered to the Company by Barlow for such re-issuance.
ARTICLE IV FINANCIAL STATEMENTS; INFORMATION AND INSPECTION
RIGHTS.
4.1. Delivery of Financial Statements. The Company shall deliver
to each
holder of shares of Series C Preferred Stock, as soon as
available after the end
of each fiscal year of the Company, the audited financial
statements of the
Company for such fiscal year then ended, together with the
written opinion of
the auditor rendered in connection therewith. With respect to
such financial
statements, if for any fiscal year, the Company shall have 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 section
shall be the consolidated and consolidating financial statements
of the Company
and all such consolidated subsidiaries.
4.2. Information Rights. The Company shall furnish to each
holder of at
least 9,901 shares of Series C Preferred Stock within five (5)
business days
after an executive officer of the Company or its Subsidiaries,
as the case may
be, has knowledge of the occurrence of a default hereunder, or
under any
material agreement of the Company or its Subsidiaries, including
without
limitation any loan or financing agreement, the commencement of
any lawsuit,
action, administrative or arbitration or other proceeding
against or
investigation with respect to the Company or the occurrence of
any event,
dispute or other development which is reasonably likely (with or
without the
passage of time) to have a Material Adverse
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Effect, or any effect, condition, event, or circumstance that
has resulted in a
Material Adverse Effect, a statement from the President of the
Company
describing such occurrence and management's anticipated
response. The Company
shall furnish to each such holder such other financial and other
reports or
information of the Company and its Subsidiaries as any of such
holders may
reasonably request with respect to the foregoing or otherwise
with respect to
the operations of the Company.
4.3. Inspection Rights. The Company shall permit each holder of
at least
9,901 shares of Series C Preferred Stock, at the Company's
expense, to visit and
inspect the Company's properties, to examine its books of
account and records
and to discuss the Company's affairs, finances and accounts with
its officers
for purposes of allowing such Investor to monitor its investment
in the Company,
all at such reasonable times and upon reasonable notice as may
be reasonably
requested by such Investor.
4.4. Limitations. Notwithstanding anything contained herein to
the
contrary, the financial reporting requ
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