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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
requirem
