Form of Amended and Restated Investors Rights Agreement, by and among the Company and Innoviva
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This AMENDED AND INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of January 26, 2021 by and between Armata Pharmaceuticals Inc., a Washington corporation (the “Company”), Innoviva, Inc., a Delaware corporation (“Innoviva”), and Innoviva Strategic Opportunities LLC, a Delaware limited liability company and a wholly-owned subsidiary of Innoviva (“Innoviva Sub” and, together with Innoviva, the “Purchasers”), in connection with (i) that certain Securities Purchase Agreement, dated as of January 27, 2020, by and between the Company and Innoviva (“2020 Purchase Agreement”), and (ii) that certain Securities Purchase Agreement, dated as of January 26, 2021, by and between the Company and Innoviva Sub (the “2021 Purchase Agreement”). This Agreement shall amend and restate in its entirety that certain Investor Rights Agreement dates as of February 12, 2020 (the “Original Agreement”), provided that nothing herein shall relieve any person of any liability with respect to any breach of the Original Agreement occurring prior to the date of this Agreement. Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreements unless otherwise defined herein).
The parties hereby agree as follows:
As used in this Agreement, the following terms shall have the following meanings:
“Applicable Percentage” means, with respect to any person on any date of determination, the quotient, expressed as a percentage, determined by dividing (i) the number of Company Common Stock owned (directly or indirectly) by such person determined on a Fully Diluted Basis by (ii) the total number of Company Common Stock that are issued and outstanding determined on a Fully Diluted Basis.
“Board” means the board of directors of the Company.
“Company Common Stock” means the shares of common stock, par value $0.01 per share, of the Company.
“Exchange Shares” means Company Common Stock issued or issuable upon the exchange of the Warrants pursuant to the terms thereof.
“Exempted Securities” means
(i) Company Common Stock (or options or other rights to acquire Company Common Stock or securities convertible or exchangeable into or exercisable for Company Common Stock) issued upon exercise of the Warrants;
(ii) Company Common Stock (or options or other rights to acquire Company Common Stock or securities convertible or exchangeable into or exercisable for Company Common Stock) issued by reason of a dividend, stock split, split-up or other distribution of Company Common Stock;
(iii) Company Common Stock (or options or other rights to acquire Company Common Stock or securities convertible or exchangeable into or exercisable for Company Common Stock) issued to employees or directors of, or consultants or advisors to the Company or any of its Subsidiaries pursuant to a plan, agreement or arrangement;
(iv) Company Common Stock (or options or other rights to acquire Company Common Stock or securities convertible or exchangeable into or exercisable for Company Common Stock) issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction ; or
(v) Company Common Stock (or options or other rights to acquire Company Common Stock or securities convertible or exchangeable into or exercisable for Company Common Stock) issued in connection with sponsored research, collaboration, technology license, development, manufacturing, supply, distribution, marketing or other similar commercial agreements or strategic partnerships.
“Fully Diluted Basis” means the number of shares of Company Common Stock outstanding or held (as the case may be), assuming the conversion, exchange or exercise of all securities or other instruments or rights that are convertible into or exercisable or exchangeable for Company Common Stock that are outstanding. For purposes of this definition, all Warrants shall be deemed converted on the date of determination in exchange for cash.
“Governmental Entity” means any federal, state, local, foreign, international or multinational entity or authority exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government.
“New Securities” means, collectively, equity securities of the Company (including Company Common Stock), 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. For the avoidance of doubt, New Securities shall not include any Exempted Securities.
“Purchase Agreements” means, collectively, the 2020 Purchase Agreement and the 2021 Purchase Agreement.
“Purchased Shares” means the Company Common Stock acquired by the Purchasers pursuant to the Purchase Agreements.
(a) Subject to the terms and conditions of this Section 3 and applicable securities or blue sky laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to the Purchasers in accordance with the terms hereof.
(b) The Company shall give notice (the “Offer Notice”) to the Purchasers, stating (i) its bona fide intention to offer or sell 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.
(c) By written notification to the Company within thirty (30) days after the Offer Notice is delivered to the Purchaser, the Purchasers 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 Purchaser’s Applicable Percentage. The failure of the Purchasers to deliver such written notice within such time period shall be deemed an election by the Purchasers not to exercise its purchase rights with respect to such Offer Notice. To the extent that the Company offers two (2) or more New Securities or other securities in units, the Purchasers must purchase such units as a whole and will not be given the opportunity to purchase only one of the securities making up such unit.
(d) The Company shall sell all applicable New Securities to the Purchasers or either of them if either Purchaser has elected to purchase such New Securities on a date to be mutually determined by the Company and the Purchasers (or either Purchaser), which date shall be not later than end of the ten (10) day period commencing at the expiration of the initial thirty (30) day election period; provided, however, that such ten (10) day period shall be extended automatically if any approvals or consents of any Governmental Entities are required to consummate the transaction and such approvals or consents are not received within such ten (10) day period for up to an additional one hundred twenty (120) days as long as such approvals or consents remain outstanding and the parties are continuing to exercise commercially reasonable efforts to obtain them.
(e) Upon the expiration of the offering period described in Section 3(d), the Company will be free to sell, during the one hundred twenty (120) day period commencing at the expiration of, as applicable, the initial thirty (30) day election period following delivery of an Offer Notice (as may be extended in accordance with Section 3(d)), any New Securities that the Purchasers have not elected to purchase, at a sale price not less than, and on other terms no less favorable to the Company than, those offered to the Purchasers as set forth in the Offer Notice, provided, that such one hundred twenty (120) day period shall be extended automatically if any approvals or consents of any Governmental Entities are required to consummate the transaction and such approvals or consents are not received within such one hundred twenty (120) day period for up to an additional one hundred twenty (120) days as long as such approvals or consents remain outstanding and the parties are continuing to exercise commercially reasonable efforts to obtain them. Any New Securities offered or sold by the Company after such one hundred twenty (120) day period (as such period may be extended in accordance with the immediately preceding sentence) must be reoffered to the Purchasers pursuant to this Section 3.
(f) The election by the Purchasers not to exercise its subscription rights under this Section 3 in any one instance shall not affect its right (other than in respect of a reduction in its Applicable Percentage) as to any subsequent proposed issuance of New Securities under this Section 3. The provisions of this Section 3 shall apply equally to any issuance or sale by the Company or any of its Subsidiaries of equity securities that would be deemed New Securities if issued by the Company which, for the avoidance of doubt, shall not include any issuance of New Securities by a wholly-owned Subsidiary to the Company or to another wholly-owned Subsidiary of the Company. Subject to the terms of this Section 3, any sale of New Securities by the Company or any other entity covered by the preceding sentence without first giving the Purchasers the rights described in this Section 3 shall be null and void and of no force and effect.
(g) Notwithstanding the terms set forth in this Section 3, if the Board determines in good faith that the Company must issue New Securities on an expedited basis without prior compliance with the terms of this Section 3 in order to avoid material harm to the Company (an “Expedited Issuance”), then, subject to compliance with the terms of the immediately following sentence, the Company may effect and consummate such Expedited Issuance without complying with the terms set forth in this Section 3 and shall not be deemed to be in breach of this Section 3 as a result thereof. As promptly as practicable following the consummation of such Expedited Issuance, the Company and the Purchasers shall comply with the terms of this Section 3 in respect of the New Securities issued in such Expedited Issuance such that the Purchasers have the opportunity to participate in such Expedited Issuance of New Securities and be put in the same place (including in respect of the percentage ownership of the equity securities of the Company) they would have been had such Expedited Issuance been effected in accordance with the terms of this Section 3.
(h) (i) The provisions of this Section 3 (i) shall not apply to the issuance of Exempted Securities and (ii) shall terminate and be of no further force or effect as of such time that the Purchaser, together with its Affiliates, have an Applicable Percentage of less than 10%.
(a) For so long as the Purchasers, together with their respective Affiliates and permitted assignees (collectively, the “Investors”) have an Applicable Percentage of at least 8%, the Company shall cause the Board to consist of not more than eight (8) members without the prior written consent of the Investors (which shall not be unreasonably withheld).
(b) For so long as the Investors have an Applicable Percentage of at least 12.5%, the Investors shall have the right to designate two (2) directors to the Board, and for so long as the Investors, collectively, and together with their Affiliates, continue to have an Applicable Percentage of at least 8% but less than 12.5%, the Investors shall have the right to designate one (1) director to the Board, in each case, in accordance with the terms of this Section 4. Any directors designated by the Investors in accordance with this Section 4 shall be referred to as “Investor Designees”. As of the date of this Agreement, Dr. Odysseas Kostas MD and Sarah Schlesinger MD are the Investor Designees. The right to designate one (1) or more Investor Designees shall terminate and be of no further force or effect as of such time that the Investors have an Applicable Percentage of less than an applicable threshold percentage referenced in the first sentence of this Section 4(b). At any point in which the Investors are entitled to designate an Investor Designee, the Investors may provide written notice (a “Designation Notice”) to the Company naming the applicable Investor Designee(s) and demanding that the applicable Investor Designee(s) be appointed to the Board. Promptly, and in any event within five (5) Business Days, following receipt of the Designation Notice, the Company shall (i) cause a number of existing members of the Board equal to the number of Investor Designees so designated to resign from the Board and (ii) cause the Investor Designees to be appointed to the Board. Following the delivery of a Designation Notice and prior to the appointment of the Investor Designees to the Board, the Company shall not (and shall cause its Subsidiaries not to) take or approve any action outside of the ordinary course of business including (without limitation) in respect of:
(i) strategic transactions, joint ventures and collaborations;
|(ii)||sale or acquisition of assets or shares of the Company or any of its Subsidiaries, whether by merger, consolidation or otherwise;|
|(iii)||issuance of equity or debt securities;|
|(iv)||incurrence or prepayment of indebtedness;|
|(v)||declaration or payment of any dividend or distribution;|
|(vi)||amendment of any provision of this Agreement or any other governing documents of the Company or any of its Subsidiaries in a manner that would be inconsistent with the provisions of this Agreement;|
|(vii)||any change to the Company’s or any Subsidiary’s legal form, domicile or tax structure, or make any material change to the Company’s accounting or tax policies or practices; or|
|(viii)||amend or alter the compensation of any of the Company’s or Subsidiary’s executives.|
(c) With respect to any vote of the Board, each director shall have one (1) vote and approval of all matters shall require the affirmative vote of a majority of directors.
(d) Subject to the terms of this Section 4, from and after the date hereof, the Company shall take all action within its power to cause the covenants set forth in Section 4(a) and Section 4(b) to be fulfilled in all respects including: (i) causing the Investor Designees to be named in any proxy statement of the Company with respect to the election of members of the Board, (ii) soliciting the votes of shareholders in respect of the Investor Designees in the same manner and with the same level of effort as with the solicitation in respect of other members of the Board, (iii) seeking to amend any organizational documents of the Company necessary to give effect to the Investors’ rights hereunder as may reasonably be requested by the Investors and (iv) take all actions permitted by applicable law to cause the Investor Designees to be members of the Board (including the appointment of the Investor Designees to the Board).
(e) Subject to clause (f) immediately below, in the event that an Investor Designee ceases to serve on the Board for any reason (including the death, disability or resignation of such person), the Investors shall be entitled to appoint a new Investor Designee in the place of such person, and the terms of this Section 4 shall apply equally to such replacement.
(f) In the event that the Applicable Percentage of the Investors falls below a threshold set forth in Section 4(b) such that the Investors shall lose the right to designate one or more Investor Designees, if one or more Investor Designee has been designated, the Investors shall identify, if applicable, which of the Investor Designees shall no longer be an Investor Designee (such person, a “Departing Designee”), and which Investor Designee(s) (if any) will remain as such; for the avoidance of doubt, the terms of this Section 4 shall continue to apply to any Investor Designee who is not a Departing Designee. In the event of a Departing Designee, the Investors shall cause the removal or resignation of such Departing Designee prior to the next annual meeting of the Company shareholders, and the provisions of Section 4(b) and (c) shall not apply to such Departing Designee, and in connection therewith, the Company shall not be required to name such Departing Designee on its proxy statement or solicit votes in favor of such Departing Designee.
(g) For so long as the Investor holds the Applicable percentages set forth above, in the event that any member of the Board serves on the board of directors or similar governing body of any Subsidiary of the Company (a “Subsidiary Board”) or in the event that any shareholder of the Company has appointed or designated a person to serve on a Subsidiary Board, the Investors shall be entitled to designate a number of Investor Designees to the Subsidiary Board equal to the greater of (x) one Investor Designee or (y) such other number of Investor Designees such that the proportionate representation of Investor Designees on such Subsidiary Board approximates, as closely as possible, the proportionate representation of Investor Designees on the Board. Subject to applicable law and listing requirements, the Investor Designees shall be entitled to be a member of any committee of the Board (including an executive or similar committee).
(h) Any person designated by the Investor as an Investor Designee must possess the requisite financial and business experience to serve as a director of the Company (it being understood that the directors and each of the executives and investment professionals employed by the Investor or its Affiliates shall be deemed to possess such experience). If the Board and all applicable committees of the Board reasonably determine that an Investor Designee satisfies the criteria in the foregoing sentence, the Board shall nominate and appoint such Investor Designee to the Board.
(i) For purposes of this Section 4, whenever the action of the Investors is required, such action shall be effected by vote of Investors holding a majority of the Common Stock held by all Investors.
|5.||Information and Confidentiality.|
(a) The Company shall provide to Purchasers all information and documentation reasonably requested by Purchasers, within the periods reasonably requested by Purchasers, as is necessary for the Purchasers to complete and file all public filings required to be made by Purchasers under applicable Law and the rules and regulations of the Securities Exchange Commission.
(b) The Purchasers agrees that they will keep confidential and will not disclose or divulge any confidential information obtained from the Company pursuant to the terms of this Agreement, 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 5 by either Purchaser), (b) is or has been independently developed or conceived by either Purchaser without use of the Company’s confidential information, or (c) is or has been made known or disclosed to either Purchaser by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that the Purchasers may disclose confidential information (i) to their attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services in connection with matters related to the Company; (ii) to any prospective purchaser of any Registrable Securities from either Purchaser, if such prospective purchaser agrees to be bound by the provisions of this Section 5; (iii) to any of their respective Affiliates or their or such Affiliates’ general or limited partners, members, stockholders, employees, officers or directors, in the ordinary course of business, provided that the applicable Purchasers 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, regulation, rule, court order, arbitration order or subpoena, provided that the applicable Purchaser promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. The Purchasers acknowledge and agree that the securities laws of the United States and other jurisdictions contain prohibitions on the trading in the securities of the Company while in possession of material nonpublic information regarding the Company, and agree to comply with such restrictions.
(a) Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the Purchasers. The failure or delay in enforcing compliance at any time with respect to any of the provisions, terms or conditions of this Agreement shall not be considered a waiver of such provision, term or condition itself or of any of the other provisions, terms or conditions hereof.
(b) Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in the Purchase Agreements.
(c) Assignments and Transfers by the Purchasers. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. The Purchasers may transfer or assign, in whole or from time to time in part, to one or more persons their rights hereunder in connection with the transfer of Company Common Stock or Warrants by the Purchasers to such person, provided that the Purchasers comply with all laws applicable thereto and the provisions of the applicable Purchase Agreement and the Warrant and provide written notice of assignment to the Company prior to such assignment or transfer being effected, and such transferee agrees in writing and as a condition to the receipt of the Company Common Stock or Warrants to be bound by all of the provisions contained herein.
(d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Purchasers; provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Company Common Stock are converted into the equity securities of another person, from and after the effective time of such transaction, such person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, and the term “Company” shall be deemed to refer to such person and the term “Company Common Stock” shall be deemed to include the securities received by the Purchasers in connection with such transaction unless such securities are otherwise freely tradable by the Purchasers after giving effect to such transaction.
(e) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns 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 assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(f) Counterparts. This Agreement may be executed in several counterparts, and by each party on separate counterparts, each of which and any photocopies or other electronic transmission (including by PDF) thereof shall be deemed an original, but all of which together shall constitute one and the same agreement.
(g) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
(h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.
(i) Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
(k) Specific Performance. Without limiting remedies that may be available at law or in equity, the parties acknowledge that any failure by any party to comply with their respective obligations under this Agreement would result in material irreparable injury to the other party for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the non-breaching party may specifically enforce the breaching party’s obligations under this Agreement without the need to show actual damages and without the need to post a bond or other security.
(l) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each Party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of such courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or other proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or other proceeding by mailing a copy thereof via registered or certified United States mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.
|ARMATA PHARMACEUTICALS INC.|
|INNOVIVA STRATEGIC OPPORTUNITIES LLC|