STOCKHOLDER SUPPORT AGREEMENT
Dated as of November 27, 2023
by and among
PENTERRA PHARMACEUTICALS CORP.,
DR. MARCUS HALE,
RIDGELINE VENTURES, LP,
and
MERIDIAN LIFE SCIENCES FUND III, LP
STOCKHOLDER SUPPORT AGREEMENT
This STOCKHOLDER SUPPORT AGREEMENT (this "Agreement") is made and entered into as of November 27, 2023, by and among:
Penterra Pharmaceuticals Corp., a corporation organized and existing under the laws of the State of Delaware (the "Company" or "Penterra");
Dr. Marcus Hale, an individual residing in the State of New Jersey ("Hale");
Ridgeline Ventures, LP, a limited partnership organized and existing under the laws of the State of Delaware ("Ridgeline"); and
Meridian Life Sciences Fund III, LP, a limited partnership organized and existing under the laws of the State of Delaware ("Meridian III" and, together with Hale and Ridgeline, the "Supporting Stockholders," and each individually, a "Supporting Stockholder").
Penterra and the Supporting Stockholders are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Penterra Pharmaceuticals Corp. (NYSE: PPHR), a corporation organized under the laws of the State of Delaware, with principal offices at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540, and Caliston BioSciences, Inc., a corporation organized under the laws of the State of Delaware, with principal offices at 88 Harbor Point Road, Cambridge, Massachusetts 02142 ("Caliston"), have entered into that certain Agreement and Plan of Merger, dated as of November 27, 2023 (as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms, the "Merger Agreement"), pursuant to which Caliston will merge with and into Penterra in a one-step merger, with Penterra continuing as the surviving corporation (the "Merger");
WHEREAS, the Merger Agreement provides for aggregate equity consideration of Nine Hundred Twenty-Five Million Dollars ($925,000,000), comprised of Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000) in cash (representing seventy-five percent (75%) of the aggregate consideration) and Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) in newly issued shares of Penterra common stock, par value $0.001 per share (representing twenty-five percent (25%) of the aggregate consideration), based on the thirty (30)-day volume-weighted average price of Thirty-Nine Dollars and Seventeen Cents ($39.17) per share as of June 1, 2023, resulting in the issuance of approximately 5,903,497 shares of Penterra common stock (the "Share Issuance");
WHEREAS, the Merger Agreement further provides for contingent value rights of up to One Hundred Twenty-Five Million Dollars ($125,000,000), payable to the former stockholders of Caliston upon approval by the United States Food and Drug Administration ("FDA") of CLT-4019 (Caliston's lead pipeline candidate) on or before December 31, 2026, bringing the maximum aggregate transaction value to One Billion Fifty Million Dollars ($1,050,000,000);
WHEREAS, Dr. Marcus Hale is the Chairman of the Board of Directors and Chief Executive Officer of Penterra and is the record and beneficial owner of 2,140,000 shares of Penterra common stock (the "Hale Penterra Shares"), representing approximately 1.8% of the outstanding shares of Penterra common stock (based on approximately 121,400,000 shares of Penterra common stock outstanding as of the date hereof);
WHEREAS, Dr. Hale holds a 28.5% equity interest in Caliston (the "Hale Caliston Interest"), acquired through personal investment of Forty-Two Million Dollars ($42,000,000) across Caliston's Seed, Series A, and Series B funding rounds, and Dr. Hale has served as a board observer (non-voting) at Caliston since 2018;
WHEREAS, Ridgeline Ventures, LP, a Delaware limited partnership, holds a 22.3% equity interest in Caliston (the "Ridgeline Caliston Interest"), having served as the lead investor in Caliston's Series C financing round completed in October 2021 at a post-money valuation of Six Hundred Eighty Million Dollars ($680,000,000), and Ava Lindström serves as Managing Partner of Ridgeline Ventures GP, LLC, the general partner of Ridgeline;
WHEREAS, Meridian Life Sciences Fund III, LP, a Delaware limited partnership, holds an 18.7% equity interest in Caliston (the "Meridian Caliston Interest"), having served as the lead investor in Caliston's Series B financing round, and Tomás Reyes serves as Managing Partner of Meridian III GP, LLC, the general partner of Meridian III;
WHEREAS, the Share Issuance requires approval of the stockholders of Penterra under applicable New York Stock Exchange ("NYSE") listing rules (specifically, NYSE Listed Company Manual Section 312.03, as the issuance exceeds one percent (1%) of the number of shares of Penterra common stock outstanding before the issuance), and the Merger requires approval of the stockholders of Caliston by written consent of the holders of a majority of the outstanding shares of Caliston capital stock entitled to vote thereon;
WHEREAS, the Special Committee of the Board of Directors of Penterra (the "Special Committee"), composed of Diane Prescott (Chair), James Okafor, and Dr. Helen Ng, each of whom is an independent and disinterested director, acting with the advice of its independent legal counsel, Calderwood & Harkness LLP, and its independent financial advisor, Thorngate Partners LLC, has unanimously recommended the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the Share Issuance, to the full Board of Directors of Penterra, and the Board of Directors of Penterra (excluding the recused directors Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk) unanimously approved the Merger Agreement on November 22, 2023; and
WHEREAS, as a material condition and inducement to the willingness of Penterra and Caliston to enter into the Merger Agreement, and in consideration of the execution and delivery of the Merger Agreement by Penterra and Caliston, the Supporting Stockholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Stockholder Support Agreement, dated as of November 27, 2023, by and among Penterra, Hale, Ridgeline, and Meridian III, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with Section 11.3 hereof.
"Beneficial Ownership" (and correlative terms such as "beneficially owned" and "beneficial owner") shall have the meaning ascribed to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
"Caliston" means Caliston BioSciences, Inc., a corporation organized and existing under the laws of the State of Delaware (EIN: 84-4219063), with principal offices at 88 Harbor Point Road, Cambridge, Massachusetts 02142.
"Caliston Shares" means, with respect to each Caliston Supporting Stockholder, all shares of capital stock of Caliston (including all classes and series of common stock and preferred stock) beneficially owned by such Caliston Supporting Stockholder as of the date hereof and at any time during the period from the date hereof through the Expiration Date, including without limitation:
(a) with respect to Hale, the Hale Caliston Interest, representing 28.5% of the outstanding equity of Caliston;
(b) with respect to Ridgeline, the Ridgeline Caliston Interest, representing 22.3% of the outstanding equity of Caliston; and
(c) with respect to Meridian III, the Meridian Caliston Interest, representing 18.7% of the outstanding equity of Caliston.
"Caliston Supporting Stockholders" means Hale, Ridgeline, and Meridian III, in each case solely in their capacity as holders of Caliston equity.
"Company" or "Penterra" means Penterra Pharmaceuticals Corp., a corporation organized and existing under the laws of the State of Delaware (EIN: 22-3847195; NYSE ticker: PPHR; SEC CIK: 0001587342), with principal offices at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540.
"Competing Proposal" shall have the meaning ascribed to such term in the Merger Agreement.
"Covered Penterra Shares" means, with respect to Hale, (i) the Hale Penterra Shares (2,140,000 shares of Penterra common stock) and (ii) any additional shares of Penterra common stock or other voting securities of Penterra acquired by Hale (whether by purchase, exchange, conversion, exercise of options or warrants, dividend, distribution, or otherwise) after the date hereof and prior to the Expiration Date over which Hale acquires Beneficial Ownership.
"DGCL" means the General Corporation Law of the State of Delaware, Title 8 of the Delaware Code, as amended from time to time.
"Effective Time" shall have the meaning ascribed to such term in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Expiration Date" means the date on which this Agreement terminates in accordance with Article X hereof.
"Hale Caliston Interest" means the 28.5% equity interest in Caliston beneficially owned by Dr. Marcus Hale.
"Hale Penterra Shares" means the 2,140,000 shares of Penterra common stock, par value $0.001 per share, beneficially owned by Dr. Marcus Hale as of the date hereof.
"Lien" means any mortgage, lien, pledge, charge, security interest, encumbrance, claim, option, right of first refusal, preemptive right, community property interest, or restriction of any nature (including any restriction on voting, transfer, receipt of income, or exercise of any other attribute of ownership).
"Merger" means the merger of Caliston with and into Penterra pursuant to and in accordance with the terms and conditions of the Merger Agreement, with Penterra continuing as the surviving corporation in the Merger.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of November 27, 2023, by and between Penterra and Caliston (Calderwood & Harkness LLP Draft v.7.3, execution version), as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Meridian Caliston Interest" means the 18.7% equity interest in Caliston beneficially owned by Meridian Life Sciences Fund III, LP.
"NYSE" means the New York Stock Exchange.
"Penterra Stockholder Meeting" means any meeting of the stockholders of Penterra (including any adjournment or postponement thereof) at which the Share Issuance Proposal is submitted for a vote of the stockholders of Penterra.
"Permitted Transferee" shall have the meaning ascribed to such term in Section 8.3 hereof.
"Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental entity, or other entity of any kind or nature.
"Ridgeline Caliston Interest" means the 22.3% equity interest in Caliston beneficially owned by Ridgeline Ventures, LP.
"SEC" means the United States Securities and Exchange Commission.
"Share Issuance" means the issuance of approximately 5,903,497 shares of Penterra common stock, par value $0.001 per share, as the stock component of the Merger consideration payable to the stockholders of Caliston pursuant to the Merger Agreement.
"Share Issuance Proposal" means the proposal to approve the Share Issuance in connection with the Merger, as required under NYSE Listed Company Manual Section 312.03 and any other applicable NYSE listing standards.
"Special Committee" means the Special Committee of the Board of Directors of Penterra, composed of Diane Prescott (Chair), James Okafor, and Dr. Helen Ng.
"Transfer" means, with respect to any security, to sell, transfer, pledge, hypothecate, encumber, assign, tender, gift, or otherwise dispose of (including by merger, testamentary disposition, interspousal disposition pursuant to a domestic relations proceeding, or otherwise by operation of law) such security or any participation or interest therein, either voluntarily or involuntarily, or to enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, pledge, hypothecation, encumbrance, assignment, tender, gift, or other disposition of such security or any participation or interest therein.
"Voting and Recusal Agreement" means that certain Voting and Recusal Agreement, dated as of June 2, 2023, by and between Penterra and Dr. Marcus Hale, relating to the recusal of Dr. Hale from board-level deliberations and voting with respect to the Merger and the Merger Agreement.
"Written Consent" means the written consent of the stockholders of Caliston approving and adopting the Merger and the Merger Agreement in accordance with Section 228 and Section 251 of the DGCL and the provisions of Caliston's certificate of incorporation and bylaws.
Section 1.2 — Interpretation
(a) Except as otherwise expressly provided herein, all capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Merger Agreement.
(b) All references in this Agreement to the DGCL shall mean the General Corporation Law of the State of Delaware, as amended, including without limitation Sections 141(a), 144, 228, and 251 thereof.
(c) The words "hereof," "herein," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms "include," "includes," and "including" shall be deemed to be followed by the words "without limitation." The word "or" shall not be exclusive. All references to Articles, Sections, and Exhibits shall be deemed references to Articles and Sections of, and Exhibits to, this Agreement unless the context otherwise requires. All references to "$" or "Dollars" shall mean United States dollars. Unless the context otherwise requires, all references to a "day" or "days" shall mean calendar days; provided that any action required to be taken on a day that is not a business day shall be taken on the next succeeding business day. As used herein, "business day" shall mean a day other than a Saturday, Sunday, or day on which commercial banks in New York, New York are authorized or required by law to be closed.
(d) The headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The Parties have participated jointly in the negotiation and drafting of this Agreement, and, in the event of any ambiguity or question of intent arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
ARTICLE II — REPRESENTATIONS AND WARRANTIES OF DR. MARCUS HALE
Dr. Marcus Hale hereby represents and warrants to Penterra as follows:
Section 2.1 — Ownership of Penterra Shares
(a) As of the date hereof, Hale is the record and beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 2,140,000 shares of Penterra common stock, par value $0.001 per share (the Hale Penterra Shares), representing approximately 1.8% of the approximately 121,400,000 shares of Penterra common stock issued and outstanding as of the date hereof. The Hale Penterra Shares constitute all of the shares of Penterra common stock and other voting securities of Penterra beneficially owned by Hale as of the date hereof.
(b) The Hale Penterra Shares are owned by Hale free and clear of all Liens, including any voting agreements, stockholder agreements, proxies, or other agreements or arrangements (whether written or oral) with respect to the voting, Transfer, or other disposition of the Hale Penterra Shares, other than (i) this Agreement, (ii) the Voting and Recusal Agreement dated June 2, 2023, (iii) applicable restrictions under federal and state securities laws, and (iv) any Liens arising under the organizational documents of Penterra applicable to stockholders of Penterra generally.
(c) Hale has sole voting power and sole power of disposition with respect to all of the Hale Penterra Shares, with no restrictions on Hale's rights of voting or disposition pertaining thereto other than those set forth in this Agreement and the Voting and Recusal Agreement, and no Person other than Hale has any right to direct or approve the voting or disposition of any of the Hale Penterra Shares.
Section 2.2 — Ownership of Caliston Equity
(a) As of the date hereof, Hale is the beneficial owner of a 28.5% equity interest in Caliston (the Hale Caliston Interest), acquired through personal investment of Forty-Two Million Dollars ($42,000,000) across Caliston's Seed, Series A, and Series B funding rounds. The Hale Caliston Interest constitutes all of the equity interests in Caliston beneficially owned by Hale as of the date hereof.
(b) Hale has served as a board observer (non-voting) at Caliston since 2018, during which time he has attended fourteen (14) of sixteen (16) Caliston board meetings. Hale does not hold a voting board seat at Caliston and has not exercised voting authority at the Caliston board level.
(c) The Hale Caliston Interest is owned by Hale free and clear of all Liens, other than (i) restrictions under Caliston's certificate of incorporation, bylaws, and other organizational documents applicable to stockholders of Caliston generally, (ii) applicable restrictions under federal and state securities laws, (iii) any rights of first refusal, co-sale rights, or similar rights set forth in any investors' rights agreement or stockholders' agreement to which Hale is a party with respect to his Caliston equity, and (iv) this Agreement.
(d) Hale has full power and authority to execute the Written Consent and to otherwise act with respect to the Hale Caliston Interest as contemplated by this Agreement, and no consent or approval of any Person (other than consents or approvals that have been obtained) is required in connection therewith.
Section 2.3 — Authority; Binding Agreement
(a) Hale has full legal capacity, right, and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Hale.
(b) This Agreement constitutes a legal, valid, and binding obligation of Hale, enforceable against Hale in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and (ii) the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
Section 2.4 — No Conflicts
The execution, delivery, and performance by Hale of this Agreement, the compliance by Hale with the provisions hereof, and the consummation by Hale of the transactions contemplated hereby do not and will not (a) violate, conflict with, or result in any breach of any provision of any law, statute, rule, regulation, order, writ, injunction, judgment, or decree applicable to Hale, (b) violate, conflict with, result in a breach of, constitute a default (or an event which, with or without the giving of notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement, mortgage, instrument of indebtedness, or other arrangement to which Hale is a party or by which Hale is bound or to which the Hale Penterra Shares or the Hale Caliston Interest are subject, or (c) result in the creation or imposition of any Lien upon the Hale Penterra Shares or the Hale Caliston Interest.
Section 2.5 — No Proceedings
As of the date hereof, no action, suit, investigation, complaint, arbitration, or other proceeding (whether civil, criminal, or administrative) is pending or, to the knowledge of Hale, threatened against Hale before any court, tribunal, arbitral body, governmental agency, or regulatory authority that would reasonably be expected to impair the ability of Hale to perform his obligations under this Agreement or to consummate the transactions contemplated hereby on a timely basis. As of the date hereof, there is no outstanding order, writ, injunction, judgment, or decree of any court, tribunal, governmental agency, or regulatory authority to which Hale is subject that would reasonably be expected to impair the ability of Hale to perform his obligations under this Agreement.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF RIDGELINE VENTURES, LP
Ridgeline Ventures, LP hereby represents and warrants to Penterra as follows:
Section 3.1 — Organization and Authority
(a) Ridgeline is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Ridgeline has full partnership power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(b) The execution, delivery, and performance of this Agreement by Ridgeline have been duly and validly authorized by all necessary partnership action on the part of Ridgeline, including the authorization of Ridgeline Ventures GP, LLC, the general partner of Ridgeline. Ava Lindström, in her capacity as Managing Partner of Ridgeline Ventures GP, LLC, is duly authorized to execute this Agreement on behalf of Ridgeline. No other partnership proceedings on the part of Ridgeline are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by Ridgeline and constitutes a legal, valid, and binding obligation of Ridgeline, enforceable against Ridgeline in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and (ii) the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
Section 3.2 — Ownership of Caliston Equity
(a) As of the date hereof, Ridgeline is the record and beneficial owner of a 22.3% equity interest in Caliston (the Ridgeline Caliston Interest). The Ridgeline Caliston Interest constitutes all of the equity interests in Caliston beneficially owned by Ridgeline (or any of its affiliates) as of the date hereof.
(b) Ridgeline served as the lead investor in Caliston's Series C financing round, which was completed in October 2021 at a post-money valuation of Six Hundred Eighty Million Dollars ($680,000,000).
(c) The Ridgeline Caliston Interest is owned by Ridgeline free and clear of all Liens, other than (i) restrictions under Caliston's certificate of incorporation, bylaws, and other organizational documents applicable to stockholders of Caliston generally, (ii) applicable restrictions under federal and state securities laws, (iii) any rights of first refusal, co-sale rights, or similar rights set forth in any investors' rights agreement or stockholders' agreement to which Ridgeline is a party with respect to its Caliston equity, and (iv) this Agreement.
(d) Ridgeline has full power and authority to execute the Written Consent and to otherwise act with respect to the Ridgeline Caliston Interest as contemplated by this Agreement, and no consent or approval of any Person (other than consents or approvals that have been obtained) is required in connection therewith.
Section 3.3 — No Conflicts
The execution, delivery, and performance by Ridgeline of this Agreement, the compliance by Ridgeline with the provisions hereof, and the consummation by Ridgeline of the transactions contemplated hereby do not and will not (a) violate, conflict with, or result in any breach of any provision of Ridgeline's partnership agreement, certificate of limited partnership, or other organizational documents, (b) violate, conflict with, or result in any breach of any provision of any law, statute, rule, regulation, order, writ, injunction, judgment, or decree applicable to Ridgeline, (c) violate, conflict with, result in a breach of, constitute a default (or an event which, with or without the giving of notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under, any contract, agreement, mortgage, instrument of indebtedness, or other arrangement to which Ridgeline is a party or by which Ridgeline is bound or to which the Ridgeline Caliston Interest is subject, or (d) result in the creation or imposition of any Lien upon the Ridgeline Caliston Interest.
Section 3.4 — No Proceedings
As of the date hereof, no action, suit, investigation, complaint, arbitration, or other proceeding (whether civil, criminal, or administrative) is pending or, to the knowledge of Ridgeline, threatened against Ridgeline before any court, tribunal, arbitral body, governmental agency, or regulatory authority that would reasonably be expected to impair the ability of Ridgeline to perform its obligations under this Agreement or to consummate the transactions contemplated hereby on a timely basis. As of the date hereof, there is no outstanding order, writ, injunction, judgment, or decree of any court, tribunal, governmental agency, or regulatory authority to which Ridgeline is subject that would reasonably be expected to impair the ability of Ridgeline to perform its obligations under this Agreement.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF MERIDIAN LIFE SCIENCES FUND III, LP
Meridian Life Sciences Fund III, LP hereby represents and warrants to Penterra as follows:
Section 4.1 — Organization and Authority
(a) Meridian III is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Meridian III has full partnership power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
(b) The execution, delivery, and performance of this Agreement by Meridian III have been duly and validly authorized by all necessary partnership action on the part of Meridian III, including the authorization of Meridian III GP, LLC, the general partner of Meridian III. Tomás Reyes, in his capacity as Managing Partner of Meridian III GP, LLC, is duly authorized to execute this Agreement on behalf of Meridian III. No other partnership proceedings on the part of Meridian III are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by Meridian III and constitutes a legal, valid, and binding obligation of Meridian III, enforceable against Meridian III in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and (ii) the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
Section 4.2 — Ownership of Caliston Equity
(a) As of the date hereof, Meridian III is the record and beneficial owner of an 18.7% equity interest in Caliston (the Meridian Caliston Interest). The Meridian Caliston Interest constitutes all of the equity interests in Caliston beneficially owned by Meridian III (or any of its affiliates) as of the date hereof.
(b) Meridian III served as the lead investor in Caliston's Series B financing round.
(c) The Meridian Caliston Interest is owned by Meridian III free and clear of all Liens, other than (i) restrictions under Caliston's certificate of incorporation, bylaws, and other organizational documents applicable to stockholders of Caliston generally, (ii) applicable restrictions under federal and state securities laws, (iii) any rights of first refusal, co-sale rights, or similar rights set forth in any investors' rights agreement or stockholders' agreement to which Meridian III is a party with respect to its Caliston equity, and (iv) this Agreement.
(d) Meridian III has full power and authority to execute the Written Consent and to otherwise act with respect to the Meridian Caliston Interest as contemplated by this Agreement, and no consent or approval of any Person (other than consents or approvals that have been obtained) is required in connection therewith.
Section 4.3 — No Conflicts
The execution, delivery, and performance by Meridian III of this Agreement, the compliance by Meridian III with the provisions hereof, and the consummation by Meridian III of the transactions contemplated hereby do not and will not (a) violate, conflict with, or result in any breach of any provision of Meridian III's partnership agreement, certificate of limited partnership, or other organizational documents, (b) violate, conflict with, or result in any breach of any provision of any law, statute, rule, regulation, order, writ, injunction, judgment, or decree applicable to Meridian III, (c) violate, conflict with, result in a breach of, constitute a default (or an event which, with or without the giving of notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under, any contract, agreement, mortgage, instrument of indebtedness, or other arrangement to which Meridian III is a party or by which Meridian III is bound or to which the Meridian Caliston Interest is subject, or (d) result in the creation or imposition of any Lien upon the Meridian Caliston Interest.
Section 4.4 — No Proceedings
As of the date hereof, no action, suit, investigation, complaint, arbitration, or other proceeding (whether civil, criminal, or administrative) is pending or, to the knowledge of Meridian III, threatened against Meridian III before any court, tribunal, arbitral body, governmental agency, or regulatory authority that would reasonably be expected to impair the ability of Meridian III to perform its obligations under this Agreement or to consummate the transactions contemplated hereby on a timely basis. As of the date hereof, there is no outstanding order, writ, injunction, judgment, or decree of any court, tribunal, governmental agency, or regulatory authority to which Meridian III is subject that would reasonably be expected to impair the ability of Meridian III to perform its obligations under this Agreement.
ARTICLE V — COVENANTS OF DR. MARCUS HALE (PENTERRA VOTING OBLIGATIONS)
Section 5.1 — Agreement to Vote Penterra Shares in Favor
Hale hereby covenants and agrees that, from and after the date hereof until the Expiration Date, at the Penterra Stockholder Meeting (or any adjournment or postponement thereof), or at any other meeting of the stockholders of Penterra, however called, or in connection with any written consent of the stockholders of Penterra, in each case at which any of the following matters are submitted for the consideration and vote of the stockholders of Penterra, Hale shall vote (or cause to be voted), in person or by proxy, all of the Covered Penterra Shares (which, as of the date hereof, consist of 2,140,000 shares, representing approximately 1.8% of the outstanding shares of Penterra common stock):
(a) in favor of the Share Issuance Proposal, being the proposal to approve the issuance of approximately 5,903,497 shares of Penterra common stock, par value $0.001 per share, as the stock component of the Merger consideration in connection with the Merger, as required under NYSE Listed Company Manual Section 312.03 and any other applicable NYSE listing standards;
(b) in favor of any proposal to adjourn or postpone the Penterra Stockholder Meeting to a later date if, as of the time for which such meeting is originally scheduled (as set forth in the proxy statement relating to the Penterra Stockholder Meeting), there are not sufficient votes to approve the Share Issuance Proposal or a quorum is not present at the Penterra Stockholder Meeting; and
(c) against (i) any Competing Proposal (as defined in the Merger Agreement), (ii) any action, proposal, transaction, or agreement that would reasonably be expected to impede, interfere with, delay, postpone, discourage, or adversely affect the timely consummation of the Merger or the Share Issuance, (iii) any action, proposal, transaction, or agreement that would result in a breach of any covenant, representation, warranty, or other obligation or agreement of Penterra contained in the Merger Agreement, and (iv) any other action, agreement, or transaction that is intended, or would reasonably be expected, to prevent, impede, or materially delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger and the Share Issuance.
For the avoidance of doubt, the obligations of Hale under this Section 5.1 shall apply with respect to all Covered Penterra Shares, including any shares of Penterra common stock or other voting securities of Penterra acquired by Hale after the date hereof and prior to the Expiration Date.
Section 5.2 — Quorum
Hale hereby covenants and agrees that, from and after the date hereof until the Expiration Date, at the Penterra Stockholder Meeting (or at any adjournment or postponement thereof), Hale shall be present (in person or by valid proxy) so that all of the Covered Penterra Shares are counted as present for purposes of determining the presence of a quorum at such meeting. In the event that the Penterra Stockholder Meeting is adjourned or postponed, Hale shall be present (in person or by valid proxy) at each such adjourned or postponed meeting so that all of the Covered Penterra Shares are counted as present for quorum purposes at each such meeting.
Section 5.3 — No Inconsistent Agreements
From and after the date hereof until the Expiration Date, Hale shall not, directly or indirectly, (a) enter into any voting agreement, voting trust, proxy, or similar arrangement or agreement with respect to any of the Covered Penterra Shares that is inconsistent with Hale's obligations pursuant to this Agreement, (b) grant any proxy or power of attorney with respect to any of the Covered Penterra Shares (other than to Penterra as expressly provided in Section 7.1 hereof), or (c) take any other action that would in any way restrict, limit, or interfere with the performance of Hale's obligations hereunder or the transactions contemplated hereby.
Section 5.4 — Acknowledgment of Recusal at Board Level
For the avoidance of doubt, the covenants and obligations of Hale under this Article V relate solely to the voting of the Covered Penterra Shares by Hale in his capacity as a stockholder of Penterra and are separate from and in addition to Hale's obligations under the Voting and Recusal Agreement, dated as of June 2, 2023, by and between Penterra and Hale, pursuant to which Hale has agreed to recuse himself from all board-level deliberations relating to the Merger and the Merger Agreement, to abstain from voting on the Merger Agreement and the transactions contemplated thereby at the board level, and to abide by the information barrier established under the Independence Protocol for Project Coriander (as defined in the Voting and Recusal Agreement). Nothing in this Article V shall be deemed to modify, amend, or supersede any obligation of Hale under the Voting and Recusal Agreement.
ARTICLE VI — COVENANTS OF CALISTON SUPPORTING STOCKHOLDERS (WRITTEN CONSENT OBLIGATIONS)
Section 6.1 — Agreement to Execute Written Consent
Each Caliston Supporting Stockholder hereby covenants and agrees that, from and after the date hereof until the Expiration Date, such Caliston Supporting Stockholder shall execute (or cause to be executed) the Written Consent approving and adopting the Merger and the Merger Agreement, and each of the transactions contemplated thereby, with respect to all Caliston Shares beneficially owned by such Caliston Supporting Stockholder, as follows:
(a) Hale shall execute the Written Consent with respect to the Hale Caliston Interest, representing 28.5% of the outstanding equity of Caliston;
(b) Ridgeline shall execute the Written Consent with respect to the Ridgeline Caliston Interest, representing 22.3% of the outstanding equity of Caliston; and
(c) Meridian III shall execute the Written Consent with respect to the Meridian Caliston Interest, representing 18.7% of the outstanding equity of Caliston.
The Parties acknowledge and agree that the combined Caliston equity interests held by the Caliston Supporting Stockholders total 69.5% of the outstanding shares of Caliston capital stock entitled to vote on the Merger, which constitutes a majority of the outstanding shares of Caliston capital stock and is sufficient to approve the Merger and the Merger Agreement by written consent in lieu of a meeting of stockholders of Caliston in accordance with Section 228 and Section 251 of the DGCL and Caliston's certificate of incorporation and bylaws.
Section 6.2 — Timing of Written Consent
Each Caliston Supporting Stockholder covenants and agrees to execute and deliver the Written Consent promptly, and in any event within five (5) business days, following receipt of a written request by Penterra or Caliston to do so, which request may be delivered at any time after the date of the Merger Agreement. Each Caliston Supporting Stockholder acknowledges that the timely delivery of the Written Consent is a material condition to the consummation of the Merger. For the record, the Parties acknowledge that the Written Consent was executed by the Caliston Supporting Stockholders, holding in the aggregate 69.5% of the outstanding shares of Caliston capital stock, on December 1, 2023.
Section 6.3 — No Revocation
Each Caliston Supporting Stockholder hereby covenants and agrees that, once executed and delivered, such Caliston Supporting Stockholder shall not revoke, withdraw, modify, or amend the Written Consent or take any action to invalidate or render ineffective the Written Consent, in whole or in part, without the prior written consent of Penterra. Each Caliston Supporting Stockholder acknowledges that the irrevocability of the Written Consent is essential to the certainty of the transaction contemplated by the Merger Agreement.
Section 6.4 — No Inconsistent Agreements
From and after the date hereof until the Expiration Date, no Caliston Supporting Stockholder shall, directly or indirectly, (a) enter into any voting agreement, voting trust, proxy, consent, or similar arrangement or agreement with respect to any of such Caliston Supporting Stockholder's Caliston Shares that is inconsistent with such Caliston Supporting Stockholder's obligations pursuant to this Agreement, (b) grant any proxy or power of attorney with respect to any of such Caliston Supporting Stockholder's Caliston Shares (other than to Penterra as expressly provided in Section 7.2 hereof), or (c) take any other action that would in any way restrict, limit, or interfere with the performance of such Caliston Supporting Stockholder's obligations hereunder or the transactions contemplated hereby.
ARTICLE VII — IRREVOCABLE PROXY
Section 7.1 — Grant of Irrevocable Proxy — Hale (Penterra Shares)
(a) Hale hereby irrevocably appoints Penterra (acting through any duly authorized officer of Penterra other than Hale, to avoid any conflict of interest) and any designee of Penterra as Hale's true and lawful attorney-in-fact and proxy (with full power of substitution and resubstitution), for and in the name, place, and stead of Hale, to attend any meeting of the stockholders of Penterra at which the Share Issuance Proposal is to be voted upon, to include the Covered Penterra Shares in any computation for purposes of establishing a quorum at any such meeting, and to vote (or cause to be voted) the Covered Penterra Shares, or to execute and deliver a written consent with respect to the Covered Penterra Shares, in each case in accordance with Section 5.1 hereof, solely in the event that Hale fails to comply with his voting obligations set forth in Section 5.1 within two (2) business days prior to the date of the Penterra Stockholder Meeting (or any adjournment or postponement thereof) or, in the case of a written consent, within five (5) business days following a request to act by written consent.
(b) Hale hereby affirms that the proxy set forth in this Section 7.1 is irrevocable and coupled with an interest sufficient in law to support an irrevocable power, and that such proxy is granted in consideration of this Agreement and the Merger Agreement. Hale acknowledges that the proxy granted hereby is given to secure the performance of a duty, and that such proxy shall not be terminated by any act of Hale or by operation of law, by the death, incapacity, or dissolution of Hale, or by the occurrence of any other event or events (except as provided in Section 7.1(c) below).
(c) The proxy granted in this Section 7.1 shall terminate and be of no further force or effect automatically upon the Expiration Date, and Penterra shall take no action pursuant to such proxy after the Expiration Date.
Section 7.2 — Grant of Irrevocable Proxy — Caliston Supporting Stockholders (Caliston Shares)
(a) Each of Hale, Ridgeline, and Meridian III hereby irrevocably appoints Penterra (acting through any duly authorized officer of Penterra other than Hale, to avoid any conflict of interest) and any designee of Penterra as such Caliston Supporting Stockholder's true and lawful attorney-in-fact and proxy (with full power of substitution and resubstitution), for and in the name, place, and stead of such Caliston Supporting Stockholder, to execute and deliver the Written Consent with respect to all of such Caliston Supporting Stockholder's Caliston Shares in accordance with Section 6.1 hereof, solely in the event that such Caliston Supporting Stockholder fails to comply with its obligations to execute and deliver the Written Consent in accordance with Section 6.2 within the time period specified therein.
(b) Each Caliston Supporting Stockholder hereby affirms that the proxy set forth in this Section 7.2 is irrevocable and coupled with an interest sufficient in law to support an irrevocable power, and that such proxy is granted in consideration of this Agreement and the Merger Agreement. Each Caliston Supporting Stockholder acknowledges that the proxy granted hereby is given to secure the performance of a duty, and that such proxy shall not be terminated by any act of such Caliston Supporting Stockholder or by operation of law, by the death, incapacity, or dissolution of such Caliston Supporting Stockholder, or by the occurrence of any other event or events (except as provided in Section 7.2(c) below).
(c) The proxy granted in this Section 7.2 shall terminate and be of no further force or effect automatically upon the Expiration Date, and Penterra shall take no action pursuant to such proxy after the Expiration Date.
Section 7.3 — Prior Proxies Revoked
Each Supporting Stockholder hereby represents that any proxies heretofore given by such Supporting Stockholder with respect to the Covered Penterra Shares (in the case of Hale) or such Supporting Stockholder's Caliston Shares (in the case of each Caliston Supporting Stockholder), as applicable, that are inconsistent with the terms of this Agreement are hereby revoked and that no subsequent proxy, consent, or power of attorney shall be given or executed by such Supporting Stockholder (and if given or executed, shall not be effective) with respect thereto that is inconsistent with the terms of this Agreement. Each Supporting Stockholder agrees that it will take such further action and execute such other instruments as may be necessary to effectuate the intent of this Section 7.3.
ARTICLE VIII — TRANSFER RESTRICTIONS
Section 8.1 — Restriction on Transfer — Hale Penterra Shares
From the date hereof until the Expiration Date, Hale shall not, directly or indirectly:
(a) Transfer any Covered Penterra Shares or any interest therein, whether by sale, gift, merger, tendering into any tender offer or exchange offer, or otherwise;
(b) deposit any Covered Penterra Shares into a voting trust or enter into any voting agreement, voting arrangement, or pooling agreement with respect to any Covered Penterra Shares (other than this Agreement);
(c) grant any proxy, consent, or power of attorney with respect to any Covered Penterra Shares that is inconsistent with this Agreement (other than as expressly provided in Article VII hereof); or
(d) take any action that would (i) make any representation or warranty of Hale contained in this Agreement untrue or incorrect in any material respect, (ii) have the effect of preventing, disabling, or materially delaying Hale from performing any of his obligations under this Agreement, or (iii) otherwise be inconsistent with the agreements and covenants of Hale set forth in this Agreement.
Any Transfer or attempted Transfer of any Covered Penterra Shares in violation of this Section 8.1 shall be null and void, and Penterra shall not, and shall instruct its transfer agent not to, give any effect in Penterra's stock records to any such purported Transfer.
Section 8.2 — Restriction on Transfer — Caliston Shares
From the date hereof until the Expiration Date, no Caliston Supporting Stockholder shall, directly or indirectly, (a) Transfer any of its Caliston Shares or any interest therein, whether by sale, gift, merger, or otherwise, (b) deposit any Caliston Shares into a voting trust or enter into any voting agreement, voting arrangement, or pooling agreement with respect to any Caliston Shares (other than this Agreement), (c) grant any proxy, consent, or power of attorney with respect to any Caliston Shares that is inconsistent with this Agreement (other than as expressly provided in Article VII hereof), or (d) take any action that would make any representation or warranty of such Caliston Supporting Stockholder contained in this Agreement untrue or incorrect in any material respect, or have the effect of preventing, disabling, or materially delaying such Caliston Supporting Stockholder from performing any of its obligations under this Agreement. Any Transfer or attempted Transfer of any Caliston Shares in violation of this Section 8.2 shall be null and void.
Section 8.3 — Permitted Transfers
Notwithstanding the provisions of Sections 8.1 and 8.2, a Supporting Stockholder may Transfer Covered Penterra Shares or Caliston Shares, as applicable, to a Permitted Transferee; provided, however, that:
(a) a "Permitted Transferee" means (i) in the case of Hale, an affiliate of Hale (as defined in Rule 12b-2 under the Exchange Act), a family trust for the benefit of Hale or members of his immediate family, an estate planning vehicle established by Hale, or a charitable organization to which Hale Transfers shares; and (ii) in the case of Ridgeline or Meridian III, an affiliate of such entity or a successor fund managed by the same management team;
(b) as a condition precedent to any such Transfer, the Permitted Transferee shall have executed and delivered to Penterra a joinder agreement, in form and substance reasonably satisfactory to Penterra, pursuant to which such Permitted Transferee shall agree to be bound by all of the terms and conditions of this Agreement as if such Permitted Transferee were an original signatory hereto; and
(c) such Transfer shall not delay or impair the consummation of the Merger or any of the transactions contemplated by the Merger Agreement.
No Transfer to a Permitted Transferee shall relieve the transferring Supporting Stockholder of its obligations under this Agreement unless and until such Permitted Transferee has executed the joinder agreement described in clause (b) above.
Section 8.4 — Transfer of Record; Stop Transfer Instructions
Each Supporting Stockholder hereby agrees that Penterra may instruct its transfer agent, Columnar Trust Services, Inc., or any successor transfer agent of Penterra, to (a) place a notation or legend on the certificates or book-entry positions representing the Covered Penterra Shares (in the case of Hale) indicating the existence of this Agreement and the transfer restrictions set forth herein, and (b) place a stop transfer order against all of the Covered Penterra Shares to prevent any Transfer of such shares in violation of this Agreement. Each Supporting Stockholder further agrees that Penterra may provide a copy of this Agreement, or a summary thereof, to Caliston and to Caliston's transfer agent, for purposes of placing similar notations or stop transfer instructions with respect to the Caliston Shares, to the extent applicable.
ARTICLE IX — ADDITIONAL COVENANTS
Section 9.1 — No Solicitation
From and after the date hereof until the Expiration Date, each Supporting Stockholder shall not, and shall cause its respective affiliates, officers, directors, employees, agents, representatives, and advisors not to, directly or indirectly, (a) solicit, initiate, knowingly encourage, or knowingly facilitate (including by way of furnishing nonpublic information) any inquiry, proposal, indication of interest, or offer relating to a Competing Proposal (as defined in the Merger Agreement), (b) participate or engage in any discussions or negotiations with any Person regarding any Competing Proposal or any inquiry, proposal, indication of interest, or offer that would reasonably be expected to lead to a Competing Proposal, or (c) enter into any letter of intent, agreement in principle, memorandum of understanding, merger agreement, acquisition agreement, or other similar agreement relating to a Competing Proposal. Each Supporting Stockholder shall, and shall cause its respective affiliates, officers, directors, employees, agents, representatives, and advisors to, immediately cease and cause to be terminated any and all existing discussions and negotiations with any Person conducted prior to the date hereof with respect to any Competing Proposal.
Section 9.2 — Notification
Each Supporting Stockholder shall promptly (and in any event within forty-eight (48) hours) notify Penterra in writing of (a) any approach, inquiry, proposal, indication of interest, or offer from any Person (other than Penterra or Caliston) relating to a Competing Proposal or any matter that could reasonably be expected to lead to a Competing Proposal, including the identity of the Person making such approach and the material terms and conditions thereof, (b) any material change in the number of Covered Penterra Shares (in the case of Hale) or Caliston Shares (in the case of each Caliston Supporting Stockholder) beneficially owned by such Supporting Stockholder, and (c) the commencement or threat of any action, suit, claim, or proceeding against such Supporting Stockholder relating to this Agreement, the Merger, or the transactions contemplated hereby or by the Merger Agreement.
Section 9.3 — Further Assurances
Each Supporting Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents, instruments, and other assurances, and shall take, or cause to be taken, such further actions, as Penterra or Caliston may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement and to vest in Penterra the rights set forth in this Agreement, including the execution of the Written Consent and the voting of the Covered Penterra Shares as contemplated herein.
Section 9.4 — Waiver of Appraisal Rights
To the fullest extent permitted by applicable law, including the DGCL, each Caliston Supporting Stockholder hereby irrevocably and unconditionally waives, and agrees not to assert or perfect, any rights of appraisal, dissenters' rights, or similar rights that such Caliston Supporting Stockholder may have under Section 262 of the DGCL or otherwise with respect to the Merger, the Merger Agreement, and the transactions contemplated thereby. Each Caliston Supporting Stockholder acknowledges that it has been advised by counsel with respect to such waiver and understands the consequences thereof.
Section 9.5 — Disclosure
Each Supporting Stockholder hereby consents to and authorizes the publication and disclosure by Penterra and Caliston (and their respective affiliates and representatives) of such Supporting Stockholder's identity, the nature of such Supporting Stockholder's commitments, arrangements, and understandings under this Agreement, and the terms of this Agreement, including a copy of this Agreement in its entirety, in (a) any filing with the SEC (including the Current Report on Form 8-K filed by Penterra on November 27, 2023), (b) any proxy statement, information statement, prospectus, or other disclosure document prepared and filed by Penterra or Caliston in connection with the Merger, the Share Issuance, or the transactions contemplated by the Merger Agreement, and (c) any other disclosure required by applicable law, the rules and regulations of the SEC, or the listing standards of the NYSE. Each Supporting Stockholder agrees to promptly provide to Penterra and Caliston any information about such Supporting Stockholder that is reasonably requested by Penterra or Caliston for inclusion in any such filing, proxy statement, or other disclosure document.
ARTICLE X — TERMINATION
Section 10.1 — Expiration Date
This Agreement shall automatically terminate, without any notice or other action by any Party, upon the earliest to occur of the following (the date on which this Agreement terminates being the "Expiration Date"):
(a) the Effective Time of the Merger (as defined in the Merger Agreement);
(b) the valid termination of the Merger Agreement in accordance with its terms, including, without limitation, in circumstances giving rise to (i) the reverse termination fee of Thirty-Two Million Three Hundred Seventy-Five Thousand Dollars ($32,375,000) payable by Penterra to Caliston, or (ii) the company termination fee of Twenty-Seven Million Seven Hundred Fifty Thousand Dollars ($27,750,000) payable by Caliston to Penterra, in each case as provided in and subject to the terms and conditions of the Merger Agreement;
(c) the mutual written agreement of Penterra and each of the Supporting Stockholders to terminate this Agreement; and
(d) any amendment, modification, supplement, or waiver of the Merger Agreement that (i) decreases the aggregate consideration payable to the stockholders of Caliston below Nine Hundred Twenty-Five Million Dollars ($925,000,000) (exclusive of the contingent value rights), (ii) changes the form of consideration payable to the stockholders of Caliston in a manner materially adverse to any Supporting Stockholder (including any change to the cash-to-stock ratio of 75%/25% set forth in the Merger Agreement), or (iii) is otherwise materially adverse to any Supporting Stockholder, in each case of clauses (i), (ii), and (iii), without the prior written consent of each affected Supporting Stockholder.
Section 10.2 — Effect of Termination
Upon termination of this Agreement in accordance with Section 10.1, this Agreement shall thereupon become void and of no further force or effect, all rights and obligations of the Parties hereunder shall terminate, and no Party shall have any liability or obligation to any other Party arising out of or in connection with this Agreement; provided, however, that:
(a) the provisions of Article XI (Miscellaneous) shall survive the termination of this Agreement; and
(b) no termination of this Agreement shall relieve any Party of liability for damages resulting from any willful and material breach of this Agreement by such Party occurring prior to such termination, it being understood and agreed that the right of any Party to pursue remedies for any such willful and material breach shall survive termination.
ARTICLE XI — MISCELLANEOUS
Section 11.1 — Notices
All notices, requests, demands, consents, waivers, and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) when sent by electronic mail (with confirmation of receipt), (c) one (1) business day after being sent by nationally recognized overnight courier service (with proof of delivery), or (d) three (3) business days after being mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or at such other address as shall be given in writing by any Party to the other Parties in accordance with this Section 11.1):
If to Penterra:
Penterra Pharmaceuticals Corp. 400 Innovation Drive, Suite 1200 Princeton, New Jersey 08540
Attention: Lawrence Whittaker, General Counsel and Corporate Secretary
Email: l.whittaker@penterra.com