Exhibit 10.2
IMARX THERAPEUTICS, INC.
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the
"AGREEMENT") is entered into as of April 14, 2006, by and among IMARX
THERAPEUTICS, INC., a Delaware corporation (the "COMPANY"), and the investors
listed on Exhibit A hereto, referred to hereinafter as the "INVESTORS" and each
individually as an "INVESTOR."
RECITALS
WHEREAS, certain of the Investors and the Company have entered into that
certain Amended and Restated Investor Rights Agreement dated October 10, 2002
(the "A/D PRIOR RIGHTS AGREEMENT") and, in accordance with Section 5.6 of the
Prior Rights Agreement, the Company and certain of the signatories to the Prior
Rights Agreement whose signatures appear below and who hold, in the aggregate,
the percentage of capital stock of the Company required to amend and restate the
A/D Prior Rights Agreement desire to amend and restate the A/D Prior Rights
Agreement in its entirety as set forth herein;
WHEREAS, certain of the Investors and the Company have entered into that
certain Registration Rights Agreement dated January 19, 2001 (the "B/C PRIOR
RIGHTS AGREEMENT") and, in accordance with Section 14(c) of the B/C Prior Rights
Agreement, the Company and certain of the signatories to the B/C Prior Rights
Agreement whose signatures appear below and who hold, in the aggregate, the
percentage of capital stock of the Company required to amend and restate the B/C
Prior Rights Agreement desire to amend and restate the B/C Prior Rights
Agreement in its entirety as set forth herein;
WHEREAS, the Investors have purchased shares of the Company's Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock, and/or Series
F Convertible Preferred Stock (the "PREFERRED STOCK") pursuant to various stock
purchase agreements, most recently pursuant to that certain Series F Preferred
Stock Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT");
WHEREAS, the obligations in the Purchase Agreement are conditioned upon the
execution and delivery of this Agreement; and
WHEREAS, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, the parties desire to enter into this
Agreement to grant registration, information and other rights to the Investors
as set forth below.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that each of the A/D Prior Rights
Agreement and B/C Prior Rights Agreement shall be amended and restated in their
entirety as follows:
SECTION 1. GENERAL.
1.1 DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FORM S-1" means such form under the Securities Act as is in effect on
the date hereof or any similar or successor registration form requiring full
disclosure under the Securities Act subsequently adopted by the SEC (as defined
below) which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
"FORM S-3" means such form under the Securities Act as in effect on
the date hereof or any successor or similar registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
"HOLDER" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued
or issuable upon conversion of the Shares, (b) any shares of Common Stock issued
to the Investors on or prior to the date hereof, and (c) any shares of Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned, or as to which all registration rights of such Holder have
terminated under Section 2.7.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration
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and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of a single special counsel for the
Holders as provided in Section 2.5, blue sky fees and expenses and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be
paid in any event by the Company).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"SHARES" shall mean shares of the Company's Preferred Stock held by
the Investors.
"SPECIAL REGISTRATION STATEMENT" shall mean a registration statement
relating to any employee benefit plan or with respect to any corporate
reorganization or other transaction under Rule 145 of the Securities Act.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 RESTRICTIONS ON TRANSFER.
(A) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(I) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(II) (A) The transferee has agreed in writing to be bound by the
terms of this Agreement, (B) such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(III) Notwithstanding the provisions of subsections (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer (A) by a Holder which is a partnership to its partners or former
partners in accordance with their respective partnership interests, (B) by a
Holder which is a limited liability company to its members or former members in
accordance with their respective interest in the limited liability company, (C)
by a Holder to his or her family members or trusts, family limited partnerships
or family limited liability companies, for the benefit of an individual Holder
or his or her family
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member(s), (D) by a Holder which is a corporation to its shareholders in
accordance with their respective interest in the corporation, or to its
subsidiaries or other entities in which it holds a controlling interest, or (E)
by a Holder to any affiliate of such Holder or any entity or vehicle including a
partnership in which such Holder and/or its affiliates has a majority economic
interest and which is managed by such Holder and/or its affiliates; provided
that in each case the transferee will be subject to the terms of this Agreement
to the same extent as if he were an original Holder hereunder.
(B) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.
(C) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Holder thereof if the Holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(D) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(A) REQUEST BY MAJORITY OF HOLDERS. If the Company shall receive at
any time after December 31, 2008 a written request from the Holders of at least
a majority of the Registrable Securities then outstanding (the "INITIATING
HOLDERS") that the Company file a registration statement under the Securities
Act covering the registration of Registrable Securities having an anticipated
aggregate public offering price (net of any underwriting discounts and
commissions) of not less than ten million dollars ($10,000,000), then the
Company shall, within fifteen (15) days of the receipt of such written request,
provide a Request Notice to all Holders, and use its best efforts to effect, as
soon as practicable but in any event within ninety (90) days after the date such
request is given by the Initiating Holders, the registration on Form S-1 (or any
successor form of such long-form registration) under the Securities Act of all
Registrable Securities which Holders request to be registered and included in
such registration by written
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notice given by such Holders to the Company within fifteen (15) days after
receipt of the Request Notice, subject only to the limitations of this Section
2.2.
(B) UNDERWRITING. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice referred to in subsection 2.2(a). The managing underwriter shall
be selected by the Initiating Holders and reasonably acceptable to the Company.
In such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 2.2, if the managing underwriter advises the Company
in writing that marketing factors require a limitation of the number of
securities to be underwritten, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of Registrable Securities that may be included
in the underwriting shall be reduced as required by the managing underwriter and
allocated among the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then outstanding held by each
Holder requesting registration (including the Initiating Holders); provided,
however, that the number of shares of Registrable Securities to be included in
such underwriting and registration shall not be reduced unless all other
securities of the Company are first entirely excluded from the underwriting and
registration. Any Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.
(C) MAXIMUM NUMBER OF DEMAND REGISTRATIONS. The Company shall be
obligated to effect no more than two (2) registrations pursuant to Section
2.2(a) and shall not be obligated to effect any such registration (i) during the
180-day period after the effective date of the Company's initial public offering
of its securities pursuant to a registration statement filed under the
Securities Act; or (ii) if the Initiating Holders propose to dispose of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made under Section 2.4. Subject to Section 2.2(d) below, if, within
thirty (30) days of the Company's receipt of the request for such registration,
the Company shall furnish to the Holders requesting such registration a notice
stating that the Company intends to file a registration statement pursuant to
Section 2.3 hereof within ninety (90) days, the Company shall not be required to
effect a registration pursuant to Section 2.2(a) until ninety (90) days after
the effective date, or the abandonment, of such registration statement. This
deferral right may not be used within one year of the expiration of a deferral
pursuant to Section 2.2(d). A registration under Section 2.2(a) shall not be
counted as "effected" for purposes of this Section 2.2(c) unless and until such
time as the SEC declares effective the applicable registration statement
covering all of the Registrable Securities requested by the Holders to be
registered, unless the Initiating Holders withdraw their request for such
registration due to reasons other than the discovery of material adverse
information concerning the Company of which the initiating Holders were not
aware at the time of such request, in which case such withdrawn registration
statement shall be counted as "effected" for purposes of this Section 2.2(c).
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(D) DEFERRAL. Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting the filing of a registration statement pursuant to
this Section 2.2, a certificate signed by the chief executive officer of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer taking action with respect to such filing for a
period of not more than ninety (90) days after receipt of the request of the
Initiating Holders; provided, however, the Company may not utilize this deferral
right or the delaying right provided in Section 2.2(c) more than once in any
twelve (12)-month period.
2.3 PIGGYBACK REGISTRATIONS.
(A) NOTICE. The Company shall notify all Holders of Registrable
Securities in writing at least thirty (30) days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements effected by the Company for stockholders other than the
Holders but excluding Special Registration Statements) and will cause to be
registered all of the Registrable Securities that each such Holder has requested
to be included in such registration. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within twenty (20) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities (but excluding Special
Registration Statement(s)), all upon the terms and conditions set forth herein.
(B) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any stockholder of the Company (other than a Holder) on a pro rata
basis based on the total number of shares of Common Stock owned by those
stockholders who are not Holders desiring to participate in the underwriting. No
such reduction shall (i) reduce the securities being offered by the Company for
its own account to be included in the registration and underwriting, or (ii)
reduce the amount of securities of the selling Holders included in the
registration below twenty-five percent (25%) of the total amount of
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securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
stockholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling stockholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than two-thirds (2/3)
of the Registrable Securities proposed to be sold in the offering. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "HOLDER," and any pro rata
reduction with respect to such "HOLDER" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "HOLDER," as defined in this sentence.
(C) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.5 hereof.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any similar
short-form registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(A) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(B) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(I) if Form S-3 is not available for such offering by the
Holders;
(II) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for any Holders pursuant to this Section 2.4;
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(III) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than Five Hundred Thousand Dollars ($500,000);
(IV) if within thirty (30) days of receipt of a written request
from any Holder or Holders pursuant to this Section 2.4, the Company gives
notice to such Holder or Holders of the Company's intention to make a public
offering, other than pursuant to a Special Registration Statement, within sixty
(60) days;
(V) if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company, or if there be
none, by the Chief Executive Officer, stating that in the good faith judgment of
the Board of Directors of the Company, it would be materially detrimental to the
Company and its stockholders for such Form S-3 registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
2.4; provided, that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period; or
(VI) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(C) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 2.2 or 2.3, respectively.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or Section 2.4 herein, and the fees and disbursements of counsel for
the Company and the reasonable fees and disbursements of one (1) counsel for the
selling Holder or Holders up to a total of $65,000 in connection with a
registration pursuant to Section 2.2 or up to a total of $40,000 in connection
with a registration pursuant to Section 2.3 or 2.4, shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of shares so registered. The Company shall not,
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 2.2 or 2.4, the request of which has been subsequently
withdrawn by the initiating Holders unless (a) the withdrawal is based upon
material adverse information concerning the Company of which the initiating
Holders were not aware at the time of such request or (b) the Holders of a
majority of Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 2.2 or Section 2.4, as applicable, in which
event such right shall be forfeited by all Holders). If the Holders are required
to pay the Registration Expenses, such expenses shall be borne by the Holders of
securities (including Registrable Securities) requesting
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such registration in proportion to the number of shares for which registration
was requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to demand
registrations.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(A) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred eighty (180) days
or, if earlier, until the Holder or Holders have completed the distribution
related thereto.
(B) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act in order to enable the disposition of all securities covered by
such registration statement for the period set forth in paragraph (a) above.
(C) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the Holders may reasonably request
to facilitate the disposition of Registrable Securities owned by them.
(D) Use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(E) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(F) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing. The Company will use reasonable efforts to amend or supplement such
prospectus in order to cause such prospectus not to include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
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(G) Use its reasonable efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect five
(5) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire with respect to all Registrable
Securities proposed to be sold by such Holder (and its affiliates, partners,
former partners, members and former members) if (a) Rule 144 or another similar
exemption under the Securities Act is available for the sale of all such
Holder's Registrable Securities during a three (3)-month period without
registration and (b) the Company has completed its Initial Offering and is
subject to the provisions of the Exchange Act.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(A) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(B) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.9 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 2.2, 2.3 or 2.4, this Section 2.9
shall apply. "Affiliate," for purposes of this Section 2.9, shall mean a
Holder's partners, managers (in the case of a limited liability company),
officers and directors , legal counsel, accountants, and any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Exchange Act.
(A) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder and its Affiliates against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged
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violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each Holder and each of its Affiliates any legal or other expenses reasonably
incurred by them in connection with investigating any matter or defending any
proceeding from which such loss, claim, damage, liability or action may result;
provided however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon (i) a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder or such
Affiliate or (ii) a Violation which occurs as a result of use by a Holder of a
registration statement that the Holder was advised to discontinue use of
pursuant to Section 2.15.
(B) To the extent permitted by law, each Holder will severally and not
jointly, if Registrable Securities held by such Holder are included in the
securities as to which such registration qualification or compliance is being
effected, indemnify and hold harmless the Company, each of its directors, its
officers and each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and each person who controls such
underwriter and any other Holder selling securities under such registration
statement and any of such other Holder's Affiliates, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
Affiliate of such Holder, may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such (i) Violation occurs in reliance upon and in conformity with written
information furnished by such Holder under an instrument duly executed by such
Holder and stated to be specifically for use in connection with such
registration, or (ii) such Violation occurs as a result of use by the Holder of
a registration statement that the Holder was advised to discontinue pursuant to
Section 2.15; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder and its Affiliates in connection
with investigating any matter or defending any proceeding from which such loss,
claim, damage, liability or action may result if it is judicially determined
that there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 2.9(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided further, that in no event shall any indemnity
obligation of a Holder under this Section 2.9 exceed the net proceeds from the
offering received by such Holder.
(C) Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, and to
11
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party, if
based on the advice of counsel, representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.
Notwithstanding the above, in the event more than one Holder is an indemnified
party, the indemnifying party shall be obligated to pay the reasonable fees and
expenses of only one counsel for all indemnified parties in each relevant
jurisdiction (except to the extent that representation of all indemnified
parties in any such jurisdiction would be inappropriate under applicable
standards of professional conduct), and such single counsel shall be selected by
the indemnified party or parties who registered the largest number of
Registrable Securities in the offering at issue.
(D) To provide for just and equitable contribution to joint liability
under the Securities Act in any case in which either (i) any party otherwise
entitled to indemnification hereunder makes a claim for indemnification pursuant
to this Section 2.9 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
this Section 2.9 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any party hereto for
which indemnification is provided under this Section 2.9, then, and in each such
case, such parties will contribute to the aggregate losses, claims, damages,
liabilities and expenses to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Securities
Act) shall be entitled to contribution under this Section 2.9(d).
(E) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement. No indemnifying
party shall be liable for any settlement entered into without its written
consent, which consent shall not be unreasonably withheld. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which
12
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned (a)
by a Holder to a transferee or assignee of such Registrable Securities which is
a subsidiary, parent, affiliate, general partner, limited partner, retired
partner, member, retired member or stockholder of a Holder, (b) by a Holder to a
transferee or assignee of such Registrable Securities which is a Holder's family
member or trust for the benefit of an individual Holder or his family member(s),
(c) by a Holder to a transferee or assignee of such Registrable Securities which
acquires at least five percent (5%) of the then outstanding Registrable
Securities, or (d) by a Holder to a transferee or assignee to whom all of
Holder's Registrable Securities are transferred; provided, however, (i) the
transfer of Registrable Securities complies with Section 2.1 hereof; (ii) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (iii) such transferee shall agree in writing to be subject to all
restrictions set forth in this Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders holding at least seventy-five
percent (75%) of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this Section 2.11 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this Section 2,
Holders of Registrable Securities hereby agree to be bound by the provisions
hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. Other than as provided
in Section 5.11, from and after the date of this Agreement, the Company shall
not, without the prior written consent of the Holders holding at least
seventy-five percent (75%) of the Registrable Securities then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would allow such holder or prospective holder (i) to include
such securities in any registration unless, under the terms of such agreement,
such holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of such securities will not
reduce the number of the Registrable Securities of the Holders that are included
or (ii) to demand registration of any securities held by such holder or
prospective holder.
2.13 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. Each
Investor hereby agrees that such Investor shall not sell, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any Common Stock
(or other securities) of the Company held by such Investor (other than those
included in the registration) for a period specified by the representative of
the underwriters of Common Stock (or other securities) of the Company not to
exceed one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act (or such
other period, not to exceed 20 additional days, as may be requested by the
Company or an underwriter to accommodate regulatory restrictions on (i) the
publication or other distribution of research reports and (ii) analyst
recommendations
13
and opinions, including but not limited to, the restrictions contained in NASD
Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or
amendments thereto); provided that:
(I) such agreement shall apply only to the Company's Initial
Offering; and
(II) all officers and directors of the Company and holders of at
least two percent (2%) of the Company's voting securities enter into similar
agreements.
Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall provide,
within ten (10) days of such request, such information as may be required by the
Company or such representative in connection with the completion of any public
offering of the Company's securities pursuant to a registration statement filed
under the Securities Act so long as the Company and such representative agree
that if the Holder supplying such information is not participating in the
Offering and so requests, the Company and such representative shall treat such
information as confidential, shall seek (with the cooperation and reasonable
efforts of the Holder) a protective order, confidential treatment or other
appropriate remedy, shall furnish only that portion of the information which is
legally required and shall exercise reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such information to the
extent reasonably requested by Holder, provided, however, that no Holder who is
not participating in the Offering and who is not a director or officer of the
Company shall be required to provide such information unless such Holder is a
holder of five percent (5%) of the outstanding shares of the Company as
determined by the rules and regulations of the Exchange Act. Notwithstanding the
foregoing, the Holders shall not be required to execute and deliver NASD
Questionnaires to the Company or the representatives of the underwriters. The
obligations described in this Section 2.13 shall not apply to a registration
pursuant to a Special Registration Statement. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period. Each Investor agrees that any transferee of any
shares of Registrable Securities shall be bound by this Section 2.13.
2.14 RULE 144 REPORTING. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(A) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the Initial Offering;
(B) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(C) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with
14
the reporting requirements of said Rule 144 of the Securities Act, and of the
Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
2.15 NOTICE TO DISCONTINUE. Each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 2.6(f), such Holder shall forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.6(f) and, if so
directed by the Company, such Holder shall deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities which is current at the time of
receipt of such notice.
SECTION 3. COVENANTS.
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(A) The Company will maintain in all material respects true books and
records of account in which full and correct entries will be made of all its
business transactions pursuant to a system of accounting established and
administered in accordance with generally accepted accounting principles in the
United States consistently applied ("GAAP"), and will set aside on its books all
such proper accruals and reserves as shall be required under GAAP.
(B) As soon as practicable after the end of each fiscal year of the
Company, and in any event within one hundred and twenty (120) days thereafter,
the Company will furnish each Investor a balance sheet of the Company, as at the
end of such fiscal year, and a statement of income and a statement of cash flows
of the Company, for such year, all prepared in accordance with GAAP and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail. Such financial statements shall be accompanied by a
report and opinion thereon by independent public accountants of national
standing selected by the Company's Board of Directors.
(C) The Company will furnish each Investor, as soon as practicable
after the end of the first, second and third quarterly accounting periods in
each fiscal year of the Company, and in any event within forty-five (45) days
thereafter, a balance sheet of the Company as of the end of each such quarterly
period, and a statement of income and a statement of cash flows of the Company
for such period and for the current fiscal year to date, prepared in accordance
with GAAP, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
(D) The Company will furnish each Investor as soon as practicable
after the end of each month, and in any event within thirty (30) days
thereafter, a balance sheet of the Company as of the end of each such month, and
a statement of income and a statement of cash flows of the Company for such
month and for the current fiscal year to date, including a comparison to plan
figures for such period, prepared in accordance with generally accepted
15
accounting principles consistently applied, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not have
been made.
(E) If, for any period, the Company has 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 sections shall be the
consolidated and consolidating financial statements of the Company and all such
consolidated subsidiaries.
3.2 INSPECTION RIGHTS. Each Investor that holds at least 100,000 shares of
Preferred Stock (and/or Common Stock issued upon conversion thereof) (as
adjusted for stock splits, combinations, recapitalizations and the like) shall
have the right to visit and inspect any of the properties of the Company or any
of its subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any of its subsidiaries with its officers, and to review such
information as is reasonably requested all at such reasonable times and as often
as may be reasonably requested; provided, however, that the Company shall not be
obligated to comply with this Section 3.2 with respect to a competitor of the
Company or with respect to information which the Board of Directors determines
in good faith is confidential and should not, therefore, be disclosed.
3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use its
best efforts to insure that its authorized representatives use, the same degree
of care as such Investor uses to protect its own confidential information (but
not less than reasonable care) to keep confidential any information furnished to
it which the Company identifies as being confidential or proprietary (so long as
such information is not in the public domain), except that such Investor may
disclose such proprietary or confidential information to any partner, member,
subsidiary or parent of such Investor for the purpose of evaluating its
investment in the Company as long as such partner, member, subsidiary or parent
is advised of the confidentiality provisions of this Section 3.3; provided, that
any financial information provided to the Investors pursuant to this Section 3
shall be deemed confidential, regardless of whether the Company identifies it as
confidential.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.5 KEY MAN INSURANCE. Subject to the approval of the Board of Directors,
the Company will use its best efforts to obtain and maintain in full force and
effect term life insurance (with annual premiums which are reasonably acceptable
to the Board of Directors) in the amount of Three Million Dollars ($3,000,000)
on the life of Xx. Xxxx Xxxxx; naming the Company as beneficiary.
3.6 DIRECTORS' EXPENSES. The Company shall reimburse each of the members of
its Board of Directors for all reasonable out-of-pocket expenses incurred by
him/her in connection with attendance at Board meetings (including any meetings
of committees of the Board) and any other activities as are required or
requested by the Company (i.e., meetings, trade shows, etc.). Other than such
reimbursement, the Company shall not pay any compensation to any of its
16
directors for their services as directors, except that the Company may elect to
compensate any independent director.
3.7 DIRECTORS AND OFFICERS INSURANCE. The Company shall promptly, and in
any event within ninety (90) days after the date hereof, obtain and maintain in
full force and effect directors and officers insurance in an amount to be
determined by the Company's Board of Directors in good faith.
3.8 STOCK-BASED GRANTS AND AWARDS. All shares of Common Stock and/or
options, warrants or other Common Stock purchase rights, and the Common Stock
issued pursuant to such options, warrants or other rights, issued to employees,
officers or directors of, or consultants or advisors, strategic partners,
lenders and other creditors to the Company or any subsidiary, shall be issued
pursuant to stock purchase or stock option plans or other arrangements approved
by the Board of Directors (or a duly authorized committee of the Board) that
contain a provision giving the Company or its designee a right of first refusal
or right of first offer to purchase such shares of Common Stock prior to any
transfer thereof, except transfers for estate planning purposes where the
transferee agrees in writing to remain bound to such right of first refusal or
right of first offer.
3.9 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor upon
the effective date of the registration statement pertaining to the Initial
Offering which results in the Preferred Stock being converted into Common Stock.
SECTION 4. RIGHTS OF FIRST REFUSAL.
4.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first refusal
to purchase its pro rata share of all Equity Securities, as defined below, that
the Company may, from time to time, propose to sell and issue after the date of
this Agreement, other than the Equity Securities excluded by Section 4.6 hereof.
Each Investor's pro rata share is equal to the ratio of (a) the number of shares
of the Company's Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares) which such Investor is deemed to be a
holder immediately prior to the issuance of such Equity Securities to (b) the
total number of shares of the Company's outstanding Common Stock (including all
shares of Common Stock issued or issuable upon conversion of the Shares or upon
the exercise of any outstanding warrants or options that are exercisable
immediately prior to the issuance of the Equity Securities. The term "EQUITY
SECURITIES" shall mean (i) any Common Stock, Preferred Stock or other security
of the Company, (ii) any security convertible or exchangeable into or
exercisable for, with or without consideration, any Common Stock, Preferred
Stock or other security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to or
purchase any Common Stock, Preferred Stock or other security or (iv) any such
warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have thirty
(30) days from the giving of such notice to agree to purchase its pro
17
rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Investor who would cause the Company to be in
violation of applicable federal securities laws by virtue of such offer or sale;
provided, however, the Company shall use its commercially reasonable efforts to
satisfy the requirements for an exemption from registration and qualification in
connection with such offer or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Investors elect to purchase their pro rata share of the Equity Securities, then
the Company shall promptly notify in writing the Investors who do so elect and
shall offer such Investors the right to acquire such unsubscribed shares. The
Investors shall have five (5) days after receipt of such notice to notify the
Company of their election to purchase all or a portion thereof of the
unsubscribed shares. If the Investors fail to exercise in full the rights of
first refusal, the Company shall have ninety (90) days thereafter to sell the
Equity Securities in respect of which the Investor's rights were not exercised,
at a price and upon general terms and conditions materially no more favorable to
the purchasers thereof than specified in the Company's notice to the Investors
pursuant to Section 4.2 hereof. If the Company has not sold such Equity
Securities within ninety (90) days of the notice provided pursuant to Section
4.2, the Company shall not thereafter issue or sell any Equity Securities,
without first offering such securities to the Investors in the manner provided
above.
4.4 TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal established by this Section 4 shall not apply to, and shall terminate
upon the effective date of the registration statement pertaining to the
Company's Initial Offering which results in the Preferred Stock being converted
into Common Stock. The rights of first refusal established by this Section 4 may
be amended, or any provision waived, with the written consent of Investors
holding at least seventy-five percent (75%) of the Common Stock issued or
issuable upon conversion of the Shares held by all Investors; provided, however,
such rights of first refusal may not be amended or any provision waived with
respect to any Investor without the written consent of such Investor, unless
such amendment or waiver applies to all Investors in the same fashion. The
Company shall give prompt notice of any amendment or waiver hereunder to any
party that did not consent in writing thereto.
4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10. Each Investor shall be entitled to apportion the right of first
refusal granted hereunder between or among such Investor and such Investor's
affiliates who are also Investors hereunder, in such proportions as such
Investor deems appropriate
4.6 EXCLUDED SECURITIES. The rights of first refusal established by this
Section 4 shall not apply to any of the following Equity Securities:
(A) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued pursuant to such options,
warrants or other rights to employees, officers or directors of, or consultants,
advisors, strategic partners, lenders or creditors to the Corporation or any
subsidiary pursuant to stock purchase or stock option plans or
18
other arrangements that are approved by the Board of Directors; provided, that
issuances of Common Stock and/or options, warrants or other Common Stock
purchase rights, and the Common Stock issued pursuant to such options, warrants
or other rights after the date hereof may not exceed the number of shares of
Common Stock reserved for issuance pursuant to the Company's 2000 Stock Option
Plan as of such date (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like), except with the approval by the Board of
Directors (including a majority of the independent, non-employee directors then
serving);
(B) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued pursuant to such options,
warrants or other rights to equipment lessors other than an Affiliate or bank
lenders as approved by the Board of Directors;
(C) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued pursuant to such options,
warrants or other rights to corporate partners or in connection with other
strategic transactions approved by the Board of Directors; provided, no
Affiliate is a corporate partner or party to the strategic transaction;
(D) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
approved by the Board of Directors;
(E) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(F) shares of Common Stock issued upon conversion of shares of
Preferred Stock;
(G) additional shares of Common Stock that are issued or become
issuable upon conversion or exercise of other outstanding securities of the
Corporation as a result of the operation of anti-dilution provisions which are
contained in the original terms of such securities; and
(H) any Equity Securities that are issued by the Company pursuant to a
registration statement filed under the Securities Act.
For purposes of this Section 4.6, "Affiliate" means with respect to an
equipment lessor, corporate partner or party to a strategic transaction any
person or entity ("Person") that directly or indirectly controls, is controlled
by, or is under common control with an officer, director or Significant
Stockholder of the Company including, without limitation, any partner, officer,
director or member of such Person, any spouse, parent, sibling, child or
stepchild of such Person and any venture capital or angel investor fund now or
hereafter existing which is controlled by or under common control with one or
more general partners or shares the same management company with such Person.
"Significant Stockholder" means any Person who directly or indirectly owns five
percent (5%) or more of the outstanding shares of Common Stock and Preferred
Stock of the Company.
19
SECTION 5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely in Delaware.
5.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Investor and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities in compliance with Section 2.1 hereof specifying
the full name and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment of dividends
or any redemption price.
5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
5.5 SEVERABILITY. In case any provisions of this Agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.6 AMENDMENT AND WAIVER.
(A) Except as otherwise expressly provided, this Agreement may be
amended or and the observance of any term of this Agreement may be waived
(either generally or in a particular instance) only upon the written consent of
the Company and the holders of at least seventy-five percent (75%) of the
Registrable Securities then outstanding. Notwithstanding the foregoing, this
Agreement may not be amended or terminated and the observance of any term hereof
may not be waived with respect to any Investor without the written consent of
such Investor, unless such amendment, termination or waiver applies to all
Investors in the same fashion. The Company shall give prompt notice of any
amendment or termination or waiver hereunder to any party that did not consent
in writing thereto.
(B) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Series F Preferred Stock as "INVESTORS," "HOLDERS" and parties hereto.
20
(C) Any amendment or waiver effected in accordance with this Section
shall be binding upon the Company and each Holder and each transferee of a
Holder.
(D) For the purposes of determining the number of Holders or Investors
entitled to vote or exercise any rights hereunder, the Company shall be entitled
to rely solely on the list of record holders of its stock as maintained by or on
behalf of the Company.
5.7 DELAYS OR OMISSIONS. Subject to Section 5.6, it is agreed that no delay
or omission to exercise any right, power, or remedy accruing to any party, upon
any breach, default or noncompliance of another party under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. Subject to Section 5.6, it is further agreed that any waiver, permit,
consent, or approval of any kind or character on any Holder's part of any
breach, default or noncompliance under the Agreement or any waiver on such
Holder's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature
pages hereof or Exhibit A hereto or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
5.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
21
5.11 ADDITIONAL INVESTORS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Preferred
Stock pursuant to the Purchase Agreement, any purchaser of such shares of
Preferred Stock may become a party to this Agreement without the consent of any
other party hereto except the Company by executing and delivering an additional
counterpart signature page to this Agreement and shall be deemed an "INVESTOR"
hereunder.
5.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY:
IMARX THERAPEUTICS, INC.
By: /s/ Xxxx X. Xxxxx, M.D.
------------------------------------
Xxxx X. Xxxxx, M.D.
Its: Chief Executive Officer
0000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxx@xxxxx.xxx
Attn: Xxxx Xxxx, CFO
INVESTORS:
-------------------------------------
Name of Entity (if applicable):
By:
---------------------------------
Print Individual Name:
--------------
Print Title (if applicable):
--------
Address:
----------------------------
-------------------------------------
Telephone:
--------------------------
Fax:
--------------------------------
Email:
------------------------------
Attn:
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[Signature Page to Second Amended and Restated Investor Rights Agreement]
