Exhibit 10.4
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made as of
_________ ___, 2003, by and among DIOMED HOLDINGS, INC. (the "Company"), a
Delaware corporation, and each of the Investors signatory to the Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated as of August 8,
2003, between the Company and the parties listed on Schedule A of this
Agreement. Capitalized terms used but not defined in this Agreement shall have
the respective meanings given them in the Securities Purchase Agreement.
WHEREAS, Pursuant to the Securities Purchase Agreement, the Holders
have acquired certain shares of the Company's Common Stock; and
WHEREAS, Pursuant to the Securities Purchase Agreement, the Company and
the Holders have entered into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Holders hereby
agree as follows:
1. RESTRICTIONS ON TRANSFERABILITY. None of the Restricted Securities
may be sold, assigned, transferred, pledged or otherwise disposed of, whether or
not for value, except in compliance with applicable law. At such time as the
Restricted Securities cease to be Restricted Securities under the terms of this
Agreement, the provisions of this Agreement shall no longer apply to the shares
of the Common Stock that theretofore were Restricted Securities.
2. RESTRICTIVE LEGEND.
2.1 SHARES OF STOCK. Each certificate representing Restricted
Securities that are shares of Common Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under applicable state securities laws or otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). THESE SHARES
MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE SECURITIES ACT.
2.2 STOP TRANSFER INSTRUCTIONS. Each Holder consents to the Company's
making a notation on its records and giving instructions to any transfer agent
of the Restricted Securities in order to prevent a transfer that is prohibited
by this Agreement.
3. INTENTIONALLY OMITTED
4. MANDATORY REGISTRATION
4.1 FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
shall prepare and file with the SEC, no later than thirty (30) days following
the Tranche II Closing Date (the "Required Filing Date"), the Resale
Registration Statement or other Offering Document that registers all of the
Restricted Securities. The Company will use commercially reasonable efforts to
cause the Resale Registration Statement to be declared effective by the SEC on a
date no later than ninety (90) days after the Tranche II Closing Date (the
"Required Effective Date"). Notwithstanding the foregoing, if the Tranche II
Closing does not occur on or prior to November 15, 2003 then the Required Filing
Date shall be the date that is 95 days after the Tranche I Closing, and the
Required Effective Date shall be the date that is 70 days after the filing of
the Resale Registration Statement.
4.2 PAYMENTS FOR NON-FILING AND NON-EFFECTIVENESS. Unless the Company's
performance is waived in writing by the Investor Majority, the Company shall
make payment to the Holders in such amounts and at such times as follows:
(i) If the Company does not file the Resale Registration
Statement on or before the Required Filing Date, within five (5)
business days after the Required Filing Date the Company shall issue to
the Holders without demand therefore, upon payment of the par value
thereof by the Holder to the Company, fully paid and non-assessable
shares of Common Stock representing three percent (3%) of the
Investors' Shares acquired by each such Holder under the Securities
Purchase Agreement (a "3% Payment"), plus an additional 3% Payment for
every thirty (30) days after the Required Filing Date during which the
Company does not file the Resale Registration Statement (collectively,
the "Late Filing Payment").
(ii) If the Resale Registration Statement is not declared
effective by the SEC on or before the Required Effective Date, within
five (5) business days after the Required Effective Date the Company
shall issue to the Holders without demand therefor, upon payment of the
par value thereof by the Holder to the Company, a 3% Payment, plus an
additional 3% Payment for every thirty (30) days after the Required
Effective Date during which the SEC has not declared the Resale
Registration Statement to be effective (collectively, the "Late
Effective Payment").
(iii) For the avoidance of doubt, the payment of Late Filing
Payments and/or Late Effective Payments shall not relieve the Company
from its obligation to file the Resale Registration Statement or to use
commercially reasonable efforts to cause the Resale Registration
Statement to be declared effective by the SEC as contemplated by this
Agreement.
(iv) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this provision shall not be payable to the extent
any delay in the effectiveness of the Resale Registration Statement
occurs because of an act of, or a failure to act or to act timely by
any of the Holders or their counsel as required by Section 12.
(v) Notwithstanding the foregoing, the aggregate amount of any
Late Filing Payments and Late Effective Payments shall not exceed
twelve percent (12%)
2
of the amount of the Investors' Shares issued by the Company pursuant
to the Stock Purchase Agreement and such Late Filing Payments and Late
Effective Payments shall constitute liquidated damages for the periods
for which they were paid. Holders shall be entitled to pursue remedies
at law or in equity for periods of default subsequent to the periods
for which such Late Filing Payments and Late Effective Payments were
made.
(vi) Within thirty (30) days after the Resale Registration
Statement is declared effective by the SEC, the Company shall, as
necessary, file a post-effective amendment in combination with a new
Resale Registration Statement which may be necessary to cover any
Restricted Securities issued to the Holders in the form of Late Filing
Payments and/or Late Effective Payments that were not included in the
Resale Registration Statement, the effectiveness of which shall render
non-applicable and shall therefore terminate the Holders' rights under
Sections 5 and 6.
(vii) If the Company is required to pay Late Filing Payments
and/or Late Effective Payments, the Company shall promptly issue to the
Holders receiving such payments one or more invoices for the par value
of the Common Stock issued in payment thereof.
5. DEMAND REGISTRATION.
5.1 NOTICE FROM HOLDERS. If, at any time after the date that is ninety
(90) days after the date of this Agreement until the second anniversary of the
Tranche II Closing Date, for so long as any of the Restricted Securities are
outstanding and are not the subject of an effective registration statement, the
Company receives a written request from the Investor Majority that the Company
file a registration statement under the Act covering the registration of all,
but not less all, of the Restricted Securities, then the Company will promptly,
and in no event later than thirty (30) days of the receipt thereof, subject to
the limitations of Sections 5.2 and 5.3, use its best efforts to take such
actions to register with, or otherwise seek such approvals of, the SEC as are
necessary or appropriate in order to permit the public offer and sale of the
Restricted Securities within 180 days after the receipt of such notice.
5.2 REGISTERED PUBLIC OFFERING INVOLVING AN UNDERWRITER. If the Holders
intend to distribute the Restricted Securities covered by their request by means
of an underwriting, the Holders will notify the Company of such desire and prior
to such distribution the Company and the Holders will mutually agree in writing
to the rules and procedures that shall govern such distribution.
6. PIGGY-BACK REGISTRATION. From and after the date that is ninety (90)
days after the date of this Agreement and until the second anniversary of the
Tranche II Closing Date, for so long as any of the Restricted Securities are
outstanding and are not the subject of an effective registration statement, if
the Company contemplates making an offering of Common Stock (or other equity
securities convertible into or exchangeable for Common Stock) registered for
sale under the 1933 Act or proposes to file a registration statement covering
any of its securities other than (i) a registration on Form S-8 or S-4, or any
successor or similar forms; and (ii) a shelf registration under Rule 415 under
the 1933 Act for the sole purpose of registering shares to be
3
issued in connection with the acquisition of assets, the Company will at each
such time give prompt written notice to the Holders of its intention to do so
and of such Holder's rights under this Section 6. Upon the written request of
any such Holder made within thirty (30) days after the receipt of any such
notice (which request shall specify the Restricted Securities intended to be
disposed of by such Holder and the intended method of disposition thereof), the
Company will use its best efforts to effect the registration of all Restricted
Securities which the Company has been so requested to register by the Holders,
to the extent requisite to permit the disposition (in accordance with the
intended methods of disposition) of the Restricted Securities by the Holders
requesting registration, by inclusion of such Restricted Securities in the
registration statement which covers the securities which the Company proposes to
register; PROVIDED, that if, at any time after giving written notice of its
intention to register any Restricted Securities and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such Restricted Securities, the Company may, at its election,
give written notice of such determination to the Holders requesting registration
and, thereupon, (i) in the case of a determination not to register, the Company
shall be relieved of its obligation to register any Restricted Securities in
connection with such registration (but not from its obligation to pay the
expenses of registration in connection therewith), and (ii) in the case of a
determination to delay registering such Restricted Securities, shall be
permitted to delay registering any Restricted Securities, for the same period as
the delay in registering such other securities.
7. OBLIGATIONS OF THE COMPANY.
The Company shall do the following:
7.1 Whenever required under this Agreement to effect the registration
of any Restricted Security, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC (or any other equivalent
governmental authority in a jurisdiction outside of the United
States responsible for the regulation and oversight of such
jurisdiction's securities laws (a "Governmental Authority"))
Offering Documents with respect to such Restricted Securities
and use its best efforts to cause such Offering Documents to
become effective as expeditiously as possible, and, in the
case of the registration of Restricted Securities under
Section 4, keep such Offering Documents effective for a period
of up to three (3) years or, in the case of the registration
of Restricted Securities under Sections 5 or 6, upon the
request of the Holders of a majority of the outstanding
Investors' Shares which are then beneficially owned by the
Holders, keep such Offering Documents effective for a period
of up to one hundred twenty (120) days or, in either event, if
earlier, until the distribution contemplated in the Offering
Document has been completed or until all Restricted Securities
covered by such Offering Document can be sold in any ninety
(90) day period without registration in compliance with Rule
144(k) of the Securities Act; PROVIDED, that, such three
(3)-year or one hundred twenty (120)-day period, as the case
may be, shall be extended for a period of time equal to the
period any Holder refrains from selling any Restricted
Securities included in such registration at the request of an
underwriter of the Common Stock (or other securities) of the
Company, at the request of the Company pursuant to Section
12.2 hereof or as a result of a Stop Order (as hereinafter
defined);
4
(b) notify each Holder whose securities are to be registered of
the effectiveness of the Offering Documents and the
effectiveness or final approval of any post-effective
amendment to any Offering Document; and prepare and file with
the SEC or a Governmental Authority such amendments and
supplements to such Offering Documents as may be necessary to
comply with the provisions of the Securities Act and any other
applicable laws with respect to the disposition of all
Restricted Security covered by such Offering Documents;
(c) furnish to each Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act and other applicable laws,
and such other documents as it may reasonably request in order
to facilitate the disposition of Restricted Security owned by
it;
(d) use its best efforts to (i) register and qualify the
securities covered by such Offering Documents under such other
securities or "blue sky" laws of such states or jurisdictions
as may be reasonably requested by the Holders, but in any
event in no more than five (5) states and jurisdictions, and
do all other acts and things that may be necessary or
desirable to enable the Holders to consummate their public
sale or other disposition of the Restricted Security in such
states or jurisdictions; PROVIDED, that the Company will not
be required in connection therewith or as a condition thereto
to qualify to do business, where not otherwise required, or to
file a general consent to service of process in any such
states or jurisdictions, unless the Company is already subject
to service in such jurisdiction and except as may be required
by the Securities Act and (ii) cause such Restricted Security
to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the
disposition of such Restricted Security;
(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 of
such offering;
(f) notify each Holder of Restricted Security covered by such
Offering Document, at any time when a prospectus relating
thereto is required to be delivered, of (i) the issuance of
any stop order or equivalent order by the SEC or any
Governmental Authority suspending the effectiveness of such
Offering Document or the initiation of any proceedings by any
person to such effect (a "Stop Order"), and use commercially
reasonable efforts to obtain the release of such suspension as
soon as reasonably practicable and (ii) any communication from
the SEC or any Governmental Authority threatening the issuance
of a Stop Order;
5
(g) cause all such Restricted Securities registered pursuant
hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed;
(h) provide a transfer agent and registrar for all Restricted
Securities registered pursuant hereunder and a CUSIP number
for all such Restricted Securities, in each case not later
than the effective date of such registration and use its best
efforts to cause the transfer agent to remove restrictive
legends on the securities covered by such registration;
(i) use its best efforts to furnish, at the request of any Holder,
on the date that such Restricted Securities are delivered to
the underwriters for sale in connection with a registration
pursuant to this Agreement, if such securities are being sold
through underwriters, or, if such securities are not being
sold through underwriters, on the date that the Offering
Document with respect to such securities becomes effective,
(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 and reasonably
satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters and to
the Holders requesting registration of Restricted Security and
(ii) a "comfort" 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 and reasonably satisfactory to a
majority in interest of the Holders requesting registration,
addressed to the underwriters and to the Holders requesting
registration of Restricted Security;
(j) as soon as practicable after becoming aware of the happening
of any event as a result of which the Offering Documents, as
then in effect, include an 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,
(i) notify each Holder of Restricted Securities covered by
such Offering Document, (ii) use its best commercially
reasonable efforts to prepare a supplement or amendment to the
Offering Documents (and make all required filings with the SEC
and Governmental Authorities) to correct such untrue statement
or omission if not otherwise satisfied through the filing of a
report to the SEC or otherwise pursuant to applicable
securities laws, and (ii) simultaneously (and thereafter as
requested) deliver such number of copies of such supplement or
amendment to each Holder of Restricted Securities covered by
such supplemented or amended Offering Documents as each such
Holder may request in writing; and
(k) use commercially reasonable best efforts to prevent the
issuance of any stop order or other suspension of
effectiveness of an Offering Document, and, if such an order
is issued, to obtain the withdrawal of such order at the
earliest practicable time.
6
8. NONPUBLIC INFORMATION. Notwithstanding any other provision of this
Agreement, the Company's obligation to file a registration statement under this
Agreement, or to cause such registration statement to become and remain
effective, shall be suspended for a period not to exceed twenty (20) days (and
for periods not exceeding, in the aggregate, sixty (60) days in any 12-month
period) if there exists at the time material non-public information relating to
the Company which, in the reasonable opinion of the Company determined in good
faith, should not be disclosed.
9. EXPENSES OF REGISTRATION. The Company will bear all expenses
incurred in connection with registrations pursuant to this Agreement, including,
without limitation, all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for the Company and independent
accountants for the Company and expenses of any special audits of the Company's
financial statements incidental to or required by such registration, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars' fees, but the Company will not pay underwriters'
fees, discounts or commissions relating to the Restricted Securities or any fees
or expenses of legal counsel for any of the Holders.
10. INDEMNIFICATION.
10.1 INDEMNITY BY THE COMPANY. If the Company registers any Restricted
Securities pursuant to this Agreement, the Company will indemnify and hold
harmless each Holder, its officers, directors and partners and each other
person, if any, who controls (within the meaning of the Securities Act) each
Holder, against any losses, claims, damages or liabilities, joint or several, to
which each Holder, or such controlling persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement (or alleged untrue statement) of any material fact contained in
any registration statement under which such Restricted Securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon 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 any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities law
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, and will reimburse each
Holder, its officers, directors and partners, and each person controlling each
Holder, for any reasonable legal and any other expenses incurred in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage or liability arises out of
or is based on any untrue statement or omission based upon written information
furnished to the Company by an instrument duly executed by each Holder
specifically for use therein.
10.2 INDEMNITY BY THE HOLDER. Each Holder will, if Restricted
Securities held by or issuable to such Holder are included in the securities as
to which such registration is being effected, indemnify and hold harmless the
Company, each of its directors, each officer who signs the registration
statement, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company and such
underwriter (within the meaning of the Securities Act), against all claims,
losses, expenses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
7
offering circular or other document made in writing by such Holder for purposes
of inclusion in such registration statement, or any omission (or alleged
omission) by such Holder to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred by them in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder
specifically for use therein; provided, that the total amount for which such
Holder, shall be liable under this Section 10.2 shall not in any event exceed
the proceeds (net of underwriting discounts and commissions) received by such
Holder from the sale of Restricted Securities sold by such Holder in such
registration.
10.3 NOTICE BY THE INDEMNIFIED PARTY. Each party entitled to
indemnification under this Section 10 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claims
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;
PROVIDED, that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations hereunder, unless such failure
resulted in actual detriment to the Indemnifying Party. 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 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 of such claim or litigation.
10.4 UNDERWRITING AGREEMENT. Notwithstanding the foregoing, to the
extent that the provisions on indemnification contained in the underwriting
agreements entered into among the Holders, the Company and the underwriters in
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall be
controlling as to the Restricted Securities included in the public offering;
PROVIDED, that if, as a result of this Section 10.4, the Holder, and any person
controlling the Holder, are held liable for an amount which exceeds the
aggregate proceeds received by the Holder from the sale of Restricted Securities
included in a registration, as provided in Section 10.2, pursuant to such
underwriting agreement (the "Excess Liability"), the Company shall reimburse any
such Holder for such Excess Liability.
10.5 CONTRIBUTION. If the indemnification provided for in this Section
10 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand
8
and of the Indemnified Party on the other hand in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. The relevant fault of the
Indemnifying Party and the Indemnified Party shall be determined 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. Notwithstanding the foregoing, the amount
that any Holder shall be obligated to contribute pursuant to this Section 10.5
shall be limited to an amount equal to the proceeds to any Holder of the
Restricted Securities sold pursuant to the registration statement which gives
rise to such obligation to contribute (less the aggregate amount of any damages
which any Holder has otherwise been required to pay in respect of such loss,
claim, damage, liability or action or any substantially similar loss, claim,
damage, liability or action arising from the sale of such Restricted
Securities).
10.6 SURVIVAL OF INDEMNITY. The indemnification and contribution
provided by this Section 10 shall be a continuing right to indemnification and
shall survive the registration and sale of any securities by any person entitled
to indemnification under this Agreement.
11. LOCKUP AGREEMENT. In the event that the Holders desire to engage in
an underwritten offering, the Holder will agree to reasonable and customary
lockup provisions prior to the commencement of such offering.
12. HOLDER'S COOPERATION.
12.1 INFORMATION REGARDING HOLDER. It is a condition precedent to the
obligations of the Company to take any action to effect the registration of any
Restricted Securities pursuant to this Agreement with respect to the Restricted
Securities of any Holder that such Holder furnish to the Company such
information regarding itself, the Restricted Securities held by it, and the
intended method of disposition of such securities as is reasonably requested by
the Company in order to comply with applicable law or by the managing
underwriter in order to satisfy the requirements applicable to such registration
of such Holder's Restricted Securities.
12.2 OBLIGATIONS OF THE HOLDER. Each Holder will not (until further
notice by the Company) effect sales thereof (or deliver a prospectus to any
purchaser) after receipt of telegraphic or written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus. At the end of the period during which the Company is
obligated to keep any registration statement filed under this Agreement current
and effective as required by applicable law, each Holder shall discontinue sales
of shares pursuant to such registration statement upon receipt of notice from
the Company of its intention to remove from registration the shares of
Restricted Securities covered by such registration statement that remain unsold,
and each Holder shall notify the Company of the number of such shares registered
that remain unsold immediately upon receipt of such notice from the Company.
13. RULE 144. With a view to making available to the Holder the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Restricted Securities to the public without registration, the Company
agrees to:
9
(a) make and keep public information available, as those terms are
understood and defined in Rule 144; and
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under
the Securities Act and the Exchange Securities Act.
14. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "HOLDER" shall mean the person that has executed this
Agreement (other than the Company) and any other person who
holds Restricted Securities and who has assumed the
obligations of the Holder under this Agreement pursuant to
Section 3(c).
(b) "INVESTOR NOMINEES" has the meaning given to it in the
Stockholders' Agreement, dated the date hereof, among the
Company, the Investors and certain other stockholders of the
Company.
(c) "LATE EFFECTIVE PAYMENT" shall have the meaning given to it in
Section 4.2.
(d) "LATE FILING PAYMENT" shall have the meaning given to it in
Section 4.2.
(e) "OFFERING DOCUMENTS" shall mean any application, offering
memoranda, prospectuses, registration statements or other
documents necessary or appropriate in order to effect any
offer or sale of Restricted Security in the manner set forth
herein.
(f) "REGISTER," "registered" and "registration" shall refer to (i)
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such
registration statement, and compliance with applicable state
securities laws of such states in which any of the Holders
notifies the Company of his intention to offer Restricted
Securities, or (ii) in the case of an offer and sale outside
of the United States, the preparation and filing of the
relevant Offering Documents with any applicable Governmental
Authority and the declaration or ordering of effectiveness of
such Offering Documents.
(g) "RESALE REGISTRATION STATEMENT" shall mean the registration
statement filed by the Company to register the resale by the
Investors of the Restricted Securities.
(h) "RESTRICTED SECURITIES" shall mean (i) the Investors' Shares,
(ii) any shares of Common Stock issued to the Investors as
Late Filing Payments pursuant to Section 4.2(ii) and (iii)
only as to the Resale Registration Statement that is declared
effective by the SEC, any shares of Common Stock issued to the
Investors as Late Effectiveness Payments pursuant to Section
4.2 (iii), in each case only to the extent the same have not
been sold to the public. As to
10
any particular Restricted Securities, such securities shall
cease to be Restricted Securities when (i) a registration
statement with respect to the sale of such securities shall
have become effective under the Securities Act and such
securities shall have been disposed of under such registration
statement, (ii) such securities shall have become eligible for
resale pursuant to Rule 144(k) and any restrictive legend on
certificates representing such securities shall have been
removed, (iii) such securities shall have been otherwise
transferred or disposed of, and (x) new certificates therefor
not bearing a legend restricting further transfer shall have
been delivered by the Company, and (y) subsequent transfer or
disposition of them shall not require their registration or
qualification under the Securities Act or any similar state
law then in force or compliance with Rule 144, or (iv) such
securities shall have ceased to be outstanding.
Notwithstanding the foregoing, Restricted Securities shall not
include otherwise Restricted Securities (i) sold by a person
in a transaction in which his rights under this Agreement are
not properly assigned, or (ii) (A) sold to or through a broker
or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt
from the registration and prospectus delivery requirements of
the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such
sale or (C) the registration rights associated with such
securities have been terminated pursuant to this Agreement.
(i) "REQUIRED EFFECTIVE DATE" shall have the meaning given to it
in Section 4.1.
(j) "REQUIRED FILING DATE" shall have the meaning given to it in
Section 4.1.
(k) "RULE 144" shall mean Rule 144 under the Securities Act or any
successor or similar rule as may be enacted by the SEC from
time to time.
(l) "RULE 145" shall mean Rule 145 under the Securities Act or any
successor or similar rule as may be enacted by the SEC from
time to time.
(m) "3% PAYMENT" shall have the meaning given to it in Section
4.2.
15. GOVERNING LAW; MISCELLANEOUS.
15.1 With respect to governing law, jurisdiction and waiver of jury
trial, the parties agree as follows:
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX
00
XX XXX XXXX SITTING IN NEW YORK COUNTY OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF SUCH STATE. EACH OF THE COMPANY
AND THE INVESTORS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT RELATED
THERETO. EACH OF THE COMPANY AND THE INVESTORS WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(c) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY INVESTMENT DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY INVESTMENT
DOCUMENT OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED
IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
15.2 Notices to be delivered hereunder shall be delivered in the manner
as set forth in the Securities Purchase Agreement and shall be deemed effective
when given in such manner as provided by the Securities Purchase Agreement.
15.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
15.4 This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
15.5 All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
12
15.6 A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.
15.7 This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.
15.8 The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
15.9 If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
15.10 This Agreement may be amended only by the written consent of the
Holders of at least 75% of the outstanding Investors' Shares which are then
beneficially owned by the Holders and an instrument in writing signed by the
Company.
15.11 This Agreement represents the final agreement among the parties
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties or by prior or contemporaneous written
agreements.
[Signature page follows.]
13
IN WITNESS WHEREOF, the parties have executed and delivered this
Investors' Rights Agreement as of the date first above written above.
COMPANY:
DIOMED HOLDINGS, INC.
By:
----------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Chief Executive Officer
HOLDER:
------------------------------------------
By:
---------------------------------------
Name:
Title:
