EXHIBIT 10.21
ADVANCIS PHARMACEUTICAL CORPORATION
FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT,
dated this 2nd day of July, 2003 (this "AGREEMENT"), is entered into
by and among ADVANCIS PHARMACEUTICAL CORPORATION, a Delaware corporation (the
"CORPORATION"), and those stockholders of the Corporation listed on Schedule 1
hereto (hereinafter referred to collectively as the "INVESTORS").
BACKGROUND
The Corporation and certain of the Investors entered into a
Convertible Preferred Stock Purchase Agreement dated January 7, 2000 (the
"SERIES A STOCK PURCHASE AGREEMENT") pursuant to which the Corporation sold
shares of its Series A Convertible Preferred Stock, par value $.01 per share,
and the Corporation granted to the Investors certain registration and other
rights with respect to such shares pursuant to a Stockholders' Agreement dated
of even date therewith (the "SERIES A STOCKHOLDERS' AGREEMENT").
The Corporation and certain of the Investors entered into a
Series B Convertible Preferred Stock Purchase Agreement dated Novembe 13, 2000
(the "SERIES B STOCK PURCHASE AGREEMENT") pursuant to which the Corporation sold
shares of its Series B Convertible Preferred Stock, par value $.01 per share,
and the Corporation granted to the Investors certain registration and other
rights with respect to such shares pursuant to an Amended and Restated
Stockholders' Agreement dated of even date therewith which amended and restated
in its entirety the Series A Stockholders' Agreement (the "SERIES B
STOCKHOLDERS' AGREEMENT").
The Corporation and certain of the Investors entered into a
Series C Convertible Preferred Stock Purchase Agreement dated April 24, 2001
(the "SERIES C STOCK PURCHASE AGREEMENT") pursuant to which the Corporation sold
shares of its Series C Convertible Preferred Stock, par value $.01 per share,
and the Corporation granted to the Investors certain registration and other
rights with respect to such shares pursuant to a Second Amended and Restated
Stockholders' Agreement dated of even date therewith which amended and restated
in its entirety the Series B Stockholders' Agreement (the "SERIES C STOCKHOLDERS
AGREEMENT").
The Corporation and certain of the Investors entered into a
Series D Convertible Preferred Stock Purchase Agreement dated October 24, 2001,
as amended February 4, 2002 (the "SERIES D STOCK PURCHASE AGREEMENT") pursuant
to which the Corporation sold shares of its Series D Convertible Preferred
Stock, par value $.01 per share and the Corporation granted to the Investors
certain registration and other rights with respect to such shares pursuant to a
Third Amended and Restated Stockholders' Agreement dated October 24, 2001, as
amended February 4, 2002, which amended and restated in its entity the Series C
Stockholders Agreement (the "SERIES D STOCKHOLDERS AGREEMENT").
The Corporation and the Investors are entering into a Series E
Convertible Preferred Stock Purchase Agreement dated the date hereof (the
"SERIES E STOCK PURCHASE AGREEMENT") in connection with which the Corporation
has agreed to sell and the Investors have agreed to buy shares of its Series E
Convertible Preferred Stock, par value $.01 per share.
In connection with the Series E Stock Purchase Agreement, the
Corporation desires to amend and restate the Series D Stockholders' Agreement in
its entirety to grant to the Investors certain registration and other rights
with respect to the Preferred Stock (as hereinafter defined) held by the
Investors.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and undertakings of the Corporation and the Investors
hereunder and under the Series E Stock Purchase Agreement, the parties hereto do
hereby agree as follows:
Section 1. Definitions. As used herein, the following terms
shall have the following respective meanings:
"BOARD" shall mean the Board of Directors of the Corporation.
"BUDGET" shall have the meaning set forth in Section 2.8
hereof.
"CERTIFICATE" shall mean the Fifth Restated Certificate of
Incorporation of the Corporation.
"COMMISSION" shall mean the U.S. Securities and Exchange
Commission.
"COMMON STOCK" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state
and local laws, ordinances, rules and regulations that regulate, fix liability
for, or otherwise relate to, the handling, use (including use in industrial
processes, in construction, as building materials, or otherwise), storage and
disposal of hazardous and toxic wastes and substances, and to the discharge,
leakage, presence, migration, threatened release or release (whether by
disposal, a discharge into any water source or system or into the air, or
otherwise) of any pollutant or effluent. Without limiting the preceding
sentence, the term "ENVIRONMENTAL LAWS" shall specifically include the following
federal and state laws, as amended:
FEDERAL
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601 et. seq.;
Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901
et. seq.;
Clean Xxxxx Xxx, 00 X.X.X. 0000 et. seq.; and
Clean Air Act, 42 U.S.C. 7401 et. seq.
STATE
Water Pollution Control, MD Code Xxx., Envir. Sections 9-301 -
9-351 (1999)
Water, Ice, Sanitary Facilities, MD Code Xxx., Envir. Sections
9-201 - 9-278 (1999)
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Water Pollution Control and Abatement, MD Code Xxx., Envir.
Sections 4-401 - 4-420 (1999)
Inter Agency Noise Control Committee, MD Code Xxx., Envir.
Sections 3-301 - 3-304 (1999)
Watershed Sediment and Waste Control, MD Code Xxx., Envir.
Sections 4-301 - 4-314 (1999)
Drinking Water, MD Code Xxx., Envir. Sections 9-401 - 9-426
(1999)
Hazardous Waste Facility Siting Program, MD Code Xxx., Envir.
Sections 7-401 - 7-413 (1999)
Landfill Siting, MD Code Xxx., Envir. Sections 9-204 - 9-278
(1999)
Controlled Hazardous Substances, MD Code Xxx., Envir. Sections
7-201 7-268 (1999)
Private Wetlands, MD Code Xxx., Envir. Sections 16-301 -
16-310 (1999)
"EQUITY PERCENTAGE" shall mean, as to any Investor, that
percentage figure which expresses the ratio that (a) the number of shares of
issued and outstanding Common Stock then owned by such Investor bears to (b) the
aggregate number of shares of issued and outstanding Common Stock then owned by
all Investors. For purposes solely of the computation set forth in clauses (a)
and (b) above, all issued and outstanding securities held by the Investors that
are convertible into or exercisable or exchangeable for shares of Common Stock
(including any issued and issuable shares of Preferred Stock) or for any such
convertible, exercisable or exchangeable securities, shall be treated as having
been so converted, exercised or exchanged at the rate or price at which such
securities are convertible, exercisable or exchangeable for shares of Common
Stock in effect at the time in question (which, for purposes of Section 2.3 of
this Agreement, shall be at the time of delivery by the Corporation of the
notice of the Offer contemplated by Section 2.3(b)), whether or not such
securities are at such time immediately convertible, exercisable or
exchangeable.
"EQUITY PERCENTAGE SECURITIES" shall have the meaning set
forth in Section 2.3(a) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"EXCHANGE ACT REGISTRATION STATEMENT" shall have the meaning
set forth in Section 2.5 hereof.
"EXCESS SECURITIES" shall have the meaning set forth in
Section 2.3(d) hereof.
"EXCESS SECURITIES NOTICE" shall have the meaning set forth in
Section 2.3(d) hereof.
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"EXCESS SECURITIES PERIOD" shall have the meaning set forth in
Section 2.3(d) hereof.
"EXCLUDED FORMS" shall have the meaning given such term in
Section 3.5 hereof.
"EXCLUDED SECURITIES" shall mean, collectively:
(a) the Reserved Shares;
(b) Common Stock issued or issuable to
officers, directors or employees of or consultants or independent contractors to
the Corporation, pursuant to the Advancis Pharmaceutical Corporation 2000 Stock
Incentive Plan or pursuant to any written agreement, plan or arrangement,
including pursuant to any options granted under any stock option plan of the
Corporation, to purchase, or rights to subscribe for, such Common Stock, that
has been approved in form and in substance by the holders of a majority of the
combined voting power of the Preferred Shares then outstanding, calculated in
accordance with Article III, Section A.6(a) of the Certificate (including, in
such calculation, any outstanding Restricted Shares held by such holders), and
which, as a condition precedent to the issuance of such shares, provides for the
vesting of such shares and subjects such shares to restrictions on transfers and
rights of first offer in favor of the Corporation (collectively, the "REQUIRED
TERMS"), unless any of such Required Terms are waived by holders of shares
representing at least a majority of the voting power of the Preferred Shares
then outstanding (determined as set forth in Section A.6(a) of the Certificate);
provided, however, that the maximum number of shares of Common Stock heretofore
or hereafter issuable pursuant to the Plan and all such agreements, plans and
arrangements shall not exceed 4,000,000 shares (subject to adjustment as
required to comply with any anti-dilution rights set forth in any such
agreement, plan or arrangement or upon the approval of at least a majority of
the voting power of the Preferred Shares then outstanding);
(c) Common Stock issued as a stock
dividend payable in shares of Common Stock, or capital stock of any class
issuable upon any subdivision, recombination, split-up, stock split or reverse
stock split of all the outstanding shares of such class of capital stock of the
Corporation;
(d) any securities issued pursuant to
the acquisition by the Corporation of any other corporation, partnership, joint
venture, trust or other entity by any merger, stock acquisition, reorganization,
purchase of substantially all assets or otherwise in which the Corporation, or
its stockholders of record immediately prior to the effective date of such
transaction, directly or indirectly, own at least a majority of the voting power
of the acquired entity or the resulting entity after such transaction;
(e) any shares of Common Stock,
Preferred Stock or any other security convertible into or exercisable or
exchangeable for Common Stock or Preferred Stock issued to banks or leasing
companies in order to obtain financing or to secure leases of equipment,
including, without limitation:
(i) in connection with the
Oxford Loan (as defined in Schedule 5.2 to the Series E Stock Purchase
Agreement), any warrants issued to
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General Electric Capital Corporation, its assignee or affiliate ("GE CAPITAL")
for the purchase of up to a total of 48,000 shares of Common Stock, together
with any shares of Common Stock issued or issuable pursuant to such warrants;
(ii) in connection with the GE
Loan (as defined in Schedule 5.2 to the Series E Stock Purchase Agreement), any
warrants issued to GE Capital, for the purchase of up to a total of 17,778
shares of Common Stock, together with any shares of Common Stock issued or
issuable pursuant to such warrants;
(iii) in connection with the GE
Loan, any shares of Common Stock, Preferred Stock or any other security
convertible into or exercisable or exchangeable for Common Stock or Preferred
Stock issued to GE Capital pursuant to any right granted to it by the
Corporation to $1,000,000 or more of equity in each of the Corporation's
subsequent rounds of private equity financing; and
(f) the warrant issued to Alexandria
Real Estate Equities, L.P. ("ALEXANDRIA") dated August 14, 2000 for the purchase
of up to 20,000 shares of Common Stock and any shares of Common Stock issued or
issuable pursuant to such warrant.
"GROUP" shall mean: (i) as to an Investor that is a limited
partnership: (a) any and all of the venture capital limited partnerships now
existing or hereafter formed that are affiliated with or under common control
with one or more of the general partners or one or more general partners of the
general partner of such Investor and any predecessor or successor thereto, (b)
any limited partner of such Investor, (c) in the case of HCV V or HCV VI, the
HCV Group; (d) as to any Investor that is a trust, any grantor or beneficiary
thereof, or any other trust, corporate entity or partnership under common
control with such trust, (e) in the case of Alexandria, any entity controlled by
or under common control with Alexandria and (f) as to any Investor, any other
Investor.
"HAZARDOUS MATERIALS" shall include without limitation, any
flammable explosives, petroleum products, petroleum byproducts, radioactive
materials, hazardous wastes, hazardous substances, toxic substances or other
similar materials regulated by Environmental Laws.
"HCV GROUP" shall mean, collectively, (a) HCV I, (b) HCV II,
(c) HCV III, (d) HCV IV, (e) HCV V, (f) HCV VI, (g) any venture capital limited
partnership now existing or hereafter formed which is affiliated with or under
common control with one or more general partners of any general partner of HCV V
(including, without limitation, HCV I, HCV II, HCV III and HCV IV or HCVI) (an
"HCV Fund"); (h) any limited partners or affiliates of HCV I, HCV II, HCV III,
HCV IV, HCV V, HCV VI or any other HCV Fund; and (i) any successors or assigns
of any of the foregoing persons.
"HCV I" shall mean HealthCare Ventures I, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV I under this Agreement.
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"HCV II" shall mean HealthCare Ventures II, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV II under this Agreement.
"HCV III" shall mean HealthCare Ventures III, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV III under this Agreement.
"HCV IV" shall mean HealthCare Ventures IV, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV IV under this Agreement.
"HCV V" shall mean HealthCare Ventures V, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV V under this Agreement.
"HCV VI" shall mean HealthCare Ventures VI, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV VI under this Agreement.
"INCENTIVE SHARES" shall have the meaning set forth in Section
5.2(a) of the Stock Purchase Agreement.
"INVESTORS" shall mean each of the persons listed on Schedule
1 hereto, severally, but not jointly and severally.
"NOTICE OF ACCEPTANCE" shall have the meaning set forth in
Section 2.3(c) hereof.
"OFFER" shall have the meaning set forth in Section 2.3(b)
hereof.
"OFFERED SECURITIES" shall mean, except for Excluded
Securities, (a) any shares of Common Stock, Preferred Stock or any other equity
security of the Corporation, (b) any debt security or capitalized lease with any
equity feature with respect to the Corporation, or (c) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any such equity
security, debt security or capitalized lease.
"OTHER SHARES" shall have the meaning set forth in Section
3.5(e) hereof.
"PREFERRED SHARES" shall mean collectively, the Series A
Preferred Shares, the Series B Preferred Shares, the Series C Preferred Shares,
the Series D Preferred Shares and the Series E Preferred Shares.
"PREFERRED STOCK" shall mean the Preferred Stock, par value
$.01 per share, of the Corporation.
"PREFERRED STOCKHOLDERS" shall mean, collectively, all holders
of shares of Preferred Stock of the Corporation.
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"PROPERTY" shall include, without limitation, land, buildings
and laboratory facilities owned or leased by the Corporation or as to which the
Corporation now has any duties, responsibilities (for clean-up, remedy or
otherwise) or liabilities under any Environmental Laws, or as to which the
Corporation or any subsidiary of the Corporation may have such duties,
responsibilities or liabilities because of past acts or omissions of the
Corporation or any such subsidiary or their predecessors, or because the
Corporation or any such subsidiary or their predecessors in the past was such an
owner or operator of, or bore some other relationship with, such land, buildings
and/or laboratory facilities.
"REFUSED SECURITIES" shall have the meaning set forth in
Section 2.3(f) hereof.
"RESERVED SHARES" shall collectively mean the shares of Common
Stock reserved by the Corporation for issuance upon the conversion of the Series
A Preferred Shares, the Series B Preferred Shares, the Series C Preferred
Shares, the Series D Preferred Shares and the Series E Preferred Shares, or upon
exercise of the Incentive Shares.
"RESTRICTED SECURITIES" shall mean: any of the Series A
Preferred Shares, the Series B Preferred Shares, the Series C Preferred Shares,
the Series D Shares, and the Series E Preferred Shares and the Common Stock
issued or issuable upon the conversion of the Series A Preferred Shares, the
Series B Preferred Shares, the Series C Preferred Shares, the Series D Preferred
Shares or the Series E Preferred Shares, all shares of Common Stock issued or
issuable in respect thereof by way of stock splits, stock dividends, stock
combinations, recapitalizations or like occurrences, and any other shares of
Common Stock or other securities of the Corporation which may be issued
hereafter to any of the Investors or any member of their Group which are
convertible into or exercisable or exchangeable for shares of Common Stock
(including, without limitation, other classes or Series of Convertible Preferred
Stock, warrants, options or other rights to purchase Common Stock or convertible
debentures or other convertible debt securities) and the Common Stock issued or
issuable upon such conversion or exercise of such other securities, which have
not been sold (a) in connection with an effective registration statement filed
pursuant to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A
promulgated by the Commission under the Securities Act.
"RESTRICTED SHARES" shall mean the shares of Common Stock
issued or issuable upon the conversion or exchange of the Restricted Securities
or otherwise constituting a portion of the Restricted Securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES A PREFERRED SHARES" shall mean shares of Series A
Preferred Stock issued pursuant to the Series A Stock Purchase Agreement.
"SERIES A PREFERRED STOCK" shall mean Series A Convertible
Preferred Stock, par value $.01 per share, of the Corporation.
"SERIES A STOCK PURCHASE AGREEMENT" shall mean the Convertible
Preferred Stock Purchase Agreement, dated as of January 7, 2000, among the
Corporation and the Investors listed on Schedule 1 thereto.
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"SERIES B PREFERRED SHARES" shall mean shares of Series B
Preferred Stock issued or issuable pursuant to the Series B Stock Purchase
Agreement.
"SERIES B PREFERRED STOCK" shall mean Series B Convertible
Preferred Stock, par value $.01 per share, of the Corporation.
"SERIES B STOCK PURCHASE AGREEMENT" shall mean the Series B
Convertible Preferred Stock Purchase Agreement, dated November 13, 2000, among
the Corporation and the Investors listed on Schedule 1 thereto.
"SERIES C PREFERRED SHARES" shall mean shares of Series C
Preferred Stock issued pursuant to the Series C Stock Purchase Agreement.
"SERIES C PREFERRED STOCK" shall mean Series C Convertible
Preferred Stock, par value $.01 per share, of the Corporation.
"SERIES C STOCK PURCHASE AGREEMENT" shall mean the Series C
Convertible Preferred Stock Purchase Agreement, dated April 24, 2001, among the
Corporation and the Investors listed on Schedule 1 thereto.
"SERIES D PREFERRED SHARES" shall mean shares of Series D
Preferred Stock issued pursuant to the Series D Stock Purchase Agreement.
"SERIES D PREFERRED STOCK" shall mean Series D Convertible
Preferred Stock, par value $.01 per share, of the Corporation.
"SERIES D STOCK PURCHASE AGREEMENT" shall mean the Series D
Convertible Preferred Stock Purchase Agreement, dated as of October 25, 2001, as
amended February 4, 2002, among the Corporation and the Investors listed on
Schedule 1 thereto, as amended.
"SERIES E PREFERRED SHARES" shall mean shares of Series E
Preferred Stock issued pursuant to the Series E Stock Purchase Agreement or upon
exercise of the warrants issued pursuant to the Series E Stock Purchase
Agreement.
"SERIES E PREFERRED STOCK" shall mean Series E Convertible
Preferred Stock, par value $.01 per share, of the Corporation.
"SERIES E STOCK PURCHASE AGREEMENT" shall mean the Series E
Convertible Preferred Stock Purchase Agreement, dated of even date herewith,
among the Corporation and the Investors listed on Schedule 1 thereto.
"STOCKHOLDERS" shall mean all holders of capital stock of the
Corporation.
"30-DAY PERIOD" shall have the meaning set forth in Section
2.3(b) hereof.
"TRANSFER" shall include any disposition of any Restricted
Securities or of any interest therein which would constitute a sale thereof
within the meaning of the Securities Act.
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SECTION 2. Certain Covenants of the Corporation.
2.1. Meetings of the Board of Directors. The Corporation
shall call, and use its best efforts to have, regular meetings of the Board not
less often than quarterly. The Corporation shall pay all reasonable and
appropriately documented travel expenses and other out-of-pocket expenses
incurred by directors who are not employed by the Corporation in connection with
attendance at meetings to transact the business of the Corporation or attendance
at meetings of the Board or any committee thereof.
2.2. Reservation of Shares of Common Stock and Preferred
Stock, Etc. The Corporation shall at all times have authorized and reserved out
of its authorized but unissued shares of Common Stock, a sufficient number of
shares of Common Stock to provide for the conversion of the Series A Preferred
Shares, the Series B Preferred Shares, the Series C Preferred Shares, the Series
D Preferred Shares and the Series E Preferred Shares. Neither the issuance of
the Series A Preferred Shares, the Series B Preferred Shares, the Series C
Preferred Shares, the Series D Preferred Shares or the Series E Preferred Shares
nor the shares of Common Stock issuable upon the conversion of the Series A
Preferred Shares, the Series B Preferred Shares, the Series C Preferred Shares,
the Series D Preferred Shares or the Series E Preferred Shares shall be subject
to a preemptive right of any other Stockholder.
2.3. Right of First Refusal.
(a) The Corporation shall not issue, sell or
exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any Offered Securities unless in each case the
Corporation shall have first offered to sell to the Investors all of such
Offered Securities, on the terms set forth herein (as to all Investors,
collectively, and in the aggregate, the "EQUITY PERCENTAGE SECURITIES"). Each
Investor shall be entitled to purchase up to its Equity Percentage of the Equity
Percentage Securities. Each Investor may delegate its rights and obligations
with respect to such Offer to one or more members of its Group, which members
shall thereafter be deemed to be "INVESTORS" for the purpose of applying this
Section 2.3 to such Offer.
(b) The Corporation shall deliver to each
Investor written notice of the offer to sell to such Investor its Equity
Percentage of the Equity Percentage Securities, specifying the price and terms
and conditions of the offer (each, an "OFFER"). The Offer by its terms shall
remain open and irrevocable for a period of thirty (30) days from the date of
its delivery to such Investor (the "30-DAY PERIOD"), subject to extension solely
with respect to the Investors to include the Excess Securities Period (as such
term is hereinafter defined).
(c) Each Investor shall evidence its intention
to accept its Offer by delivering a written notice signed by the Investor,
setting forth the number of shares of the Equity Percentage Securities that the
Investor elects to purchase (the "NOTICE OF ACCEPTANCE"). The Notice of
Acceptance must be delivered to the Corporation prior to the end of the 30-Day
Period.
(d) If any Investor fails to exercise its right
hereunder to purchase all of its Equity Percentage of the Equity Percentage
Securities, then the Corporation
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shall so notify the other Investors in a written notice (the "EXCESS SECURITIES
NOTICE"). The Excess Securities Notice shall be given by the Corporation
promptly after it learns of the intentions of all Investors with respect to the
purchase by each such Investor of less than all of its Equity Percentage of the
Equity Percentage Securities, but in no event later than ten (10) days after the
expiration of the 30-Day Period. The Investors who or which have agreed to
purchase their Equity Percentage of the Equity Percentage Securities shall have
the right to purchase the portion of the Equity Percentage Securities not
purchased by such Investor (the "EXCESS SECURITIES"), on a pro rata basis (as to
each Investor, calculated with respect to a percentage figure which expresses
the ratio that the number of shares of issued and outstanding Common Stock, on a
fully diluted basis, then owned by such Investor who or which has agreed to
purchase its Equity Percentage of the Offered Securities bears to the aggregate
number of shares of issued and outstanding Common Stock then owned by all
Investors, on a fully diluted basis, who or which have agreed to purchase their
Equity Percentage of the Offered Securities), by giving notice within ten (10)
days after receipt of the Excess Securities Notice from the Corporation. The
twenty (20) day period during which (i) the Corporation must give the Excess
Securities Notice to the other Investors, and (ii) each of the other Investors
must give the Corporation notice of its intention to purchase all or any portion
of its pro rata share of the Excess Securities, is hereinafter referred to as
the "EXCESS SECURITIES PERIOD."
(e) If the Investors tender their Notices of
Acceptance prior to the end of the 30-Day Period indicating their intention to
purchase all of the Offered Securities or, if prior to the termination of the
Excess Securities Period, the Investors tender Excess Securities Notices to
purchase all of the Excess Securities, the Corporation shall schedule a closing
of the sale of all such Offered Securities. Upon the closing of the sale of the
Offered Securities to be purchased by the Investors, each Investor shall (i)
purchase from the Corporation that portion of the Equity Percentage Securities
and the Excess Securities for which it tendered a Notice of Acceptance and an
Excess Securities Notice, if applicable, upon the terms specified in the Offer,
and (ii) execute and deliver an agreement further restricting transfer of such
Equity Percentage Securities substantially as set forth in Section 3.1, 3.2 and
3.3 of this Agreement. In addition, with respect to the Offered Securities being
purchased by the Investors, the Corporation shall provide each such Investor
with the rights and benefits set forth in this Agreement. The obligation of the
Investors to purchase such Offered Securities is further conditioned upon the
preparation of a purchase agreement embodying the terms of the Offer, which
shall be reasonably satisfactory in form and substance to such Investors and
counsel for the Investors.
(f) If the Investors do not tender their Notices
of Acceptance prior to the end of the 30-Day Period, or if prior to the
termination of the Excess Securities Period, the Investors tender Excess
Securities Notices to purchase less than all of the Excess Securities, the
Corporation shall have ninety (90) days from the expiration of the 30-Day
Period, or the Excess Securities Period, if applicable, to sell the Offered
Securities (including the Excess Securities) refused by the Investors (the
"REFUSED SECURITIES") to any other person or persons, but only upon terms and
conditions which are in all material respects (including, without limitation,
price and interest rate) no more favorable to such other person or persons, and
no less favorable to the Corporation, than those set forth in the Offer. Upon
and subject to the closing of the sale of all of the Refused Securities (which
shall include full payment to the Corporation), each Investor shall (i) purchase
from the Corporation those Offered Securities (including, with respect to the
Investors, the Excess Securities) for which it tendered a Notice of Acceptance
and
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an Excess Securities Notice, if applicable, upon the terms specified in the
Offer, and (ii) execute and deliver an agreement restricting transfer of such
Offered Securities (including the Excess Securities) substantially as set forth
in Sections 3.1, 3.2 and 3.3 of this Agreement. In addition, with respect to the
Offered Securities being purchased by the Investors, the Corporation shall
provide each such Investor with the rights and benefits set forth in this
Agreement. The Corporation agrees, as a condition precedent to accepting payment
for and making delivery of any Refused Securities to any executive officer,
employee, consultant or independent contractor of or to the Corporation, or to
any other person, to have each and every such person execute and deliver a Stock
Restriction Agreement substantially in the form attached hereto as Exhibit A, or
as may be modified or amended from time to time with the prior approval of the
holders of a majority of the combined voting power of the Preferred Shares then
outstanding, calculated in accordance with Article III, Section A.6(a) of the
Certificate (including in such calculation, any outstanding Restricted Shares
held by such holders), to the extent such purchaser has not already executed
such Agreement. The obligation of the Investors to purchase such Offered
Securities (including, with respect to the Investors, the Excess Securities) is
further conditioned upon the preparation of a purchase agreement embodying the
terms of the Offer, which shall be reasonably satisfactory in form and substance
to such Investors, and counsel for the Investors. Notwithstanding the foregoing,
it shall not be a condition to the acquisition of shares of Preferred Stock
pursuant to this Section 2.3 by such directors, officers, employees, consultants
or independent contractors of the Corporation that such shares of Preferred
Stock be subject to the restrictions imposed by a Stock Restriction Agreement
(other than the restrictions imposed by or arising out of federal and state
securities laws).
(g) In each case, any Offered
Securities not purchased either by the Investors or by any other person in
accordance with this Section 2.3 may not be sold or otherwise disposed of until
they are again offered to the Investors under the procedures specified in
Paragraphs (a), (b), (c), (d), (e) and (f) hereof.
(h) Each Investor may, by prior written
consent, waive its rights under this Section 2.3. Such a waiver shall be deemed
a limited waiver and shall only apply to the extent specifically set forth in
the written consent of such Investor.
(i) Notwithstanding any other provision
of this Agreement to the contrary, the restrictions and obligations on the
Corporation and the rights of the Investors which comprise the Right of First
Refusal set forth in this Section 2.3 shall not apply to any public offerings of
the Corporation's securities following an initial public offering of the
Corporation's securities.
2.4. Negative Covenants.
(a) Special Approvals. The Corporation
shall not, directly or indirectly, take any of the actions specified in Article
III, Section A.6(c) of the Certificate without the prior written consent or vote
of the Investors holding a majority of the then outstanding shares of Preferred
Stock held by Investors, determined in accordance with Article III, Section
A.6(a) of the Certificate.
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(b) Stock and Option Agreements.
Without the prior written consent or vote of the Investors holding a majority of
the then outstanding shares of Preferred Stock held by Investors, determined in
accordance with Article III, Section A.6(a) of the Certificate (including, in
such calculation, any outstanding Restricted Shares held by such Investors), the
Corporation shall not (i) issue any shares of Common Stock or options, warrants
or other rights to acquire Common Stock or other securities of the Corporation
to any employee, officer, director, consultant, independent contractor or other
person or entity except for Excluded Securities, (ii) grant any stock options
with a per share exercise price that is less than the fair market value of such
shares of stock, or (iii) make any restricted stock awards at a per share
purchase price that is less than the fair market value of the restricted stock,
such fair market value in the foregoing subsection (ii) and in this subsection
(iii) to be determined by the Board.
(c) Registration Rights. The
Corporation shall not hereafter grant to any persons any rights to register or
qualify stock of the Corporation under federal or state securities laws, unless
it shall have first obtained the written consent of Investors holding a majority
of the then outstanding shares of Preferred Stock held by Investors, determined
in accordance with Section A.6(a) of Article III of the Certificate (including,
in such calculation, any outstanding Restricted Shares held by such holders).
2.5. Filing of Reports Under the Exchange Act.
(a) The Corporation shall give prompt
notice to the holders of Preferred Shares of (i) the filing of any registration
statement (an "EXCHANGE ACT REGISTRATION STATEMENT") pursuant to the Exchange
Act, relating to any class of equity securities of the Corporation, (ii) the
effectiveness of such Exchange Act Registration Statement, and (iii) the number
of shares of such class of equity securities outstanding, as reported in such
Exchange Act Registration Statement, in order to enable the holders of Preferred
Shares to comply with any reporting requirements under the Exchange Act or the
Securities Act. Upon the written request of a majority in interest of the
holders of Preferred Shares, the Corporation shall, at any time after the
Corporation has registered any shares of Common Stock under the Securities Act,
file an Exchange Act Registration Statement relating to any class of equity
securities of the Corporation then held by the holders of Preferred Shares or
issuable upon conversion or exercise of any class of debt or equity securities
or warrants or options of the Corporation then held by the Investors, whether or
not the class of equity securities with respect to which such request is made
shall be held by the number of persons which would require the filing of a
registration statement under Section 12(g)(1) of the Exchange Act.
(b) If the Corporation shall have filed
an Exchange Act Registration Statement or a registration statement (including an
offering circular under Regulation A promulgated under the Securities Act)
pursuant to the requirements of the Securities Act, which shall have become
effective (and in any event, at all times following the initial public offering
of any of the securities of the Corporation), then the Corporation shall comply
with all of the reporting requirements of the Exchange Act (whether or not it
shall be required to do so) and shall comply with all other public information
reporting requirements of the Commission as a condition to the availability of
an exemption from the Securities Act for the sale of any of the Restricted
Securities by any holder of Restricted Securities (including any such exemption
pursuant to Rule 144 or Rule 144A thereof, as amended from time to time, or any
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successor rule thereto or otherwise). The Corporation shall cooperate with each
holder of Restricted Securities in supplying such information as may be
necessary for such holder of Restricted Securities to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act (under
Rule 144 or Rule 144A thereunder or otherwise) for the sale of any of the
Restricted Securities by any holder of Restricted Securities.
2.6. Access to Records. Until such time that the
Corporation has a class of its equity securities registered under the Exchange
Act and is required to file reports thereunder pursuant to Sections 13 or 15(d)
of the Exchange Act, the Corporation shall afford to each of the Investors and
such Investor's employees, counsel and other authorized representatives, free
and full access, at all reasonable times and for reasonable periods of time, to
all of the books, records and properties of the Corporation and to all officers
and employees of the Corporation. Each authorized representative of an Investor
who may have access to any confidential or proprietary information of the
Corporation shall execute a non-disclosure agreement in form and substance
approved by the Corporation.
2.7. Financial Reports. Until such time that the
Corporation has a class of its equity securities registered under the Exchange
Act and is required to file reports thereunder pursuant to Sections 13 or 15(d)
of the Exchange Act, except with respect to the obligation set forth in Section
2.7(d)(i) hereunder which shall survive such time, the Corporation shall furnish
each of the Investors with the financial information described below:
(a) The Corporation shall deliver to
each of the Investors, within forty-five (45) days after the end of such
quarterly accounting period, unaudited financial statements for such quarterly
accounting period, certified by the Chief Financial Officer or the Treasurer of
the Corporation as presenting fairly the financial condition and results of
operations of the Corporation and as having been prepared on a basis consistent
with the accounting principles reflected in the Corporation's annual audited
financial statements, accompanied by a report, signed by the Chief Financial
Officer or the Treasurer of the Corporation, summarizing the operating and
financial highlights of the Corporation for such quarterly accounting period,
which report shall include (i) a comparison between the actual quarterly
operating and financial results, the Budget (as defined in Section 2.8 hereof)
and the results of the similar quarterly accounting period for the prior fiscal
year of the Corporation, together with an explanation of material variances from
the Budget and such similar quarterly accounting period, as the case may be, and
(ii) a narrative analysis of operations and trends in the business of the
Corporation during such quarterly accounting period.
(b) Within ninety (90) days after the
end of each fiscal year of the Corporation, audited financial statements of the
Corporation, which shall include an income statement and a statement of cash
flow for such fiscal year and a balance sheet as of the last day thereof, each
prepared in accordance with generally accepted accounting principles
consistently applied, and accompanied by the report of such independent
certified public accountants as shall have been approved by the Board.
(c) If for any period the Corporation
shall have any subsidiary or subsidiaries whose accounts are consolidated with
those of the Corporation, then the financial
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statements delivered for such period pursuant to paragraphs (a) and (b) of this
Section 2.7 shall be the consolidated and consolidating financial statements of
the Corporation for all such consolidated subsidiaries.
(d) Promptly upon becoming available:
(i) copies of all financial
statements, reports, press releases, notices, proxy statements and other
documents sent by the Corporation to its Stockholders or released to the public
and copies of all regular and periodic reports, if any, filed by the Corporation
with the Commission or any securities exchange or self-regulatory organization;
and
(ii) any other financial or
other information available to management of the Corporation that any of the
Investors shall have reasonably requested on a timely basis.
2.8. Budget and Operating Forecast. Until such
time that the Corporation has a class of its equity securities registered under
the Exchange Act and is required to file reports thereunder pursuant to Sections
13 or 15(d) of the Exchange Act, the Corporation shall prepare and submit to the
Board and each of the Investors an operating plan with monthly and quarterly
breakdowns (the "BUDGET") for each fiscal year at least forty-five (45) days
prior to the beginning of each fiscal year of the Corporation, provided that the
Corporation shall deliver the Budget for its initial fiscal year to the Board
and each of the Investors by no later than sixty (60) days after the date
hereof. The Budget shall be deemed accepted as the Budget for such fiscal year
only when it has been approved by the Board. The Budget shall be reviewed by the
Corporation periodically and all changes therein, and all material deviations
therefrom, shall be reviewed by the Board on at least a quarterly basis.
2.9. System of Accounting. The Corporation shall
maintain, and cause each of its subsidiaries, when and if any shall exist, to
maintain, its books of accounts, related records and system of accounting in
accordance with good business practices and generally accepted accounting
principles, and shall cause the matters contained therein to be appropriately
and accurately reflected in the financial reports (which shall be prepared in
accordance with generally accepted accounting principles) furnished pursuant to
this Agreement.
2.10. Restriction on Transfer Rights. The rights
granted to each of the Investors pursuant to Sections 2.6 through 2.8 hereof
shall not be transferred or assigned by any Investor to, and shall not inure to
the benefit of, any successor, transferee or assignee of any Investor, which is
engaged in any line of business directly competitive with the Corporation.
2.11. Confidentiality and Non-Competition
Agreements for Key Employees. The Corporation shall cause each person who is
presently an employee of or a consultant or independent contractor to the
Corporation or who becomes an employee of or a consultant to the Corporation
subsequent to the date hereof and who shall have or be proposed to have access
to confidential or proprietary information of the Corporation to execute a
confidentiality and non-competition agreement in form and substance attached
hereto or
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otherwise approved by the Board prior to the commencement of such person's
employment by the Corporation in such capacity.
2.12. Stock Restriction Agreement for Directors,
Officers, Employees and Consultants Who Are or Become Stockholders. The
Corporation shall cause each of its directors, officers, employees, consultants
or independent contractors who own any shares of capital stock of the
Corporation, or who exercise any options, warrants or other rights to purchase
any shares of such capital stock, to execute a Stock Restriction Agreement
substantially in the form attached hereto as Exhibit A, and as may be modified
and amended from time to time with the approval of the holders of a majority of
the combined voting power of the Preferred Shares then outstanding, determined
in accordance with Section A.6(a) of Article III of the Certificate (including,
in such calculation, any outstanding Restricted Shares held by such holders),
prior and as a condition to the acquisition of such shares or the exercise of
such options, warrants or rights, by such person. Notwithstanding the foregoing,
it shall not be a condition to the acquisition of shares of Preferred Stock
pursuant to Section 2.3 hereof by such directors, officers, employees,
consultants or independent contractors of the Corporation that such shares of
Preferred Stock be subject to the restrictions imposed by a Stock Restriction
Agreement (other than the restrictions imposed by or arising out of federal and
state securities laws).
2.13. Marketing and Promotional Material. Each of
the Investors will have the right to review and approve, in advance of
publication, distribution or dissemination, any reference to such Investor or
any entity affiliated with such Investor (other than the Corporation), contained
in any document, instrument, report or filing or in any advertising, marketing,
promotional and similar materials.
2.14. Environmental Matters. The Corporation shall
promptly advise the Investors in writing of any pending or threatened claim,
demand or action by any governmental authority or third party relating to any
Hazardous Materials affecting the Property of which it has knowledge. The
Corporation shall not discharge, place, release, spill or dispose of any
Hazardous Materials or any other pollutants or effluents upon the Property or
elsewhere (including, but not limited to, underground injection of such
substances), and the Corporation shall not discharge into the air any emission
which would require a permit under the Clean Air Act or its state counterparts
or any other Environmental Laws, except in compliance with the Environmental
Laws. The Stockholders of the Corporation shall have no control over, or
authority with respect to, the waste disposal operations of the Corporation. The
Corporation hereby indemnifies, defends and holds harmless the Investors from
and against any and all manner of actions, causes of action, suits, debts,
accounts, controversies, judgments, claims, demands, losses or liabilities of
any nature (including reasonable attorneys' fees) directly or indirectly arising
out of or attributable to (a) any misrepresentation or breach of any of the
representations or covenants set forth in Section 5.18 of the Series A Stock
Purchase Agreement, Section 5.18 of the Series B Stock Purchase Agreement,
Section 5.18 of the Series C Stock Purchase Agreement, Section 5.18 of the
Series D Stock Purchase Agreement, or Section 5.18 of the Series E Stock
Purchase Agreement or (b) the use, generation, storage, release, threatened
release, discharge, disposal or presence of Hazardous Materials on, under or
about the Property by any person during the period that the Corporation was the
legal or equitable owner of the Property or which occurred prior to such time
and was otherwise actually known by, or should have been known by, the
Corporation. The obligation of the Corporation to indemnify the
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Investors shall specifically cover and include, without limitation, all fines
and penalties imposed by federal, state or local authorities, costs of removing
or neutralizing the Hazardous Materials, injury to the property adjoining the
Property, injury to persons living or working on or about the Property or
adjoining or otherwise affecting property, and all other indirect or
consequential damages incurred by the Investors. Following the initial public
offering of any of the securities of the Corporation: (1) the Investors
acknowledge that the Corporation will be obligated to comply with all
regulations promulgated under the Securities Act, including Regulation FD, and
that if there is a conflict between such regulations and the requirements of
this Section 2.14, the Corporation shall not be required to comply with this
Section 2.14 to the extent of such conflict; and (2) the Corporation shall have
no obligation to notify or indemnify any Investor under this Section 2.14 that
holds less than 200,000 shares of Common Stock (as adjusted for any stock
dividend, split-up, combination or reclassification following the date of this
Agreement.)
SECTION 3. Transfer of Securities.
3.1. Restriction on Transfer. The Restricted
Securities shall not be transferable, except upon the conditions specified in
this Section 3, which conditions are intended solely to ensure compliance with
the provisions of the Securities Act in respect of the Transfer thereof.
3.2. Restrictive Legend. Each certificate
evidencing any Restricted Securities and each certificate evidencing any such
securities issued to subsequent transferees of any Restricted Securities shall
(unless otherwise permitted by the provisions of Section 3.3 or 3.10 hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW. THE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933
OR ANY APPLICABLE STATE SECURITIES LAW OR AN EXEMPTION
THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY, THE TRANSFER OF
THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED
______________, 2003, AMONG ADVANCIS PHARMACEUTICAL
CORPORATION AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
ADVANCIS PHARMACEUTICAL CORPORATION.
3.3. Notice of Transfer. By acceptance of any
Restricted Securities, the holder thereof agrees to give prior written notice to
the Corporation of such holder's intention to
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effect any Transfer and to comply in all other respects with the provisions of
this Section 3.3. Each such notice shall describe the manner and circumstances
of the proposed Transfer and shall be accompanied by: (a) the written opinion of
counsel for the holder of such Restricted Securities, or, at such holder's
option, a representation letter of such holder, addressed to the Corporation
(which opinion of counsel, or representation letter, as the case may be, shall
be reasonably acceptable to the Corporation), as to whether, in the case of a
written opinion, in the opinion of such counsel, such proposed Transfer involves
a transaction requiring registration of such Restricted Securities under the
Securities Act and applicable state securities laws or an exemption thereunder
is available, or, in the case of a representation letter, such letter sets forth
a factual basis for concluding that such proposed transfer involves a
transaction requiring registration of such Restricted Securities under the
Securities Act and applicable State Securities laws or that an exemption
thereunder is available, or (b) if such registration is required and if the
provisions of Section 3.4 hereof are applicable, a written request addressed to
the Corporation by the holder of such Restricted Securities, describing in
detail the proposed method of disposition and requesting the Corporation to
effect the registration of such Restricted Shares pursuant to the terms and
provisions of Section 3.4 hereof; provided, however, that (y) in the case of a
Transfer by a holder to a member of such holder's Group, no such opinion of
counsel or representation letter of the holder shall be necessary, provided that
the transferee agrees in writing to be subject to Sections 3.1, 3.2, 3.3 and
3.10 hereof to the same extent as if such transferee were originally a signatory
to this Agreement, and (z) in the case of any holder of Restricted Securities
that is a partnership, no such opinion of counsel or representation letter of
the holder shall be necessary for a Transfer by such holder to a partner of such
holder, or a retired partner of such holder who retires after the date hereof,
or the estate of any such partner or retired partner if, with respect to such
Transfer by a partnership, (i) such Transfer is made in accordance with the
partnership agreement of such partnership, and (ii) the transferee agrees in
writing to be subject to the terms of Sections 3.1, 3.2, 3.3 and 3.10 hereof to
the same extent as if such transferee were originally a signatory to this
Agreement. If in such opinion of counsel or as reasonably concluded from the
facts set forth in the representation letter of the holder (which opinion and
counsel, or representation letter, as the case may be, shall be reasonably
acceptable to the Corporation), the proposed Transfer may be effected without
registration under the Securities Act and any applicable state securities laws
or "blue sky" laws, then the holder of Restricted Securities shall thereupon be
entitled to effect such Transfer in accordance with the terms of the notice
delivered by it to the Corporation. Each certificate or other instrument
evidencing the securities issued upon such Transfer (and each certificate or
other instrument evidencing any such securities not Transferred) shall bear the
legend set forth in Section 3.2 hereof unless: (a) in such opinion of such
counsel or as can be concluded from the representation letter of such holder
(which opinion and counsel or representation letter shall be reasonably
acceptable to the Corporation) the registration of future Transfers is not
required by the applicable provisions of the Securities Act and state securities
laws, or (b) the Corporation shall have waived the requirement of such legend;
provided, however, that such legend shall not be required on any certificate or
other instrument evidencing the securities issued upon such Transfer in the
event such Transfer shall be made in compliance with the requirements of Rule
144 (as amended from time to time or any similar or successor rule) promulgated
under the Securities Act. The holder of Restricted Securities shall not effect
any Transfer until such opinion of counsel or representation letter of such
holder has been given to and accepted by the Corporation (unless waived by the
Corporation) or until registration of the Restricted Shares involved in the
above-mentioned
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request has become effective under the Securities Act. In the event that an
opinion of counsel is required by the registrar or transfer agent of the
Corporation to effect a transfer of Restricted Securities in the future, the
Corporation shall seek and obtain such opinion from its counsel, and the holder
of such Restricted Securities shall provide such reasonable assistance as is
requested by the Corporation (other than the furnishing of an opinion of
counsel) to satisfy the requirements of the registrar or transfer agent to
effectuate such transfer.
3.4. Required Registration. If the Corporation
shall be requested (a) by Investors holding at least 50% of the aggregate
outstanding Restricted Securities held by all Investors (based on the underlying
Common Stock for which the Restricted Securities are convertible or exercisable)
to effect the registration under the Securities Act of Restricted Shares, or (b)
after the first registration pursuant to this Section 3.4, by one or more of the
Investors holding Restricted Securities to effect the registration under the
Securities Act of Restricted Shares having a proposed aggregate offering price
equal to or greater than $5,000,000, then the Corporation shall promptly give
written notice of such proposed registration to all holders of Restricted
Securities, and thereupon the Corporation shall promptly use its best efforts to
effect the registration under the Securities Act of the Restricted Shares that
the Corporation has been requested to register for disposition as described in
the request of such holders of Restricted Securities and in any response
received from any of the holders of Restricted Securities within 30 days after
the giving of the written notice by the Corporation; provided, however, that the
Corporation shall not be obligated to effect any registration under the
Securities Act except in accordance with the following provisions and Section
3.6, and provided further, however, that the Investors may not require the
Corporation to engage in an initial public offering of the securities of the
Corporation prior to January 1, 2005.
(a) Subject to Section 3.6, the
Corporation shall not be obligated to file and cause to become effective more
than two (2) registration statements in which Restricted Shares are registered
under the Securities Act pursuant to this Section 3.4, if all of the Restricted
Shares requested to be registered by the Investors on such registration
statements are sold thereunder substantially upon the price and terms offered.
(b) Notwithstanding the foregoing, the
Corporation may include in each such registration requested pursuant to this
Section 3.4 any authorized but unissued shares of Common Stock (or authorized
treasury shares) for sale by the Corporation or any issued and outstanding
shares of Common Stock for sale by others; provided, however, that, if the
number of shares of Common Stock so included pursuant to this clause (b) exceeds
the number of Restricted Shares requested by the holders of Restricted Shares
requesting such registration, then such registration shall be deemed to be a
registration in accordance with and pursuant to Section 3.5; and provided
further, however, that the inclusion of such previously authorized but unissued
shares by the Corporation or issued and outstanding shares of Common Stock by
others in such registration does not adversely affect, in the sole opinion of
the holders of Restricted Securities requesting such registration, the ability
of the holders of Restricted Securities requesting such registration to market
the entire number of Restricted Shares requested by them.
3.5. Piggyback Registration.
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(a) Each time that the Corporation
proposes for any reason to register any of its securities under the Securities
Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or
similar or successor forms (collectively, "EXCLUDED FORMS"), the Corporation
shall promptly give written notice of such proposed registration to all holders
of Restricted Securities, which shall offer such holders the right to request
inclusion of any Restricted Shares in the proposed registration.
(b) Each holder of Restricted
Securities shall have thirty (30) days from the receipt of such notice to
deliver to the Corporation a written request specifying the number of Restricted
Shares such holder intends to sell and the holder's intended method of
disposition.
(c) In the event that the proposed
registration by the Corporation is, in whole or in part, an underwritten public
offering of securities of the Corporation, any request under Section 3.5(b) may
specify that the Restricted Shares be included in the underwriting (i) on the
same terms and conditions as the shares of Common Stock, if any, otherwise being
sold through underwriters under such registration, or (ii) on terms and
conditions comparable to those normally applicable to offerings of common stock
in reasonably similar circumstances in the event that no shares of Common Stock
other than Restricted Shares are being sold through underwriters under such
registration.
(d) Upon receipt of a written request
pursuant to Section 3.5(b), the Corporation shall promptly use its best efforts
to cause all such Restricted Shares to be registered under the Securities Act,
to the extent required to permit sale or disposition as set forth in the written
request.
(e) Notwithstanding the foregoing, if
the managing underwriter of any such proposed registration determines and
advises in writing that the inclusion of all Restricted Shares proposed to be
included in the underwritten public offering, together with any other issued and
outstanding shares of Common Stock proposed to be included therein by holders
other than the holders of Restricted Securities (such other shares hereinafter
collectively referred to as the "OTHER SHARES"), would interfere with the
successful marketing of the Corporation's securities, then the total number of
such securities proposed to be included in such underwritten public offering
shall be reduced, (i) first by the shares requested to be included in such
registration by the holders of Other Shares, and (ii) second, if necessary, (A)
one-half (1/2) by the securities proposed to be issued by the Corporation, and
(B) one-half (1/2) by the Restricted Shares proposed to be included in such
registration by the holders thereof, on a pro rata basis, based upon the number
of Restricted Shares sought to be registered by each such holder. The shares of
Common Stock that are excluded from the underwritten public offering pursuant to
the preceding sentence shall be withheld from the market by the holders thereof
for a period, not to exceed 180 days from the closing of such underwritten
public offering, that the managing underwriter reasonably determines as
necessary in order to effect such underwritten public offering. In the event
that Investors holding at least 50% of the aggregate outstanding Restricted
Securities held by all Investors request the inclusion of Restricted Shares in
the offering pursuant to this Section 3.5 and, by reason of a reduction in
accordance with this Section 3.5(e), less than 80% of such Restricted Shares are
actually included in the offering,
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then, in each such instance, the Investors shall be entitled to request one (1)
additional registration under Section 3.4 of this Agreement.
3.6. Registrations on Form S-2 and S-3. At such
time as the Corporation shall have qualified for the use of Form S-2 or Form S-3
(or any successor form promulgated under the Securities Act), the holders of
Restricted Securities shall have the right to request in writing an unlimited
number (but collectively, not more than two (2) annually) of registrations on
Form S-2 or Form S-3. Each such request by a holder shall: (a) specify the
number of Restricted Shares which the holder intends to sell or dispose of, (b)
state the intended method by which the holder intends to sell or dispose of such
Restricted Shares, and (c) request registration of Restricted Shares having a
proposed aggregate offering price of at least $500,000. Upon receipt of a
request pursuant to this Section 3.6, the Corporation shall use its reasonable
commercial efforts to effect such registration or registrations on Form S-2 or
Form S-3.
3.7. Preparation and Filing. If and whenever the
Corporation is under an obligation pursuant to the provision of this Section 3
to use its reasonable commercial efforts to effect the registration of any
Restricted Shares, the Corporation shall, as expeditiously as practicable:
(a) prepare and file with the
Commission a registration statement with respect to such securities and use its
reasonable commercial efforts to cause such registration statement to become and
remain effective in accordance with Section 3.7(b) hereof;
(b) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective until the earlier of (i) the sale of all
Restricted Shares covered thereby or (ii) nine (9) months, and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all Restricted Shares covered by such registration statement;
(c) furnish to each holder whose
Restricted Shares are being registered pursuant to this Section 3 such number of
copies of any summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such holder may reasonably request in order to facilitate the
public sale or other disposition of such Restricted Shares;
(d) use its reasonable commercial
efforts to register or qualify the Restricted Shares covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as each holder whose Restricted Shares are being registered
pursuant to this Section 3 shall reasonably request and do any and all other
acts or things which may be necessary or advisable to enable such holder to
consummate the public sale or other disposition in such jurisdictions of such
Restricted Shares; provided, however, that the Corporation shall not be required
to consent to general service of process for all purposes in any jurisdiction
where it is not then subject to process, qualify to do business as a foreign
corporation where it would not be otherwise required to qualify or submit to
liability for state or local taxes where it is not otherwise liable for such
taxes;
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(e) at any time when a prospectus
covered by such registration statement and relating thereto is required to be
delivered under the Securities Act within the appropriate period mentioned in
Section 3.7(b) hereof, notify each holder whose Restricted Shares are being
registered pursuant to this Section 3 of the happening of any event as a result
of which the prospectus included in such registration, 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 and, at the
request of such holder, prepare, file and furnish to such holder a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such prospectus shall not 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 in light of the circumstances then existing;
(f) if the Corporation has delivered
preliminary or final prospectuses to the holders of Restricted Shares that are
being registered pursuant to this Section 3 and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the
Corporation shall promptly notify such holders and, if requested, such holders
shall immediately cease making offers of Restricted Shares and return all
prospectuses to the Corporation. The Corporation shall promptly provide such
holders with revised prospectuses and, following receipt of the revised
prospectuses, such holders shall be free to resume making offers of the
Restricted Shares; and
(g) furnish, at the request of any
holder whose Restricted Shares are being registered pursuant to this Section 3,
on the date that such Restricted Shares are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 3, if such
securities are being sold through underwriters, or, on the date that the
registration statement with respect to such securities becomes effective, if
such securities are not being sold through underwriters, (i) an opinion, dated
such date, of the counsel representing the Corporation 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 to
the holder or holders making such request, and (ii) a letter dated such date,
from the independent certified public accountants of the Corporation, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the holder or holders making such request.
3.8. Expenses. The Corporation shall pay all
expenses incurred by the Corporation in complying with this Section 3,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), fees and expenses of complying with the securities and blue sky laws of
all such jurisdictions in which the Restricted Shares are proposed to be offered
and sold, printing expenses and fees and disbursements of counsel (including
with respect to each registration effected pursuant to Sections 3.4, 3.5 and
3.6, the reasonable fees and disbursements of counsel for the Investors, as
selling Stockholder(s) thereunder that are being registered pursuant to this
Section 3); provided, however, that all underwriting discounts and selling
commissions applicable to the Restricted Shares covered by registrations
effected pursuant to Section 3.4, 3.5 and 3.6 hereof shall be borne by the
seller or sellers thereof, in proportion to the number of Restricted Shares sold
by each such seller or sellers.
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3.9. Indemnification.
(a) In the event of any registration of
any Restricted Shares under the Securities Act pursuant to this Section 3 or
registration or qualification of any Restricted Shares pursuant to Section
3.7(d) hereof, the Corporation shall indemnify and hold harmless the seller of
such shares, each underwriter of such shares, if any, each broker or any other
person acting on behalf of such seller and each other person, if any, who
controls any of the foregoing persons, within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
any of the foregoing 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 an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Restricted Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or any document incident to registration or qualification
of any Restricted Shares pursuant to Section 3.7(d) hereof, 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, with respect to any prospectus, necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or any violation by the Corporation of the Securities Act or any
state securities or blue sky laws applicable to the Corporation and relating to
action or inaction required of the Corporation in connection with such
registration or qualification under the Securities Act or such state securities
or blue sky laws. The Corporation shall reimburse on demand such seller,
underwriter, broker or other person acting on behalf of such seller and each
such controlling person for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Corporation
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary or final prospectus or amendment or
supplement thereto or any document incident to registration or qualification of
any Restricted Shares pursuant to Section 3.7(d) hereof, in reliance upon and
in conformity with written information furnished to the Corporation by such
seller, underwriter, broker, other person or controlling person specifically for
use in the preparation thereof.
(b) Before Restricted Shares held by
any prospective seller shall be included in any registration pursuant to this
Section 3, such prospective seller and any underwriter acting on its behalf
shall have agreed to indemnify and hold harmless (in the same manner and to the
same extent as set forth in paragraph (a)) the Corporation, each director of the
Corporation, each officer of the Corporation who signs such registration
statement and any person who controls the Corporation within the meaning of the
Securities Act, with respect to any untrue statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such untrue statement or
omission was made in reliance upon and in conformity with written information
furnished to the Corporation through an instrument duly executed by such seller
or such underwriter specifically for use in the preparation of such registration
statement, preliminary prospectus, final prospectus or amendment or supplement;
provided, however, that the maximum amount of liability in respect of such
indemnification shall be limited, in the case of each
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prospective seller, to an amount equal to the net proceeds actually received by
such prospective seller from the sale of Restricted Shares effected pursuant to
such registration.
(c) Promptly after receipt by an
indemnified party of notice of the commencement of any action involving a claim
referred to in Section 3.9(a) or Section 3.9(b) hereof, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 3.9, give written notice to the latter of the commencement
of such action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and, after notice to such indemnified party from the
indemnifying party of its election to assume the defense thereof, the
indemnifying party shall be responsible for any legal or other expenses
subsequently incurred by it in connection with the defense thereof; provided,
however, that, if any indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to such indemnified party
which are different from or additional to those available to the indemnifying
party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section
3.9, the indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party, and such indemnifying party
shall reimburse such indemnified party and any person controlling such
indemnified party for the fees and expenses of counsel retained by the
indemnified party which are reasonably related to the matters covered by the
indemnity agreement provided in this Section 3.9. The indemnifying party shall
not make any settlement of any claims indemnified against hereunder without the
written consent of the indemnified party or parties, which consent shall not be
unreasonably withheld.
(d) In order to provide for just and
equitable contribution to joint liability under the Securities Act in any case
in which either (i) any holder of Restricted Shares exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 3.9, 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 3.9 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
holder or any such controlling person in circumstances for which indemnification
is provided under this Section 3.9; then, in each such case, the Corporation
and such holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject as is appropriate to reflect the
relative fault of the Corporation and such holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, it being understood that the parties acknowledge that the
overriding equitable consideration to be given effect in connection with this
provision is the ability of one party or the other to correct the statement or
omission which resulted in such losses, claims, damages or liabilities, and that
it would not be just and equitable if contribution pursuant hereto were to be
determined by pro rata allocation or by any other method of allocation which
does not take into consideration the foregoing equitable considerations.
Notwithstanding the foregoing, (i) no such holder will be required to contribute
any amount in excess of the proceeds to it of all Restricted Shares sold by it
pursuant to such registration statement, and (ii) no person or entity guilty of
fraudulent misrepresentation, within
-23-
the meaning of Section 11(f) of the Securities Act, shall be entitled to
contribution from any person or entity who is not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding any of the
foregoing, if, in connection with an underwritten public offering of any
Restricted Shares, the Corporation, the holders of such Restricted Shares and
the underwriters enter into an underwriting or purchase agreement relating to
such offering which contains provisions covering indemnification among the
parties, then the indemnification provision of this Section 3.9 shall be deemed
inoperative for purposes of such offering.
3.10. Removal of Legends, Etc. Notwithstanding the
foregoing provisions of this Section 3, the restrictions imposed by this
Section 3 upon the transferability of any Restricted Securities shall cease and
terminate when (a) any such Restricted Securities are sold or otherwise disposed
of in accordance with the intended method of disposition by the seller or
sellers thereof set forth in a registration statement or such other method
contemplated by Section 3.3 hereof that does not require that the securities
transferred bear the legend set forth in Section 3.2 hereof, including a
Transfer pursuant to Rule 144 or a successor rule thereof (as amended from time
to time), or (b) the holder of Restricted Securities has met the requirements
for transfer of such Restricted Securities pursuant to subparagraph (k) of Rule
144 or a successor rule thereof (as amended from time to time) promulgated by
the Commission under the Securities Act. Whenever the restrictions imposed by
this Section 3 have terminated, a holder of a certificate for Restricted
Securities as to which such restrictions have terminated shall be entitled to
receive from the Corporation, without expense, a new certificate not bearing the
restrictive legend set forth in Section 3.2 hereof and not containing any other
reference to the restrictions imposed by this Section 3.
SECTION 4. Securities Act Registration Statements. Except for
securities of the Corporation registered on Excluded Forms, the Corporation
shall not file any registration statement under the Securities Act covering any
securities unless it shall first have given each holder of Restricted Securities
written notice thereof. The Corporation further covenants that each holder of
Restricted Securities shall have the right, at any time when it may be deemed to
be a controlling person of the Corporation, within the meaning of the Securities
Act, to participate in the preparation of such registration statement and to
request the insertion therein of material furnished to the Corporation in
writing which in such holder's judgment should be included. In connection with
any registration statement referred to in this Section 4, the Corporation shall
indemnify, to the extent permitted by law, each holder of Restricted Securities,
its officers, partners and directors and each person, if any, who controls any
such holder within the meaning of the Securities Act in the same manner and to
the same extent as the Corporation is required to indemnify a seller of
Restricted Securities in Section 3.9 hereof. If, in connection with any such
registration statement, any holder of Restricted Securities shall furnish
written information to the Corporation expressly for use in the registration
statement, then such holder shall indemnify the Corporation, each director of
the Corporation, each officer of the Corporation who signs such registration
statement and each person, if any, who controls the Corporation within the
meaning of the Securities Act to the same extent as a seller of Restricted
Securities is required to indemnify such persons in Section 3.9 hereof.
-24-
SECTION 5. Election of Directors.
5.1 Voting for Directors. At each annual meeting
of the stockholders of the Corporation and at each special meeting of the
stockholders of the Corporation called for the purposes of electing directors of
the Corporation, and at any time at which stockholders of the Corporation shall
have the right to, or shall, vote for the election of directors, then, in each
such event, each Investor shall vote all shares of Preferred Stock and any other
shares of voting stock of the Corporation then owned (or controlled as to voting
rights) by it, whether by purchase, exercise of rights, warrants or options,
stock dividends or otherwise:
(a) to fix and maintain the number of
directors on the Board of Directors of the Corporation at not more than six (6);
(b) pursuant to Article III, Section
A.6(b)(i) of the Certificate, to elect to the Board one (1) director designated
by HCV V, one (1) director designated by HCV VI and two (2) outside directors to
be agreed to by HCV V and Rudnic (as defined below);
(c) to elect to the Board Xx. Xxxxxx
Xxxxxx ("RUDNIC");
(d) to elect to the Board Xxxxx
Xxxxxxxx ("ISBISTER").
5.2. Cooperation of the Corporation. The
Corporation shall use its best efforts to effectuate the purposes of this
Section 5, including promoting the adoption of any necessary amendment of the
Bylaws of the Corporation and the Certificate.
5.3 Notices. The Corporation shall provide the
Investors with at least twenty (20) days' prior notice in writing of any
intended mailing of notice to the stockholders of the Corporation for a meeting
at which directors are to be elected. HCV V and HCV VI shall notify the
Corporation in writing at least three (3) days prior to such mailing of the
persons designated by them pursuant to Article III, Section A.6(b)(i) of the
Certificate and Section 5.1 above as nominees for election to the Board. In the
absence of any notice from HCV V or HCV VI, the director(s) then serving and
previously designated by HCV V or HCV VI, as the case may be, shall be
renominated.
5.4. Removal. Except as otherwise provided in
this Section 5, no Investor shall vote to remove any member of the Board
designated in accordance with the foregoing provisions of this Section 5 unless
the party who designated such director (the "DESIGNATING PARTY") shall so vote
or otherwise consent, and, if the Designating Party shall so vote or otherwise
consent, then the non-designating Investors shall likewise so vote. Any vacancy
on the Board created by the resignation, removal, incapacity or death of any
person designated under Sections 5.1(a), (b) and (c) shall be filled by
another person designated by the original Designating Party. Each Investor shall
vote all voting shares of Preferred Stock of the Corporation and all other
shares of voting stock of the Corporation owned or controlled by such Investor
in accordance with each such new designation, and no such vacancy shall be
filled in the absence of a new designation by the original Designating Party.
5.5. Duration of Section. This Section 5 and the
rights and obligations of the parties hereunder shall automatically terminate
upon the closing of the Corporation's
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initial public offering (the "EXPIRATION DATE"). Prior to such termination: (a)
the rights and obligations of any Investor under this Section 5 shall terminate
upon the date on which such Investor no longer owns any Restricted Securities,
whereupon the obligations of the remaining Investors to vote in favor of the
designee of such Investor shall also terminate; (b) the obligations of the
Investors to vote in favor of Rudnic, and not to vote to remove Rudnic from the
Board, under this Section 5 shall terminate upon the earlier of the date that
(i) Rudnic is no longer one of the three most senior executive officers of the
Corporation, as determined by the Board, or (ii) Rudnic, or any trust for which
Rudnic, his wife or his children is trustee or beneficial owner, ceases to be a
holder of at least one percent (1%) of the outstanding capital stock of the
Corporation, and (c) the obligations of the Investors to vote in favor of
Isbister, and not to vote to remove Isbister from the Board, under this Section
5 shall terminate upon the date that Isbister or any trust for which Isbister is
trustee or beneficial owner ceases to be a holder of at least one-half of one
percent (0.5%) of the outstanding capital stock of the Corporation.
SECTION 6. Remedies. In case any one or more of the covenants
or agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may proceed to protect and enforce its or their rights, either by
suit in equity and/or action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement.
Notwithstanding the generality of the foregoing, in the event that the
Corporation materially breaches any of its covenants and/or agreements set forth
herein, the Investors shall have the additional remedy, in their sole discretion
upon the election by a majority in voting power thereof, provided that such
breach has not been cured by the sixtieth (60th) day after receipt of notice
from an Investor of such breach by the Corporation, to exercise immediately
their right of redemption set forth in Article III, Section A.5 of the
Certificate, as provided therein with respect to all, but not less than all, of
their shares, irrespective of whether such right of redemption otherwise is
mature. With respect to a breach of which the Corporation is aware or reasonably
should be aware, such sixty (60) day period within which the Corporation shall
have the right to cure such breach shall be deemed to have commenced on the
tenth (10th) day after the occurrence of such breach, irrespective of notice of
such breach from an Investor, if the Corporation shall not have notified the
Investors of such breach by such date. The rights, powers and remedies of the
parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement or
law. No single or partial assertion or exercise of any right, power or remedy of
a party hereunder shall preclude any other or further assertion or exercise
thereof.
SECTION 7. Successors and Assigns. Except as otherwise
expressly provided herein, this Agreement shall bind and inure to the benefit of
the Corporation and each of the Investors and the respective successors and
assigns of the Corporation and each of the Investors. Subject to the
requirements of Section 3 hereof, this Agreement and the rights and duties of
the Investors set forth herein may be freely assigned, in whole or in part, by
each Investor. Any transferee (other than an Investor) to whom rights under
Section 3 are transferred shall, as a condition to such transfer, deliver to
the Corporation a written instrument by which such transferee identifies itself,
gives the Corporation notice of the transfer of such rights, identifies the
securities of the Corporation owned or acquired by it and agrees to be bound by
the obligations imposed hereunder to the same extent as if such transferee were
an Investor
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hereunder. A transferee to whom rights are transferred pursuant to this Section
7 will be thereafter deemed to be an Investor for the purpose of the execution
of such transferred rights and may not again transfer such rights to any other
person or entity, other than as provided in this Section 7. Neither this
Agreement nor any of the rights or duties of the Corporation set forth herein
shall be assigned by the Corporation, in whole or in part, without having first
received the written consent of the Investors holding 66 2/3 percent in voting
power of the outstanding Preferred Shares, determined in accordance with Section
A.6(a) of the certificate (including, in such calculation, any outstanding
Restricted Shares by such Investors).
SECTION 8. Duration of Agreement. The rights and obligations
of the Corporation and each Investor set forth herein shall survive
indefinitely, unless and until, by their respective terms, they are no longer
applicable.
SECTION 9. Entire Agreement. This Agreement, together with the
other writings referred to herein or delivered pursuant hereto which form a part
hereof, contains the entire agreement among the parties with respect to the
subject matter hereof and amends, restates and supersedes all prior and
contemporaneous arrangements or understandings with respect thereto, including
without limitation the Series D Stockholders Agreement.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered, certified or overnight mail, postage prepaid, or telecopied
with a confirmation copy by regular mail, addressed or telecopied, as the case
may be, to such party at the address or telecopier number, as the case may be,
set forth below or such other address or telecopier number, as the case may be,
as may hereafter be designated in writing by the addressee to the addressor
listing all parties:
(a) If to the Corporation, to:
Advancis Pharmaceutical Corporation
00000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Ph.D.
President and Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
Telecopier: (000) 000-0000
(b) If to the Investors, as set forth on
Schedule 1.
with a copy to:
Xxxxxx Xxxxxxxx XXX
-00-
000 Xxxxxx Xxxx
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Telecopier: (000) 000-0000
All such notices, requests, consents and communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the third business day following the
date of such mailing, (c) in the case of overnight mail, on the first business
day following the date of such mailing, and (d) in the case of facsimile
transmission, when confirmed by facsimile machine report.
SECTION 11. Changes. The terms and provisions of this
Agreement may not be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, except pursuant to the written consent of
the Corporation and the holders of a majority in combined voting power of the
Preferred Shares then outstanding, determined in accordance with Article III,
Section A.6(a) of the Certificate (including, in such calculation, any
outstanding Restricted Shares held by such holders).
SECTION 12. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 13. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement.
SECTION 14. Nouns and Pronouns. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of names and pronouns shall
include the plural and vice-versa.
SECTION 15. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 16. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, excluding
the conflict of law doctrines of Delaware or any other jurisdiction to the
contrary.
SECTION 17. Effectiveness. Notwithstanding any other provision
of this Agreement, this Agreement shall not be effective until the Closing (as
such term is defined in the Stock Purchase Agreement).
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF the parties hereto have executed this
Stockholders' Agreement on the date first above written.
CORPORATION:
ADVANCIS PHARMACEUTICAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, Ph.D.
President and Chief Executive Officer
[signatures of Investors appear on the following pages]
INVESTORS:
HEALTHCARE VENTURES V, L.P.
By: HealthCare Partners V, L.P.
as General Partner
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxxx
Administrative Partner
HEALTHCARE VENTURES VI, L.P.
By: HealthCare Partners VI, L.P.
as General Partner
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxx
Administrative Partner
RHO MANAGEMENT TRUST, I
By: Rho Capital Partners, Inc.
as Investment Advisor
By: /s/
-----------------------------------
Title:
XXXXXX TRUST
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
Trustee
J&J DEVELOPMENT CORPORATION
By: /s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
Vice President
ALEXANDRIA EQUITIES, LLC
By: Alexandria Real Estate Equities, Inc.
a Maryland corporation, Managing Member
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxxxx X. Xxxxx
/s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxxx
MIDDLEGATE SECURITIES
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Partner
PRIVATY EQUITY HOLDING, L.L.C.
By: Xxxxxx Xxxxxx Medical Institute
its Manager
By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Managing Director - Investment
Strategy & Absolute Return
TARGETED ENTREPRENEURIAL SERVICES, LLC
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Partner
THE DC 1998 NFA TRUST FBO XXX XXXXX
By: /s/ Xxx X. Xxxxx
--------------------------------------------
Xxx X. Xxxxx
Trustee
INVESTOR (IF AN INDIVIDUAL):
/s/ Xxxxxx Xxxxxxxxx
____________________________________________
Name: Xxxxxx Xxxxxxxxx
INVESTOR (IF AN ENTITY):
Name of Entity: ___________________________________
By:________________________________
Name:
Title:
