1999 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS 1999 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT is made as of
the 28th day of May 1999, by and among MedicaLogic, Inc., an Oregon corporation
(the "Company"), and the investors listed on Schedule A attached hereto
(collectively, the "Series A Investors"), the investors listed on Schedule C
attached hereto (the "Series C Investors"), the investors listed on Schedule E
attached hereto (the "Series E Investors") the investor listed on Schedule F
hereto (the "Series F Investor") and the investors listed on Schedule J hereto
(the "Series J Investors"). The Series A Investors, the Series C Investors, the
Series E Investors, the Series F Investor and the Series J Investors are
sometimes collectively referred to herein as the "Investors" and individually as
an "Investor."
RECITALS
WHEREAS, the Company, the Series A Investors, the Series C Investors,
the Series E Investors and the Series F Investor are parties to the 1997 Amended
and Restated Investor Rights Agreement (the "1997 Agreement") dated as of
November 10, 1997, as amended;
WHEREAS, Section 3.7 of the 1997 Agreement provides that the 1997
Agreement may be amended only with the written consent of the Company and the
holders of more than 50 percent of the Series A Preferred Stock, the holders of
more than 50 percent of the Series C Preferred Stock, the holders of more than
50 percent of the Series E Preferred Stock, the holders of more than 50 percent
of the Series E Preferred Stock and the holders of more than 50 percent of the
Series F Preferred Common Stock (including the Common Stock issued upon
conversion thereof) then outstanding;
WHEREAS, the undersigned include the Company and the holders of more
than 50 percent of the Series A Preferred Stock, more than 50 percent of the
Series C Preferred Stock, the holders of more than 50 percent of the Series E
Preferred Stock and the holders of more than 50 percent of the Series F
Preferred Stock (including the Common Stock issued upon conversion thereof)
outstanding and there are no shares of Series G Preferred Stock outstanding.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree to amend and restate the 1997
Agreement (a) to waive any rights of first offer arising under section 2.3 of
the 1997 Agreement and Section 2.3 of this Agreement in connection with the
issuance of shares of the Company's Series J Preferred Stock, to the extent the
holders of such rights are not purchasing their pro rata portion of such
shares, (b) to consent to providing registration rights to the Series J
Investors and (c) to further provide as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended.
(e) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, Series
A-1 Preferred Stock, Series C Preferred Stock, Series C-1 Preferred Stock,
Series E Preferred Stock, Series E-1 Preferred Stock, Series F Preferred Stock,
Series F-1 Preferred Stock, Series J Preferred Stock, Series J-1 Preferred
Stock, or any series of Preferred Stock subsequently authorized and issued under
Section 5(c)(ii)(E) of Article II.D., Section 5(c)(ii)(E) of Article II.F.,
Section 5(c)(ii)(E) of Article II.H., Section 5(c)(ii)(E) of Article II.I. or
Section 5(c)(ii)(E) of Article II.M. of the Company's 1994 Restated Articles of
Incorporation, as amended; (ii) the Common Stock of the Company purchased
pursuant to the Common Stock Purchase Agreement by and among the Company, Xxxx
X. Xxxxxxx, Xxxxxxx Samco, Sequoia Capital Growth Fund, Sequoia Technology
Partners III, New Enterprise Associates VI, Limited Partnership and Stanford
University, dated August 3, 1994; and (iii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of the shares referenced in (i) or (ii)
above, excluding in all cases, however, any Registrable Securities sold by a
person in a transaction in which his rights
2
under this Section 1 are not assigned or assignable and any Registrable
Securities sold to the public or sold pursuant to Rule 144 promulgated under the
Act.
(g) The number of shares of "Registrable Securities then
outstanding" shall be the aggregate number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
(a) If the Company shall receive at any time after December 31,
1999, a written request from (i) the Holders of at least fifteen percent (15%)
of the Registrable Securities then outstanding, or (ii) the holders of at least
thirty percent (30%) of the Company's Series J Preferred Stock then outstanding,
that the Company file a registration statement under the Act covering the
registration of the Registrable Securities then outstanding, then the Company
shall, within ten (10) days of the receipt thereof, give written notice of such
request to all Holders and shall, subject to the limitations of subsection
1.2(b), use its best efforts to effect as soon as practicable, and in any event
within 120 days of the receipt of such request, the registration under the Act
of all Registrable Securities that the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company in accordance with
paragraph 3.5, provided that the Registrable Securities requested by the Holders
to be registered pursuant to such request must either (i) be at least fifteen
percent (15%) of all Registrable Securities then outstanding or (ii) have an
anticipated aggregate public offering price of not less than $5,000,000.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to subsection 1.2(a) and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders, provided that
such underwriter shall be of nationally recognized standing and shall agree to
firmly underwrite such offering. In such event, the right of any Holder to
include his Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
subsection 1.4(e)) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting. Notwithstanding
any other provisions of this Section 1.2, if
3
the underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting. In a registration pursuant to Section 1.2(a)(ii), if Registrable
Securities held by a Series J Investor are excluded from the registration
pursuant to the previous sentence as a result of election of Holders other than
Series J Investors to participate in the registration, then that registration
will not be deemed to be a registration requested by the Series J Investors for
the purposes of Section 1.2(d)(ii).
(c) Notwithstanding the foregoing:
(i) If the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 1.2, a certificate signed by the
Chief Executive Officer of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such registration statement to be filed and
it is therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer taking action with respect to such
filing for a period of not more than 90 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
(ii) Upon written notice by the Company to Holders
requesting a registration statement pursuant to this Section 1.2 stating that in
the good faith judgment of the Board of Directors of the Company it would be
advantageous to the Company to raise capital in the proposed registration, then
the Company may offer shares for its own account in the proposed registration.
If any underwriter in connection with the proposed registration advises the
Initiating Holders and the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders and the Company shall so advise all Holders of Registrable Securities
which would otherwise be underwritten pursuant hereto, and the number of shares
of Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities
owned by each Holder; provided, however, that the number of shares to be offered
for the account of the Company in such underwriting shall not be reduced unless
all other securities are first entirely excluded from the underwriting; and,
provided, further, however, that the number of shares of Registrable Securities
to be included in such underwriting shall not be reduced unless all other
securities (other than shares to be offered for the account of the Company) are
first entirely excluded from the underwriting. In a registration pursuant to
4
Section 1.2(a)(ii), if Registrable Securities held by a Series J Investor are
excluded from the registration pursuant to this Section 1.2(c)(ii), then that
registration will not be deemed to be a registration requested by the Series J
Investors for the purposes of Section 1.2(d)(ii), and if Registrable Securities
held by Holders other than Series J Investors are excluded from the registration
pursuant to this Section 1.2(c)(ii), then that registration will not be deemed
to be a registration requested by the Holders for the purposes of Section
1.2(d)(i).
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect,
(i) Any registration pursuant to this Section 1.2(a)(i)
after the Company has effected one registration pursuant to that subsection and
such registration has been declared or ordered effective;
(ii) Any registration pursuant to this Section 1.2(a)(ii)
after the Company has effected two registration pursuant to that subsections and
such registrations have been declared or ordered effective; or
(iii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date sixty (60) days after the effective date of, a registration
subject to Section 1.3 hereof, provided that the Company is actively employing
in good faith all reasonable efforts to cause such registration statement to
become effective.
1.3 Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
5
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its diligent efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for a period of up to one hundred eighty
(180) days provided, however, that (i) such 180-day period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 180-day period shall be extended,
if necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective
amendment which (I) includes any prospectus required by Section 10(a)(3) of the
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
6
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2 (which right
may be assigned as provided in Section 1.13), including (without limitation) all
registration, filing, qualification, printers' and accounting fees, fees and
disbursements of counsel for the Company (including fees and disbursements of
counsel for the Company in its capacity as counsel to the selling Holders
hereunder; if Company counsel does not make itself available for this purpose,
the Company will pay the reasonable fees and
7
disbursements of one counsel for the selling Holders) shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their demand
registration rights pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing,
qualification, printers' and accounting fees, fees and disbursements of counsel
for the Company (including fees and disbursements of counsel for the Company in
its capacity as counsel to the selling Holders hereunder; if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders) but
excluding underwriting discounts and commissions relating to Registrable
Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between a majority of the Registrable Securities that indicated
they would like to be included in the underwriting, the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested by shareholders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder or in such other proportions as shall mutually
be agreed to by such selling shareholders) but in no event shall (i) the amount
of securities of the selling Holders included in the offering be reduced below
thirty percent (30%) of the total amount of securities included in such
offering, unless such offering is the initial
8
public offering of the Company's securities in which case the selling
shareholders may be excluded if the underwriters make the determination
described above and no other shareholder's securities are included or (ii)
notwithstanding (i) above, any shares being sold by a shareholder exercising a
demand registration right granted in Section 1.2 be excluded from such offering.
For purposes of the preceding parenthetical concerning apportionment, for any
selling shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro-rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements made therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the 1934 Act, any state securities
law, or any rule or regulation promulgated under the Act, and the Company will
pay to each such Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided; however, that the indemnity agreement contained in this subsection
1.10(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
9
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person or any such underwriter or Holder, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided,
however, that in no event shall any indemnity under this subsection 1.10(b)
exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
10
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying parry, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
11
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act, and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.12: (1) if
Form S-3 is not available for offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 150 days after receipt of
the request of the Holder or Holders under this Section 1.12; provided, however,
that the Company shall not utilize this right more than once in any twelve month
period, (4) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected one registration on Form S-3 for the
Holders pursuant to this Section 1.12; or (5) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
12
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. The Company shall bear and pay all expenses
incurred in connection with a registration requested pursuant to Section 1.12,
including (without limitation) all registration, filing, qualification,
printer's and accounting fees, fees and disbursements of counsel for the Company
(including fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holder or Holders hereunder; if Company counsel does not
make itself available for this purpose, the Company will pay the reasonable fees
and disbursements of one counsel for the selling Holder or Holders) but
excluding underwriting discounts and commissions relating to Registrable
Securities; provided, however, that the Company shall not be obligated to pay
registration expenses under this paragraph if the Company has already effected
two registrations on Form S-3 pursuant to this Section 1.12. Registrations
effected pursuant to this Section 1.12 shall not be counted as registrations
effected pursuant to Sections 1.2 or 1.3.
1.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities, provided: (a) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee acquires
from the Holder more than 100,000 shares; (c) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.15 below;
and (d) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
1.14 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 1.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
during the period of duration specified by the Company and an underwriter of
common stock or other securities of the Company following the date of the first
sale to the public pursuant to
13
a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company, all other persons
with registration rights (whether or not pursuant to this Agreement) and all
shareholders who hold greater than 1% of the Company's outstanding stock enter
into similar agreements;
(c) such market stand-off time period shall not exceed 90 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of the period.
Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
1.16 Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right provided
for in this Section 1 after ten (10) years following the consummation of the
sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the initial firm commitment underwritten
offering of its securities to the general public.
(b) In addition, the right of any Holder to request registration
or inclusion in any registration pursuant to Section 1 shall terminate on such
date, after the closing of the first registered public offering of Common Stock
of the Company, that all shares of Registrable Securities held or entitled to be
held upon conversion by such Holder may immediately be sold under Rule 144
during any 90-day period; provided, however, that the provisions of this Section
1.16(b) shall not apply to any Holder who owns at least one percent (1%) of the
Company's outstanding stock.
14
2. Covenants of the Company.
2.1 Delivery of Financial Statements.
(a) The Company shall deliver to each Investor who holds any
shares of Preferred Stock or the shares issued or issuable upon conversion
thereof:
(i) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
shareholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with Generally Accepted Accounting Principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(ii) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement,
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter;
(b) The Company shall deliver to each Investor who holds at
least 100,000 shares of Series A Preferred Stock, Series C Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series J Preferred Stock
(or Common Stock issued or issuable upon conversion thereof, as adjusted for
stock splits, stock dividends, and the like):
(i) as soon as practicable, but in any event thirty (30)
days prior to the end of each fiscal year, a budget and business plan for the
next fiscal year, prepared on a monthly basis, including balance sheets and
statements of cash flows for such months (the "Annual Financial Plan") and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
(ii) within twenty (20) days of the end of each month, an
unaudited income statement and statement of cash flows and balance sheet for and
as of the end of such month, in reasonable detail, and comparing the results to
the Annual Financial Plan and to the prior year comparable period;
(iii) with respect to the financial statements called for in
subsections (a)(ii) and (b)(ii) of this Section 2.1, an instrument executed by
the Chief Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment; and
15
(iv) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as any of
such Investors or any assignee of any of such Investors may from time to time
request; provided, however, that the Company shall not be obligated under this
subsection (b)(iv) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each of the Investors who
holds at least 100,000 shares of Series A Preferred Stock, Series C Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock or Series J Preferred
Stock (or the Common Stock issuable upon conversion thereof, as adjusted for
stock splits, stock dividends and the like), at such Investors' expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by such Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information.
2.3 Right of First Offer. Subject to the terms and conditions
specified in this paragraph 2.3, the Company hereby grants to each Investor a
right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). For purposes of this Section 2.3, "Investor" includes
any general partners, affiliates, immediate family members (or a trust for the
benefit therefor) to whom shares of Preferred Stock or the Common Stock issuable
upon conversion thereof, were gifted or transferred and any trust for the
benefit of an Investor (collectively, "All Related Parties"). Each of the
Investors shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners and affiliates in such proportions as it deems
appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Investor (provided that the Company shall not be obligated to offer Shares
to any Investor or other party that is not an accredited investor as defined in
Rule 501(a) under the Act) in accordance with the following provisions:
(a) The Company shall deliver a notice ("Notice") to each
Investor stating (i) its bona fide intention to offer such Shares, (ii) the
number of such Shares to be offered and (iii) the price and terms, if any, upon
which it proposes to offer such Shares.
(b) By written notification received by the Company, within 30
calendar days after receiving the Notice, an Investor may elect to purchase or
obtain, at the price and on the terms specified in the Notice, up to that
portion of such Shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon
16
conversion of the Series A Preferred Stock, Series A-1 Preferred Stock, Series C
Preferred Stock, Series C-1 Preferred Stock, Series E Preferred Stock, Series
E-1 Preferred Stock, Series F Preferred Stock, Series F-1 Preferred Stock,
Series J Preferred Stock or Series J-1 Preferred Stock then held, by such
Investor bears to the total number of shares of Common Stock outstanding, or
issuable upon conversion of outstanding Series A Preferred Stock, Series A-1
Preferred Stock, Series C Preferred Stock, Series C-1 Preferred Stock, Series E
Preferred Stock, Series E-1 Preferred Stock, Series F Preferred Stock, Series
F-1 Preferred Stock, Series J Preferred Stock or Series J-1 Preferred Stock.
(c) If all Shares that the Investors are entitled to obtain
pursuant to subsection 2.3(b) are not elected to be obtained as provided in
subsection 2.3(b) hereof, the Company may, during the 60-day period following
the expiration of the period provided in subsection 2.3(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more materially favorable to the offeree
than those specified in the Notice. If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement is
not consummated within 30 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.3 shall not be
applicable to (i) the shares of Common Stock issuable or issued to directors,
employees or other service providers to the Company at any time when the total
number of shares of Common Stock so issuable or issued after the date of this
Agreement (and not repurchased at cost by the Company in connection with the
termination of service as a director, employee or other service provider) does
not exceed 4,891,174 plus (x) the number of shares of Common Stock repurchased
at cost by the Company from directors, employees or other service providers in
connection with termination of employment or other service arrangements pursuant
to agreements entered into prior to or on the date of this Agreement and (y) the
number of shares of Common Stock subject to outstanding options on the date of
this Agreement that subsequently terminate unexercised, (ii) the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities, (iii) the issuance of securities in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, (iv) up to 550,000
shares of Common Stock issued to Enterprise Partners, provided such stock is
issued by the Corporation for not less than $2.00 per share, or (v) Common Stock
issued to Baylor College of Medicine ("BCM") or its assignees in connection with
the sale of software licenses by the Company to BCM and other customers in the
Houston, Texas market.
(e) The right of first offer set forth in this Section 2.3 may
not be assigned or transferred.
17
2.4 IRC Section 305. So long as any shares of Series A Preferred
Stock, Series A-1 Preferred Stock, Series C Preferred Stock, Series C-1
Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock, Series F
Preferred Stock, Series F-1 Preferred Stock, Series J Preferred Stock, or Series
J-1 Preferred Stock remain outstanding, the Company will not, without approval
of holders of a majority of the Series A Preferred Stock, Series A-1 Preferred
Stock, Series C Preferred Stock, Series C-1 Preferred Stock, Series E Preferred
Stock, Series E-1 Preferred Stock, Series F Preferred Stock, Series F-1
Preferred Stock, Series J Preferred Stock, or Series J-1 Preferred Stock then
outstanding (together on an as-converted basis) do any act or thing which the
Company knows would result in taxation of the holders of shares of the Series A
Preferred Stock, Series A-1 Preferred Stock, Series C Preferred Stock, Series
C-1 Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock,
Series F Preferred Stock, Series F-1 Preferred Stock, Series J Preferred Stock,
or Series J-1 Preferred Stock under Section 305 of the Internal Revenue Code of
1986, as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
2.5 Directors' Expenses. The Company shall pay all reasonable expenses
of members of the Company's Board of Directors when such members are acting on
behalf of the Company, including attending meetings of the Board of Directors.
2.6 Company Right of First Refusal. The Company covenants that, unless
otherwise approved by (i) unanimous vote of the Company's Board of Directors or
(ii) holders of a majority of the outstanding shares of Series A Preferred
Stock, Series C Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series J Preferred Stock (voting together on an as-converted basis), as
to any stock of the Company issued after June 30, 1993 to employees, directors,
officers or consultants of the Company ("Affiliates") or issuable pursuant to
stock options granted under an employee stock option plan (collectively,
"Affiliate Stock"),
(a) the Affiliate Stock shall vest over a three-year period with
no shares vesting during the first six months and 1/30 of the shares vesting
each month thereafter, with the unvested shares subject to repurchase by the
Company at cost in the event of termination of such individual's services to the
Company for any reason;
(b) the Company shall have a right of first refusal to purchase
any such Affiliate Stock offered for sale upon the same terms the Affiliate
offers to sell such Affiliate Stock to any third party; and
(c) should the Company decline to exercise its right of first
refusal, the Series A Investors, Series C Investors, Series E Investors, Series
F Investors and Series J Investors shall have a right of first refusal to
purchase on a pro rata basis (according to the total shares of Common Stock
issued or issuable upon conversion of Series A Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series J
18
Preferred Stock) any such Affiliate Stock offered for sale upon the same terms
the Affiliate offers to sell such Affiliate Stock to any third party.
2.7 Encumbering Assets. The Company shall not encumber all or
substantially all of its assets without the unanimous approval of its Board of
Directors.
2.8 Salary Increases. The Company shall not increase the compensation
of directors, officers or management employees (including any such increase
pursuant to any bonus, pension, profit sharing or other plan or commitment)
without the unanimous approval of its Board of Directors.
2.9 Issuance of Stock. Except for shares of the Company's Common Stock
issuable on the exercise of options outstanding as of the date of this
agreement, the Company shall not issue any shares of the Company's capital stock
to Xxxx Xxxxxxx, Xxxxxxx Samco or Xxxxx Xxxxxxxxxxx without the unanimous
consent of its Board of Directors.
2.10 Loans; Insider Transactions. The Company shall not, without the
unanimous approval of its Board of Directors, (i) make, or permit any subsidiary
to make, any loan or advance to or guarantee, directly or indirectly, any
indebtedness of, any person, including, without limitation, any employee or
director of the Company or any subsidiary, except advances and similar
expenditures in the ordinary course of business or under the terms of an
employee stock or option plan approved by the Board of Directors or (ii) enter
into any material transaction with any officer, director or holder of more than
five percent (5%) of the outstanding stock of the Company, including any
contract or agreement providing for the employment of, furnishing of goods or
services by, or the rental of real or personal property from such person.
2.11 Termination of Covenants. The covenants set forth in Sections 2.1
through 2.10 shall terminate and be of no further force or effect upon the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with a firm commitment
underwritten offering of its securities to the general public.
2.12 Board Observation Rights. Each Investor who holds at least
100,000 shares of Series A Preferred Stock, Series C Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series J Preferred Stock (or Common
Stock issued or issuable upon conversion thereof, as adjusted for stock splits,
stock dividends, and the like) shall have the right to send a nonvoting observer
to attend meetings of the Board of Directors of the Company. Such observers
shall have the right to receive notice of all such meetings and to receive all
information and materials provided by the Company to the Board of Directors;
provided, however, that such observer shall agree to hold in confidence all
information so provided and shall not use such information other than for
purposes of its investment in the Company; and, provided, further, that the
Company reserves the right to withhold any
19
information and to exclude such observer from any meeting or portion thereof if
access to such information or attendance at such meeting could reasonably be
expected to adversely affect the attorney-client privilege between the Company
and its counsel or if such access or attendance would reasonably be expected to
result in disclosure of trade secrets to a direct competitor of the Company.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid or upon delivery to a recognized courier service and addressed
to the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or
20
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of more than fifty percent
(50%) of the Series A Preferred Stock, the holders of more than fifty percent
(50%) of the Series C Preferred Stock, the holders of more than fifty percent
(50%) of the Series E Preferred Stock, the holders of more than fifty percent
(50%) of the Series F Preferred Common Stock and the holders of more than fifty
percent (50%) of the Series J Preferred Stock (including the Common Stock issued
upon conversion thereof) then outstanding (together on an as-converted basis).
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Registrable Securities, or shares of Series A
Preferred Stock, Series A-1 Preferred Stock, Series C Preferred Stock, Series
C-1 Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock,
Series F Preferred Stock, Series F-1 Preferred Stock, Series J Preferred Stock,
Series J-1 Preferred Stock or any series of Preferred Stock subsequently
authorized and issued under Section 5(c)(ii)(E) of Article II.D., Section
5(c)(ii)(E) of Article II.F., Section 5(c)(ii)(E) of Article II.H., Section
5(c)(ii)(E) of Article II.I. or Section 5(c)(ii)(E) of Article II.M. of the
Company's 1994 Restated Articles of Incorporation, as amended (including the
Common Stock issued or issuable upon conversion thereof), as applicable, then
outstanding, each further holder of all such Registrable Securities, shares of
Series A Preferred Stock, Series C Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series J Preferred Stock (including the Common Stock
issued or issuable upon conversion thereof) as applicable, and the Company.
3.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.9 Aggregation of Stock. All shares of Registrable Securities or
Series A Preferred Stock, Series C Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series J Preferred Stock (including the Common Stock
issuable upon conversion thereof), as applicable, held or acquired by an
Investor and All Related Parties of such Investor shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.10 Entire Agreement; Amendment; Waiver. This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and supersedes the 1997 Agreement.
3.11 Additional Parties. In the event of a subsequent closing with an
investor as provided for in Section 1.3 of the Stock Purchase Agreement between
the Company and the Series J Investors, such investor shall become a party to
this Agreement as an "Investor" upon receipt from such investor of a fully
executed signature page hereto.
21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MEDICALOGIC, INC.
By: XXXX XXXXXXX
-------------------------------------
Printed Name: Xxxx Xxxxxxx, M.D.
Title: President
INVESTORS: VHA INC.
By: XXXXXXX XXXXXXX
-------------------------------------
Its: Sr. VP
------------------------------------
Printed name: Xxxxxxx Xxxxxxx
---------------------------
APPLEWOOD ASSOCIATES, L.P.
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
21ST CENTURY COMMUNICATIONS
PARTNERS, L.P.
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
21ST CENTURY COMMUNICATIONS
T-E PARTNERS, L.P.
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
22
21ST CENTURY COMMUNICATIONS
FOREIGN PARTNERS, L.P.
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
BOSTON SAFE DEPOSIT & TRUST CO.,
TRUSTEE FOR US WEST PENSION TRUST
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
BOSTON SAFE DEPOSIT & TRUST CO.,
TRUSTEE FOR US WEST BENEFIT
ASSURANCE
By:
-------------------------------------
Its:
------------------------------------
Printed name:
---------------------------
PILGRIM, XXXXXX HYBRID PARTNERS I,
L.P.
By: Pilgrim Xxxxxx Hybrid Partners
General Partners L.P.
By: Pilgrim Xxxxxx & Associates, Ltd.,
Its General Partner
By: XXXXXX X. XXXX
-------------------------------------
Its: Executive Officer
------------------------------------
Printed name: Xxxxxx X. Xxxx
---------------------------
NEW ENTERPRISE ASSOCIATES VI, LIMITED
PARTNERSHIP
By: NEA Partners VI, Limited Partnership
- its General Partner
By: XXXXXX X. XXXX
-------------------------------------
Printed name: Xxxxxx X. Xxxx
---------------------------
Title: General Partner
----------------------------------
23
SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995
By: XXXX XXXXXXX
-------------------------------------
Printed name: Xxxx Xxxxxxx
---------------------------
Title: Partner
----------------------------------
SEQUOIA CAPITAL GROWTH FUND
SEQUOIA TECHNOLOGY PARTNERS III
By: XXXX XXXXXXX
-------------------------------------
Printed name: Xxxx Xxxxxxx
---------------------------
Title: Partner
----------------------------------
OMEGA VENTURES II, L.P.
By: Omega Ventures II Management, L.L.C.
Its General Partner
By: XXXXXXX X. XXXXX
-------------------------------------
Its Managing Member
Printed name: Xxxxxxx X. Xxxxx
---------------------------
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management, L.L.C.
Its Investment General Partner
By: XXXXXXX X. XXXXX
-------------------------------------
Its Managing Member
Printed name: Xxxxxxx X. Xxxxx
---------------------------
24
CROSSOVER FUND II, L.P.
By: Crossover Investment Management,
L.L.C.
Its General Partner
By: XXXXXXX X. XXXXX
-------------------------------------
Its Managing Member
Printed name: Xxxxxxx X. Xxxxx
---------------------------
CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management,
L.L.C.
Its General Partner
By: XXXXXXX X. XXXXX
-------------------------------------
Its Managing Member
Printed name: Xxxxxxx X. Xxxxx
---------------------------
BAYVIEW INVESTORS, LTD.
By: Xxxxxxxxx, Xxxxxxxx & Company Private
Equity Group, L.L.C.
Its General Partner
By: XXXXXXX X. XXXXX
-------------------------------------
Its Managing Member
Printed name: Xxxxxxx X. Xxxxx
---------------------------
FRANKLIN CAPITAL ASSOCIATES III L.P.
By: Franklin Ventures III L.P.
Its General Partner
By:
-------------------------------------
Its Managing Member
Printed name:
---------------------------
25
CONTINENTAL CASUALTY COMPANY
By: XXXXX XXXXXX
-------------------------------------
Its: Sr. V.P.
------------------------------------
Printed name: Xxxxx Xxxxxx
---------------------------
QUANTUM INDUSTRIAL PARTNERS LDC
By: XXXXXXX X. XXXX
-------------------------------------
Its: Attorney-in-Fact
------------------------------------
Printed name: Xxxxxxx X. Xxxx
---------------------------
SFM DOMESTIC INVESTMENTS LLC
By: XXXXXXX X. XXXX
-------------------------------------
Its: Attorney-in-Fact
------------------------------------
Printed name: Xxxxxxx X. Xxxx
---------------------------
SEQUOIA CAPITAL FRANCHISE FUND
By: XXXX XXXXXXX
-------------------------------------
Its: Partner
------------------------------------
Printed name: Xxxx Xxxxxxx
---------------------------
SEQUOIA CAPITAL FRANCHISE PARTNERS
By: XXXX XXXXXXX
-------------------------------------
Its: Partner
------------------------------------
Printed name: Xxxx Xxxxxxx
---------------------------
26
FRANKLIN CAPITAL ASSOCIATES III L.P.
By: FRANKLIN VENTURES III L.P.,
its General Partner
By: W. XXXXX XXXXXXX
-------------------------------------
W. Xxxxx Xxxxxxx
its General Partner
XXXXXXX XXXXXXX XXXXXXX XXXXX IV L.P.
By: CSHB VENTURES IV L.P.,
its General Partner
By: W. XXXXX XXXXXXX
-------------------------------------
W. Xxxxx Xxxxxxx
its General Partner
CROSSOVER FUND II, L.P.
By: Crossover Investment Management,
L.L.C.
its General Partner
By: XXXXXXX XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx, Managing Member
CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management,
L.L.C.
its General Partner
By: XXXXXXX XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx, Managing Member
27
OMEGA VENTURES II, L.P.
By: Omega Ventures II Management, L.L.C.
its General Partner
By: XXXXXXX XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx, Managing Member
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management, L.L.C.
its General Partner
By: XXXXXXX XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx, Managing Member
BAYVIEW INVESTORS, LTD.
By: XXXX X. XXXXXXX
-------------------------------------
Xxxx X. Xxxxxxx, Authorized Signatory
DELL USA L.P.
By: Dell Gen. P. Corp.,
Its General Partner
By: XXXXXX X. XXXXX, XX.
---------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
-------------------------------
Title: Vice President and
Assistant Secretary
------------------------------
28
SUPPLEMENTAL SIGNATURE PAGE
(1999 Amended and Restated Investor Rights Agreement)
This Supplemental Signature Page to the MedicaLogic, Inc. 1999 Amended and
Restated Investor Rights Agreement dated as of May 28, 1999 (the "Investor
Rights Agreement") is executed and delivered as of the date set forth below.
For and in consideration of the mutual promises contained in the Investor
Rights Agreement, the undersigned hereby agrees to be designated as a party to,
and agrees to be bound by each and all terms of, the Investor Rights Agreement.
Dated as of the 3rd day of August, 1999.
XXXX X. XXXXXXX
---------------------------------
Xxxx X. Xxxxxxx
XXXXXXX XXXXX
---------------------------------
Xxxxxxx Xxxxx
XXXX XXXXXX
---------------------------------
Xxxx Xxxxxx
29
SCHEDULE A
SCHEDULE OF SERIES A INVESTORS
------------------------------
Total
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
Xxxxx Ventures III, L.P. 460,000 $ 460,000.00
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Sequoia Capital Growth Fund 1,479,093 $ 1,479,093.00
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Sequoia Technology Partners III 158,241 $ 158,241.00
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
New Enterprise Associates VI, 2,637,334 $ 2,637,334.00
Limited Partnership
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxx 15,333 $ 15,333.00
New Enterprise Associates
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Total: 5,750,001 $ 5,750,001.00
30
SCHEDULE C
SCHEDULE OF SERIES C INVESTORS
------------------------------
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
Omega Ventures II, L.P. 1,140,391 $ 2,565,879.75
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Omega Ventures II Cayman, L.P. 281,831 $ 634,119.75
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Crossover Fund II, L.P. 499,051 $ 1,122,864.75
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Crossover Fund IIA, L.P. 71,528 $ 160,938.00
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Bayview Investors, Ltd. 184,978 $ 416,200.50
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Amerindo Technology 133,333 $ 299,999.25
Growth Fund II
00 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X0XX
Franklin Capital Associates III, L.P. 1,222,222 $ 2,749,999.50
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Xxxxxx Xxxx SBIC L.P. 888,890 $ 2,000,002.50
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
New Enterprise Associates VI, 1,181,112 $ 2,657,502.00
Limited Partnership
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Sequoia Capital VI 716,541 $ 1,612,217.25
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Sequoia Technology 39,370 $ 88,582.50
Partners VI
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Sequoia 1995 31,497 $ 70,868.25
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Sequoia Capital Growth Fund 370,082 $ 832,684.50
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Sequoia Technology 23,621 $ 53,147.25
Partners III
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Xxxxx Ventures III, L.P. 128,889 $ 290,000.25
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
2
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
Xxx Xxxxxx 28,889 $ 65,000.25
Xxxxxxxxx, Xxxxxxxx & Company
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxx 11,111 $ 24,999.75
Xxxxxx Xxxx Investments Inc.
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Xxxx Xxxxxx 11,111 $ 24,999.75
Xxxxxx Xxxx Investments Inc.
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Xxxxx Xxxxx 11,111 $ 24,999.75
Xxxxxx Xxxx Investments Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxxx 11,111 $ 24,999.75
Xxxxxx Xxxx Investments Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxx Xxxxxxx, M.D 6,667 $ 15,000.75
Xxxxxxx Hole Group
0000 Xxxxxxxxxx Xxxx
XX Xxx 000
Xxxxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx 4,445 $ 10,001.25
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Xxxxxx-Wild 4,444 $ 9,999.00
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxx 4,444 $ 9,999.00
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
3
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
Xxxxxxx X. Xxxxxxx 3,746 $ 8,428.50
New Enterprise Associates
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xx. Xxxx X. Xxxxxxxx, Xx. 2,222 $ 4,999.50
New Enterprise Associates
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Total 7,012,637.00 $15,778,433.25
4
SCHEDULE E
SCHEDULE OF SERIES E INVESTORS
------------------------------
Number of Total
Investor Shares Purchase Price
-------- ----------- --------------
VHA Inc. 1,587,302 $ 5,000,001.30
Applewood Associates, L.P. 317,461 $ 1,000,002.15
21st Century Communications Partners, L.P. 430,480 $ 1,356,012.00
21st Century Communications T-E Partners,
L.P. 146,480 $ 461,412.00
21st Century Communications Foreign
Partners, L.P. 57,960 $ 182,574.00
Boston Safe Deposit & Trust Co., Trustee for 714,286 $ 2,250,000.90
US West Pension Trust
Boston Safe Deposit & Trust Co., Trustee for 238,095 $ 749,999.25
US West Benefit Assurance
Pilgrim, Xxxxxx Hybrid Partners I, L.P. 634,921 $ 2,000,001.15
New Enterprise Associates VI, Limited 142,720 $ 449,568.00
Partnership
Sequoia Capital VI 85,285 $ 268,647.75
Sequoia Technology Partners VI 4,686 $ 14,760.90
Sequoia 1995 3,749 $ 11,809.35
Sequoia Capital Growth Fund 44,049 $ 138,754.35
Sequoia Technology Partners III 2,811 $ 8,854.65
Omega Ventures II, L.P. 42,582 $ 134,133.30
Omega Ventures II Cayman, L.P. 10,524 $ 33,150.60
Crossover Fund II, L.P. 18,634 $ 58,697.10
Crossover Fund IIA, L.P. 2,670 $ 8,410.50
Bayview Investors, Ltd. 6,907 $ 21,757.05
Franklin Capital Associates III, L.P. 45,638 $ 143,759.70
Xxxxxx Xxxx SBIC, L.P. 33,190 $ 104,548.50
Xxxxxxx Associates, L.L.C. 31,747 $ 100,003.05
German American Capital 111,111 $ 349,999.65
DMG Technology Partners 47,619 $ 149,999.85
Xxxx X. Xxxxxxx, Xx., M.D. 1,000 $ 3,150.00
----------- --------------
4,761,907 $15,000,007.05
5
SCHEDULE F
SCHEDULE OF SERIES F INVESTORS
------------------------------
Number of Total
Investor Shares Purchase Price
-------- ----------- --------------
Continental Casualty Company 4,000,000 $13,600,000.00
6
SCHEDULE J
SCHEDULE OF SERIES J INVESTORS
------------------------------
Number of Total
Investor Shares Purchase Price
-------- ----------- --------------
Quantum Industrial Partners LDC 3,136,842 $14,900,000.00
SFM Domestic Investments LLC 3,136,842 $14,900,000.00
Sequoia Capital Franchise Fund 894,737 $ 4,250,000.00
Sequoia Capital Franchise Partner 157,895 $ 750,000.00
INITIAL SERIES J CLOSING 7,326,316 $34,800,000.00
Franklin Capital Associates III L.P. 105,263 $ 500,000.00
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxx IV L.P. 421,053 $ 2,000,000.00
Crossover Fund II, L.P. 78,535 $ 373,043.00
Crossover Fund IIA, L.P. 11,256 $ 53,467.00
Omega Ventures II, L.P. 67,893 $ 322,492.00
Omega Ventures II Cayman, L.P. 23,732 $ 112,727.00
Bayview Investors, Ltd. 29,110 $ 138,272.00
Dell Computer Corporation 1,052,632 $ 5,000,000.00
SECOND CLOSING TOTAL 1,789,474 $ 8,500,000.00
GRAND TOTAL 9,115,790 $43,300,000.00
7
