EXHIBIT 4.2
INVESTOR RIGHTS AGREEMENT
among
SEATTLE GENETICS, INC
and
THE INVESTORS NAMED HEREIN
Dated as of [__________] [__], 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.......................................... 1
1.1 Definitions................................................................. 1
1.2 Rules of Construction....................................................... 6
ARTICLE II BOARD OF DIRECTORS.......................................................... 6
2.1 Election of Board Members................................................... 6
2.2 Board Meetings.............................................................. 9
2.3 Expenses.................................................................... 9
2.4 Subsidiary Board............................................................ 9
2.5 Committees.................................................................. 9
2.6 Qualifications of Board Members............................................. 9
ARTICLE III ADDITIONAL AGREEMENTS...................................................... 10
3.1 Inconsistent Agreements.................................................... 10
3.2 Information Rights......................................................... 10
3.3 Compliance................................................................. 12
3.4 Insurance.................................................................. 12
3.5 Affirmative Covenants...................................................... 12
3.6 Tax Treatment.............................................................. 14
ARTICLE IV REGISTRATION RIGHTS........................................................ 14
4.1 Required Registration...................................................... 14
4.2 Piggyback Registration..................................................... 16
4.3 Registrations on Form S-3.................................................. 16
4.4 Preparation and Filing..................................................... 17
4.5 Expenses................................................................... 20
4.6 Indemnification............................................................ 21
4.7 Underwriting Agreement..................................................... 23
4.8 Suspension................................................................. 24
4.9 Information by Holder...................................................... 24
4.10 Exchange Act Compliance.................................................... 24
4.11 No Conflict of Rights...................................................... 24
4.12 Transfer of Registration Rights............................................ 25
4.13 Termination................................................................ 25
ARTICLE V SECURITIES LAW COMPLIANCE; LEGENDS......................................... 25
5.1 Restriction on Transfer.................................................... 25
5.2 Restrictive Legends........................................................ 25
(i)
ARTICLE VI AMENDMENT AND WAIVERS...................................................... 26
6.1 Amendment.................................................................. 26
6.2 Waivers; Extensions........................................................ 26
ARTICLE VII TERMINATION................................................................ 27
ARTICLE VIII MISCELLANEOUS.............................................................. 27
8.1 Grant of Proxy............................................................. 27
8.2 Regulatory Matters......................................................... 27
8.3 Severability............................................................... 28
8.4 Entire Agreement........................................................... 28
8.5 Independence of Agreements, Covenants, Representations and Warranties...... 29
8.6 Successors and Assigns..................................................... 29
8.7 Counterparts; Facsimile Signatures......................................... 29
8.8 Remedies................................................................... 29
8.9 Notices.................................................................... 30
8.10 Governing Law; Waiver of Jury Trial........................................ 31
8.11 Further Assurances......................................................... 31
8.12 Conflicting Agreements..................................................... 31
8.13 No Third Party Reliance.................................................... 32
(ii)
INVESTOR RIGHTS AGREEMENT dated as of
[________], 2003, among SEATTLE GENETICS, INC.,
a Delaware corporation (the "Company"), and the
INVESTORS of the Company listed on Schedule I
hereto, and their permitted assigns
(collectively, the "Investors").
WHEREAS, the Company proposes to issue up to an aggregate of
1,640,000 shares of its Series A Convertible Preferred Stock, par value $0.001
per shares (the "Series A Preferred Stock") and warrants (the "Warrants") to
purchase up to 2,050,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), pursuant to a Securities Purchase Agreement dated as of May 12,
2003 (the "Purchase Agreement") among the Company and the Investors.
WHEREAS, as a condition of entering into the Purchase Agreement,
the Investors have requested that the Company extend to them certain
registration rights, information rights and other rights, and the Company
desires to extend such rights, on terms set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
1.1 DEFINITIONS.
Capitalized terms used in this Agreement and not defined herein have the
meanings ascribed to them in the Purchase Agreement. The following capitalized
terms used in this Agreement have the meanings ascribed to them below:
"Accountants" has the meaning ascribed to it in Section 3.2(a)(iii).
"BBI" means collectively, Xxxxx/Xxxxx Investments, L.P., Xxxxx Bros.
Investments, L.P., Xxxxx Bros. Investments II, L.P., Xxxxx Biotech Fund I, L.P.,
Xxxxx Biotech Fund II, L.P., Xxxxx Biotech Fund II (Z), L.P. and/or any other
entity controlled by, controlling or under common control with any of the
preceding Persons at such time, to the extent such Persons hold shares of Series
A Preferred Stock, Warrants or Common Stock issued upon conversion of the Series
A Preferred Stock or exercise of the Warrants.
"BBI Director" has the meaning ascribed to it in Section 2.1(b)(ii).
"Board" means the board of directors of the Company.
"BAVP" means BAVP, L.P.
"Bylaws" means the Bylaws of the Company, as amended, modified,
supplemented or restated and in effect from time to time.
"Common Stock" has the meaning ascribed to it in the Recitals.
"Common Stock Equivalents" means all shares of Common Stock outstanding
and all shares of Common Stock issuable (without regard to any present
restrictions on such issuance) upon the conversion, exchange or exercise of all
Securities of the Company that are convertible, exchangeable or exercisable for
Common Stock.
"Company" has the meaning ascribed to it in the Caption and shall
include any Subsidiary of the Company.
"Document(s)" means, individually or collectively, this Agreement, the
Purchase Agreement, the Certificate of Designations, the Warrants, the Option
Agreement, the Regulatory Sideletter and all other documents executed in
connection with this transaction.
"Equity Incentive Plans" means, collectively, the Company's 1998 Stock
Option Plan, the 2000 Directors' Stock Option Plan and the 2000 Employee Stock
Purchase Plan, in each case, as amended, and any stock option, issuance,
appreciation rights or other equity incentive plan for the independent
directors, officers, and full time employees of, and consultants to, the Company
which plan has been approved by the Board.
"Excluded Investors" means BAVP and X.Xxxx.
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time, consistently applied.
"JPMP Director" has the meaning ascribed to it in Section 2.1(b)(i).
"JPMP Entities" means, collectively, X.X. Xxxxxx Partners (BHCA), L.P.,
JPMP Global, X.X. Xxxxxx Partners Global Investors (Cayman), L.P., X.X. Xxxxxx
Partners Global Investors A, L.P., X.X. Xxxxxx Partners Global Investors
(Cayman) II, L.P. and/or any other entity controlled by, controlling or under
common control with any of the preceding Persons at such time, including any
entity controlled by JPMP Master Fund Manager, L.P., or any Affiliate thereof,
or any entity managed or advised by X.X. Xxxxxx Partners, LLC, JPMP Capital
Corp. or any Affiliate thereof, to the extent such Persons hold shares of Series
A Preferred Stock or Warrants, or Common Stock issuable upon conversion or
exercise thereof.
"JPMP Global" means X.X. Xxxxxx Partners Global Investors, L.P.
"Information" has the meaning ascribed to it in Section 4.4(a)(ix).
"Inspectors" has the meaning ascribed to it in Section 4.4(a)(ix).
"Investors' Counsel" has the meaning ascribed to such term in Section
4.4(a)(ii).
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"Material Sale" means (i) the sale (in one or a series of related
transactions) of all or substantially all of the Company's assets to a Person or
a group of Persons acting in concert (including, without limitation, the sale of
a division of the Company or such assets of the Company that would materially
change the nature or composition of the Company's business lines), (ii) the sale
or transfer (in one or a series of related transactions) of a majority of the
outstanding capital stock of the Company, to one Person or a group of Persons
acting in concert, or (iii) the merger or consolidation of the Company with or
into another Person that is not an Affiliate of the Company, in each case in
clauses (ii) and (iii) above under circumstances in which the holders of a
majority in voting power of the outstanding capital stock of the Company
immediately prior to such transaction own less than a majority in voting power
of the outstanding capital stock of the Company, or the surviving or resulting
corporation or acquirer, as the case may be, immediately following such
transaction; provided, however, that a debt or equity financing where (x) the
Company is the surviving corporation and (y) individuals who served as members
of the Board immediately prior to such financing constitute at least
three-fourths (3/4) of the members of the Board (rounded up to the nearest whole
number) after such financing, shall not be deemed a Material Sale. A sale (or
multiple related sales) of one or more Subsidiaries (whether by way of merger,
consolidation, reorganization or sale of all or substantially all assets or
securities) which constitutes all or substantially all of the consolidated
assets of the Company shall be deemed a Material Sale.
"Material Transaction" means any material transaction in which the
Company or any of its Subsidiaries proposes to engage or is engaged, including a
purchase or sale of assets or securities, financing, merger, consolidation,
tender offer or any other transaction that would require disclosure pursuant to
the Exchange Act, and with respect to which the Board has determined in good
faith that compliance with this Agreement may reasonably be expected to either
materially interfere with the Company's or such Subsidiary's ability to
consummate such transaction in a timely fashion or require the Company to
disclose material, non-public information prior to such time as it would
otherwise be required to be disclosed.
"NASD" has the meaning ascribed to it in Section 4.4(a)(xiv).
"NMS" has the meaning ascribed to it in Section 4.4(a)(xiv).
"Observer" has the meaning ascribed to it in Section 2.1(f).
"Other Shares" means at any time those shares of Common Stock that do
not constitute Primary Shares or Registrable Shares.
"Preferred Directors" has the meaning ascribed to it in Section
2.1(b)(ii).
"Preferred Stock" means, collectively, the Series A Preferred Stock and
any other class or series of Preferred Stock issued by the Company in accordance
with the Restated Certificate or any certificate of designations and this
Agreement.
"Primary Shares" means, at any time, the authorized but unissued shares
of Common Stock or Common Stock held by the Company in its treasury.
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"Prospectus" means the prospectus included in a Registration Statement,
including any prospectus subject to completion, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Shares and, in each case, by
all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Public Offering" means the closing of a public offering of Common Stock
solely for cash pursuant to a Registration Statement declared effective under
the Securities Act, except that a Public Offering shall not include an offering
of securities to be issued as consideration in connection with a business
acquisition pursuant to Rule 145 of the Securities Act, an offering of
securities issuable pursuant to an Equity Incentive Plan, a registration in
which the only stock being registered is Common Stock issuable upon conversion
of debt securities which are also being registered or any 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
Registrable Securities hereunder.
"Public Sale" means any sale, occurring simultaneously with or after a
Public Offering, of Securities to the public pursuant to an offering registered
under the Securities Act or to the public through a broker, dealer or market
maker (pursuant to the provisions of Rule 144 or otherwise).
"Purchase Agreement" has the meaning ascribed to it in the Recitals.
"Records" has the meaning ascribed to it in Section 4.4(a)(ix).
"Registrable Shares" means, at any time, (a) Common Stock issued or
issuable upon conversion of the Series A Preferred Stock held, or hereafter
acquired, by the Investors and their permitted assigns, (b) Common Stock issued
or issuable upon exercise of the Warrants held, or hereafter acquired, by the
Investors and their permitted assigns, and (c) any Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such above-described securities.
Notwithstanding the foregoing, Registrable Shares shall not include any
Securities sold by a Person to the public pursuant to a Registration Statement
which has been declared effective, or Rule 144 or sold in a private transaction
in which the Transferor's rights under Article IV of this Agreement are not
assigned, in each case where the restrictive legends and transfer restrictions
with respect to Common Stock are removed and the Common Stock in the hands of
the purchaser is freely transferable without any restriction or registration
under the Securities Act in any public or private transaction.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Shares, and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Representative" of a Person shall be construed broadly and shall
include such Person's partners, officers, directors, employees, agents, counsel,
accountants and other representatives.
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"Requisite Investors" means those Investors who hold in the aggregate at
least sixty-six and two-thirds percent (66 2/3%) of the outstanding Series A
Preferred Stock (including Common Stock issued upon conversion thereof) held by
all Investors at the time of determination; provided, however, that in the event
such determination is in connection with the required registration of
Registrable Shares as set forth in Sections 4.1 hereof, Requisite Investors
means those Investors who hold in the aggregate in excess of thirty-three and
one-third percent (33 1/3%) of the then outstanding Series A Preferred Stock
held by the Investors; provided, further, however, that in the event such
determination is in connection with the required registration of Registrable
Shares as set forth in Sections 4.3 hereof, Requisite Investors means those
Investors who hold in the aggregate in excess of thirty-three and one-third
percent (33 1/3%) of the then outstanding Series A Preferred Stock (including
Common Stock issued upon conversion thereof) held by the Investors. In any
situation where consent from or approval of the Requisite Investors is required,
the Company may select the Investors constituting the Requisite Investors in its
discretion and the requirement shall be deemed satisfied so long as the consent
or approval is received from Investors who hold the requisite percentage of
Series A Preferred Stock (including Common Stock issued upon conversion thereof)
called for herein. In such case the Company shall promptly provide notice of
such consent or approval to each of the Investors.
"Restated Certificate" means the Fourth Amended and Restated Certificate
of Incorporation of the Company, as amended and in effect at the time of
determination, including any certificates of designations filed with the
Secretary of State of the State of Delaware pursuant to the terms thereof.
"Rule 144" means Rule 144 (including Rule 144(k)) and all other
subdivisions thereof) promulgated by the Commission under the Securities Act, as
such rule may be amended from time to time, or any similar or successor rule
then in force.
"Section 2.1 Notice" has the meaning set forth in Section 2.1(c).
"Series A Preferred Stock" has the meaning ascribed to it in the
Recitals.
"Stock" means the Preferred Stock, the Common Stock and any and all
other capital stock or other equity Securities (including, without limitation,
derivative Securities therefor) of the Company.
"Suspension Period" has the meaning ascribed to it in Sections 4.8.
"X.Xxxx" means X. Xxxx Price Health Sciences Fund, Inc.
"Transfer" of Securities shall be construed broadly and shall include
any issuance, sale, assignment, transfer, participation, gift, bequest,
distribution, or other disposition thereof, or any pledge or hypothecation
thereof, placement of a Lien thereon or grant of a security interest therein or
other encumbrance thereon, in each case whether voluntary or involuntary or by
operation of law or otherwise. "Transferor" means a Person engaging in a
Transfer of Securities, and "Transferee" means a Person acquiring Securities
through a Transfer.
"Warrants" has the meaning ascribed to it in the Recitals.
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1.2 RULES OF CONSTRUCTION.
The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. The use
in this Agreement of the term "including" means "including, without limitation."
The words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the schedules and exhibits, as the
same may from time to time be amended, modified, supplemented or restated, and
not to any particular section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All references to sections, schedules and exhibits
mean the sections of this Agreement and the schedules and exhibits attached to
this Agreement, except where otherwise stated. The title of and the section and
paragraph headings in this Agreement are for convenience of reference only and
shall not govern or affect the interpretation of any of the terms or provisions
of this Agreement. The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require or
permit. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the following month or year corresponding to the
starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day
following the starting date. For example, one month following February 18 is
March 18, and one month following March 31 is May 1.
ARTICLE II
BOARD OF DIRECTORS
2.1 ELECTION OF BOARD MEMBERS.
(a) The number of directors constituting the Board, as fixed
from time to time by the Board in accordance with the Bylaws, shall be nine (9).
Notwithstanding any provision in the Bylaws, the number of directors
constituting the Board shall not be increased to greater than eleven (11)
without the prior written consent of the Requisite Investors for so long as both
JPMP Global and BBI are entitled to designate a Preferred Director.
(b) At each annual meeting of the holders of any class of
Stock, and at each special meeting of the holders of any class of Stock called
for the purpose of electing directors of the Company, and at any time at which
holders of any class of Stock shall have the right to, or shall, vote for or
consent in writing to the election of directors of the Company, then, and in
each such event, the Investors (other than the Excluded Investors) shall vote
all of the shares of Series A Preferred Stock owned by them or their Affiliates,
and their respective Transferees shall so vote for, or consent in writing with
respect to such shares in favor of, the election of two
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individuals to serve as directors to the Board pursuant to Article III(A)(3)(a)
of the Certificate of Designations determined as follows:
(i) one individual designated by JPMP Global (the
"JPMP Director"), for so long as the JPMP Entities collectively own at
least fifty percent (50%) of the Series A Preferred Stock (or Common
Stock issued upon conversion thereof) that they acquired on the Closing
Date; and
(ii) one individual designated by BBI (the "BBI
Director" and together with the JPMP Director, the "Preferred
Directors"), for so long as BBI owns at least fifty percent (50%) of the
Series A Preferred Stock (or Common Stock issued upon conversion
thereof) that it acquired on the Closing Date;
provided, however, that, in the event that JPMP Global or BBI shall no longer
have the right to designate an individual for election to the Board pursuant to
clause (i) or (ii) above, respectively, the Board shall, upon the expiration of
the term of the JPMP Director or BBI Director, as applicable, and for all times
thereafter, be entitled to (x) fill the vacancy created thereby in accordance
with the Bylaws, or (y) reduce the number of directors constituting the Board by
eliminating the seat previously reserved for the JPMP Director or BBI Director
as the case may be. The Company agrees to nominate for election to the Board as
the JPMP Director and the BBI Director, or for the filling of any vacancies on
the Board created by such nominees, the persons designated by JPMP Global or
BBI, as applicable, pursuant to this Section 2.1. The parties hereby agree that,
effective immediately after the Closing, Xxxxxxxx Xxxxxxxx shall be added as a
member of the Board as the JPMP Director and Xxxxx Xxxxx shall be added as a
member of the Board as the BBI Director. The obligation of each Investor to vote
its shares as directed by this Section 2.1(b) (to the extent such obligation
exists hereunder) shall cease, without any further action on the part of the
Investors or the Company, at such time as neither JPMP Global nor BBI are
entitled to designate a director pursuant to clause (i) or (ii) above.
(c) The Company shall give at least 30 days prior written
notice of the date of the earliest estimated proposed mailing of proxy materials
for election of directors of the Company. JPMP Global and BBI shall, within 10
Business Days of receipt of such notice from the Company, give written notice (a
"Section 2.1 Notice") to the Company of the name of each individual that JPMP
Global and BBI intend to nominate for election or reelection to the Board and
all information relating to each such individual that is required to be
disclosed in any solicitation of proxies for election of directors, or as
otherwise required, in each case pursuant to Regulation 14A under the Exchange
Act (including such individual's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected). At the request
of the Board, any individual so nominated for election as a director shall
furnish to the Secretary of the Company that information required to be set
forth in the Section 2.1 Notice.
(d) Subject to the next sentence, the Investors (other than
the Excluded Investors) shall vote their shares of Series A Preferred Stock (i)
to remove any director whose removal is required by the party or parties with
the power to designate such director and (ii) to fill any vacancy created by the
removal, resignation or death of a director, in each case for the election of a
new director designated and approved, in accordance with the provisions of this
Section 2.1; provided, however, that the obligation of each Investor to vote its
shares as directed by this Section 2.1(d) (to the extent such obligation exists
hereunder) shall cease, without any
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further action on the part of the Investors or the Company, at such time as
neither JPMP Global nor BBI are entitled to designate a director pursuant to
Sections 2.1(b)(i) or (ii) above. Each of the JPMP Director and the BBI Director
shall only be removed by JPMP Global or BBI, respectively. At all times, the
person serving as the JPMP Director or the BBI Director shall be either (i) an
employee of one of the JPMP Entities or BBI, respectively, holding the position
of "Principal" or any position senior thereto, or (ii) a person reasonably
acceptable to a majority of the other members of the Board of Directors,
provided, however, that in the case of clause (ii) such person must be qualified
to serve as a member of the board of directors of a publicly traded company.
Vacancies on the Board shall be filled within 30 days of the date such vacancy
is created or immediately before the first action to be taken by the Board after
the date such vacancy is created; provided, however, that if a vacancy on the
Board is a result of JPMP Global or BBI no longer having the right to designate
a director pursuant to Section 2.1(b) above, the Board may elect to reduce the
number of directors constituting the Board by eliminating the seat previously
reserved for the JPMP Director or BBI Director, as the case may be.
(e) The directors to be elected pursuant to this Section 2.1
shall serve for terms extending from the date of their election and
qualification until their successors shall have been elected and qualified in
accordance with this Section 2.1.
(f) JPMP Global and BBI shall have the right to have that
number of representatives (each such representative, an "Observer") determined
as hereinafter provided present at all meetings of the Board. Such right shall
from time to time be exercisable by delivery to the Company of written notice
from the Requisite Investors specifying the names of such Observers. The number
of Observers shall at all times and from time to time be equal to the number of
members of the Board that JPMP Global and BBI are then entitled to designate
pursuant to Section 2.1(b)(i) or (ii) above, as applicable, but whose seats on
the Board are at the time vacant. The Company will give each Observer reasonable
prior notice (it being agreed that the same prior notice given to the Board
shall be deemed reasonable prior notice) in any manner permitted in the Bylaws
for notices to directors of the time and place of any proposed meeting of the
Board. Each such Observer will be entitled (i) to receive true and complete
copies of all documents furnished to any director in connection with such
meeting and (ii) to be present in person as an Observer at any such meeting or,
if a meeting is held by telephone conference, to participate therein for the
purpose of listening thereto; provided, that in each case, the Observers may be
excluded from access to any materials prepared for the Board or meeting or
portion thereof if the Board reasonably believes, upon advice of counsel, that
such exclusion is reasonably necessary to preserve the attorney-client
privilege.
(g) Each of JPMP Global and BBI agree to use reasonable
efforts to cause the individual serving as the JPMP Director or the BBI
Director, respectively, to provide the Company, on a timely basis, with any
information relating to such individual that the Company may be required to
disclose pursuant to Applicable Law, including without limitation those rules or
regulations promulgated by the NASD and the NMS.
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2.2 BOARD MEETINGS.
The Company shall convene meetings of the Board at least four times each
fiscal year at regular time intervals. The Company may use video conferencing
capabilities or teleconference facilities for meetings of the Board and any
committees thereof ("Committees").
2.3 EXPENSES.
The Company shall pay or reimburse each of the Preferred Directors and
any Observer for the reasonable out-of-pocket expenses incurred by such
Preferred Director or Observer in connection with attending formal meetings of
the Board, any Committee thereof (including any Subsidiary board or committee
meetings), or attending any other activities in connection with the fulfillment
of such Preferred Director's duties, including, but not limited to, reasonable
travel and related expenses.
2.4 SUBSIDIARY BOARD.
The Company shall cause the board of directors of each of its
Subsidiaries (except for any Subsidiary that is formed in a jurisdiction other
than the United States) to be constituted in a manner similar to the Board.
2.5 COMMITTEES.
The Board may, from time to time, establish and maintain certain
Committees. To the extent allowed under Applicable Law, the Board shall, upon
the request of the Preferred Directors, appoint at least one Preferred Director
to serve on each Committee formed by the Board (other than the Option Committee
that is solely responsible for granting stock options to employees of the
Company below the level of "Director", for so long as such Committee is
comprised solely of employee directors).
2.6 QUALIFICATIONS OF BOARD MEMBERS.
If at any time (a) the holders of Series A Preferred Stock shall be
entitled to elect one or more individuals to serve as directors to the Board
pursuant to Article III(A)(3)(a) of the Certificate of Designations and (b)
Section 2.1 of this Agreement shall have been terminated or shall no longer be
in effect, then each Person elected pursuant to the Certificate of Designations
shall be a Person reasonably acceptable to a majority of the other members of
the Board of Directors (it being understood and agreed by the parties hereto
that an employee of an Investor holding the position of "Principal" or any
position senior thereto shall be deemed acceptable); provided, however, that
such Person must be qualified to serve as a member of the board of directors of
a publicly traded company.
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ARTICLE III
ADDITIONAL AGREEMENTS
3.1 INCONSISTENT AGREEMENTS.
The Company shall not enter into any agreement containing any provision
which would (a) be violated or breached by the exercise or performance by the
Company of any of its respective rights or obligations under any Document, or
(b) impair the ability of the Company or any Subsidiary to comply with the terms
of the Documents.
3.2 INFORMATION RIGHTS.
(a) The Company shall furnish (x) each of the JPMP Director
and the BBI Director or (y) if there is no JPMP Director or BBI Director then
serving on the Board, the JPMP Entities or BBI, as applicable, (provided that
the Company shall be obligated to furnish such information to the JPMP Entities
and BBI only for so long as JPMP Global and BBI continue to have the right to
designate a director pursuant to Section 2.1(b) above) with the following:
(i) Quarterly Reports. As soon as available, but not
later than 45 days after the end of each quarter in each fiscal year
(other than the last quarter in each fiscal year) of the Company, a
balance sheet of the Company and the related statements of income,
stockholders' equity and cash flows, unaudited but prepared in
accordance with GAAP consistently applied and certified by the President
or the Chief Financial Officer of the Company, such balance sheet to be
as of the end of such quarter and such statements of income,
stockholders' equity and cash flows to be for such quarter and for the
period from the beginning of the fiscal year to the end of such quarter,
in each case with comparative statements for the prior fiscal year. The
Company providing a copy of its Form 10-Q for the applicable quarter
shall satisfy the requirements of this Section.
(ii) Annual Audit. As soon as available, but not
later than 90 days after the end of each fiscal year of the Company,
audited financial statements of the Company, which shall include a
statement of cash flows and statement of operations for such fiscal year
and a balance sheet as at the last day thereof, each prepared in
accordance with GAAP consistently applied (except as set forth in the
notes thereto), and accompanied by the report of a firm of independent
certified public accountants of nationally recognized standing selected
by the Board (the "Accountants"). The Company shall maintain a system of
accounting sufficient to enable the Accountants to render the report
referred to in this clause. The Company providing a copy of its Form
10-K for the applicable fiscal year shall satisfy the requirements of
this Section.
(iii) Annual Operating Plan. Within 60 days after the
beginning of each fiscal year of the Company, an annual operating plan,
including a qualitative summary by the President of the Company and an
updated consolidated budget, projected income statements, balance sheets
and cash flow statements (setting forth in detail the
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assumptions therefor) on a monthly basis for the Company and its
Subsidiaries for such fiscal year of the Company.
(iv) Subsidiaries. If for any period the Company
shall have any Subsidiary or Subsidiaries whose accounts are
consolidated with those of the Company, then in respect of such period
the financial statements delivered pursuant to the foregoing clauses
shall be consolidated (and consolidating if normally prepared by the
Company) financial statements of the Company and all such consolidated
Subsidiaries.
(v) GAAP Reporting. The financial statements and
reports delivered under this subsection shall fairly present in all
material respects the financial position and results of operations of
the Company at the dates thereof and for the periods then ended and
shall have been prepared in accordance with GAAP, in the case of
unaudited financial statements, subject to normal year-end audit
adjustments and the absence of footnotes.
(b) Access to Records and Properties. The Company shall
afford the Preferred Directors, during normal business hours and with reasonable
advance notice, reasonable access to (i) visit and inspect the assets,
properties and information (financial or otherwise), (ii) examine upon
reasonable advance notice, the books of accounts and records of the Company and
(iii) make copies of such records and permit such Preferred Directors to discuss
all aspects of the Company and each Subsidiary with any officers, employees or
Accountants of the Company, in each case consistent with the highest level of
access to information and inspection rights granted by the Company to other
members of its Board; provided, however, that such investigation shall not
unreasonably interfere with the operations of the Company. The Company will
instruct the Accountants to discuss such aspects of the financial condition of
the Company with any such Preferred Director as such Preferred Director may
reasonably request, and to permit such Preferred Director to inspect, copy and
make extracts from such financial statements, analyses, work papers and other
documents and information (including electronically stored documents and
information) prepared by the Accountants with respect to the Company as such
Preferred Director may reasonably request.
(c) Other Reports; Miscellaneous. The Company shall promptly
provide to each of the Investors:
(i) as soon as available, but not later than 45 days
after the end of each quarterly accounting period, a Form 10-Q or, if
the Company does not file quarterly reports with the Commission, the
documents referred to in Section 3.2(a)(i);
(ii) as soon as available, but not later than 90 days
after the end of each fiscal year, a Form 10-K or, if the Company does
not file an annual report with the Commission, the audited consolidated
financial statements referred to in Section 3.2(a)(ii);
(iii) simultaneously with any distribution of any
document to holders of the Common Stock, any such document so
distributed; and
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(iv) copies of all financial statements, reports,
press releases, notices, proxy statements and other documents sent by
the Company or its Subsidiaries to its stockholders generally or
released to the public and copies of all regular and periodic reports,
if any, filed by the Company or its Subsidiaries with the Commission,
any securities exchange or the NASD.
(d) Notice of Material Sale. The Company shall promptly
provide to the JPMP Entities and BBI notice of any proposed Material Sale, and
shall afford the Preferred Directors with reasonable time to review and comment
on any agreement relating to such Material Sale, as applicable.
3.3 COMPLIANCE.
The Company (a) in carrying out its business shall comply in all
material respects with Applicable Law and Orders of any Governmental Authority
applicable to it, its business and the ownership of its assets and (b) shall
obtain and maintain in full force and effect all Federal, state, local and
foreign governmental licenses and permits material to and necessary in the
conduct of its business.
3.4 INSURANCE.
All the insurable properties of the Company shall be insured for the
benefit of the Company in the full amounts required to protect the Company
against risks usually insured against by Persons operating similar properties in
the localities in which such properties are located under policies in effect and
issued by national insurers of recognized responsibility.
3.5 AFFIRMATIVE COVENANTS.
The Company shall observe and perform the following, except to the
extent waived upon the written consent of the Requisite Investors:
(a) Payment Under the Documents. The Company shall pay or
accrue, as the case may be, any amounts payable under the Documents in
accordance with the terms of the Documents.
(b) Payment of Taxes, etc. The Company shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (i) all amounts of taxes, assessments and
governmental charges or levies imposed upon it or upon its property and (ii) all
lawful claims that, if unpaid, could reasonably be expected by law to become a
Lien upon its property; provided, however, that the Company shall not be
required to pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.
(c) Preservation of Corporate Existence, etc. The Company
shall preserve and maintain its corporate existence; provided, however, that any
Subsidiary may merge or consolidate with any other Subsidiary or the Company.
The Company shall preserve and maintain its rights (charter and statutory), and
all material permits, licenses, approvals, privileges and franchises necessary
or desirable in the normal conduct of its business.
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(d) Keeping of Books. The Company shall keep proper books of
record and account, in which entries that are full and correct in all material
respects shall be made of all financial transactions and the assets and business
of the Company and each such Subsidiary in accordance with GAAP.
(e) Maintenance of Properties, etc. The Company shall
maintain and preserve all of its properties that are reasonably required in the
conduct of its business in good working order and condition, ordinary wear, tear
and depletion excepted.
(f) Transactions with Affiliates. The Company shall conduct
all transactions otherwise permitted under the Documents with any of its
Affiliates on terms that are fair and reasonable and no less favorable to the
Company than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate.
(g) D&O Insurance; Indemnification. The Company shall
maintain director and officer liability insurance, with coverage of at least $10
million, from a nationally recognized insurance company rated "A" or above,
which insurance and amount thereof shall be acceptable to the Investors, and
shall keep such insurance in full force and effect. The Company's Restated
Certificate and Bylaws shall at all times provide for indemnification and
exculpation of the Preferred Directors to the fullest extent permissible under
Applicable Law.
(h) Performance of Documents. The Company shall perform and
observe all of the terms and provisions of each Document to be performed or
observed by it, maintain each such Document in full force and effect, and
enforce such Document in accordance with its terms.
(i) Proprietary Information and Inventions Agreements. The
Company shall require each employee of the Company as a condition to the
employment of such individual, to execute and deliver a nondisclosure and
proprietary assignment agreement in the Company's standard form.
(j) Material Indebtedness. The Company shall perform and
observe any and all of its obligations with respect to material Indebtedness of
the Company.
(k) Public Announcements. The Company shall consult with the
Requisite Investors before issuing, and shall provide the Requisite Investors
with the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by the Purchase
Agreement and shall not issue any such press release or make any such public
statement without the prior written consent of the Requisite Investors, except
to the extent expressly required by Applicable Law and, in such case, the
Company shall first promptly notify the Requisite Investors of such obligation
and allow such Requisite Investors to provide comment to any such disclosure
prior thereto. Notwithstanding the foregoing, if any such press release or
public statement specifically names or mentions any Investor, the consent of
such Investor will be required prior to the issuance of such press release or
public statement, except as may be expressly required by Applicable Law and, in
such case, the Company shall first promptly notify such Investor of such
obligation and allow such Investor to provide comment to any such disclosure
prior thereto.
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3.6 TAX TREATMENT.
(a) The Company shall treat the shares of Series A Preferred
Stock held by the Investors as stock that participates in the corporate growth
of the Company to a significant extent within the meaning of Treasury Regulation
Section 1.305-5(a), and will not treat such shares as "preferred stock" for
purposes of the Code.
(b) On or before January 31 of each year, the Company shall
provide the Investors with a statement containing the Company's "Issuer
Allocation Percentage" for New York State tax purposes if the Company files or
is required to file a tax return in the State of New York for such year.
ARTICLE IV
REGISTRATION RIGHTS
4.1 REQUIRED REGISTRATION.
(a) If at any time the Company shall be requested by the
Requisite Investors to effect the registration under the Securities Act of
Registrable Shares having an aggregate gross offering price (before underwriters
discounts and commissions) of at least $5,000,000, it shall promptly give
written notice to the other Investors of its requirement to so register such
Registrable Shares (which notice shall specify the number of Registrable Shares
proposed to be included in such registration and the intended method of
distribution, which may be pursuant to a shelf registration) and, upon the
written request, delivered to the Company within 30 days after delivery of any
such notice by the Company, of such other Investors to include in such
registration Registrable Shares of such Investors (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall, subject to Section 4.1(b) below, promptly use its best
efforts to effect such registration on an appropriate form, under the Securities
Act of the Registrable Shares which the Company has been so requested to
register.
(b) Anything contained in Section 4.1(a) to the contrary
notwithstanding, the Company shall not be obligated to effect pursuant to
Section 4.1(a) any registration under the Securities Act except in accordance
with the following provisions:
(i) the Company shall not be obligated to use its
best efforts to file and cause to become effective (A) more than two (2)
Registration Statements initiated pursuant to Section 4.1(a); provided
however, that if the Investors were unable to sell at least 90% of the
Registrable Shares requested to be included in the last registration
initiated by such group pursuant to Section 4.1(a) as a result of an
underwriter's cutback, then additional registrations shall be added to
this Section 4.1(b) until the foregoing condition is satisfied for such
Investors, (B) any Registration Statement during the period starting
with the date 60 days prior to the Company's good faith estimate of the
date of filing of, and ending on the date 180 days after the effective
date of, any other registration
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statement (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto) pursuant to which Primary
Shares are to be or were sold; provided, however, that in the case of
clause (B) the Company is actively employing in good faith all
reasonable efforts to cause such Registration Statement to become
effective and the Investors were offered the right to have the
Registrable Shares included in such registration pursuant to Section 4.2
below, or (C) more than one Registration Statement pursuant to Section
4.1(a) in any consecutive six-month period;
(ii) the Company may delay the filing or
effectiveness of any Registration Statement for a period of up to 90
days after the date of a request for registration pursuant to Section
4.1(a) if at the time of such request the Company is engaged in a
Material Transaction; provided, however, that the Company may only so
delay the filing or effectiveness of a registration statement pursuant
to this Section 4.1(b)(ii) on one occasion during any twelve-month
period; and
(iii) with respect to any registration pursuant to
Section 4.1(a), the Company may include in such registration any Primary
Shares or Other Shares; provided, however, that if the managing
underwriter advises the Company that the inclusion of all Registrable
Shares, Primary Shares and Other Shares proposed to be included in such
registration would interfere with the successful marketing (including
pricing) of all such Securities, then the number of Registrable Shares,
Primary Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(A) first, the Registrable Shares held by
the Investors requesting that their Registrable Shares be
included in such registration pursuant to Section 4.1(a), pro
rata based upon the number of Registrable Shares owned by each
such Investor at the time of such registration;
(B) second, the Primary Shares; and
(C) third, the Other Shares.
(c) A requested registration under Section 4.1(a) may be
rescinded prior to such registration being declared effective by the Commission
by written notice to the Company from the Requisite Investors; provided,
however, that such rescinded registration shall not count as a registration
initiated pursuant to this Section 4.1 for purposes of subclause (A) of clause
(i) of subsection (b) above if (x) the Company shall have been reimbursed (pro
rata by the Investors requesting registration or in such other proportion as
they may agree) for all out-of-pocket expenses incurred by the Company in
connection with such rescinded registration, provided that each registration
that may be requested under this Section 4.1 may not be rescinded pursuant to
clause (x) more than two times, provided, further that such rescission may not
be made more than once in any 12-month period or (y) (1) the participating
Investors reasonably believed that the registration statement contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein not
misleading, (2) notified the Company of such fact and requested that the Company
correct such alleged misstatement or omission and (3) the Company has refused to
correct such alleged misstatement or omission.
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4.2 PIGGYBACK REGISTRATION.
If the Company proposes for any reason to register Primary Shares or
Other Shares under the Securities Act (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto), it shall
promptly give written notice to each Investor of its intention so to register
the Primary Shares or Other Shares and, upon the written request, given within
20 days after delivery of any such notice by the Company, of any such Investor
to include in such registration Registrable Shares (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall use its best efforts to cause all such Registrable Shares to
be included in such registration on the same terms and conditions as the
Securities otherwise being sold in such registration; provided, however, that if
the managing underwriter advises the Company that the inclusion of all
Registrable Shares or Other Shares proposed to be included in such registration
would interfere with the successful marketing (including pricing) of Primary
Shares proposed to be registered by the Company, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(i) first, the Primary Shares;
(ii) second, the Registrable Shares held by the
Investors requesting their Registrable Shares be included in such
registration pursuant to the terms of this Section 4.2 and the holders
of registrable securities under the Existing Rights Agreement, pro rata
based upon the number of Common Stock Equivalents owned by each such
seller at the time of such registration; provided, however, that in no
event shall the amount of securities requested to be included in such
registration pursuant to the terms of this Section 4.2(ii) be reduced
below fifty percent (50%) of the total amount of securities included in
such registration; and
(iii) third, the Other Shares (excluding the
registrable securities under the Existing Rights Agreement).
4.3 REGISTRATIONS ON FORM S-3.
(a) Anything contained in this Section 4.3 to the contrary
notwithstanding, at such time as and for so long as the Company shall have
qualified for the use of Form S-3 promulgated under the Securities Act or any
successor form thereto, the Requisite Investors shall have the right to request
in writing an unlimited number of registrations on Form S-3, or such successor
form, of Registrable Shares, which request or requests shall (i) specify the
number of Registrable Shares intended to be sold or disposed of, (ii) state the
intended method of disposition of such Registrable Shares and (iii) relate to
Registrable Shares having an aggregate gross offering price (before underwriting
discounts and commissions) of at least $1,000,000, and upon receipt of such
request, the Company shall use its best efforts promptly to effect the
registration under the Securities Act of the Registrable Shares so requested to
be registered. Whenever the Company is required by this Section 4.3(a) to use
its best efforts to effect the registration of Registrable Shares, each of the
procedures and requirements of Section 4.1 (including but not limited to the
requirement that the Company notify all holders of Registrable Shares from whom
notice has not been received and provide them with the opportunity to
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participate in the offering) shall apply to such registration. A requested
registration on Form S-3 or any such successor form in compliance with this
Section shall not count as a registration demanded pursuant to Section 4.1(a),
but shall otherwise be treated as a registration initiated pursuant to and
shall, except as otherwise expressly provided in this Section, be subject to
Section 4.1(b).
(b) Anything contained in Section 4.3(a) to the contrary
notwithstanding, the Company shall not be obligated to effect pursuant to
Section 4.3(a) any registration under the Securities Act except in accordance
with the following provisions:
(i) the Company shall not be obligated to effect
such registration if it is requested within six (6) months after a
registered offering of the Company in which the Investors were given the
opportunity to participate; and
(ii) the Company may delay the filing or
effectiveness of any Registration Statement on Form S-3 for a period of
up to 90 days after the date of a request for registration pursuant to
this Section 4.3 if at the time of such request the Company is engaged
in a Material Transaction; provided, however, that the Company may only
so delay the filing or effectiveness of a registration statement
pursuant to this Section 4.3(b)(ii) on one occasion during any
twelve-month period.
(c) On the effective date of the conversion of the
outstanding shares of Series A Preferred Stock into shares of Common Stock
pursuant to Article V(B)(1) of the Certificate of Designations, the Company
shall send written notice to the holders of such shares of their right to have
such shares registered for sale to the public pursuant to the terms of this
Agreement. Upon receipt of a request for registration of such shares from the
holders of a majority thereof, the Company shall use its best efforts promptly
to effect the registration under the Securities Act of all of the shares of
Common Stock issued upon such conversion in accordance with the provisions of
Section 4.3(a) above; provided, that if the Company shall not be qualified to
use Form S-3 (or any such successor form) at the time such shares of Series A
Preferred Stock are converted into shares of Common Stock, the Company shall use
its best efforts to register all such shares on an appropriate long-form
registration statement under the Securities Act in accordance with Section 4.1
hereof. Notwithstanding anything to the contrary contained in this Agreement,
registration of shares of Common Stock pursuant to this Section 4.3(c) shall be
subject only to Section 4.3(b)(ii) above.
4.4 PREPARATION AND FILING.
(a) If and whenever the Company is under an obligation
pursuant to the provisions of this Article IV to use its best efforts to effect
the registration of any Registrable Shares, the Company shall, as expeditiously
as practicable:
(i) With respect to registrations pursuant to
Sections 4.1, 4.2 and 4.3, use its best efforts to cause a Registration
Statement that registers such Registrable Shares to become and remain
effective for a period of 150 days (excluding any period during which
such effectiveness is suspended) or until all of such Registrable Shares
have been disposed of (if earlier);
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(ii) furnish, at least five Business Days before
filing a Registration Statement that registers such Registrable Shares,
a Prospectus relating thereto and any amendments or supplements relating
to such Registration Statement or Prospectus, to one counsel selected
by, in the case of a Registration initiated pursuant to Section 4.1(a)
or 4.3, the Requisite Investors (the "Investors' Counsel"), copies of
all such documents proposed to be filed (it being understood that such
five Business Day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are
supplied to the Investors' Counsel in advance of the proposed filing by
a period of time that is customary and reasonable under the
circumstances);
(iii) 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 for at least the period set forth in
Section 4.4(a)(i) or until all of such Registrable Shares have been
disposed of (if earlier) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such
Registrable Shares;
(iv) notify the Investors' Counsel promptly in
writing (A) of any comments by the Commission with respect to such
Registration Statement or Prospectus, or any request by the Commission
for the amending or supplementing thereof or for additional information
with respect thereto, (B) of the issuance by the Commission of any stop
order suspending the effectiveness of such Registration Statement or
Prospectus or any amendment or supplement thereto or the initiation of
any proceedings for that purpose (and the Company shall use its best
efforts to prevent the issuance thereof or, if issued, to obtain its
withdrawal) and (C) of the receipt by the Company of any notification
with respect to the suspension of the qualification of such Registrable
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purposes;
(v) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Shares reasonably requests
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller of Registrable Shares to
consummate the disposition in such jurisdictions of the Registrable
Shares owned by such seller; provided, however, that the Company will
not be required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any
jurisdiction where it would not otherwise be required so to do but for
this clause (v);
(vi) furnish to each seller of such Registrable
Shares such number of copies of a summary Prospectus or other
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
seller of Registrable Shares may reasonably request in order to
facilitate the public sale or other disposition of such Registrable
Shares;
(vii) use its best efforts to cause such Registrable
Shares to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue
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of the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Shares;
(viii) notify on a timely basis each seller of such
Registrable Shares at any time when a Prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (i) of this Section
4.4(a) 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 light of the circumstances then existing and,
at the request of such seller, prepare and furnish to such seller 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
offerees 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;
(ix) make available for inspection by any seller of
such Registrable Shares, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all pertinent financial, business and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such Registration
Statement (and any of the Information which the Company determines in
good faith to be confidential, and of which determination the Inspectors
are so notified, shall not be used by such seller or such Inspector for
any purpose other than exercise of such due diligence responsibility and
shall not be disclosed by the Inspectors unless (A) the disclosure of
such Information is necessary to avoid or correct a material
misstatement or omission in the Registration Statement, (B) the release
of such Information is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction, (C) such Information has been
made generally available to the public or (D) the seller of Registrable
Shares agrees that it will, upon learning that disclosure of such
Information is sought in a court of competent jurisdiction, give notice
to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Information
deemed confidential);
(x) use its best efforts to obtain from its
independent certified public accountants a "cold comfort" letter in
customary form and covering such matters of the type customarily covered
by cold comfort letters;
(xi) use its best efforts to obtain, from its
counsel, an opinion or opinions in customary form (which shall also be
addressed to the Investors selling Registrable Shares in such
registration);
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(xii) provide a transfer agent and registrar (which
may be the same entity and which may be the Company) for such
Registrable Shares;
(xiii) issue to any underwriter to which any seller of
Registrable Shares may sell Securities in such offering certificates
evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national
securities exchange on which any shares of the Common Stock are listed
or, if the Common Stock is not listed on a national securities exchange,
use its best efforts to qualify such Registrable Shares for inclusion on
the automated quotation system of the National Association of Securities
Dealers, Inc. (the "NASD"), National Market System ("NMS"), or such
other national securities exchange as the Requisite Investors shall
request if the Common Stock is not then eligible for trading on the NMS;
(xv) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable,
earnings statements which need not be audited covering a period of 12
months beginning within three months after the effective date of the
Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(xvi) use its best efforts to take all other steps
necessary to effect the registration of such Registrable Shares
contemplated hereby.
(b) Each holder of Registrable Shares that sells Registrable
Shares pursuant to a registration under this Agreement agrees that during such
time as such seller may be engaged in a distribution of the Registrable Shares,
such seller shall comply with Regulation M promulgated under the Exchange Act
and pursuant thereto it shall, among other things: (i) not engage in any
stabilization activity in connection with the Securities of the Company in
contravention of such rules; (ii) distribute the Registrable Shares under the
Registration Statement solely in the manner described in the Registration
Statement; and (iii) cease distribution of such Registrable Shares pursuant to
such Registration Statement upon receipt of written notice from the Company that
the prospectus covering the Registrable Shares contains any untrue statement of
a material fact or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
4.5 EXPENSES.
All expenses incurred by the Company in complying with Section 4.4,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), fees and expenses of complying with
securities and blue sky laws, printing expenses, fees and expenses of the
Company's counsel and accountants and reasonable fees and expenses of the
Investors' Counsel, shall be paid by the Company; provided, however, that all
underwriting discounts and selling commissions applicable to the Registrable
Shares and all fees and expenses of counsel for the seller or sellers other than
the Investors' Counsel, shall not be
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borne by the Company but shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Shares sold by such seller or sellers.
4.6 INDEMNIFICATION.
(a) To the maximum extent permitted by law, in connection
with any registration of any Registrable Shares under the Securities Act
pursuant to this Article IV, the Company shall indemnify and hold harmless the
seller of such Registrable Shares, each underwriter, broker or any other Person
acting on behalf of such seller, each other Person, if any, who controls any of
the foregoing Persons within the meaning of the Securities Act and each
Representative of any of the foregoing Persons, 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 the Registration Statement under which such
Registrable Shares were registered, any preliminary Prospectus or final
Prospectus contained therein, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Shares, 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 Company of the Securities Act
or state securities or blue sky laws applicable to the Company and relating to
action or inaction required of the Company in connection with such registration
or qualification under such state securities or blue sky laws, and the Company
shall promptly reimburse such seller, such underwriter, such broker, such
controlling Person or such Representatives for any legal or other expenses
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable to any such Person 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 Prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable Shares in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Person, or a Person duly
acting on their behalf, specifically for use in the preparation thereof;
provided further, however, that the foregoing indemnity agreement is subject to
the condition that, insofar as it relates to any untrue statement, allegedly
untrue statement, omission or alleged omission made in any preliminary
Prospectus but eliminated or remedied in the final Prospectus (filed pursuant to
Rule 424 of the Securities Act), such indemnity agreement shall not inure to the
benefit of any indemnified party from whom the Person asserting any loss, claim,
damage, liability or expense purchased the Registrable Shares which are the
subject thereof, if a copy of such final Prospectus had been timely made
available to such Indemnified Person and such final Prospectus was not delivered
to such Person with or prior to the written confirmation of the sale of such
Registrable Shares to such Person.
(b) To the maximum extent permitted by law, in connection
with any registration of Registrable Shares under the Securities Act pursuant to
this Article IV, each seller of Registrable Shares shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
paragraph (a) of this Section 4.6) the Company, each underwriter or
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broker involved in such offering, each other seller of Registrable Shares under
such Registration Statement, each Person who controls any of the foregoing
Persons within the meaning of the Securities Act and any Representative of the
foregoing Persons with respect to any statement or omission from such
Registration Statement, any preliminary Prospectus or final Prospectus contained
therein, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or such underwriter through an instrument duly executed
by such seller or a Person duly acting on their behalf specifically for use in
connection with the preparation of such Registration Statement, preliminary
Prospectus, final Prospectus, amendment or supplement; provided, however, that
the obligation to indemnify will be several, not joint and several, among the
sellers of Registrable Shares, and the maximum amount of liability in respect of
such indemnification shall be in proportion to and limited, in the case of each
seller of Registrable Shares, to an amount equal to the proceeds actually
received by such seller from the sale of Registrable 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 the preceding
paragraphs of this Section 4.6, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action (provided, however, that an
indemnified party's failure to give such notice in a timely manner shall only
relieve the indemnification obligations of an indemnifying party to the extent
such indemnifying party is prejudiced by such failure). 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 from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party 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 or
equitable defenses available to such indemnified party which are in addition to
or conflict with 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 4.6, 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 that portion of the
reasonable fees and expenses of any counsel (plus appropriate special and local
counsel) retained by the indemnified party which are reasonably related to the
matters covered by the indemnity agreement provided in this Section 4.6.
Notwithstanding the foregoing, the indemnity agreement set forth in Section
4.6(a) shall not apply to amounts paid in settlement if such settlement is
effected without the written consent of the Company (which consent shall not be
unreasonably withheld).
(d) If the indemnification provided for in this Section 4.6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage or liability referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such
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indemnified party as a result of such loss, claim, damage or liability 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 hand in
connection with the statements or omissions which resulted in such loss, claim,
damage or liability as well as any other relevant equitable considerations;
provided, however, that the maximum amount of liability in respect of such
contribution shall be limited, in the case of each seller of Registrable Shares,
to an amount equal to the proceeds actually received by such seller from the
sale of Registrable Shares effected pursuant to such registration. 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) The indemnification and contribution provided for under
this Article IV will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party and will survive the
transfer of Securities.
(f) The indemnification required by this Section 4.6 will be
made by periodic payments during the course of the investigation or defense, as
and when bills are received or expenses incurred, subject to prompt refund in
the event any such payments are determined not to have been due and owing
hereunder.
4.7 UNDERWRITING AGREEMENT.
(a) Notwithstanding the provisions of Sections 4.4 and 4.6,
to the extent that the sellers of Registrable Shares in a proposed registration
shall enter into an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such sections of this
Article IV, the provisions contained in such sections of this Article IV
addressing such issue or issues shall be of no force or effect with respect to
such registration, but this provision shall not apply to the Company if the
Company is not a party to the underwriting or similar agreement.
(b) If any registration pursuant to Section 4.1 or 4.3 is
requested to be an underwritten offering, the Company shall negotiate in good
faith to enter into a reasonable and customary underwriting agreement with the
underwriters thereof. The Company shall be entitled to receive indemnities from
lead institutions, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement and to the extent customary given their role in such distribution.
(c) No holder of Registrable Shares may participate in any
registration hereunder that is underwritten unless such holder agrees (i) to
sell such holder's Registrable Shares proposed to be included therein on the
basis provided in any underwriting arrangements acceptable to the Company and
the Investors holding a majority of the Registrable Shares to be included in
such registration and (ii) as expeditiously as possible, notify the Company of
the
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occurrence of any event concerning such holder as a result of which the
Prospectus relating to such registration contains 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, in light of the circumstances under
which they were made, not misleading.
4.8 SUSPENSION.
Anything contained in this Article IV to the contrary notwithstanding,
the Company may (not more than once with respect to each registration), by
notice in writing to each holder of Registrable Shares to which a Prospectus
relates, require such holder to suspend, for up to 90 days (the "Suspension
Period"), the use of any Prospectus included in a Registration Statement filed
under Section 4.1, 4.2 or 4.3 if a Material Transaction exists that would
require an amendment to such Registration Statement or supplement to such
Prospectus (including any such amendment or supplement made through
incorporation by reference to a report filed under Section 13 of the Exchange
Act). The period during which such Prospectus must remain effective shall be
extended by a period equal to the Suspension Period. The Company may (but shall
not be obligated to) withdraw the effectiveness of any Registration Statement
subject to this provision.
4.9 INFORMATION BY HOLDER.
Each holder of Registrable Shares to be included in any registration
shall furnish to the Company and the managing underwriter such written
information regarding such holder and the distribution proposed by such holder
as the Company or the managing underwriter may reasonably request in writing and
as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Article IV.
4.10 EXCHANGE ACT COMPLIANCE.
The Company 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,
which are conditions to the availability of Rule 144 for the sale of the Common
Stock. The Company shall cooperate with each holder of Registrable Shares in
supplying such information as may be reasonably necessary for such holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.
4.11 NO CONFLICT OF RIGHTS.
The Company represents and warrants to the Investors that the
registration rights granted to the Investors hereby do not conflict with any
other registration rights granted by the Company. The Company shall not, after
the date hereof, grant any registration rights which conflict with or impair, or
have any priority over, the registration rights granted hereby, without the
prior consent of the Requisite Investors. In any underwritten public offering,
the managing underwriter shall be a nationally recognized investment banking
firm selected by the Company, and reasonably acceptable to the Requisite
Investors.
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4.12 TRANSFER OF REGISTRATION RIGHTS.
The registration rights provided in this Article IV may be Transferred
by any Investor to (i) any principal, officer, or retired or principal officer
of an Investor, (ii) to an Affiliate of an Investor, or (iii) to any Transferee
of at least 100,000 shares of Common Stock held by such Investor, in each case
so long as the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such Transferee and the
securities with respect to which such registration rights are being assigned.
4.13 TERMINATION.
This Article IV shall terminate and be of no further force or effect, as
to any Investor, upon such time as Rule 144 or another similar exemption under
the Securities Act is available for the sale of all such Investor's Registrable
Shares in a single transaction without regard to volume limitations; provided,
however, that Sections 4.5 and 4.6 shall survive the termination of this Article
IV.
ARTICLE V
SECURITIES LAW COMPLIANCE; LEGENDS
5.1 RESTRICTION ON TRANSFER.
(a) Except for Transfers that constitute Public Sales and
Transfers to Affiliates, no Investor shall Transfer any Registrable Shares to a
Person not already a party to this Agreement, unless and until such Person
executes and delivers to the Company a joinder agreement, pursuant to which such
Person will thereupon become a party to, and be bound by and obligated to comply
with the terms and provisions of, this Agreement, as an Investor hereunder. No
Person who acquires Company Securities in a Public Sale shall be required to
execute a joinder agreement
(b) In addition to any other restrictions on the Transfer of
any Securities contained in this Agreement, the Investors shall not Transfer any
Registrable Shares except in compliance with the conditions specified in this
Article V.
5.2 RESTRICTIVE LEGENDS.
(a) Each certificate evidencing Registrable Shares and each
certificate issued in exchange for or upon the Transfer of any Registrable
Shares (if such shares remain Registrable Shares as defined herein after such
Transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN INVESTOR RIGHTS AGREEMENT DATED AS OF [_________] [__], 2003,
AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN
OF THE COMPANY'S STOCKHOLDERS, AS THE SAME
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MAY BE AMENDED FROM TIME TO TIME. THE TERMS OF SUCH INVESTOR
RIGHTS AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON
TRANSFERS. A COPY OF SUCH INVESTOR RIGHTS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST."
(b) The Company shall imprint such legends on certificates
evidencing shares outstanding prior to the date hereof. The legend set forth
above shall be removed from the certificates evidencing any shares that cease to
be Registrable Shares in accordance with the terms of this Agreement.
ARTICLE VI
AMENDMENT AND WAIVERS
6.1 AMENDMENT.
Except as expressly set forth herein, the provisions of this Agreement
may only be amended or waived with the prior written consent of (i) the Company
and (ii) the Requisite Investors; provided, however, that (A) any such
amendment, modification, or waiver that would adversely affect the rights
hereunder of any Investor, in its capacity as an Investor, without similarly
affecting the rights hereunder of all Investors, shall not be effective as to
such Investor without such Investor's prior written consent, (B) any such
amendment, modification, or waiver of Section 2.1(b)(i) hereof shall require the
prior written consent of the JPMP Entities, (C) any such amendment,
modification, or waiver of Section 2.1(b)(ii) hereof shall require the prior
written consent of the BBI Entities, (D) any such amendment, modification, or
waiver the objective of which is to terminate Section 2.1 hereof shall only
require the prior written consent of the JPMP Entities and BBI and (E) Schedule
I to this Agreement shall be deemed to be automatically amended from time to
time to reflect Transfers of Stock made in accordance with the terms of this
Agreement, without requiring the consent of any party, and the Company will,
from time to time, distribute to the Investors a revised Schedule I to reflect
any such changes.
6.2 WAIVERS; EXTENSIONS.
No course of dealing between the Company and the Investors (or any of
them) or any delay in exercising any rights hereunder will operate as a waiver
of any rights of any party to this Agreement. The failure of any party to
enforce any of the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such party thereafter
to enforce each and every provision of this Agreement in accordance with its
terms.
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ARTICLE VII
TERMINATION
The provisions of this Agreement, except as otherwise expressly provided
herein, shall terminate upon the first to occur of (a) the consummation of a
Liquidation (as such term is defined in the Certificate of Designations) or (b)
the approval of such termination by (i) the Company and (ii) the Requisite
Investors. Anything contained herein to the contrary notwithstanding, as to any
particular Investor, this Agreement shall no longer be binding or of further
force or effect as to such Investor, except as otherwise expressly provided
herein, as of the date such Investor has Transferred all of such Investor's
interest in the Company's Securities and the Transferees of such Securities
have, if required by Section 5.1(a) hereof, executed joinder agreements.
ARTICLE VIII
MISCELLANEOUS
8.1 GRANT OF PROXY.
Each Investor (other than the Excluded Investors) hereby irrevocably
grants to and appoints X.X. Xxxxxx Partners (BHCA), L.P. ("JPMP-BHCA") (and any
officer of JPMP-BHCA) and BBI (and any officer of BBI), as such Investor's proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of such Investor, to vote, act by written consent or grant a
consent, proxy or approval in respect of the shares of Series A Preferred Stock
owned by such Investor, with respect to such vote or action by written consent
exclusively as agreed by such Investor in this Agreement in the event that such
Investor shall fail at any time to vote or act by written consent with respect
to any of such Investor's shares of Series A Preferred Stock in favor of the
JPMP Director or BBI Director, as the case may be, as agreed by such Investor in
this Agreement. Each Investor (other than the Excluded Investors) hereby affirms
that any such irrevocable proxy set forth in this Section 8.1 is given in
connection with the Investors' purchase of Securities pursuant to the Purchase
Agreement in order to secure the performance of the obligations of such Investor
under this Agreement. Each such Investor hereby further affirms that any such
proxy hereby granted shall be irrevocable, and shall be deemed coupled with an
interest, in accordance with Section 212(e) of the Delaware General Corporation
Law.
8.2 REGULATORY MATTERS.
(a) Cooperation of Other Investors. Each Investor agrees to
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and the JPMP
Entities, a duly executed copy of which is attached hereto as Exhibit A,
regarding regulatory matters (the "Regulatory Sideletter"), including, without
limitation, voting to approve an amendment to the Company's Fundamental
Documents or this Agreement in a manner reasonably acceptable to the Company and
each of
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the JPMP Entities or any Affiliate of any of the JPMP Entities entitled to make
such request pursuant to the Regulatory Sideletter in order to remedy a
Regulatory Problem (as defined in the Regulatory Sideletter). Anything contained
in this Section 8.2(a) to the contrary notwithstanding, no Investor shall be
required under this Section 8.2(a) to take any action that would adversely
affect in any material respect such Investor's rights, obligations or
liabilities under this Agreement or as a stockholder of the Company.
(b) Covenant Not to Amend. The Company and each Investor
(other than the JPMP Entities) agree to provide the JPMP Entities with at least
twenty (20) Business Days prior notice of its or their intention to amend, or
effectively amend by permanently foregoing its rights under, the voting or other
provisions of any of the Company's Fundamental Documents or this Agreement and
agree not to amend, or effectively amend by permanently foregoing its rights
under, the voting or other provisions of any Fundamental Document or this
Agreement prior to the earlier to occur of (i) the end of such twenty (20)
Business Day period or (ii) the date that the JPMP Entities notify the Company
and each other Investor that it will not have a Regulatory Problem as a result
thereof. The JPMP Entities agree to notify the Company and each other Investor
as to whether or not it would have a Regulatory Problem within ten (10) Business
Days after the JPMP Entities have received notice of such proposed amendment or
such effective amendment.
8.3 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of this Agreement or such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not be invalid, prohibited or unenforceable in such jurisdiction, it shall,
as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.4 ENTIRE AGREEMENT.
This Agreement and the other agreements referred to herein and to be
executed and delivered in connection herewith embody the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede and preempt any and all prior and contemporaneous
understandings, agreements, arrangements or representations by or among the
parties, written or oral, which may relate to the subject matter hereof or
thereof in any way. Other than this Agreement, the other Documents and the other
agreements referred to herein and therein to be executed and delivered in
connection herewith and therewith, there are no other agreements continuing in
effect relating to the subject matter hereof.
-28-
8.5 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.
All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder. The exhibits and schedules attached hereto are hereby made part of
this Agreement in all respects.
8.6 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, this Agreement will bind and inure
to the benefit of and be enforceable by the Company and its successors and
assigns and the Investors and any subsequent holders of Registrable Shares and
the respective successors and assigns of each of them, so long as they hold
Registrable Shares. None of the provisions hereof shall create, or be construed
or deemed to create, any right to employment in favor of any Person by the
Company or any of its Subsidiaries. This Agreement is not intended to create any
third party beneficiaries.
8.7 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
8.8 REMEDIES.
(a) Each Investor shall have all rights and remedies
reserved for such Investor pursuant to this Agreement and all of the rights that
such holder has under any law or equity. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law or equity.
(b) The parties hereto agree that if any parties seek to
resolve any dispute arising under this Agreement pursuant to a legal proceeding,
the prevailing parties to such proceeding shall be entitled to receive
reasonable fees and expenses (including reasonable attorneys' fees and expenses)
incurred in connection with such proceedings.
(c) It is acknowledged that it will be impossible to measure
in money the damages that would be suffered by any party hereto if any Person
also party hereto fails to comply with any of the obligations imposed on it upon
them in this Agreement or in the Restated Certificate or Bylaws and that in the
event of any such failure, the aggrieved party will be irreparably damaged and
will not have an adequate remedy at law. Any such aggrieved party shall,
therefore, be entitled to equitable relief, including specific performance, to
enforce such
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obligations, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
8.9 NOTICES.
All notices or other communications which are required or otherwise
delivered hereunder shall be deemed to be sufficient and duly given if contained
in a written instrument (a) personally delivered or sent by telecopier, (b) sent
by nationally-recognized overnight courier guaranteeing next Business Day
delivery or (c) sent by first class registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
(i) if to the Company, to:
Seattle Genetics, Inc.
00000 00xx Xxxxx X.X.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Seattle Genetics, Inc.
00000 00xx Xxxxx X.X.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
With an additional copy to:
Venture Law Group
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(ii) if to an Investor, to him, her or it at the
address set forth on Schedule I attached hereto;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) when delivered, if
personally delivered, (ii) when sent, if sent by telecopy on a Business Day (or,
if not sent on a Business Day, on the next Business Day after
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the date sent by telecopy), (iii) on the first Business Day after dispatch, if
sent by nationally recognized, overnight courier guaranteeing next Business Day
delivery and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.
8.10 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and construed
and enforced in accordance with the domestic laws of the State of New York,
without giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State of New York
will control the interpretation and construction of this Agreement, even if
under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
Notwithstanding the foregoing provisions of this Section 8.10, those provisions
of this Agreement that relate to the internal governance of the Company and are
required by Delaware corporate law to be governed by such, shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
8.11 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the provisions of this Agreement
and the consummation of the transactions contemplated hereby.
8.12 CONFLICTING AGREEMENTS.
No Investor shall enter into any stockholder agreements or arrangements
of any kind with any Person with respect to any Securities on terms inconsistent
with the provisions of this Agreement (whether or not such agreements or
arrangements are with other Investors or with Persons that are not parties to
this Agreement), including agreements or arrangements with respect to the
acquisition or disposition of Securities in a manner which is inconsistent with
this Agreement.
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8.13 NO THIRD PARTY RELIANCE.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Investors to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Investors have expressly relied thereon) and (b) are solely for the benefit of
the Stockholders. Accordingly, no third party (including, without limitation,
any holder of capital stock of the Company) or anyone acting on behalf of any
thereof other than the Investors, shall be a third party or other beneficiary of
such representations and warranties and no such third party shall have any
rights of contribution against the Investors or the Company with respect to such
representations or warranties or any matter subject to or resulting in
indemnification under this Agreement or otherwise.
* * * * *
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IN WITNESS WHEREOF, the undersigned have duly executed this
Investor Rights Agreement as of the date first written above.
COMPANY:
SEATTLE GENETICS, INC.
By:
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President & CEO
STOCKHOLDERS:
X.X. XXXXXX PARTNERS (BHCA), L.P.
By: JPMP Master Fund Manager, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By:
------------------------------------
Name:
Title:
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By:
------------------------------------
Name:
Title:
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN), L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By:
------------------------------------
Name:
Title:
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS A, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By:
------------------------------------
Name:
Title:
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN) II, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By:
------------------------------------
Name:
Title:
XXXXX/TISCH INVESTMENTS, L.P.
By: Xxxxx/Xxxxx Capital, L.P.,
its general partner
By: Xxxxx/Tisch Capital (GP), LLC,
its general partner
By:
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Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BROS. INVESTMENTS, L.P.
By: Xxxxx Bros. Capital, L.P.,
its general partner
By: Xxxxx Bros. Capital (GP), LLC,
its general partner
By:
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Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BROS. INVESTMENTS II, L.P.
By: Xxxxx Bros. Capital, L.P.,
its general partner
By: Xxxxx Bros. Capital (GP), LLC,
its general partner
By:
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Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BIOTECH FUND I, L.P.
By: Xxxxx Biotech Capital, L.P.,
its general partner
By: Xxxxx Biotech Capital (GP), LLC,
its general partner
By:
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Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BIOTECH FUND II, L.P.
By: Xxxxx Biotech Capital II, L.P.,
its general partner
By: Xxxxx Biotech Capital II (GP), LLC,
is general partner
By:
------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BIOTECH FUND II (Z), L.P.
By: Xxxxx Biotech Capital II, L.P.,
its general partner
By: Xxxxx Biotech Capital II (GP), LLC,
is general partner
By:
------------------------------------
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
BAVP, L.P.
By: BA Venture Partners VI, LLC,
its general partner
By:
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Name: Xxxxx X. Xxxx
Title: Managing Director
DELPHI VENTURES VI, L.P.
By: Delphi Management Partners VI,
L.L.C., its general partner
By:
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Name: Xxxxx Xxxxxxxxxxx
Title: Managing Member
DELPHI BIOINVESTMENTS VI, L.P.
By: Delphi Management Partners VI,
L.L.C., its general partner
By:
------------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Managing Member
X. XXXX PRICE HEALTH SCIENCES FUND,
INC.
By:
------------------------------------
Name:
Title:
SCHEDULE I
INVESTORS
NAME AND ADDRESS
X.X. Xxxxxx Partners (BHCA), L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
X.X. Xxxxxx Partners Global Investors, L.P.
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
NAME AND ADDRESS
X.X. Xxxxxx Partners Global Investors
(Cayman), L.P.
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
X.X. Xxxxxx Partners Global Investors A,
L.P.
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
NAME AND ADDRESS
X.X. Xxxxxx Partners Global Investors
(Cayman) II, L.P.
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
Xxxxx/Tisch Investments, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
Xxxxx Bros. Investments, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
NAME AND ADDRESS
Xxxxx Bros. Investments II, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
Xxxxx Biotech Fund I, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
Xxxxx Biotech Fund II, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
NAME AND ADDRESS
Xxxxx Biotech Fund II (Z), L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
BAVP, L.P.
c/o BA Venture Partners
000 Xxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Delphi Ventures VI, L.P.
c/o Delphi Ventures
0000 Xxxx Xxxx Xx.
Xxxx. 0, Xxx. 000
Xxxxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Attention: Xxxxx Xxxxxxxxxxx
Delphi BioInvestments VI, L.P.
c/o Delphi Ventures
0000 Xxxx Xxxx Xx.
Xxxx. 0, Xxx. 000
Xxxxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Attention: Xxxxx Xxxxxxxxxxx
NAME AND ADDRESS
X. Xxxx Price Health Sciences Fund, Inc.
c/o X. Xxxx Price Associates, Inc.
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
Xxxxxxx X. Xxxxxx
Associate Legal Counsel
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Facsimile: 000-000-0000
