Exhibit 10.10
FOURTH AMENDED AND RESTATED MASTER RIGHTS AGREEMENT
This Fourth Amended and Restated Master Rights Agreement (this
"Agreement") is made and entered into as of the 19th day of December, 2003 (the
"Effective Date") by and among INHIBITEX, Inc., a Delaware corporation (the
"Company"), the entities listed on Schedule I and those who execute an
Instrument of Adherence in the form attached as Exhibit B (collectively, the
"Purchasers"), and entities listed on Schedule II, (together with the
Purchasers, the "Investors") and the persons listed on Schedule III
(individually, a "Common Holder" and collectively the "Common Holders").
WHEREAS, the Purchasers are acquiring shares of the Company's Series E
Convertible Preferred Stock, $0.001 par value per share, and Series E Warrants
(as hereinafter defined), pursuant to that certain Series E Preferred Stock and
Warrant Purchase Agreement dated as of even date herewith, by and among the
Company and the other parties thereto (the "Purchase Agreement");
WHEREAS, as a condition to the closing under the Purchase Agreement,
the Investors and the Company desire to enter into this Agreement setting out
certain rights and obligations among the parties;
WHEREAS, the Company and certain parties hereto are parties to that
certain Third Amended and Restated Master Rights Agreement dated as of February
7, 2002 (the "Prior Rights Agreement"); and
WHEREAS, the Company and the holders of at least 66-2/3% of the
outstanding Series B, 66-2/3% of the outstanding Series C and 66-2/3% of the
outstanding Series D (as such terms are defined herein) desire that this
Agreement completely amend and restate the Prior Rights Agreement.
AGREEMENT
In consideration of the following mutual covenants and agreements, and
subject to the terms and conditions set forth herein, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. The following definitions shall be applicable to
the terms set forth below as used in this Agreement:
(a) "Affiliates." The term "Affiliate" shall mean, with
respect to any Person (as defined below), any other Person which directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person, or is a stockholder or partner of such
Person or such Person, in the case of an entity, that has the same investment
manager.
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(b) "Certificate of Incorporation." The term "Certificate
of Incorporation" shall mean the Company's Seventh Amended and Restated
Certificate of Incorporation, as amended from time to time.
(c) "Board." The term "Board" shall mean the Board of
Directors of the Company.
(d) "Budget." The term "Budget" shall have the meaning
set forth in Section 2.1(d) hereof.
(e) "CDP." The term "CDP" shall mean Capital Technologies
CDPQ inc.
(f) "Commission." The term "Commission" shall mean the
Securities and Exchange Commission or any other federal agency at the time
administering the federal securities laws.
(g) "Common Stock." The term "Common Stock" shall mean
the Company's common stock, par value $0.001 per share, as constituted on the
date hereof.
(h) "Company's Notice." The term "Company's Notice" shall
have the meaning set forth in Section 3.3 hereof.
(i) "Conversion Shares." The term "Conversion Shares"
shall mean any Common Stock issued or issuable upon conversion of the Preferred
Stock, any Common Stock issued or issuable upon conversion of the Series D
issued or issuable upon the exercise of the Series D Warrants, any Common Stock
issued or issuable upon the exercise of the Series E Warrants, any Common Stock
issued or issuable upon exercise of any other warrants or rights, and any Common
Stock issued or issuable upon conversion of any convertible securities issued or
issuable upon the exercise of any other warrants or rights held by the
Investors.
(j) "Essex." The term "Essex" shall mean Essex Woodlands
Health Ventures V, LP or any of its Affiliates.
(k) "Equity Securities." The term "Equity Securities"
shall have the meaning set forth in Section 2.2 hereof.
(l) "GAAP." The term "GAAP" shall mean generally accepted
accounting principles (as such principles are applied in the United States of
America as of the date of the financial statement with respect to which the term
is used), consistently applied.
(m) "Initial Public Offering" means a consummated firmly
underwritten public offering of the Company's Common Stock on a Form S-1
Registration Statement, or any similar form of registration statement, adopted
by the Commission from and after the date hereof, filed with the Commission
under the Securities Act (as defined below) with respect to which the Company
receives gross
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proceeds of at least $50,000,000 before underwriting discounts, commissions and
fees, and the price to the public is at least $8.00 per share (as appropriately
adjusted for subdivisions and combinations of shares of Common Stock and
dividends and distributions on Common Stock payable in shares of Common Stock
after the date of this Agreement).
(n) "Initiating Holders." The term "Initiating Holders"
shall mean the holders of Registrable Stock initially requesting registration of
Registrable Stock pursuant to Section 3.1 of this Agreement.
(o) "Investors' Notice." The term "Investors' Notice"
shall have the meaning set forth in Section 3.3 hereof.
(p) "Long-Form Registration Statement." The term
"Long-Form Registration Statement" shall mean a registration statement on Form
X-0, Xxxx X-0, Form SB-1 or Form SB-2, or any similar form of registration
statement adopted by the Commission from and after the date hereof.
(q) "NEA." The term "NEA" shall mean New Enterprise
Associates 10, Limited Partnership or any of its Affiliates.
(r) "Permitted Transferees." The term "Permitted
Transferees" of a Person shall mean any shareholder, member or partner of any
non-natural Person upon a pro rata distribution by a partnership to its
partners, by a limited liability company to its members or otherwise upon the
dissolution or liquidation of the non-natural Person, or as to any natural
Person any family member of a Person or trust established by a Person or such
Person's family member for estate planning purposes.
(s) "Person." The term "Person" shall mean any
individual, unincorporated organization, firm, corporation, partnership,
investment fund, trust, joint venture, governmental authority or political
subdivision thereof, or other entity, and shall include any successor of the
foregoing (by merger or otherwise).
(t) "Preferred Stock." The term "Preferred Stock" shall
mean the Company's Series A, Series B, Series B-1, Series C, Series C-1, Series
D, Series D-1, Series E and Series E-1.
(u) "Prospective Sellers." The term "Prospective Sellers"
shall have the meaning set forth in Section 3.6(a)(ii) hereof.
(v) "Register." The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act.
(w) "Registrable Stock." The term "Registrable Stock"
shall mean any (i) Common Stock issued to or issuable upon conversion of the
shares of Preferred Stock issued, held or acquired by any of the Investors, (ii)
Common Stock issued or issuable upon conversion of the Series D Stock issued or
issuable upon the exercise of the Series
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D Warrants, (iii) Common Stock issued or issuable upon conversion of the Series
E Stock issued or issuable upon the exercise of the Series E Warrants, (iv) any
Common Stock issued as (or issuable upon 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, and (v) any other shares of Common Stock now held or hereafter
acquired by Persons holding the securities in (i), (ii), (iii) and (iv) above. A
Person shall be deemed to be a holder of Registrable Stock when such Person has
a right to acquire such Registrable Stock (whether by conversion or otherwise)
regardless of whether such acquisition has actually been effected. Each share of
Registrable Stock shall continue to be Registrable Stock in the hands of each
subsequent holder thereof subject to the limitations set forth in Section 3.14
hereof; provided that each share of Registrable Stock shall cease to be
Registrable Stock when transferred (x) pursuant to a registered public offering,
or (y) in accordance with Rule 144 promulgated by the Commission under the
Securities Act.
(x) "Requesting Holders." The term "Requesting Holders"
shall have the meaning set forth in Section 3.1 (c) hereof.
(y) "Reserved Shares." The term "Reserved Shares" shall
mean 3,809,868 shares of Common Stock currently reserved for issuance to
directors, officers, employees and consultants upon the exercise of outstanding
or future options of the Company pursuant to plans or arrangements approved by
the holders of a majority of the outstanding Preferred Stock, and any additional
shares of Common Stock approved by written consent or vote of the Board
including the unanimous consent or approval of the directors elected by the
holders of outstanding Series D, Series D-1, Series E and Series E-1.
(z) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to a sale.
(aa) "Securities Act." The term "Securities Act" shall
mean the Securities Act of 1933, as amended.
(bb) "Series A." The term "Series A" shall mean the
Company's Series A Convertible Preferred Stock, par value $.001 per share.
(cc) "Series B." The term "Series B" shall mean the
Company's Series B Convertible Preferred Stock, par value $.001 per share.
(dd) "Series B-1." The term "Series B-1" shall mean the
Company's Series B-1 Convertible Preferred Stock, par value $.001 per share.
(ee) "Series C." The term "Series C" shall mean the
Company's Series C Convertible Preferred Stock, par value $.001 per share.
(ff) "Series C-1." The term "Series C-1" shall mean the
Company's Series C-1 Convertible Preferred Stock, par value $.001 per share.
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(gg) "Series D." The term "Series D" shall mean the
Company's Series D Convertible Preferred Stock, par value $.001 per share.
(hh) "Series D-1." The term "Series D-1" shall mean the
Company's Series D-1 Convertible Preferred Stock, par value $.001 per share.
(ii) "Series D Common." The term "Series D Common" shall
mean any Common Stock issued upon conversion of the Series D.
(jj) "Series D-1 Common." The term "Series D-1 Common"
shall mean any Common Stock issued upon conversion of the Series D-1.
(kk) "Series D Warrants." The term "Series D Warrants"
shall mean the warrants exercisable into Series D issued by the Company pursuant
to the Preferred Stock and Warrant Purchase Agreement dated as of February 7,
2002, by and among the Company and the other parties thereto.
(ll) "Series E Warrants." The term "Series E Warrants"
shall mean the warrants exercisable into Series E issued by the Company pursuant
to the Purchase Agreement.
(mm) "Series E." The term "Series E" shall mean the
Company's Series E Convertible Preferred Stock, par value $.001 per share.
(nn) "Series E-1." The term "Series E-1" shall mean the
Company's Series E-1 Convertible Preferred Stock, par value $.001 per share.
(oo) "Series E Common." The term "Series E Common" shall
mean any Common Stock issued upon the conversion of the Series E.
(pp) "Series E-1 Common." The term "Series E-1 Common"
shall mean any Common Stock issued upon the conversion of the Series E-1.
(qq) "Short-Form Registration Statement." The term
"Short-Form Registration Statement" shall mean a registration statement on Form
S-3 or any similar form of registration statement adopted by the Commission from
and after the date hereof.
(rr) "Shares." The term "Shares" shall mean and include
all shares of Stock now owned or hereafter acquired by any Investor or Common
Holder. For purposes of this Agreement, all of the Stock which an Investor or
Common Holder has a right to acquire from the Company upon the conversion,
exercise or exchange of any of the securities of the Company then owned by such
Investor or Common Holder shall be deemed to be Shares then owned by such
Investor or Common Holder.
(ss) "Stock." The term "Stock" shall mean and include all
shares of Common Stock, all shares of Preferred Stock and all other securities
of the Company which may be issued in exchange for or respect of shares of
Common Stock or Preferred
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Stock (whether by way of stock split, stock dividend, combination,
reclassification, reorganization, or any other means).
(tt) "Warrant Shares." The term "Warrant Shares" shall
mean the Series D issued upon exercise of the Series D Warrants and/or the
Series E issued upon the exercise of the Series E Warrants.
(uu) "WBCP." The term "WBCP" shall mean the Xxxxxxx Xxxxx
Capital Partners, LLC.
(vv) "ATV." The term "ATV" shall mean Alliance Technology
Ventures I, L.P. or any of its affiliates.
1.2 Additional Definitions. In addition to the foregoing,
capitalized terms used in this Agreement and not otherwise defined in this
Article I shall have the meanings so given to such terms herein.
ARTICLE II.
COVENANTS OF THE COMPANY
2A. Covenants of the Company. The Company agrees as follows:
2.1 Accounting; Financial Statements and Other Information;
Inspection Rights.
(a) Accounting. The Company shall maintain and cause each
of its subsidiaries to maintain a system of accounting established and
administered in accordance with GAAP and shall set aside on its books and cause
each of its subsidiaries to set aside on its books all such proper reserves as
shall be required by GAAP.
(b) Financial Statements. So long as there are any shares
of Preferred Stock (whether Series A, Series B, Series B-1, Series C, Series
C-1, Series D, Series D-1, Series E or Series E-1), any Series D Common, Series
D-1 Common, Series E Common, Series E-1 Common, Series D Warrants or Series E
Warrants outstanding, the Company shall deliver to each Investor, within 90 days
after the end of each fiscal year of the Company, a consolidated and
consolidating balance sheet of the Company and its subsidiaries as of the end of
such period and consolidated and consolidating statements of operations, cash
flows and stockholders' equity (deficit) of the Company and its subsidiaries for
such period, setting forth in each case comparisons to the Budget and the
previous such period, all in reasonable detail and accompanied by the opinion
thereon of independent public accountants of national standing, which opinion
shall not be qualified and shall state that the financial statements were
prepared in accordance with GAAP applied on a basis consistent with that of the
previous such period, fairly present the consolidated financial condition of the
Company as of the date thereof and for the periods covered thereby and that the
audit by such accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards.
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(c) Additional Information. So long as there are any
shares of Preferred Stock (whether Series A, Series B, Series B-1, Series C,
Series C-1, Series D, Series D-1, Series E or Series E-1), any Series D Common,
Series D-1 Common, Series E Common, Series E-1 Common, Series D Warrants or
Series E Warrants outstanding, the Company shall deliver to each Investor:
(i) within 30 days after the end of each monthly
accounting period, and 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year of the Company, a consolidated
and consolidating balance sheet of the Company and its subsidiaries as of the
end of each such period, and consolidated and consolidating statements of
operations, cash flows and stockholders' equity (deficit) of the Company and its
subsidiaries and changes in consolidated and consolidating financial position of
the Company and its subsidiaries for each such period and for the period from
the beginning of the current fiscal year to the end of such monthly or quarterly
period, setting forth in each case comparisons to the Budget and the
corresponding periods of the previous fiscal year, all in accordance with GAAP
(subject to the absence of footnote disclosures and to normal year-end
adjustments for recurring accruals) and certified by the chief financial officer
(or other authorized officer) of the Company;
(ii) upon the request of Investors holding a
majority of the outstanding shares of Preferred Stock, a majority of the
outstanding Series C and Series C-1, a majority of the outstanding Series D,
Series D-1, Series E and Series E-1 (voting together as a single class on an
as-if converted basis) or Series D Common, Series D-1 Common, Series E Common
and Series E-1 Common (voting together as a single class on an as-if converted
basis) or a majority of the Warrant Shares (assuming for the purposes of this
calculation the conversion of any outstanding Series D Warrants and Series E
Warrants), concurrently with the delivery of each of the financial statements
referred to in subsections 2.1(b) and 2.1(c)(i) above, an executed written
report by the chief executive officer of the Company with respect to the
operations of the Company during the period covered by such statements,
including a discussion, in reasonable detail, or operating results versus Budget
and of problems and achievements versus goals and milestones and setting forth
nonbinding goals and milestones for the ensuing month, quarter and year;
(iii) within 90 days after the end of each fiscal
year of the Company, a copy of any management letter delivered to the Company by
its independent public accountants with respect to such year;
(iv) promptly (but in any event within ten days)
after becoming aware of any material adverse event or circumstance affecting the
Company or any of its subsidiaries (including, but not limited to, the filing of
any material litigation against the Company or any of its subsidiaries and the
discovery that the Company or any of its subsidiaries is not, or with the
passage of time will not be, in compliance with any provision of this Agreement,
its Bylaws, the Certificate of Incorporation or any other material agreement of
the Company or any of its subsidiaries), a notice specifying the nature and
period of existence thereof, and the actions the Company has taken and/or
proposes to take with respect thereto;
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(v) promptly (but in any event within ten days)
after transmission thereof, copies of any general communication from the Company
or any of its subsidiaries to its stockholders, directors or the financial
community at large, and any reports filed by the Company or any of its
subsidiaries with any securities exchange, the National Association of
Securities Dealers, Inc., any state official or agency charged with securities
regulation, the Commission or any other governmental agency, domestic or foreign
(including, without limitation, any correspondence between the Company or any of
its subsidiaries and any of the foregoing which contains information materially
adverse to the Company or any of its subsidiaries); and
(vi) with reasonable promptness, such other
information and financial data concerning the Company and its subsidiaries as
any Person entitled to receive information under this Section 2.1 may reasonably
request.
(d) Annual Budget.
(i) On or prior to each December 15, the Company
shall deliver to each Investor a Budget (the "Budget") for each succeeding
12-month period commencing each subsequent January 1, which shall meet the
approval of the Board. The Budget shall contain the current business and
marketing plans of the Company for the succeeding 12-month period, including but
not limited to, cash flow and pro forma profit and loss statements for each
month included in such period. The Company agrees to use commercially reasonable
efforts to conduct its business in conformity with the Budget.
(ii) At each meeting of the Board, operating
management will report on the receipts and expenditures of the Company as of a
date reasonably close to the date of the meeting and will recommend for action
by the Board any changes in the Budget which it considers necessary or
appropriate. No expenditure in excess of $250,000 may be made by or on behalf of
the Company without the approval of the Board or a committee thereof, other than
expenditures provided for in a Budget which has been previously approved by the
Board.
(iii) The Budget may be amended or otherwise
modified by the Board at such time or times as the Board deems appropriate.
(e) Inspection Rights. The Company shall permit any
Investor or any representative designated by any Investor to visit and inspect
any of the properties of the Company or any of its subsidiaries, including its
and their books of account (and to make copies thereof and to take extracts
therefrom), and to discuss its and their affairs, finances and accounts with its
and their officers or employees and with representatives of the Company's
lenders, all at such reasonable times and as often as may be reasonably
requested; provided that such rights shall be exercised in a manner so as not to
materially and adversely disrupt the ordinary course of business of the Company
or any of its subsidiaries.
(f) Limitation of Rights. The rights of the Investors to
receive the information and conduct any inspections provided for in this Section
2.1 are subject to
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the Investors' agreement to keep all such information confidential and use such
information only for the purposes of evaluating its investment in the Company.
Notwithstanding the foregoing, the Investors may disclose such information to
such Investor's partners, members, advisors and attorneys; provided that each
such person shall become subject to the confidentiality provisions of this
clause by virtue of the receipt of such information; and provided further, that
such Investor agrees that it shall inform its partners, members, advisors and
attorneys who receive such information of the confidential nature of such
information.
2.2 Right of First Refusal for Issuance of Equity Securities.
(a) So long as there are shares of Series B, Series C,
Series D or Series E outstanding, subject to subsection (c) hereof, if the
Company determines to issue any additional shares of its capital stock, or
warrants, options, rights or other securities convertible into shares of its
capital stock (collectively, the "Equity Securities"), from and after the date
of this Agreement, the Company shall first give each of the Investors then
holding shares of the Series B, Series C, Series D or Series E (each, a "Series
B Investor," "Series C Investor," "Series D Investor" or Series E Investor,"
respectively, and collectively, the "Preferred Investors") the right to purchase
such Equity Securities by delivering to each of them a written offer which shall
state the price and other material terms and conditions of the proposed issuance
(the "Offer"). If the Company proposes to issue the Equity Securities for
consideration other than solely cash and/or promissory notes, the offer to the
Series B Investors, Series C Investors, Series D Investors and Series E
Investors shall, to the extent of such consideration, permit such Investors to
pay in lieu thereof, cash equal to the fair market value of such consideration,
and the offer shall state the Company's estimate of such fair market value. The
Board shall fix the period of the offer which shall be a minimum of 30 days or
such longer period as is necessary to determine the fair market value of the
consideration referred to in the preceding sentence. Each Series B Investor,
Series C Investor, Series D Investor and Series E Investor shall have the right
to assign any or all of the rights such Investor may have to purchase Equity
Securities under this Section 2.2 to any of its Permitted Transferees or any of
its Affiliates.
(b) A Series B Investor, a Series C Investor, a Series D
Investor or a Series E Investor may accept an Offer only by giving written
notice to the Company before the Offer expires that such Investor has accepted
the offer to purchase some or all of the securities offered (the "Accepted
Securities"); provided, however, that the maximum number or amount of securities
each of the Preferred Investors shall be entitled to purchase shall be equal to
that number or amount of securities to be issued multiplied by a fraction, the
numerator of which shall be the aggregate number of Conversion Shares to which
such Preferred Investor is entitled (any shares of Preferred Stock deemed to be
Series B-1, Series C-1, Series D-1 or Series E-1 shall be excluded from the
definition of Conversion Shares for the purposes of the numerator) and the
number of shares of Common Stock held by such Preferred Investor and the
denominator of which shall be the aggregate number of shares of Common Stock and
Conversion Shares then outstanding. Notwithstanding the foregoing, any such
Preferred Investor (an "Oversubscribing Investor") may, at the time it accepts
the offer, subscribe to purchase
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any or all securities offered ("Oversubscription Securities") which may be
available as a result of the rejection, or partial rejection, of the offer by
other Preferred Investors. All Oversubscription Securities shall be allocated on
a pro rata basis among each Oversubscribing Investor based upon the number of
Conversion Shares (subject to the previous exclusion in this first sentence of
this subsection (b)) and shares of Common Stock held by such Oversubscribing
Investor divided by the number of Conversion Shares and shares of Common Stock
held in the aggregate by all such Oversubscribing Investors. If any such
Oversubscribing Investor declines to purchase all or part of such
Oversubscribing Investor's pro rata allocation of Oversubscription Securities,
any remaining Oversubscription Securities shall be offered to each other
Oversubscribing Investor, on a pro rata basis based upon the number of
Conversion Shares (subject to the previous exclusion in this first sentence of
this subsection (b)) and shares of Common Stock held by such Oversubscribing
Investor divided by the number of Conversion Shares and shares of Common Stock
held in the aggregate by all such Oversubscribing Investors. The sale of
Oversubscription Securities shall continue pursuant to the process set forth in
the immediately preceding sentence until all of the Equity Securities have been
purchased by the Preferred Investors or until no Preferred Investor desires to
purchase any remaining Oversubscription Securities.
Promptly following the expiration of the Offer, the Company
shall allocate the securities subscribed for among the Preferred Investors
accepting the Offer (the "Subscribing Holders") in the manner described in the
immediately preceding paragraph and shall by written notice (the "Acceptance
Notice") advise all Subscribing Holders of the number or amount of securities
allocated to each of the Subscribing Holders. Within ten days following receipt
of the Acceptance Notice, each of the Subscribing Holders shall deliver to the
Company payment in full for the Accepted Securities purchased by it against
delivery by the Company to each Subscribing Holder of a certificate or
certificates evidencing the Accepted Securities purchased by it.
To the extent the offer is not subscribed in full by the
Series B Investors, Series C Investors, Series D Investors or Series E
Investors, the Company may, for a period of 90 days thereafter, issue and sell
the unaccepted securities, or any of them, at the same price, and upon the other
terms and conditions specified in such Offer, to any Person or Persons.
(c) Notwithstanding the provisions of this Section 2.2,
the Company shall not be required to first offer the Equity Securities to the
Preferred Investors if:
(i) the issuance is pursuant to the conversion
of any shares of the Preferred Stock (including conversion into any other series
of Preferred Stock), exercise of any Series D Warrant or Series E Warrant or
conversion of any Warrant Shares;
(ii) the Company proposes to issue Reserved
Shares, or nontransferable options to purchase Common Stock, for cash only, to
its officers or employees, or officers or employees of any of its subsidiaries,
or to outside consultants or contractors in connection with services performed
for the Company, pursuant to
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employment agreements or compensation plans or other arrangements approved by a
majority of the Board;
(iii) the issuance is in connection with any stock
split, stock dividend (including any dividend payable on the shares of Series C,
Series C-1, Series D, Series D-1, Series E and Series E-1 in kind at the option
of the holder) or recapitalization of the Company;
(iv) the issuance is pursuant to an underwritten
public offering;
(v) the issuance is pursuant to the acquisition
of another company or a strategic alliance which has been approved by the
holders of a majority of the outstanding Series C and Series C-1 and by the
holders of a majority of the outstanding Series D, Series D-1, Series E and
Series E-1 (voting together as a single class on an as-if converted basis); or
(vi) the Company issues Series E pursuant to the
Purchase Agreement at Additional Closings (as defined in the Purchase Agreement)
provided however that such issuances of Series E shall not exceed, in the
aggregate, 2,247,756 shares of Series E.
2.3 Reserved Shares.
(a) The Reserved Shares shall be issued from time to time
to directors, officers, employees and consultants of the Company under such
arrangements, contracts or plans as are recommended by the management of the
Company and approved by the holders of a majority of the outstanding Series B
and Series B-1, by the holders of a majority of the outstanding Series C and
Series C-1 and by the holders of a majority of the outstanding Series D, Series
D-1, Series E and Series E-1 (voting together as a single class on an as-if
converted basis).
(b) Except with respect to options or warrants issued to
outside consultants, contractors or business partners, unless otherwise approved
by the majority consent of the Board, any such arrangements, contracts or plans
with respect to the Reserved Shares shall not provide for a vesting schedule at
a rate in excess of 33-1/3% per annum from the date of issuance.
2.4 Non-disclosure Agreement. Unless otherwise approved by the
unanimous consent of the Board, the Company shall require all present and future
officers and key employees of and other employees who have access to
confidential information, and consultants to, the Company and its subsidiaries
to execute and deliver a confidentiality agreement in a form attached to the
Purchase Agreement at Exhibit B thereto.
2.5 Stock Option Agreements. Unless otherwise approved by the
majority consent of the Board, the Company shall cause all future purchasers of,
and all future holders of options to purchase, Common Stock who are employees,
consultants, contractors or business partners of the Company to execute and
deliver a Stock Option Agreement substantially in the form attached at Exhibit A
hereto or pursuant to an
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agreement approved by those members of the Board elected by the holders of the
outstanding Series B, Series B-1, Series C, Series C-1, Series D, Series D-1,
Series E and Series E-1, and such agreements shall provide the Company with a
right of first refusal over dispositions of such restricted stock or Common
Stock issued or issuable upon exercise of such options, such right of first
refusal to expire on the earlier of the Company's initial public offering or a
merger, consolidation or sale of substantially all of the assets or capital
stock of the Company.
2.6 Election of Directors. From and after the date hereof, each
Investor and Common Holder shall vote all of his or its Series A, Series B,
Series B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1 and
Common Stock which are voting shares and any other voting securities of the
Company over which such Investor has voting control and shall take all other
necessary or desirable actions within his or its control (whether in his or its
capacity as a stockholder, director, member of a board committee or officer of
the Company or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Company shall take all
necessary or desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that the
following shall occur: (i) the Board shall set the number of directors by
resolution, and such number shall not be more than eleven; (ii) to cause and
maintain the election to the Board of three (3) designated representatives of
the holders of outstanding Series B and Series B-1 (voting as a single class on
an as-if converted basis) (the "Series B Directors"); (iii) to cause and
maintain the election to the Board of one (1) designated representative of WBCP
(the "WBCP Director"), which shall designate the representative on the Board
which the Series C is entitled to elect pursuant to the Certificate of
Incorporation; (iv) to cause and maintain the election to the Board of one (1)
designated representative of Essex (the "Essex Director"), which shall designate
one of the two representatives on the Board which the Series D and Series E are
entitled to elect pursuant to the Certificate of Incorporation; (v) to cause and
maintain the election to the Board of one (1) designated representative of NEA
(the "NEA Director"), which shall designate one of the two representatives on
the Board which the Series D and Series E are entitled to elect pursuant to the
Certificate of Incorporation; and (vi) to cause and maintain the election to the
Board of one (1) designated representative of the holders Series A and Common
Stock (voting as a single class on an as-if converted basis) (the "Series
A/Common Director"). The initial Essex Director shall be Xxxx Xxxxxx and the
initial NEA Director shall be Xxx Xxxxxxx. The WBCP Director shall be a member
of the Audit Committee and Compensation Committee of the Board, if any. The
outstanding Series D, Series D-1, Series E and Series E-1 (voting as a single
class on an as-if converted basis) shall be entitled to designate one (1)
director to the Audit Committee and Compensation Committee of the Board, if any.
If the WBCP Director ceases to serve as a member of the Board, the resulting
vacancy shall be filled by a representative designated by WBCP. If the Essex
Director ceases to serve as a member of the Board, the resulting vacancy shall
be filled by a representative designated by Essex. If the NEA Director ceases to
serve as a member of the Board, the resulting vacancy shall be filled by a
representative designated by NEA. If the Series A/Common Director ceases to
serve as a member of the Board, the resulting vacancy shall be filled by a
representative designated by the holders of Series A
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and Common Stock (voting as a single class on as-if converted basis). If any of
the Series B Directors cease to serve as a member of the Board, the resulting
vacancy shall be filled by a representative designated by the holders of the
outstanding Series B and Series B-1 (voting as a single class on an as-if
converted basis). The remaining four (4) directors shall be elected by a
plurality of the holders of the outstanding shares of Series A, Series B, Series
B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1 and Common
Stock (voting together as a single class on an as-if converted basis). The Board
shall meet at least quarterly. The Bylaws of the Company shall provide, in
addition to any provisions required by law, that any two directors, holders of
at least 25% of the Series B and Series B-1 issued and outstanding or holders of
at least 25% of the Series D, Series D-1, Series E and Series E-1 issued and
outstanding (voting as a single class on an as-if converted basis) or holders of
at least 25% of the Series C and Series C-1 issued and outstanding may call a
meeting of the Board. As of the Effective Date, the members of the Board shall
be Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxx
Xxxxxx, Xxxx Xxxxxxxxxxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxx X. Xxxxxxxxx and
Xxxxx X. Xxxxxxxx. The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, the board of any subsidiary and any committee thereof. At the request of
WBCP, Essex and NEA, so long as their respective WBCP Director, Essex Director
and NEA Director serves on the Board and for two years thereafter if available
to the Company, the Company shall use reasonable commercial efforts to maintain
directors and officers indemnity insurance coverage reasonably satisfactory to
WBCP, Essex and NEA and the Company's Certificate of Incorporation and Bylaws
shall provide for indemnification and exculpation of directors to the fullest
extent permitted under applicable law.
2.7 Board Observers.
(a) For as long as Xxxxxxx Technology Partners
("Xxxxxxx") holds at least five percent (5%) of the issued and outstanding
Series B and Series B-1, Xxxxxxx shall be entitled to have a representative of
Xxxxxxx attend all Board meetings as an observer but not as a member of the
Board and to receive notice of such meetings and any information provided with
respect thereto.
(b) For as long as AM Fund I, L.P. ("AM") holds at least
five percent (5%) of the issued and outstanding Common Stock (considering its
shares of Preferred Stock as converted into Common Stock for this
determination), AM shall be entitled to have a representative of AM attend all
Board meetings as an observer but not as a member of the Board and to receive
notice of such meetings and any information provided with respect thereto.
(c) In the event the WBCP Director no longer serves on
the Board and for as long as WBCP holds at least five percent (5%) of the issued
and outstanding Series C and Series C-1, WBCP shall be entitled to have a
representative of WBCP attend all Board meetings as an observer but not as a
member of the Board and to receive notice of such meetings and any information
provided with respect thereto.
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(d) In the event the Essex Director no longer serves on
the Board and for as long as Essex holds at least five percent (5%) of the
issued and outstanding Series D, Series D-1, Series E and Series E-1, Essex
shall be entitled to have a representative of Essex attend all Board meetings as
an observer but not as a member of the Board and to receive notice of such
meetings and any information provided with respect thereto.
(e) In the event the NEA Director no longer serves on the
Board and for as long as NEA holds at least five percent (5%) of the issued and
outstanding Series D, Series D-1, Series E and Series E-1, NEA shall be entitled
to have a representative of NEA attend all Board meetings as an observer but not
as a member of the Board and to receive notice of such meetings and any
information provided with respect thereto.
(f) For as long as CDP holds at least five percent (5%)
of the issued and outstanding Series D, Series D-1, Series E and Series E-1, CDP
shall be entitled to have a representative of CDP attend all Board meetings as
an observer but not as a member of the Board and to receive notice of such
meetings and any information provided with respect thereto.
(g) For as long as ATV holds at least five percent (5%)
of the issued and outstanding shares of any series of Preferred Stock, ATV shall
be entitled to have a representative of ATV attend all Board meetings as an
observer but not as a member of the Board and to receive notice of such meetings
and any information provided with respect thereto.
2.8 Termination of Company Agreements. Other than as expressly set
forth in each of the provisions of Sections 2.1 through 2.7, Sections 2.1
through 2.7 shall terminate upon the earlier of an Initial Public Offering or
when all shares of Preferred Stock have been converted or redeemed, however in
any event all the provisions of Section 2.1 through 2.7 shall terminate upon an
Initial Public Offering.
2.9 Tag-Along Rights.
(a) In the event that any Investor or Common Holder (a
"Transferring Holder") receives a bona fide offer from any person or entity
other than the Company (a "Proposed Purchaser") to purchase all or any portion
of the Series B, Series B-1, Series C, Series C-1, Series D, Series D-1, Series
E, Series E-1, Series, Series E-1, Common Stock or other Company convertible
securities ("Other Securities") owned by such Transferring Holder (a "Proposed
Transfer"), then each Investor (owning such Series B, Series B-1, Series C,
Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock or Other
Securities, in each case, a "Participation Investor") shall have the right (the
"Participation Right") to require the Proposed Purchaser to purchase (i) up to
the number of shares of the applicable Series B, Series B-1, Series C, Series
C-1, Series D, Series D-1, Series E, Series E-1, Common Stock or Other
Securities owned by each such Participation Investor equaling the number derived
by multiplying the total number of shares of the applicable Series B, Series
B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1, Common
Stock or Other Securities that the Proposed Purchaser proposes to acquire by a
fraction, the numerator of which is the total number of shares of
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the applicable Series B, Series B-1, Series C, Series C-1, Series D, Series D-1,
Series E, Series E-1, Common Stock or Other Securities owned by such
Participation Investor and the denominator of which is the total number of
shares of the applicable Series B, Series B-1, Series C, Series C-1, Series D,
Series D-1, Series E, Series E-1, or Common Stock or other Securities owned by
the Transferring Holder and all Participation Investors, and (ii) any additional
shares of the applicable Series B, Series B-1, Series C, Series C-1, Series D,
Series D-1, Series E, Series E-1, Common Stock or Other Securities that such
Participation Investor shall be entitled to sell to the Proposed Purchaser
pursuant to Section 2.9(c) if any other Participation Investor elects not to
exercise its rights hereunder. Any Series B, Series B-1, Series C, Series C-1,
Series D, Series D-1, Series E, Series E-1, Common Stock or Other Securities
purchased from a Participation Investor pursuant to this Section 2.9 (a) shall
be paid for at the same price per share, with the same form of consideration and
upon the same terms and conditions as such Proposed Transfer by the Transferring
Holder.
(b) The Transferring Holder shall, not less than thirty
(30) nor more than forty-five (45) days prior to each Proposed Transfer, notify,
or cause to be notified, each Participation Investor in writing of such Proposed
Transfer (the "Participation Notice"). Such Participation Notice shall set
forth: (i) the name of the transferor and the number of shares of Series B,
Series B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1,
Common Stock or Other Securities proposed to be transferred (the "Transferred
Shares"); (ii) the name(s) and address(es) of the Proposed Purchaser(s); (iii)
the proposed amount and form of consideration and terms and conditions of
payment offered by such Proposed Purchaser; (iv) the scheduled closing date for
the Proposed Transfer (the "Scheduled Close"); and (v) that the Proposed
Purchaser has been informed of the Participation Right provided for in Section
2.9 (a) and has agreed to purchase the Transferred Shares in accordance with the
terms hereof.
(c) The Participation Right may be exercised by any
Participation Investor by delivery of a written notice to the Transferring
Holder (the "Participation Acceptance Notice") at least ten (10) days prior to
the Scheduled Close. The Participation Acceptance Notice shall state the number
of shares of Series B, Series B-1, Series C, Series C-1, Series D, Series D-1,
Series E, Series E-1, Common Stock or Other Securities that such Participation
Investor commits to include in such Proposed Transfer to the Proposed Purchaser,
which number may not exceed the number determined as provided in clause (i) of
Section 2.9 (a) plus the number of additional shares of Series B, Series B-1,
Series C, Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock
or Other Securities, if any, that such Participation Investor would commit to
sell to the Proposed Purchaser in the event that any of the other Participation
Investors elect not to sell shares of the applicable Series B, Series B-1,
Series C, Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock
or Other Securities. The number of shares of the applicable Series B, Series
B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1, Common
Stock or Other Securities that the Transferring Holder shall be entitled to sell
shall be determined by subtracting the aggregate number of shares of the
applicable Series B, Series B-1, Series C, Series C-1, Series D, Series D-1,
Series E, Series E-1, Common Stock or Other Securities, as the case may be, that
the Participation
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Investors have elected to sell (as calculated pursuant to Sections 2.9(a) and
(c)) from the number of Transferred Shares to be acquired by the Proposed
Purchaser.
(d) In the event that the Proposed Purchaser is not
willing to purchase shares of the applicable Series B, Series B-1, Series C,
Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock or Other
Securities from the Participation Investors on the same terms and conditions as
specified in the Participation Notice, then the Transferring Holder shall not be
permitted to sell any shares of the applicable Series B, Series B-1, Series C,
Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock or Other
Securities to the Proposed Purchaser pursuant to the Proposed Transfer, unless
the Transferring Holder agrees to purchase such shares of the applicable Series
B, Series B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1,
Common Stock and/or Other Securities from the Participation Investors.
(e) Each of the Transferring Holders and those
Participation Investors who have delivered Participation Acceptance Notices
pursuant to the terms of Section 2.9(c) shall be obligated, for a ninety (90)
day period after the expiration of the thirty (30) day period referred to above,
to transfer such number of the applicable shares of the Series B, Series B-1,
Series C, Series C-1, Series D, Series D-1, Series E, Series E-1, Common Stock
or Other Securities, as calculated pursuant to Sections 2.9(a) and (c) to the
Proposed Purchaser on the terms and conditions stated in the Participation
Notice and in accordance with the provisions of this Section 2.9.
(f) Notwithstanding anything to the contrary, the rights
and obligations arising under this Section 2.9 shall not apply in the event that
either: (i) the Transferring Holder shall desire to sell or transfer all or any
portion of the applicable Series B, Series B-1, Series C, Series C-1, Series D,
Series D-1, Series E, Series E-1, Common Stock or Other Securities owned by it
(x) to its Permitted Transferees or its Affiliates, so long as such Permitted
Transferee or Affiliate, as a condition to such sale or transfer, shall agree in
writing with the Company to be bound by all the provisions of this Agreement to
the same extent as if such Permitted Transferee or Affiliate was a Common Holder
or Investor, as the case may be, or (y) in a public offering registered under
the Securities Act; (ii) the offer to purchase all or any part of the Common
Stock owned by the Transferring Holder is part of an offer, made pursuant to
Section 13 or 14 of the Securities Exchange Act of 1934, to purchase all or a
portion of the total shares of Common Stock outstanding; or (iii) is a sale of
Series B, Series B-1, Series C, Series C-1, Series D, Series D-1, Series E,
Series E-1, Common Stock or Other Securities to the Company. Furthermore,
notwithstanding anything to the contrary, the rights and obligations arising
under this Section 2.9 shall not apply to a Proposed Transfer to the extent the
Investors or the Company have exercised their rights pursuant to Article IV with
regard to the securities subject to a Proposed Transfer.
(g) The Participation Rights provided under this Section
2.9 shall apply for as long as the Series B outstanding as of July 2, 1998 or
the Series C outstanding as of the June 7, 2000 or the Series B-1 or the Series
C-1 or the Series D, the Series D-1, the Series E or the Series E-1, or Series D
Warrants or Series E Warrants are outstanding and shall terminate in any event
upon the date of the Initial Public Offering.
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(h) The Company shall not effect any transfer of Series
B, Series B-1, Series C, Series C-1, Series D, Series D-1, Series E, Series E-1
or Common Stock by any Common Holder or Investor if this Section 2.9 provides
that a Participation Notice shall be given in respect of such transfer until it
has received evidence satisfactory to it that the provisions of this Section 2.9
have been complied with.
ARTICLE III.
REGISTRATION RIGHTS
3.1 Required Registrations.
(a) If, at any time after the earlier to occur of (i) two
years from the Effective Date, or (ii) the Initial Public Offering (but in no
event within six months of the effective date of such registration in connection
therewith), holders of at least the number of shares of Registrable Stock issued
or issuable upon conversion of 500,000 shares of the Series B, Series B-1,
Series C, Series C-1, Series D, Series D-1, Series E and/or Series E-1 propose
to dispose of shares of Registrable Stock pursuant to a Long-Form Registration
Statement, then such holders may request the Company in writing to effect such
registration, stating the form of registration statement under the Securities
Act to be used (subject to the Company being eligible to use such registration
statement), such number of shares of Registrable Stock to be disposed of and the
intended method of disposition of such shares.
(b) If, at any time at which the Company is eligible to
file a registration statement on a Short-Form Registration Statement, holders of
Registrable Stock propose to dispose of shares of Registrable Stock which such
holders in their good faith discretion determine would have an anticipated
aggregate offering price of at least $1,000,000.00 pursuant to a Short-Form
Registration Statement, then such holders may request the Company in writing to
effect such registration on a Short-Form Registration Statement, stating the
form of such registration statement under the Securities Act to be used, the
number of shares of Registrable Stock to be disposed of and the intended method
of disposition of such shares.
(c) Upon receipt of the request of the holders pursuant
to Section 3.1(a) or 3.1(b) above (in the case of Section 3.1(a) or Section
3.1(b), hereinafter referred to as the "Initiating Holders"), the Company shall
give prompt written notice thereof to all other holders of Registrable Stock.
Subject to the provisions of Section 3.2 below, the Company shall (i) with
respect to Section 3.1(a), use its reasonable best efforts promptly to effect,
and (ii) with respect to Section 3.1(b) shall promptly effect, the registration
under the Securities Act of all shares of Registrable Stock specified in the
requests of the Initiating Holders and the requests (stating the number of
shares of Registrable Stock to be disposed of and the intended method of
disposition of such shares) of other holders of shares of Registrable Stock
("Requesting Holders") given within 30 days after receipt of such notice from
the Company.
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3.2 Limitations on Required Registration.
(a) The Company shall be required to prepare and file (i)
not more than two Long-Form Registration Statements, which actually become or
are declared effective, at the request of the Initiating Holders pursuant to
Section 3.1(a) hereof, or (ii) an unlimited number of Short-Form Registration
Statements, which actually become or are declared effective, at the request of
the Initiating Holders pursuant to Section 3.1(b) hereof. The two required
filings shall include any Long-Form Registration Statement filed and
subsequently withdrawn at the request of the Initiating Holders; provided that a
required filing shall not include a Long-Form Registration Statement until it
has become effective and unless the Initiating Holders are able to register and
sell at least 75% of the Registrable Stock requested to be included in such
Long-Form Registration.
(b) Only Common Stock may be included in a registration,
and, whenever a registration requested by holders of Registrable Stock is for a
firm commitment underwritten offering, if the Initiating Holders determine that
the number of shares of Common Stock so included which are to be sold by the
holders of Registrable Stock is limited due to market conditions, the holders
(including both the Initiating Holders and the Requesting Holders) of
Registrable Stock proposing to sell their shares in such underwriting and
registration shall share pro rata in the available portion of the registration
in question, such sharing to be based upon the number of shares of Registrable
Stock then held by such holders, respectively. If any holder of Registrable
Stock disapproves of the terms of the underwriting, such holder may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
Initiating Holders. The Registrable Stock so withdrawn shall also be withdrawn
from registration; provided, however, that, if by the withdrawal of such
Registrable Stock, a greater number of shares of Registrable Stock held by other
holders of Registrable Stock may be included in such registration (up to the
maximum of any limitation imposed by the Initiating Holders), then the Company
shall offer to all holders of Registrable Stock who have included Registrable
Stock in the registration the right to include additional Registrable Stock in
the same proportion used in determining the limitation imposed by the provisions
of this Section 3.2(b).
(c) The Company shall not be required to prepare and file
a registration statement pursuant to Section 3.1 hereof (i) during the period
starting with the date of filing of, and ending on the date one hundred eighty
(180) days following the effective date of, the registration statement
pertaining to the Initial Public Offering, provided that the Company makes
reasonable good faith efforts to cause such registration statement to become
effective, or (ii) if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 3.1(a), the Company gives notice to
the holders of the Company's intentions to make its Initial Public Offering
within ninety (90) days.
(d) Notwithstanding the foregoing, if the Company shall
furnish to the Initiating Holders and Requesting Holders a certificate signed by
the president of the Company stating that, in the reasonable good faith judgment
of the Board, it would be seriously detrimental to the Company and its
stockholders for such registration statement
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to be filed, the Company shall have the right to defer such filing for a period
of not more than 90 days after receipt of the request of the Initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any 12-month period.
3.3 Incidental Registration. If the Company at any time proposes
to register any of its securities for sale for its own account or for the
account of any other Person (other than a registration relating either to the
sale of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a Rule 145 transaction, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Stock), it shall each such time give written notice (the "Company's
Notice"), at its expense, to all holders of Registrable Stock of its intention
to do so at least 45 days prior to the filing of a registration statement with
respect to such registration with the Commission. If any holder of Registrable
Stock desires to dispose of all or part of its Registrable Stock, it may request
registration thereof in connection with the Company's registration by delivering
to the Company, within 30 days after receipt of the Company's Notice, written
notice of such request (the "Investors' Notice") stating the number of shares of
Registrable Stock to be disposed of and the intended method of disposition of
such shares by such holder or holders. The Company shall use its best efforts to
cause all shares of Registrable Stock specified in the Investors' Notice to be
registered under the Securities Act so as to permit the sale or other
disposition (in accordance with the intended methods thereof as aforesaid) by
such holder or holders of the shares so registered, subject, however, to the
limitations set forth in Section 3.4 hereof.
3.4 Limitations on Incidental Registration.
(a) If the registration of which the Company gives notice
pursuant to Section 3.3 above is for the purpose of permitting a disposition of
securities by the Company pursuant to a firm commitment underwritten offering,
the notice shall so state, and the Company shall have the right to limit the
aggregate size of the offering or the number of shares to be included therein by
stockholders of the Company (so that the holders of Registrable Stock shall
consist of no less than one-third of the total shares to be registered thereto)
if requested to do so in good faith by the managing underwriter of the offering
and only securities which are to be included in the underwriting may be included
in the registration.
(b) Whenever the number of shares which may be registered
pursuant to Section 3.3 is limited by the provisions of Section 3.4(a) above,
the holders of Registrable Stock shall have priority as to sales over the other
holders of the Company's securities and the Company shall cause such other
holders to withdraw from such offering to the extent necessary to allow all
requesting holders of Registrable Stock to include all of the shares so
requested to be included within such registration. Whenever the number of shares
which may be registered pursuant to Section 3.3 is still limited by the
provisions of Section 3.4(a) above, after the withdrawal of the other holders of
the Company's securities, the Company shall have priority as to sales over the
holders of Registrable Stock and each holder hereby agrees that it shall
withdraw its securities from
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such registration to the extent necessary to allow the Company to include all
the shares which the Company desires to sell for its own account to be included
within such registration. The holders of Registrable Stock given rights by
Section 3.3 above shall share pro rata in the available portion of the
registration in question, such sharing to be based upon the number of shares of
Registrable Stock then held by each of such holders, respectively.
3.5 Designation of Underwriter. In the case of any registration
initiated by the Initiating Holders pursuant to the provisions of Section 3.1
hereof which is proposed to be effected pursuant to a firm commitment
underwriting, subject to the approval of the Company, which approval shall not
be unreasonably withheld, the Initiating Holders shall have the right to
designate the managing underwriter, and all holders of Registrable Stock
participating in the registration shall sell their shares only pursuant to such
underwriting.
3.6 Registration Procedures.
(a) Whenever the holders of Registrable Stock have
requested that any Registrable Stock be registered pursuant to this Agreement,
the Company shall use its commercially reasonable efforts to effect the
registration and the sale of such Registrable Stock in accordance with the
intended method of disposition thereof (including the registration of Series B,
Series C, Series D and Series E held by a holder of Registrable Stock requesting
registration as to which the Company has received reasonable assurances that
only Registrable Stock shall be distributed to the public), and pursuant thereto
the Company shall as expeditiously as possible:
(i) prepare and file with the Commission a
registration statement (the form and substance of which shall be subject to the
approval of the holders of a majority of the Registrable Stock to be included in
such registration) with respect to such shares and use its best efforts to cause
such registration statement to become and remain effective for a period
described in Section 3.15 hereof;
(ii) prepare and file (after allowing counsel for
the holders of a majority of the Registrable Stock reasonable opportunity for
comment) with the Commission such amendments and supplements to such
registration statement and the prospectuses used in connection therewith as may
be necessary to keep such registration statement effective and current and to
comply with the provisions of the Securities Act with respect to the sale or
other disposition of all shares covered by such registration statement,
including such amendments and supplements as may be necessary to reflect the
intended method of disposition from time to time of the holder or holders of
Registrable Stock who have requested that any of their shares be sold or
otherwise disposed of in connection with the registration (the "Prospective
Sellers");
(iii) furnish to each Prospective Seller such
number of copies of each prospectus, including preliminary prospectuses, in
conformity with the requirements of the Securities Act, and such other documents
as the Prospective Seller may reasonably request in order to facilitate the
public sale or other disposition of the shares owned by it;
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(iv) use all reasonable efforts to register or
qualify the shares covered by such registration statement under such other
securities or blue sky or other applicable laws of such jurisdictions as each
Prospective Seller shall reasonably request to enable such seller to consummate
the public sale or other disposition of the shares owned by such seller,
provided that the Company shall not be required in connection therewith or as an
election thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction;
(v) upon written request, furnish to each
Prospective Seller a signed counterpart, addressed to the Prospective Sellers
and their underwriters, if any, of: (A) an opinion of counsel for the Company,
dated the effective date of the registration statement; and (B) if permitted by
applicable accounting standards, a "comfort" letter signed by the independent
public accountants who have certified the Company's financial statements
included in the registration statement; covering substantially the same matters
with respect to the registration statement (and the prospectus included therein)
and (in the case of the accountants' letter) with respect to the events
subsequent to the date of the financial statements, as are customarily covered
(at the time of such registration) in the opinions of issuers' counsel and in
accountants' letters delivered to the underwriters in connection with
underwritten public offerings of securities;
(vi) cause all such Registrable Stock to be
listed on each securities exchange or other securities trading market on which
similar securities issued by the Company are then listed;
(vii) provide a transfer agent and registrar for
all such Registrable Stock not later than the effective date of such
registration statement;
(viii) enter into such customary agreements
(including an underwriting agreement) and take all such other customary actions
as the holders of a majority of the Registrable Stock being sold reasonably
request in order to expedite or facilitate the disposition of such Registrable
Stock; and
(ix) make available for inspection by any
Prospective Seller, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such Prospective Seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Prospective Seller, underwriter, attorney,
accountant or agent in connection with the preparation of such registration
statement.
(b) Each Prospective Seller of Registrable Stock shall
furnish to the Company such information as the Company may reasonably require
from the Prospective Seller for inclusion in the registration statement (and the
prospectus included therein).
(c) The Prospective Sellers shall not (until further
notice) effect sales of the shares covered by the registration statement after
receipt of telegraphic or written
-22-
notice from the Company to suspend sales to permit the Company to correct or
update a registration statement or prospectus.
3.7 Expenses of Registration. All expenses (other than Selling
Expenses) incurred in effecting any registration requested pursuant to Section
3.1 or 3.3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and expenses
of compliance with blue sky laws, fees and disbursements of counsel for the
Company, fees and disbursements of one counsel for the holders of Registrable
Stock selected by the holders of a majority of the Registrable Stock so to be
offered for sale and reasonably acceptable to the Company, fees and expenses of
any audits incidental to or required by any such registration, and reasonable
expenses of all marketing and promotional efforts requested by the managing
underwriter (collectively, the "Registration Expenses") shall be borne by the
Company. All Selling Expenses relating to securities sold pursuant to the
registration by the holders of stock so registered, shall be borne by the
holders of the securities so registered and sold pro rata on the basis of the
number of shares so registered.
3.8 Indemnification.
(a) In the event any shares of Registrable Stock are
included in a registration statement under the Securities Act, the Company shall
indemnify and hold harmless each Prospective Seller, each underwriter (as
defined in the Securities Act) and each controlling person of any Prospective
Seller or underwriter, if any (within the meaning of the Securities Act),
against any losses, claims, damages or liabilities, joint or several (or actions
in respect thereof), to which such Prospective Seller, underwriter or
controlling person may be subject under the Securities Act, under any other
statute or at common law, including, without limitation, any such losses,
claims, damages or liabilities (or actions in respect thereof) that arise out of
or are based upon any of the following statements, omissions, or violations
(collectively, a "Violation"), (i) any untrue statement (or alleged untrue
statement) of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any summary prospectus
issued in connection with any securities being registered, or any amendment or
supplement thereto, (ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation by the Company of the Securities
Act or any blue sky law, or any rule or regulation promulgated under the
Securities Act or any blue sky law, or any other law, applicable to the Company
in connection with any such registration, qualification or compliance of any
shares of Registrable Stock, and shall reimburse each such Prospective Seller,
underwriter or controlling person for any legal or other expenses reasonably
incurred by such Prospective Seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (x) the indemnity agreement
contained in this Section 3.8 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, and (y) the Company shall not be liable to any Prospective Seller,
underwriter or controlling person in any such case to the extent that any such
loss, claim,
-23-
damage or liability arises out of or is based upon any Violation made in such
registration statement, preliminary prospectus, summary prospectus, final
prospectus, or amendment or supplement thereto, or any other document, in
reliance upon and in conformity with written information furnished to the
Company by such Prospective Seller, underwriter or controlling person,
respectively, specifically for use therein. The indemnity provided for herein
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Prospective Seller, underwriter or controlling person, and
shall survive the transfer of such securities by such Prospective Seller.
(b) To the extent permitted by law, in the event any
shares of Registrable Stock are included in a registration statement under the
Securities Act pursuant to this Agreement, the holders of such Registrable Stock
shall, severally and not jointly, indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 3.8(a)) the Company, each
director of the Company, each officer of the Company who shall sign such
registration statement and each other person, if any, who controls the Company
within the meaning of the Securities Act (except the indemnifying Prospective
Seller, if such indemnifying Prospective Seller so controls the Company),
insofar as such losses, claims, damages or liabilities (or actions with respect
thereto) arise out of or are based upon any Violation, in each case if such
statement or omission was made in reliance on and in conformity with written
information furnished to the Company by such Prospective Seller specifically for
use in preparing any such registration statement, preliminary prospectus, final
prospectus, summary prospectus or amendment or supplement thereto, or in making
any such filing or representation. Each Prospective Seller hereunder shall
promptly provide such indemnification upon request. The indemnity provided for
herein shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party and shall survive any transfer of
the Registrable Stock held by the indemnifying party. In no event shall a
Prospective Seller's obligation to indemnify any Person hereunder exceed the net
proceeds from the sale of the Prospective Seller's Registrable Stock in the
offering.
(c) If the indemnification provided for in Section 3.8(a)
or Section 3.8(b) above is unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified parties on the other in connection with the
statements or omissions or violations which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified parties
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 parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
-24-
The Company and the Investors agree that it would not be just
and equitable if contribution pursuant to this Section 3.8(c) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities or actions in respect
thereof referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.8(c), no Investor shall be required to contribute any amount in excess
of the net proceeds from the sale of the Prospective Seller's Registrable Stock
under the registration statement. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Company may require, as a condition to
including any Registrable Stock of a Prospective Seller in any registration
statement filed pursuant to Section 3.1 or Section 3.3, that the Company shall
have received an undertaking satisfactory to it from such Prospective Seller of
such Registrable Stock, severally and not jointly, to contribute to the amount
paid or payable by an indemnified party hereunder as and to the extent set forth
in this Section 3.8(c), and each Investor hereunder shall promptly provide such
undertaking upon request.
(d) Promptly after receipt by an indemnified party under
Section 3.8(a) or Section 3.8(b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made under such Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such Section or to the extent that it has not been
prejudiced as a proximate result of such failure. In case any such action shall
be brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties). Upon the permitted assumption by
the indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 3.8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time, (iii) the
-25-
indemnified party and its counsel do not actively and vigorously pursue the
defense of such action, or (iv) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
3.9 Inclusion of Additional Shares in Required Registrations;
Other Company Initiated Registrations. The Company shall not register securities
for sale for its own account or for the account of any other Person in any
registration requested by the holders of Registrable Stock pursuant to Section
3.1 hereof unless permitted to do so by the written consent of the holders of at
least 51% of the Registrable Stock as to which registration has been requested.
The Company may not cause any other registration of securities for sale for its
own account or for the account of any other Person to become effective within
180 days after the effective date of any registration requested by the holders
of Registrable Stock pursuant to Section 3.1 hereof except pursuant to
registrations on Form S-8 or Form S-4 or any successors thereto.
3.10 Rights Which May Be Granted to Other Persons. The Company
shall not grant any Person registration rights which shall in any way whatsoever
impair the priority of the registration rights granted to the Investors in this
Agreement.
3.11 Rule 144 Requirements. Immediately after the date on which a
registration statement filed by the Company under the Securities Act becomes
effective, the Company shall undertake to make publicly available, and available
to the holders of Registrable Stock, such information as is necessary to enable
the holders of Registrable Stock to make sales of Registrable Stock pursuant to
Rule 144 of the Commission under the Securities Act. The Company shall furnish
to any holder of Registrable Stock, upon request, a written statement executed
by the Company as to the steps it has taken to comply with the current public
information requirements of Rule 144.
3.12 Sale of Preferred Stock to Underwriter. Notwithstanding any
provision of this Agreement to the contrary, in lieu of converting any shares of
Preferred Stock prior to the filing of any registration statement filed pursuant
to this Agreement, the holder of such shares may sell such shares of Preferred
Stock to the underwriters of the offering being registered upon the undertaking
of such underwriters to convert the Preferred Stock on or prior to the closing
date of the offering. The Company agrees to cause the Common Stock issuable on
the conversion of the Preferred Stock to be issued within such time period as
will permit the underwriters to make and complete the distribution contemplated
by the underwriting.
3.13 Holdback. If the Company files a registration statement in
connection with an underwritten public offering of the Company's equity
securities (including any Required Registration pursuant to Section 3.1 hereof
or Incidental Registration pursuant to Section 3.3 hereof), a holder of
Registrable Stock, if so requested by the managing underwriter of such public
offering, shall not effect any sale or distribution of any shares (except
pursuant to such registration statement) of the capital stock of the Company,
whether now owned or hereafter acquired, during the period commencing with the
effective date (or such later date, if the managing underwriter of such public
offering so requests) of such registration statement and ending on the close of
business on the 120th
-26-
day thereafter or such time as the registration statement is withdrawn,
whichever is earlier. Each Holder agrees to execute and deliver such other
agreements as may be reasonably requested by the Company or the underwriter
which are consistent with the foregoing or which are necessary to give further
effect thereto. The obligations described in this Section 3.13 shall not apply
to a registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred twenty (120) day period.
3.14 Transfer of Registration Rights. The registration rights of
any Investor under this Agreement may be transferred only to (i) any transferee
who acquires at least twenty percent (20%) of such Investor's Registrable Stock,
or (ii) to its Permitted Transferee or its Affiliate; provided, however, (i) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (ii) such transferee shall agree to be subject to all restrictions
set forth in this Agreement.
3.15 Effective Period of Registration. Once any registration
effected by the Company pursuant to this Article III becomes effective, the
Company shall file all reports, financial statements and other documents
necessary to keep such registration statement current and the registration in
effect until the earlier of (i) the sale of all securities offered for sale
pursuant to the registration statement, or (ii) three months from the effective
date of the registration statement.
ARTICLE IV.
RESTRICTIONS ON TRANSFER
4.1 Notice. From the Effective Date until the completion of an
Initial Public Offering, if an Investor or Common Holder desires to offer, sell,
assign, pledge, transfer or dispose of its Shares (not including Preferred Stock
or Registrable Stock offered in the Initial Public Offering) (the "Offered
Shares") to a Person in a transaction other than (i) in the case of an Investor
to its Permitted Transferee or its Affiliate subject to 4.6, (ii) in the case of
a Common Holder to its Permitted Transferee, (iii) pursuant to Sections 3.1 or
3.3 hereof, or (iv) pursuant to Rule 144 under the Securities Act, such Investor
or Common Holder (the "Offeror") shall notify (the "Sale Notice") the Investors
(the "Nonoffering Investors") and the Company in writing of the (a) proposed
price (the "Price") and terms of payment (the "Terms") for all Offered Shares
owned by the Offeror that the Offeror seeks for its Offered Shares, and (b)
class and the percentage of the total number of shares of that class and of all
the Shares then held by such Offeror represented by the Offered Shares. The Sale
Notice shall constitute an offer by the Offeror to the Nonoffering Investors and
to the Company to sell all Offered Shares owned by the Offeror to the
Nonoffering Investors and to the Company at the Price and on the Terms.
-27-
4.2 Nonoffering Investors' Exercise of Right of First Refusal.
Each Nonoffering Investor shall have the right to purchase, at the Price and
payable in accordance with the Terms, that proportion of the Offered Shares
equal to an amount which the number of Shares then owned of record by such
Nonoffering Investor bears to the total number of Shares owned of record by all
Investors other than the Offeror. The Nonoffering Investors may exercise their
rights by giving written notice to the Offeror within 30 days after the date of
receipt of the Sale Notice.
In the event any Nonoffering Investor does not elect to purchase any or
all of the Offered Shares under this Section 4.2 (the "Unpurchased Offered
Shares"), then the other Nonoffering Investors electing to purchase the Offered
Shares shall have the right to elect to purchase that proportion of the
Unpurchased Offered Shares equal to an amount which the number of Offered Shares
originally requested to be purchased by such Nonoffering Investor bears to the
total number of Offered Shares originally requested to be purchased by all
Nonoffering Investors. Any Nonoffering Investor electing to purchase the Offered
Shares (a "Purchasing Investor") shall give written notice to the Offeror, the
other Nonoffering Investors and the Company of such election to purchase the
Offered Shares (and the maximum number of Offered Shares that such Nonoffering
Investor is willing to purchase) within the 30-day period specified in this
Section 4.2.
4.3 Company's Exercise of Right of First Refusal. In the event the
Nonoffering Investors do not elect to purchase all of the Offered Shares
pursuant to Section 4.2 hereof, then the Company shall have the right to
purchase any remaining Unpurchased Offered Shares at the Price and payable in
accordance with the Terms. The Company may exercise its right by giving written
notice to the Offeror within 30 days after the expiration of the 30-day period
specified in Section 4.2 hereof. The Offeror shall not participate in the
determination by the Company on whether to exercise the right provided in this
Section 4.3. If the Company does not exercise its right or does not purchase all
of the remaining Unpurchased Offered Shares at the Price and in accordance with
the Terms, it shall notify the Offeror and the Purchasing Investors that it is
not doing so within such 30-day period. Unless otherwise agreed by the Offeror,
all the Offered Shares must be purchased by the Nonoffering Investors and the
Company pursuant to Section 4.2 and this Section 4.3, respectively, or none may
be so purchased.
4.4 Closing. The consummation of the purchase by the Purchasing
Investors and/or the Company pursuant to any exercise of the rights set forth
above shall occur at a closing (the "Closing") to be held at the principal
offices of the Company not later than 60 days following the date on which the
Nonoffering Investors and the Company received the Sale Notice described in
Section 4.1. At the Closing, the Purchasing Investors and the Company, as
appropriate, shall make payment for the Offered Shares in accordance with the
Terms, and the Offeror shall deliver the Offered Shares, duly endorsed for
transfer, to the Purchasing Investors and the Company, as appropriate, with all
required revenue stamps attached.
4.5 Transfer to Third Party. If the rights provided above are not
exercised as to all of the Offered Shares (unless otherwise agreed to by the
Offeror) or assigned to an Affiliate of an Nonoffering Investor, or if the
purchase by the Nonoffering Investors and
-28-
the Company is not consummated within the time specified in Section 4.4 through
no fault of the Offeror, then the Offeror may transfer all, but not less than
all, of the Offered Shares not so purchased to any third party at not less than
the Price and payable in accordance with the Terms or on such other terms as the
Board determines in good faith would not have been accepted by the Nonoffering
Investors and the Company if such terms had been offered to the Nonoffering
Investors and the Company. If the transfer by the Offeror of the Offered Shares
to a third party is not consummated within 150 days after the date the Offeror
first becomes free to make such transfer, the right to transfer in accordance
with this Article IV shall expire. In such event, the restrictions of this
Agreement shall be reinstated as to the Offered Shares and any transfer of such
Offered Shares proposed to be made by the Offeror subsequent to the expiration
of that 150-day period must be made in accordance with this Agreement.
4.6 Conditions to Transfer. Any transfer of shares of shares to a
Purchasing Investor or to a third party pursuant to this Article IV shall be
subject to and conditioned upon the purchaser making the representations,
warranties and covenants set forth in Sections 3 and 4 of the Purchase
Agreement. Any sale or transfer pursuant to Article IV, to any Permitted
Transferee of any Common Holder, shall be conditioned upon such Permitted
Transferee agreeing in writing to be bound by all the provisions of this
Agreement to the same extent as if such Permitted Transferee was a Common
Holder. In addition, each Investor shall have the right to assign all or any
portion of its right of first refusal under this Section 4 of this Agreement, in
connection with one or more issuance(s) of securities of the Company, to an
Affiliate or Permitted Transferee, so long as any Affiliate or Permitted
Transferee agrees in writing with the Company to be bound by all the provisions
of this Agreement to the same extent as if such Affiliate or Permitted
Transferee was an Investor.
ARTICLE V.
MISCELLANEOUS
5.1 Adjustments Affecting Registrable Securities. The Company
shall not effect a stock split or combination of shares or take any other
action, or permit any change to occur, with respect to its capital stock that
would adversely affect at such time the ability of the holders of Registrable
Stock to include such Registrable Stock in a registration undertaken pursuant to
this Agreement or which would adversely affect the marketability of such
Registrable Stock in any such registration.
5.2 Notices. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally three days after mailed by certified mail (return receipt requested),
one day after sent by overnight courier service or when telecopied, telegraphed
or telexed (transmission confirmed), or otherwise actually delivered [these
addresses need to be confirmed and checked]
If to Series B Investors: Alliance Technology Ventures I, L.P.
ATV/GP Parallel Fund, L.P.
ATV/MFJ Parallel Fund, L.P.
0000 Xxxxxxxx Xxxxxxx
-00-
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone:(000) 000-0000
Facsimile: (000) 000-0000
AM Fund I, L.P.
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx III
Telephone: 000.000.0000
Facsimile: 713.627.9119
Xxxxxxx Technology Partners
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: X. Xxxxxx Dagi
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Series C Investors: Xxxxxxx Xxxxx Capital Partners VI, L.P.
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxxxxxxxxx
Telephone: (000) 000-0000
(000) 000-0000
Alliance Technology Ventures I, L.P.
Alliance Technology Ventures II, L.P.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
AM Fund I, L.P.
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx III
Telephone: 000.000.0000
Facsimile: 713.627.9119
Oakwood Medical Investors II, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx
-30-
Pacific Horizon Partners III, L.P.
0000 Xxxxxx Xxx., Xxx 0000
Xxxxxxx XX 00000
Attn: Xxxxxx X. Xxxxx
Xxxxxxx Technology Partners
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: X. Xxxxxx Dagi
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Series D or
Series E Investors: Essex Woodlands Health Ventures, LLC
00000 XxxXxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx, MD
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
New Enterprise Associates 10, Limited
Partnership
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Capital Technologies CDPQ inc.
0000, xxxxx Xxxx-Xxxx-Xxxxxxxx
Xxxxxxxx Xxxxxx
X0X 0X0
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxxx Xxxxx Capital Partners VI, L.P.
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxxxxxxxxx
Telephone: (000) 000-0000
(000) 000-0000
Xxxxxxx X. Mario 1997 Annuity Trust
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
-31-
Attention: Xxxxxxxxxxx X. Xxxxx, Trustee
Telephone: 000-000-0000
Alliance Technology Ventures
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Pacific Horizon Partners III, L.P.
0000 Xxxxxx Xxx., Xxx 0000
Xxxxxxx XX 00000
Attn: Xxxxxx X. Xxxxx
Xxxxxxx Biotechnology Capital Fund, L.P.
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: G. Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with copies to: Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
As set forth on Schedule I or
Schedule II hereto for any other
Investor.
If to Company: Inhibitex Inc.
c/o Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to: Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
-32-
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any other Investor: At the address and numbers set forth in
the Company's records, marked for
attention as therein indicated;
or at such other address and numbers as may have been furnished by such person
in writing to the other parties.
5.3 Severability and Governing Law. Should any Section or any part
of a Section within this Agreement be rendered void, invalid or unenforceable by
any court of law for any reason, such invalidity or unenforceability shall not
void or render invalid or unenforceable any other Section or part of a Section
in this Agreement. The laws of the state of Delaware (without regard to its
rules of conflicts of laws) shall govern the validity and interpretation hereof
and the performance by the parties hereto of their respective duties and
obligations hereunder.
5.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5.5 Captions and Section Headlines. Section titles or captions
contained in this Agreement are inserted as a matter of convenience and for
reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
5.6 Singular and Plural, Etc. Whenever the singular number is used
herein and where required by the context, the same shall include the plural, and
the neuter gender shall include the masculine and feminine genders.
5.7 Costs and Attorneys' Fees. In the event that any action, suit
or other proceeding is instituted concerning or arising out of this Agreement,
the prevailing party shall recover all of such party's costs, and attorneys'
fees incurred in each and every such action, suit or other proceeding, including
any and all appeals or petitions therefrom. As used herein, "attorneys' fees"
shall mean the full and actual costs of any legal services actually rendered in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services.
5.8 Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of (i) at least 66-2/3% of the outstanding Series B and Series B-1
or Common Stock into which Series B or Series B-1 has been converted, (ii)
66-2/3% of the outstanding Series C and Series C-1 or the Common Stock into
which Series C or Series C-1 has been converted and (iii) 66-2/3% of the
outstanding Series D, Series D-1, Series E and Series E-1 or the
-33-
Common Stock into which Series D, Series D-1, Series E or Series E-1 has been
converted; provided, however, that no such amendment or waiver shall affect the
provisions of this Section 5.8 and no such waiver shall extend to or affect any
other obligation not expressly waived. No failure to exercise and no delay in
exercising, on the part of any party, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance of
any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
5.9 Successors and Assigns. All rights, covenants and agreements
of the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns; provided, however, that prior to the receipt by the Company of
adequate written notice of the transfer of any Registrable Stock specifying the
full name and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment of dividends
or any redemption price.
5.10 Specific Performance. The parties hereto agree that the
capital stock of the Company cannot be purchased or sold in the open market and
that, for this reason, among others, the parties will be irreparably damaged in
the event that this Agreement is not specifically enforceable. Accordingly, in
the event of any controversy concerning the capital stock which is the subject
of this Agreement, or any right or obligation to register such securities, such
right or obligation shall be enforceable in a court of equity by specific
performance. The rights granted in this Section 5.10 shall be cumulative and not
exclusive, and shall be in addition to any and all other rights which the
parties hereto may have hereunder, at law or in equity.
5.11 Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof, including without limitation the Prior Rights Agreement,
unless expressly referred to herein.
5.12 Generally Accepted Accounting Principles; Adjustments of
Numbers. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles the Company
would have to alter a previously utilized accounting method or policy in order
to remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with the
-34-
Company's previous accounting methods and policies. All numbers set forth herein
which refer to share prices or amounts will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the subject class of stock.
-35-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Master Rights Agreement by duly authorized officers as of the date first above
written.
COMPANY:
INHIBITEX, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name:_________________________________
Title:________________________________
INVESTORS:
ESSEX WOODLANDS HEALTH VENTURES V, LP
By: /s/ X. X. Xxxxxx, MD
-----------------------------------
Name: J. Xxxxxxx Xxxxxx, MD
Title: Managing Director
NEW ENTERPRISE ASSOCIATES 10, LIMITED PARTNERSHIP
By: /s/ Xxxxxx X. Xxxxxxx III
-----------------------------------
Name: Xxxxxx X. Xxxxxxx III
Title: Administrative General Partner
and Chief Operating Officer
-36-
NEA VENTURES 2002, L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: General Partner
ALLIANCE TECHNOLOGY VENTURES I, L.P.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Manager
ATV/GP PARALLEL FUND, L.P.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Manager
ATV/MFJ PARALLEL FUND, L.P.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Manager
-37-
ALLIANCE TECHNOLOGY VENTURES III, L.P.
BY: ATV III PARTNERS, L.L.C., GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
ATV III AFFILIATES FUND, L.P.
BY: ATV III PARTNERS, L.L.C., GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
ALLIANCE TECHNOLOGY VENTURES II, L.P.
BY: ALLIANCE ASSOCIATES II, L.L.C., GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
ATV II AFFILIATES FUND, L.P.
BY: ALLIANCE ASSOCIATES II, L.L.C., GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Manager
-00-
XXXXXXX XXXXXXXXXXXX XXXX, INC.
By: Xxxxxx Xxxxxx By: [ILLEGIBLE]
-----------------------------------
Name:_________________________________
Title:
XXXXXXX TECHNOLOGY PARTNERS
By: /s/ T.F. Dagi
-----------------------------------
Name: T.F. Dagi
Title: Partner
AM FUND I, L.P.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: General Partner
OAKWOOD MEDICAL INVESTORS II, LLC
By: /s/ Xxxx X. Xxxxx, MD
-----------------------------------
Name: Xxxx X. Xxxxx, M.D.
Title: President and Manager,
Oakwood Medical Investors II, LLC
-39-
PACIFIC HORIZON PARTNERS III, L.P.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: General Partner
XXXXXXX XXXXX CAPITAL PARTNERS VI, L.P,
BY: XXXXXXX XXXXX CAPITAL PARTNERS VI, L.L.C.
ITS: GENERAL PARTNER
By: /s/ A.M. Minocherhomjee
-----------------------------------
Name: Xxxx Xxxxxxxxxxxxxx
Title: Managing Director
XXXXXXX BIOTECHNOLOGY CAPITAL FUND, L.P.
By: /s/ G. Xxxxxx Xxxxxxx
-----------------------------------
Name: G. Xxxxxx Xxxxxxx
Title: CEO, Xxxxxxx & Company,
its General Partner
XXXXXXX X. XXXXX 1997 ANNUITY TRUST
By: /s/ Xxxxxxxxxxx X. Mario
----------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Trustee
-40-
COMMON HOLDERS
/s/ Xxxxxx Xxxxx
--------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxxx
-41-
Schedule I - Purchasers
Schedule II - Investors
Schedule III - Common Holders
Exhibit A - Stock Option Agreement
Exhibit B - Instrument of Adherence
-42-
SCHEDULE I
LIST OF PURCHASERS
ALLIANCE TECHNOLOGY VENTURES II, L.P.
ALLIANCE TECHNOLOGY VENTURES III, L.P.
ATV II AFFILIATES FUND, L.P.
ATV III AFFILIATES FUND, L.P.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxx
ESSEX WOODLANDS HEALTH VENTURES V, L.P.
00000 XxxXxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx, MD
NEW ENTERPRISE ASSOCIATES 10, LIMITED PARTNERSHIP
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
CAPITAL TECHNOLOGIES CDPQ, INC.
Xxxxxx xx xxxxx xx xxxxxxxxx xx Xxxxxx
0000, avenue XxXxxx Xxxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxxxx X0X 0X0
Attn: Xxxx Xxxxxxxx
XXXXXXX XXXXX CAPITAL PARTNERS VI, L.P.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxxxxxxxxx
Xxxxxxxx Xxxx
XXXXXXX BIOTECHNOLOGY CAPITAL FUND, L.P.
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: G. Xxxxxx Xxxxxxx
XXXXXXX X. XXXXX 1997 ANNUITY TRUST
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxx, Trustee
-43-
SCHEDULE II
ALLIANCE TECHNOLOGY VENTURES I, L.P.
ATV/GP PARALLEL FUND, L.P.
ATV/MFJ PARALLEL FUND, L.P.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxx
AM FUND I, L.P.
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx III
XXXXXXX TECHNOLOGY PARTNERS
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: X. Xxxxxx Dagi
OAKWOOD MEDICAL INVESTORS II, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx
PACIFIC HORIZON PARTNERS III, L.P.
0000 Xxxxxx Xxx., Xxx 0000
Xxxxxxx XX 00000
Attn: Xxxxxx X. Xxxxx
-44-
SCHEDULE III
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxxx
-45-
