INVITROGEN CORPORATION
----------------------------------
STOCK PURCHASE
AND STOCKHOLDERS AGREEMENT
As of June 20, 1997
INVITROGEN CORPORATION
Stock Purchase
and Stockholders Agreement
As of June 20, 1997
Page
SECTION 1. PURCHASE AND SALE OF SHARES; REDEMPTION . . . . . . . . . . . . . 1
1.1 Description of Securities . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale and Purchase; Redemption . . . . . . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 2
2.1 Organization and Corporate Power. . . . . . . . . . . . . . . . . 2
2.2 Authorization and Non-Contravention . . . . . . . . . . . . . . . 3
2.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Subsidiaries; Investments . . . . . . . . . . . . . . . . . . . . 5
2.5 Financial Statements and Matters. . . . . . . . . . . . . . . . . 5
2.6 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . 5
2.7 Absence of Certain Developments . . . . . . . . . . . . . . . . . 5
2.8 Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Certain Contracts and Arrangements. . . . . . . . . . . . . . . . 7
2.14 Intellectual Property Rights; Employee Restrictions . . . . . . . 9
2.15 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.16 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . .10
2.17 Labor Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.18 Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.19 Hazardous Waste, Etc. . . . . . . . . . . . . . . . . . . . . . .11
2.20 Business; Compliance with Laws. . . . . . . . . . . . . . . . . .11
2.21 Investment Banking; Brokerage . . . . . . . . . . . . . . . . . .11
2.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.23 Transactions with Affiliates. . . . . . . . . . . . . . . . . . .11
2.24 Customers and Distributors. . . . . . . . . . . . . . . . . . . .11
2.25 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.26 Qualified Small Business Stock. . . . . . . . . . . . . . . . . .12
SECTION 2A. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS . . . . . . . . .12
SECTION 3. CONDITIONS OF PURCHASE. . . . . . . . . . . . . . . . . . . . . .13
3.1 Satisfaction of Conditions. . . . . . . . . . . . . . . . . . . .13
(i)
3.2 Director Election; Indemnification. . . . . . . . . . . . . . . .14
3.3 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . .14
3.4 Reincorporation . . . . . . . . . . . . . . . . . . . . . . . . .14
3.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.6 Investors' Fees . . . . . . . . . . . . . . . . . . . . . . . . .14
3.7 No Violation or Injunction. . . . . . . . . . . . . . . . . . . .14
3.8 Consents and Waivers. . . . . . . . . . . . . . . . . . . . . . .14
3.9 Repurchase Agreement. . . . . . . . . . . . . . . . . . . . . . .15
3.10 Repayment of Company Loans. . . . . . . . . . . . . . . . . . . .15
3.11 Agreement of Spouse . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.1 Financial Statements and Budgetary Information; Inspection. . . .15
4.2 Indemnification; Insurance. . . . . . . . . . . . . . . . . . . .15
4.3 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . .16
4.4 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . .16
4.5 Redemption; Use of Proceeds . . . . . . . . . . . . . . . . . . .17
4.6 Key Person Insurance. . . . . . . . . . . . . . . . . . . . . . .17
4.7 Stock Awards. . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.9 Termination of Airplane Arrangement . . . . . . . . . . . . . . .18
SECTION 5. TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . .18
5.1 General Restriction . . . . . . . . . . . . . . . . . . . . . . .18
5.2 Right of First Refusal. . . . . . . . . . . . . . . . . . . . . .19
5.3 Right of Co-Sale. . . . . . . . . . . . . . . . . . . . . . . . .20
5.4 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6. RIGHTS TO PURCHASE. . . . . . . . . . . . . . . . . . . . . . . .22
6.1 Right to Participate in Certain Sales of
Additional Securities . . . . . . . . . . . . . . . . . . . . . .22
6.2 Assignment of Rights. . . . . . . . . . . . . . . . . . . . . . .23
SECTION 7. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . .23
7.1 Optional Registrations. . . . . . . . . . . . . . . . . . . . . .23
7.2 Required Registrations. . . . . . . . . . . . . . . . . . . . . .24
7.3 Registrable Securities. . . . . . . . . . . . . . . . . . . . . .26
7.4 Further Obligations of the Company. . . . . . . . . . . . . . . .26
7.5 Indemnification; Contribution . . . . . . . . . . . . . . . . . .28
7.6 Rule 144 and Rule 144A Requirements . . . . . . . . . . . . . . .31
7.7 Transfer of Registration Rights . . . . . . . . . . . . . . . . .31
7.8 "Market Stand-off" Agreement. . . . . . . . . . . . . . . . . . .32
SECTION 8 ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . .32
8.1 Advent VIII . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(ii)
8.2 Voting for Directors. . . . . . . . . . . . . . . . . . . . . . .32
SECTION 9 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.1 Amendments, Waivers and Consents. . . . . . . . . . . . . . . . .32
9.2 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . . . .33
9.3 Survival of Representations; Warranties and Covenants;
Assignability of Rights . . . . . . . . . . . . . . . . . . . . .33
9.4 Legend on Securities. . . . . . . . . . . . . . . . . . . . . . .33
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.6 Section Headings and Gender . . . . . . . . . . . . . . . . . . .34
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.8 Notices and Demands . . . . . . . . . . . . . . . . . . . . . . .34
9.9 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . .34
9.10 Remedies; Severability. . . . . . . . . . . . . . . . . . . . . .35
9.11 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . .35
EXHIBITS
A. Investors
B. Preferred Stock Terms
C. Common Stock Redemptions
D. Projections
E. Indemnification Agreement
F-1. Opinion of Counsel (Company)
F-2. Opinion of Counsel (Subsidiaries)
G. Agreement of Spouse
(iii)
STOCK PURCHASE
AND STOCKHOLDERS AGREEMENT
STOCK PURCHASE AND STOCKHOLDERS AGREEMENT made as of this 20th day of June,
1997, by and among Invitrogen Corporation, a Delaware corporation (together with
any predecessors or successors thereto and subject to Section 2, the "Company"),
Xxxx X. Xxxxxx and Xxxxxx Xxxxxxxxx (collectively the "Stockholders" and
individually a "Stockholder"), and the investment partnerships named in EXHIBIT
A hereto (together with their successors and assigns, collectively the
"Investors," and each individually an "Investor").
WHEREAS, the majority of the outstanding shares of the Company's capital
stock prior to the date hereof are owned by the Stockholders; and
WHEREAS, the Company has authorized the issuance and sale to the Investors
of a total of 2,202,942 shares of Series A Convertible Redeemable Preferred
Stock, par value $.01 per share ("Convertible Preferred Stock"), having the
rights and preferences set forth in EXHIBIT B for an aggregate purchase price of
$15 million;
WHEREAS, the Company has agreed to redeem and the stockholders of the
Company have agreed to sell to the Company an aggregate of 1,101,471 shares of
the Company's Common Stock, par value $.01 per share ("Common Stock"), for an
aggregate purchase price of $7.5 million; and
WHEREAS, the parties hereto desire to set forth the terms of their ongoing
relationship in connection with the Company.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF SHARES; REDEMPTION
1.1 DESCRIPTION OF SECURITIES. The Company's authorized capital stock
consists of Common Stock, Convertible Preferred Stock and Redeemable Preferred
Stock, par value $.01 per share (the "Redeemable Preferred Stock"). The
Convertible Preferred Stock and the Redeemable Preferred Stock have the rights,
preferences and other terms set forth in EXHIBIT B. For purposes of this
Agreement, the shares of Convertible Preferred Stock to be acquired by the
Investors from the Company hereunder are referred to as the "Convertible
Preferred Shares," the shares of Redeemable Preferred Stock and Common Stock
issuable upon conversion of the Convertible Preferred Shares are referred to as
the "Conversion Shares," and the Convertible Preferred Shares and the Conversion
Shares are sometimes referred to herein as the "Securities."
1.2 SALE AND PURCHASE; REDEMPTION. Upon the terms and subject to the
conditions herein, and in reliance on the representations and warranties set
forth in Section 2, (a) the Investors shall jointly and severally purchase from
the Company, and the Company shall issue and sell to each of the Investors, at
the Closing (as defined in Section 1.3), the number of shares of
Convertible Preferred Stock set forth opposite the name of such Investor in
EXHIBIT A for the purchase price of $6.8091 per share, or an aggregate of
2,202,942 shares of Convertible Preferred Stock for an aggregate purchase price
of $15,000,000, and the Company shall without further action grant the Investors
the rights set forth herein. Concurrently therewith, the Company shall acquire
from stockholders of the Company, including the Stockholders, and each such
stockholder shall sell to the Company, 1,101,471 shares of Common Stock for a
price of $6.8091 per share, (the "Redemption Shares") for an aggregate
redemption price of $7.5 million, pursuant to the Repurchase Agreement (the
"Repurchase Agreement") and disclosure documents in the form attached hereto as
EXHIBIT C. All purchase and redemption payments hereunder shall be made by wire
transfer of next day available funds.
1.3 CLOSING. The closing of the purchases and sales of the Convertible
Preferred Shares and the redemption of Common Stock from the stockholders of the
Company contemplated by Section 1.2 (the "Closing") shall take place at 1:00
p.m. Pacific Time on June 20, 1997 or such later date as each of the conditions
set forth in Section 3 hereof shall have been satisfied or waived by the
Investors (the "Closing Date"); provided, however, that the Investors shall have
the right, exercisable in their sole discretion, to terminate this Agreement if
the conditions set forth in Section 3 hereof shall not have been satisfied by
June 30, 1997, and this Agreement shall automatically terminate if the
conditions set forth in Section 3 hereof shall not have been satisfied by June
30, 1997 and the Investors have not waived such conditions by July 31, 1997.
SECTION 2. REPRESENTATIONS AND WARRANTIES
In order to induce the Investors to enter into this Agreement, the Company,
and with respect to Section 2.2(b) below, each Stockholder, severally as to
himself or herself, represents and warrants to each of the Investors the
following, except as set forth in the schedule of exceptions attached hereto
(the "Disclosure Schedule"). For purposes of this Section 2, references to the
"Company" shall mean and refer to Invitrogen Corporation, a Delaware
corporation, and its subsidiaries (including without limitation with respect to
Section 2.12 hereof) and predecessors, as the context requires, except that
references to the "Company" in the first two sentences of Section 2.2(a) and in
Sections 2.3 and 2.26 shall refer to Invitrogen Corporation. Facts, documents,
matters and other items disclosed in the Disclosure Schedule shall be disclosed
for all purposes once included therein and regardless of section references in
such Disclosure Schedule.
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on its assets, liabilities, condition (financial or other),
business, results of operations or prospects (a "Material Adverse Effect"). The
Company has all required corporate power and authority to carry on its business
as presently conducted, to enter into and perform this Agreement and the
agreements contemplated hereby to which it is a party and to carry out the
transactions contemplated hereby and thereby, including the issuance of the
Securities and the redemption of the Redemption Shares. The copies of the
Certificate of Incorporation and By-laws of the Company, as amended to date
(the "Certificate of Incorporation"
2
and the "Bylaws," respectively), which have been furnished to the Investors
by the Company, are correct and complete at the date hereof. The Company is
not in violation of any term of its Certificate of Incorporation or By-laws.
2.2 AUTHORIZATION AND NON-CONTRAVENTION.
(a) The execution, delivery and performance by the Company of
this Agreement and all other agreements, documents and instruments to be
executed and delivered by the Company as contemplated hereby (including, without
limitation, the Repurchase Agreement) and the issuance and delivery of (i) the
Convertible Preferred Shares, and (ii) upon the conversion of the Convertible
Preferred Shares, the Conversion Shares, have been duly authorized by all
necessary corporate and other action of the Company. This Agreement and all
documents executed by the Company pursuant hereto (including, without
limitation, the Repurchase Agreement) are valid and binding obligations of the
Company, enforceable in accordance with their terms. The execution, delivery
and performance by the Company of this Agreement and all other agreements,
documents and instruments to be executed and delivered by the Company as
contemplated hereby (including, without limitation, the Repurchase Agreement)
and the issuance and delivery of (i) the Convertible Preferred Shares and
(ii) upon the conversion of the Convertible Preferred Shares, the Conversion
Shares, do not and will not: (A) violate, conflict with or result in a default
(whether after the giving of notice, lapse of time or both) under any contract
or obligation to which the Company is a party or by which it or its assets are
bound, or any provision of the Certificate of Incorporation or By-laws of the
Company, or cause the creation of any encumbrance upon any of the assets of the
Company except as contemplated herein or in the Certificate of Incorporation;
(B) to the Company's knowledge, violate or result in a violation of, or
constitute a default under, any provision of any law, regulation or rule, or any
order of, or any restriction imposed by, any court or governmental agency
applicable to the Company; (C) to the Company's knowledge, require from the
Company any notice to, declaration or filing with, or consent or approval of any
governmental authority or third party; or (D) accelerate any obligation under,
or give rise to a right of termination of, any agreement, permit, license or
authorization to which the Company is a party or by which the Company is bound.
(b) Each Stockholder has full right, authority, power and (if
applicable) capacity to enter into this Agreement and each agreement, document
and instrument to be executed and delivered by or on behalf of such Stockholder
pursuant to or as contemplated by this Agreement (including, without limitation,
the Repurchase Agreement) and to carry out the transactions contemplated hereby
and thereby. This Agreement and each agreement, document and instrument
executed and delivered by each Stockholder pursuant to or as contemplated by
this Agreement (including, without limitation, the Repurchase Agreement)
constitute, or when executed and delivered will constitute, valid and binding
obligations of such Stockholder enforceable in accordance with their respective
terms. The execution, delivery and performance by each Stockholder of this
Agreement and each such other agreement, document and instrument (including,
without limitation, the Repurchase Agreement), and the performance by such
Stockholder of the transactions contemplated hereby and thereby do not and will
not: (A) violate, conflict with or result in a default (whether after the
giving of notice, lapse of time or both) under
3
any contract or obligation to which such Stockholder or the Company is a party
or by which he or its assets are bound, or any provision of the Certificate of
Incorporation or By-laws of the Company, or cause the creation of any
encumbrance upon any of the assets of such Stockholder or the Company; (B)
violate or result in a violation of, or constitute a default under, any
provision of any law, regulation or rule, or any order of, or any restriction
imposed by, any court or other governmental agency applicable to the Company or
such Stockholder; (C) require from such Stockholder or the Company any notice
to, declaration or filing with, or consent or approval of any governmental
authority or other third party; or (D) accelerate any obligation under, or give
rise to a right of termination of, any agreement, permit, license or
authorization to which such Stockholder or the Company is a party or by which
such Stockholder or the Company is bound.
2.3 CAPITALIZATION. As of the Closing and after giving effect to
the transactions contemplated hereby, the authorized capital stock of the
Company will consist of 20,000,000 shares of Common Stock, of which 7,355,194
shares will be issued and outstanding, including 1,360,352 shares of Common
Stock issued to the Company's Employee Stock Ownership Plan (the "ESOP"),
2,202,942 shares of Convertible Preferred Stock, of which 2,202,942 shares
will be issued and outstanding, and 2,202,942 shares of Redeemable Preferred
Stock, of which no shares will be issued and outstanding. In addition, the
Company has authorized and reserved for issuance upon conversion of the
Convertible Preferred Shares up to 2,202,942 shares of Common Stock and
2,202,942 shares of Redeemable Preferred Stock (subject to adjustment for
stock splits, stock dividends and the like) and has reserved for issuance
upon exercise of options under the Company's 1995 and 1997 Stock Option Plans
(the "Option Plans," and together with the ESOP, the "Plans") 3,125,794 and
609,685 shares of Common Stock, respectively (subject in each case to
adjustments for stock splits, stock dividends and the like). Except for the
1,907,794 shares of Common Stock issuable upon conversion of outstanding
options under the 1995 Stock Option Plan and the Conversion Shares, the
Company has not issued or agreed to issue and is not obligated to issue any
outstanding warrants, options or other rights to purchase or acquire any
shares of its capital stock, nor any outstanding securities convertible into
such shares or any warrants, options or other rights to acquire any such
convertible securities. As of the Closing, and after giving effect to the
transactions contemplated hereby, all of the outstanding shares of capital
stock of the Company (including without limitation the Convertible Preferred
Shares) will have been duly and validly authorized and issued and will be
fully paid and nonassessable and, assuming the accuracy of the Investors'
representations herein, will have been offered, issued, sold and delivered in
compliance with applicable federal and state securities laws and not subject
to any preemptive rights. The Conversion Shares issuable upon conversion of
the Convertible Preferred Shares will upon issuance be duly and validly
authorized and issued, fully paid and nonassessable and not subject to any
preemptive rights and, assuming the accuracy of the Investors'
representations herein, will be issued in compliance with federal and state
securities laws. The relative rights, preferences and other provisions
relating to the Convertible Preferred Shares and the Redeemable Preferred
Stock are as set forth in EXHIBIT B attached hereto. Except as set forth in
Section 2.3 of the Disclosure Schedule, there are no preemptive rights,
rights of first refusal, put or call rights or obligations or anti-dilution
rights with respect to the issuance, sale or redemption of the Company's
capital stock, other than rights to which the Investors and Stockholders are
entitled as set forth in this Agreement and the Certificate of Incorporation,
and except as described in the
4
Repurchase Agreement. Except as set forth herein, there are no rights to have
the Company's capital stock registered for sale to the public under the laws of
any jurisdiction, no agreements relating to the voting of the Company's voting
securities, and no restrictions on the transfer of the Company's capital stock,
except as set forth in Section 2.3 of the Disclosure Schedule. After giving
effect to the transactions contemplated hereby, the outstanding shares of the
Company's capital stock are held beneficially and of record by the persons
identified in Section 2.3 of the Disclosure Schedule in the amounts indicated
thereon.
2.4 SUBSIDIARIES; INVESTMENTS. The Company has no subsidiaries or
interests in any corporation, joint venture, partnership or other entity, except
for Invitrogen Holland, B.V., a Dutch corporation and Invitrogen Export Company,
Ltd., a U.S. Virgin Islands corporation (collectively, the "Subsidiaries").
2.5 FINANCIAL STATEMENTS AND MATTERS.
(a) The Company has previously furnished to the Investors copies
of its audited financial statements for the fiscal years ended December 31, 1995
and 1996 together with copies of its unaudited financial statements for the
three-month periods ended March 31, 1997 and March 31, 1996. Such financial
statements referred to in this Section 2.5(a) were prepared in conformity with
generally accepted accounting principles applied on a consistent basis, are
complete, correct and consistent in all material respects with the books and
records of the Company and fairly and accurately present the financial position
of the Company as of the dates thereof and the results of operations and cash
flows of the Company for the periods shown therein (subject to the absence of
footnotes and normal year-end adjustments in the case of the unaudited
statements).
(b) The projections which have been separately disclosed in
writing to the Investors in the 1997 Business Plan Draft of March 7, 1997, 6:37
p.m. represent good faith objectives for the Company's performance for 1997
based upon assumptions which were in good faith believed to be reasonable when
made and which the Company believes continue to be reasonable as of the date
hereof.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in the unaudited balance sheet of the Company at
April 30, 1997 contained in the financial statements referred to in Section
2.5(a) (the "Base Balance Sheet"), the Company does not have and is not subject
to any material liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise.
2.7 ABSENCE OF CERTAIN DEVELOPMENTS. Since the date of the Base
Balance Sheet, there has not been any: (i) material adverse change in the
financial condition of the Company or in the assets, liabilities, condition
(financial or other), business, results of operations or prospects of the
Company (a "Material Adverse Change"), (ii) declaration, setting aside or
payment of any dividend or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any of the capital stock of the Company,
(iii) waiver of any valuable right of the Company or cancellation of any debt or
claim held by the Company, (iv) loss, destruction or damage to any
5
property which is material to the assets, liabilities, condition (financial or
other), properties, business, results of operations or prospects of the Company,
whether or not insured, (v) acquisition or disposition of any assets or other
transaction by the Company other than in the ordinary course of business, (vi)
material transaction or agreement involving the Company and any officer,
director, employee or stockholder of the Company, (vii) material increase,
direct or indirect, in the compensation paid or payable to any officer, key
employee or director of the Company or any establishment or creation of any
employment or severance agreement or employee benefit plan with respect to such
persons, (viii) material loss of personnel of the Company, material change in
the terms and conditions of the employment of the Company's key personnel or any
labor trouble involving the Company, (ix) arrangements relating to any royalty,
dividend or similar payment based on the sales volume of the Company, whether as
part of the terms of the Company's capital stock or by any separate agreement,
(x) agreement with respect to the endorsement of the Company's products, (xi)
loss or any development that is reasonably likely to result in a loss of any
significant customer, account or employee of the Company, (xii) incurrence of
indebtedness or any lien, (xiii) transaction not occurring in the ordinary
course of business, or (xiv) any agreement with respect to any of the foregoing
actions.
2.8 ORDINARY COURSE. Since the date of the Base Balance Sheet, the
Company has conducted its business only in the ordinary course and consistent
with its prior practices.
2.9 INVENTORIES. All of the Company's inventory items are of a quality
and quantity salable in the ordinary course of its business and the Company
maintains adequate inventory reserves. The inventories stated in the Base
Balance Sheet reflect the normal inventory valuation policies of the Company and
are based on and consistent with the Company's inventory records, and in the
best judgment of the Company are properly valued.
2.10 ACCOUNTS RECEIVABLE. All of the accounts receivable of the
Company, whether shown or reflected on the Base Balance Sheet or otherwise,
represent bona fide completed sales made in the ordinary course of business, are
valid and enforceable claims, are subject to no known set-offs or counterclaims,
and are, in the best judgment of the Company, fully collectible in the normal
course of business after deducting the reserve set forth in the Base Balance
Sheet and adjusted since that date, which reserve is a reasonable estimate of
the Company's uncollectible accounts.
2.11 TITLE TO PROPERTIES. Section 2.11 of the Disclosure Schedule sets
forth the addresses and uses of all real property that the Company owns, leases
or subleases. The Company has good, valid and (if applicable) marketable title
to all assets material to its business including without limitation all rights
to the Company's facility located in Carlsbad, California and to those assets
reflected on the Base Balance Sheet or acquired by it after the date thereof
(except for properties disposed of since that date in the ordinary course of
business), free and clear of all liens, claims or encumbrances of any nature,
other than liens for taxes not yet due and payable, minor liens and encumbrances
that do not materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and liens that have otherwise
arisen in the ordinary course of business. All equipment included in such
properties which is necessary
6
to the business of the Company is in good condition and repair (ordinary wear
and tear excepted) and all leases of real or personal property to which the
Company is a party are fully effective and afford the Company peaceful and
undisturbed possession of the subject matter of the lease. The property and
assets of the Company are sufficient for the conduct of its business as
presently conducted. The Company is not in violation of any zoning, building or
safety ordinance, regulation or requirement or other law or regulation
applicable to the operation of its owned or leased properties, which violation
would have a Material Adverse Effect, nor has it received any notice of any such
violation. There are no defaults by the Company or to the best knowledge of the
Company, by any other party, which might curtail in any material respect the
present use of the Company's property. The performance by the Company of this
Agreement will not result in the termination of, or in any increase of any
amounts payable under, any of its leases.
2.12 TAX MATTERS. The Company has filed all federal, state, local and
foreign income, excise and franchise tax returns, real estate and personal
property tax returns, sales and use tax returns and other tax returns required
to be filed by it where the failure to file such returns would have a Material
Adverse Effect and has paid all taxes owing by it, except taxes which have not
yet accrued or otherwise become due, for which adequate provision has been made
in the pertinent financial statements referred to in Section 2.5 above or which
will not have a Material Adverse Effect. The provision for taxes on the Base
Balance Sheet is sufficient as of its date for the payment of all accrued and
unpaid federal, state, county and local taxes of any nature of the Company, and
any applicable taxes owing to any foreign jurisdiction, whether or not assessed
or disputed. All taxes and other assessments and levies which the Company is
required to withhold or collect have been withheld and collected and have been
paid over to the proper governmental authorities except where the failure to
withhold or collect and pay over would not have a Material Adverse Effect. With
regard to the federal income tax returns of the Company, the Company has never
received notice of any audit or of any proposed deficiencies from the Internal
Revenue Service. There are in effect no waivers of applicable statutes of
limitations with respect to any taxes owed by the Company for any year. Neither
the Internal Revenue Service nor any other taxing authority is now asserting or,
to the best knowledge of the Company, threatening to assert against the Company
any deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith.
2.13 CERTAIN CONTRACTS AND ARRANGEMENTS. Except as set forth in Section
2.13 of the Disclosure Schedule (with true and correct copies delivered to the
Investors), the Company is not a party or subject to or bound by:
(a) any plan or contract providing for collective bargaining or
the like, or any contract or agreement with any labor union;
(b) any contract, lease or agreement creating any obligation of
the Company to pay to any third party $100,000 or more with respect to any
single such contract or agreement;
(c) any contract or agreement for the sale, license, lease or
disposition of products in excess of $100,000;
7
(d) any contract containing covenants directly or explicitly
limiting the freedom of the Company to compete in any line of business or with
any person or entity;
(e) any license agreement (as licensor or licensee) material to
the Company's business or projected business;
(f) any contract or agreement for the purchase of any leasehold
improvements, equipment or fixed assets for a price in excess of $100,000;
(g) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for borrowing in excess of $100,000 or
any pledge or security arrangement;
(h) any material joint venture, partnership, manufacturing,
development or supply agreement;
(i) any endorsement or any other advertising, promotional or
marketing agreement;
(j) any employment contracts, or agreements with officers, key
employees, directors or stockholders of the Company or persons or organizations
related to or affiliated with any such persons;
(k) any stock redemption or purchase agreements or other
agreements affecting or relating to the capital stock of the Company, including
without limitation any agreement with any stockholder of the Company which
includes without limitation, anti-dilution rights, registration rights, voting
arrangements, operating covenants or similar provisions;
(l) any pension, profit sharing, retirement or stock options
plans;
(m) any material royalty, dividend or similar arrangement based
on the sales volume of the Company;
(n) any acquisition, merger or similar agreement;
(o) any contract with a governmental body under which the
Company may have an obligation for renegotiation;
(p) any agreement with any stockholder of the Company or any
affiliate of any such stockholder; or
(q) any other contract not executed in the ordinary course of
business.
8
All of the Company's contracts and commitments are in full force and effect
and neither the Company, nor, to the knowledge of the Company, any other party
is in default thereunder (nor, to the knowledge of the Company, has any event
occurred which with notice, lapse of time or both would constitute a default
thereunder), except to the extent that any such default would not have a
Material Adverse Effect, and the Company has not received notice of any alleged
default under any such contract, agreement, understanding or commitment.
2.14 INTELLECTUAL PROPERTY RIGHTS; EMPLOYEE RESTRICTIONS. Except as set
forth in SCHEDULE 2.14:
(a) The Company has exclusive ownership of, with the exclusive
right to use, sell, license, dispose of, and bring actions for infringement of,
all Intellectual Property Rights (as hereinafter defined) material to the
conduct of its business as presently conducted, including without limitation all
rights to the Company name "Invitrogen" and to the trademarks and product names
listed on Schedule 2.14 hereof (the "Company Rights").
(b) The business of the Company as presently conducted and the
manufacturing and marketing of the products of the Company do not violate any
agreements which the Company has with any third party or infringe any patent,
trademark, copyright or trade secret or, to the best knowledge of the Company,
any other Intellectual Property Rights of any third party.
(c) No claim is pending or, to the best knowledge of the
Company, threatened against the Company nor has the Company received any notice
or claim from any person asserting that any of the Company's present or
contemplated activities infringe or may infringe any Intellectual Property
Rights of such person, and the Company is not aware of any infringement by any
other person of any rights of the Company under any Intellectual Property
Rights.
(d) The Company has taken all commercially reasonable steps
required to establish and preserve its ownership of all of the Company Rights;
each current and former employee of the Company, and each of the Company's
consultants and independent contractors involved in development of any of the
Company Rights, has executed an agreement regarding confidentiality, proprietary
information and assignment of inventions and copyrights to the Company, and, to
the best knowledge of the Company, none of such employees, consultants or
independent contractors is in violation of any agreement or in breach of any
agreement or arrangement with former or present employers relating to
proprietary information or assignment of inventions.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Section 2.14 of the Disclosure Schedule and all
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service xxxx applications, copyrights, copyright
applications, computer programs and other computer software, inventions,
designs, samples, specifications, schematics, know-how, trade secrets,
proprietary processes and formulae, including production technology and
processes, all source and object code, algorithms, promotional
9
materials, customer lists, supplier and dealer lists and marketing research, and
all documentation and media constituting, describing or relating to the
foregoing, including without limitation, manuals, memoranda and records.
Section 2.14 of the Disclosure Schedule contains a list and brief description of
all Intellectual Property Rights owned by or registered in the name of the
Company or of which the Company is the licensor or a licensee of a material
right or in which the Company has any material right and, in each case, a brief
description of the nature of the right.
2.15 LITIGATION. There is no litigation or governmental proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company or affecting any of its properties or assets or against any
officer, director or key employee of the Company in his or her capacity as an
officer, director or employee of the Company, which litigation, proceeding or
investigation is reasonably likely to have a Material Adverse Effect, or which
may call into question the validity or hinder the enforceability of this
Agreement or any other agreements or transactions contemplated hereby; nor to
the best knowledge of the Company has there occurred any event nor does there
exist any condition on the basis of which any such litigation, proceeding or
investigation might be properly instituted or commenced.
2.16 EMPLOYEE BENEFIT PLANS. The Company does not maintain or
contribute to any employee benefit plan, stock option, bonus or incentive plan,
severance pay policy or agreement, deferred compensation agreement, or any
similar plan or agreement (an "Employee Benefit Plan") other than the Employee
Benefit Plans identified and described in Section 2.16 of the Disclosure
Schedule. The terms and operation of each Employee Benefit Plan comply in all
material respects with all applicable laws and regulations relating to such
Employee Benefit Plans. There are no unfunded obligations of the Company under
any retirement, pension, profit-sharing, deferred compensation plan or similar
program. The Company is not required to make any payments or contributions to
any Employee Benefit Plan pursuant to any collective bargaining agreement or, to
the knowledge of the Company, any applicable labor relations law, and all
Employee Benefit Plans are terminable at the discretion of the Company without
liability to the Company upon or following such termination. The Company has
never maintained or contributed to any Employee Benefit Plan providing or
promising any health or other nonpension benefits to terminated employees. With
respect to any Employee Benefit Plan, there has occurred no "prohibited
transaction," as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or
breach of any duty under ERISA or other applicable law which could result,
directly or indirectly, in any taxes, penalties or other liability to the
Company. No litigation, arbitration or governmental administrative proceeding
(or investigation) or other proceeding (other than those relating to routine
claims for benefits) is pending or, to the best knowledge of the Company,
threatened with respect to any such Employee Benefit Plan.
2.17 LABOR LAWS. The Company employs approximately 137 employees and
generally enjoys good employer-employee relationships. The Company is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it as of the date hereof or amounts required to be reimbursed to such
10
employees. The Company is in compliance in all material respects with all
applicable laws and regulations respecting labor, employment, fair employment
practices, terms and conditions of employment, and wages and hours. There are
no charges of employment discrimination or unfair labor practices or strikes,
slowdowns, stoppages of work or any other concerted interference with normal
operations existing, pending or, to the best knowledge of the Company,
threatened against or involving the Company.
2.18 KEY EMPLOYEES. Except as set forth in Section 2.18 of the
Disclosure Schedule, to the knowledge of the Company, no key employee of the
Company has any plan or intention to terminate his employment with the Company
and no supplier has any plan or intention to terminate or reduce its business
with the Company or to materially and adversely modify its relationship with the
Company.
2.19 HAZARDOUS WASTE, ETC. No hazardous wastes, substances or materials
or oil or petroleum products have been generated, transported, used, disposed,
stored or treated by the Company and no hazardous wastes, substances or
materials, or oil or petroleum products have been released, discharged,
disposed, transported, placed or otherwise caused to enter the soil or water in,
under or upon any real property owned, leased or operated by the Company.
2.20 BUSINESS; COMPLIANCE WITH LAWS. The Company has all necessary
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as it is presently or
contemplated to be conducted, except for those which the failure of the Company
to obtain would not have a Material Adverse Effect. The Company is currently
and has heretofore been in compliance in all material respects with all federal,
state, local and foreign laws and regulations, including without limitation all
laws and regulations administered by or promulgated by the Federal Trade
Commission and/or the Food and Drug Administration.
2.21 INVESTMENT BANKING; BROKERAGE. There are no claims for investment
banking fees, brokerage commissions, finder's fees or similar compensation
(exclusive of professional fees to lawyers and accountants) in connection with
the transactions contemplated by this Agreement payable by the Company or based
on any arrangement or agreement made by or on behalf of the Company or either of
the Stockholders.
2.22 INSURANCE. The Company has fire, casualty, product liability and
business interruption and other insurance policies, with extended coverage,
sufficient in amount to allow it to replace any of its material properties which
might be damaged or destroyed, and such types and amounts of other insurance
with respect to its business and properties, on both a per occurrence and an
aggregate basis, as are customarily carried by persons engaged in the same or
similar business as the Company. There is no default or event which could give
rise to a default under any such policy.
2.23 TRANSACTIONS WITH AFFILIATES. There are no loans, leases,
contracts or other transactions between the Company and any officer, director or
five percent (5%) stockholder of
11
the Company or any family member or affiliate of the foregoing persons and there
have been no such transactions within the past five (5) years except as set
forth in Section 2.23 of the Disclosure Schedule.
2.24 CUSTOMERS AND DISTRIBUTORS. Section 2.24 of the Disclosure
Schedule sets forth each representative and distributor of the Company at the
date hereof (whether pursuant to a commission, royalty or other arrangement),
and each customer, distributor and/or broker of the Company who accounted for
more than 5% of the sales of the Company for the twelve (12) months ended
December 31, 1996 (collectively, the "Customers, Distributors and Brokers").
The relationships of the Company with its Customers, Distributors, and Brokers
are good commercial working relationships. No Customer, Distributor or Broker
of the Company has canceled or otherwise terminated its relationship with the
Company, or has during the last twelve months decreased materially its services,
supplies or materials to the Company or its usage or purchases of the services
or products of the Company. No Customer, Distributor or Broker has, to the best
knowledge of the Company, any plan or intention to terminate, to cancel or
otherwise materially and adversely modify its relationship with the Company or
to decrease materially or limit its services, supplies or materials to the
Company or its usage, purchase or distribution of the services or products of
the Company.
2.25 DISCLOSURE. The representations and warranties made or contained
in this Agreement, the schedules and exhibits hereto and the certificates and
statements executed or delivered in connection herewith, when taken together, do
not and shall not contain any untrue statement of a material fact and do not and
shall not omit to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or other material
not misleading in light of the circumstances in which they were made or
delivered. There have been no events or transactions, or information which has
come to the attention of the management of the Company, having a direct impact
on the Company or its assets, liabilities, financial condition, business,
results of operations or prospects which, in the reasonable judgment of such
management, could be expected to have a Material Adverse Effect.
2.26 QUALIFIED SMALL BUSINESS STOCK. As of the Closing, (i) the
Company will be a domestic C Corporation, (ii) the Company will not have,
during the one-year period preceding the Closing, made any purchases of its
own stock (other than stock issued to employees pursuant to the Plans (as
defined in Section 4.7 hereof) and in connection with termination of
employment), (iii) the Company's (and any predecessor's) aggregate gross
assets, as defined by Section 1202(d)(2) of the Internal Revenue Code of
1986, as amended (the "Code"), at no time between the date of incorporation
of the Company and through the Closing have exceeded or will exceed
$50,000,000, taking into account the assets of any corporations required to
be aggregated with the Company in accordance with Section 1202(d)(3) of the
Code, and (iv) the Company will be an eligible corporation, as defined by
Section 1202(e)(4) of the Code.
12
SECTION 2A. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
(a) Each Investor represents to the Company that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment contemplated by this Agreement
and making an informed investment decision with respect thereto. Each Investor
represents that it is an "accredited investor" as such term is defined in Rule
501 under the Securities Act of 1933, as amended (the "Securities Act"). Each
Investor represents to the Company that it is purchasing the Convertible
Preferred Shares for its own account, for investment only and not with a view
to, or any present intention of, effecting a distribution of such securities or
any part thereof except pursuant to a registration or an available exemption
under applicable law. Such Investor acknowledges that its respective
Convertible Preferred Shares have not been registered under the Securities Act
or the securities laws of any state or other jurisdiction and cannot be disposed
of unless they are subsequently registered under the Securities Act and any
applicable state laws or exemption from such registration is available.
(b) Each Investor has full right, authority and power under its
governing partnership agreement to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of such
Investor pursuant to or as contemplated by this Agreement and to carry out the
transactions contemplated hereby and thereby, and the execution, delivery and
performance by such Investor of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action under
such Investor's governing partnership agreement. This Agreement and each
agreement, document and instrument executed and delivered by each Investor
pursuant to or as contemplated by this Agreement constitute, or when executed
and delivered will constitute, valid and binding obligations of each of the
Investors enforceable in accordance with their respective terms. The execution,
delivery and performance by each Investor of this Agreement and each such other
agreement, document and instrument, and the performance of the transactions
contemplated hereby and thereby do not and will not: (A) violate, conflict with
or result in a default (whether after the giving of notice, lapse of time or
both) under any contract or obligation to which any Investor is a party or by
which it or its assets are bound, or cause the creation of any encumbrance upon
any of the assets of any Investor; (B) violate or result in a violation of, or
constitute a default under, any provision of any law, regulation or rule, or any
order of, or any restriction imposed by, any court or other governmental agency
applicable to such Investor; (C) require from such Investor any notice to,
declaration or filing with, or consent or approval of any governmental authority
or other third party; or (D) accelerate any obligation under, or give rise to a
right of termination of, any agreement, permit, license or authorization to
which any Investor is a party or by which such Investor is bound.
(c) Each Investor represents that there are no claims for
investment banking fees, brokerage commissions, finder's fees or similar
compensation (exclusive of professional fees to lawyers and accountants) in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of such Investor.
13
SECTION 3. CONDITIONS OF PURCHASE
Each Investor's obligation to purchase and pay for the Convertible
Preferred Shares to be purchased by it shall be subject to compliance by the
Company and the Stockholders with their agreements herein contained and to the
fulfillment to the Investors' satisfaction, or the waiver by the Investors, on
or before and at the Closing Date of the following conditions:
3.1 SATISFACTION OF CONDITIONS. The representations and warranties of
the Company and the Stockholders contained in this Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 3 shall have been satisfied or waived in writing by the Investors; there
shall have been no Material Adverse Change since the date hereof; and, on the
Closing Date, certificates to such effect executed by the President and Chief
Financial Officer of the Company shall have been delivered to the Investors.
3.2 DIRECTOR ELECTION; INDEMNIFICATION. Xxxx X. Xxxxxxx, as the nominee
of the Investors, shall have been elected as a director of the Company (together
with any subsequent nominee of the Investors, the "Investors' Nominee") and the
Company shall have entered into an Indemnification Agreement with the Investors'
Nominee and the Investors in the form attached hereto as EXHIBIT E.
3.3 OPINIONS OF COUNSEL. The Investors shall have received from Xxxx
Xxxx Xxxx & Friedenrich an opinion dated as of the Closing Date substantially in
the form attached hereto as EXHIBIT F-1 and an opinion of foreign counsel to the
Company with respect to Invitrogen Holland, B.V. in the form attached hereto as
EXHIBIT F-2.
3.4 REINCORPORATION. The Company's predecessor, Invitrogen
Corporation, a California corporation, shall have been reincorporated under the
laws of Delaware pursuant to a Certificate of Incorporation in the form attached
hereto as EXHIBIT B and otherwise on terms and conditions satisfactory to the
Investors.
3.5 AUTHORIZATION. The Board of Directors of the Company shall have
duly adopted resolutions in the form reasonably satisfactory to the Investors
and shall have taken all action necessary for the purpose of authorizing the
Company to consummate the transactions contemplated hereby in accordance with
the terms hereof and to cause the Certificate of Incorporation establishing the
Convertible Preferred Shares in the form attached hereto as EXHIBIT B to become
effective; and the Investors shall have received a certificate of the Secretary
of the Company setting forth a copy of the resolution and the Certificate of
Incorporation and By-laws of the Company and such other matters as may be
reasonably requested by the Investors.
3.6 INVESTORS' FEES. The Company shall have paid on behalf of the
Investors all legal fees and related expenses incurred by the Investors in
connection with the transactions contemplated by this Agreement in an amount not
to exceed $20,000.
14
3.7 NO VIOLATION OR INJUNCTION. The consummation of the transactions
contemplated by this Agreement shall not be in violation of any law or
regulation, and shall not be subject to any injunction, stay or restraining
order.
3.8 CONSENTS AND WAIVERS. The Company and the Stockholders shall have
obtained all consents or waivers necessary to execute this Agreement and the
other agreements and documents contemplated herein, to issue and sell the
Securities to be sold to the Investors hereunder, to redeem the shares of Common
Stock as contemplated by the Repurchase Agreement and to carry out the
transactions contemplated hereby and thereby and shall have delivered evidence
thereof to the Investors. All corporate and other action and governmental
filings necessary to effectuate the terms of this Agreement and other agreements
and instruments executed and delivered by the Company in connection herewith
shall have been made or taken.
3.9 REPURCHASE AGREEMENT. The Repurchase Agreement shall be executed
by stockholders of the Company who agree in the aggregate to the redemption of
1,101,471 shares of their Common Stock on the Closing Date (adjusted
appropriately for stock splits, stock dividends, recapitalizations and the
like).
3.10 REPAYMENT OF COMPANY LOANS. From the proceeds of the redemptions
of their Common Stock contemplated by the Repurchase Agreement, the Stockholders
shall repay in full the Promissory Notes issued by the Stockholders to the
Company in the aggregate amount of approximately $185,000.
3.11 AGREEMENT OF SPOUSE. The Spouse of each of the Stockholders shall
have executed an Agreement of Spouse in substantially the form attached hereto
as EXHIBIT G.
SECTION 4. COVENANTS
The Company and, with respect to Section 4.9 hereof, Xxxx X. Xxxxxx, agree
for the benefit of the Investors that it and he shall comply with the following
covenants, provided that the covenants set forth in Sections 4.1, 4.3 (except to
the extent provided therein), 4.4 and 4.7 shall terminate as of the closing of
the Company's first Qualified Public Offering, unless earlier terminated as may
be agreed to in writing by two-thirds in interest of the Investors. A
"Qualified Public Offering" shall have the meaning provided in the Certificate
of Incorporation attached hereto as EXHIBIT B.
4.1 FINANCIAL STATEMENTS AND BUDGETARY INFORMATION; INSPECTION. So
long as the Investors hold at least 220,000 Convertible Preferred Shares or
shares of Common Stock (subject to adjustments for stock splits, stock dividends
and the like), the Investors shall have the rights, and the Company shall have
the obligations, set forth in this Section 4.1. The Company will deliver to TA
Associates, Inc. as representative of the Investors internally prepared
unaudited monthly and quarterly financial statements and audited annual
financial statements, as well as annual budgets and operating plans. The
monthly and quarterly financial information will be provided within 30 days
after the end of each month and quarter. The annual budget and
15
operating plan will be presented at a Board of Directors' meeting at least one
month prior to the end of the fiscal year of the Company preceding the year
covered. An annual audit by an accounting firm of national recognition selected
by the Board of Directors will be provided within 90 days after each fiscal
year-end of the Company.
The Company will, upon reasonable prior notice to the Company and for
corporate purposes, permit authorized representatives of TA Associates, Inc. as
representative of the Investors to visit and inspect any of the properties of
the Company, including its books of account (and to make copies thereof and take
extracts therefrom), and to discuss its affairs, finances and accounts with its
officers, administrative employees and independent accountants, all at such
reasonable times and as often as may be reasonably requested.
4.2 INDEMNIFICATION; INSURANCE. For so long as any of the Securities
remains outstanding, the Certificate of Incorporation or By-laws of the Company
will at all times during which any nominee of any of the Investors serves as
director of the Company provide for indemnification of the directors and
limitations on the liability of the directors to the fullest extent permitted
under applicable state law. Prior to any initial public offering, the Company
will purchase a directors and officers insurance policy on terms reasonably
acceptable to the Investors' Nominee (who shall be a third party beneficiary of
this Agreement) covering directors and officers of the Company in the amount of
at least $3 million, covering, among other things, violations of federal or
state securities laws.
4.3 BOARD OF DIRECTORS. The Board of Directors of the Company shall
consist of no more than seven (7) members including the Investors' Nominee. The
Company shall cause meetings of its Board of Directors to be held at least four
(4) times each year at intervals of not more than four (4) months and shall pay
all reasonable out-of-pocket expenses incurred by the Investors' Nominee in
connection with attending meetings or other functions of the Company's Board of
Directors or any committees thereof and shall pay the Investor's Nominee fees in
an amount equal to any fees that are paid to the other non-management directors
of the Company; provided, however, that prior to the Company's initial public
offering the Company shall not be obligated to issue options or related awards
to the Investor's Nominee that it issues to the other non-management directors
of the Company, but upon the closing of such offering the Investor's Nominee
shall, for purposes of compensation, be considered a new member of the Board of
Directors and receive compensation (including options and related awards)
consistent with the Company's policies for new non-management directors of the
Company and thereafter shall be compensated in the same manner as each of the
other non-management directors of the Company. Compensation (including option
and related awards) for members of management will be determined by a
Compensation Committee of the Board of Directors comprised of one member of
management who is also a director, the Investors' Nominee and one independent
director (the "Compensation Committee").
4.4 RESTRICTIVE COVENANTS. The Company will not, without the consent
of two thirds-in-interest of the Investors:
16
(a) sell, lease or otherwise dispose of (whether in one
transaction or a series of related transactions) all or substantially all of its
assets or business, except in a transaction constituting a "Qualified
Extraordinary Transaction" (as such term is defined in the Certificate of
Incorporation in the form attached as EXHIBIT B),
(b) merge with or into or consolidate with another entity or
enter into or engage in any other transaction or series of related transactions,
in any such case in connection with or as a result of which the Company is not
the surviving entity or the owners of the Company's outstanding equity
securities prior to the transaction or series of related transactions do not own
at least a majority of the outstanding equity securities of the surviving,
resulting or consolidated entity, except in any such case in a transaction
constituting a Qualified Extraordinary Transaction,
(c) dissolve, liquidate or wind up its operations,
(d) directly or indirectly redeem, purchase, or otherwise
acquire for consideration any shares of its Common Stock or any other class of
its capital stock except (i) for redemption of Convertible Preferred Shares or
Redeemable Preferred Stock pursuant to and as provided in the Certificate of
Incorporation, (ii) as contemplated by Sections 1.2 and 4.5, or (iii) repurchase
of shares of Common Stock from employees and consultants pursuant to the
agreements described in Schedule 4.4 hereto,
(e) propose or adopt any amendment to Article IV of its
Certificate of Incorporation, or any other amendment to its Certificate of
Incorporation or By-Laws that eliminates, amends or restricts or otherwise
adversely affects the rights and preferences of the Convertible Preferred Stock
or the Redeemable Preferred Stock, or increase the authorized shares of
Convertible Preferred Stock or Redeemable Preferred Stock,
(f) declare or make dividend payments on any shares of its
Common Stock or any other class of its capital stock,
(g) create, or obligate itself to create, any class or series of
shares having preference over or being on a parity with the Convertible
Preferred Stock or the Redeemable Preferred Stock,
(h) increase the size of the Board of Directors to more than
seven (7) members,
(i) enter into any agreement or arrangement or take any other
action that eliminates, amends, restricts or otherwise adversely affects the
rights of the Investors hereunder or as holders of Securities of the relevant
class or its ability to perform its obligations hereunder; without limitation of
the foregoing, the Company shall take all commercially reasonable action
necessary or appropriate to remove promptly any impediment to the redemption of
the Securities as contemplated by the Certificate of Incorporation, or
17
(j) except as provided in the Company's 1997 Management Bonus
Plan described in Section 2.16 of the Disclosure Schedule, pay any bonuses to
the Company's executive officers or unless any such bonus shall have been
unanimously approved by the Compensation Committee.
4.5 REPURCHASE; USE OF PROCEEDS. Immediately upon the sale of the
Convertible Preferred Shares, the Company shall complete the repurchase of
1,101,471 shares of Common Stock from the stockholders of the Company for
aggregate cash payments of $7.5 million pursuant to this Agreement, in each case
on terms reasonably satisfactory to the Investors and in accordance with EXHIBIT
C hereto. The Company shall use the remaining net proceeds from the sale of the
Convertible Preferred Stock for working capital purposes.
4.6 KEY PERSON INSURANCE. Within 120 days after the date hereof, the
Company will purchase and maintain "key person" term life insurance policies of
$1 million each on the lives of Xxxx X. Xxxxxx and Xxxxxx Xxxxxxxxx, with the
Company named as beneficiary. The Company hereby agrees that such policy shall
not be assigned, borrowed against or pledged.
4.7 STOCK AWARDS. Except for (i) the issuance of option and stock
awards with respect to up to an aggregate 609,685 shares of Common Stock
pursuant to the 1997 Stock Option Plan as in effect as of the date hereof, (ii)
the reissuance under the 1997 Stock Option Plan of 1,218,000 canceled,
terminated or expired options which were originally granted under the 1995 Stock
Option Plan and the issuance of stock upon the exercise of such options, and
(iii) the reissuance under the 1997 Stock Option Plan, upon cancellation,
termination or expiration, of up to 1,907,794 options that were originally
granted under the 1995 Stock Option Plan and which are currently outstanding and
the issuance of stock upon the exercise of such options, the Company will not
grant or award options, stock or other equity-based or quasi-equity rights
(collectively, "Equity") to officers, employees, advisers, consultants,
directors or the ESOP without the consent of the Investors' Nominee, and the
Company will in no event grant Equity to either of the Stockholders without the
consent of the Investors' Nominee. The Plans and grant awards thereunder may
not be amended, revised or waived after the date hereof without the consent of
the Investors' Nominee. In no event shall additional option or stock awards be
made under the 1995 Stock Option Plan.
4.8 ASSIGNMENT. Each Investor shall have the right to assign its
rights under this Section 4 in connection with any transaction or series of
related transactions involving the Transfer (as defined in Section 5.1) to one
or more transferees of at least 220,000 shares of capital stock of the Company
(subject to adjustments for stock splits, stock dividends and the like and
aggregating all contemporaneous Transfers by two or more Investors), or to any
fund managed by or associated with TA Associates, Inc. ("TA Funds"). Upon any
such Transfer such transferee or TA Fund thereupon shall be deemed an "Investor"
for purposes of this Section 4.
4.9 TERMINATION OF AIRPLANE ARRANGEMENT. Xxxx X. Xxxxxx shall, within
thirty days of the Closing Date, cause Xxxxxx Management Corporation ("Xxxxxx
Management") to repay in full all outstanding indebtedness with respect to the
1995 Piper Malibu Mirage N711BQ
18
referenced in the Terms for Airplane Lease dated May 21, 1997 between Xxxxxx
Management and the Company (the "Airplane Lease") and shall cause the Company to
be released from any and all guarantees with respect to such indebtedness. The
Company shall exercise its right under the Airplane Lease to terminate the
Airplane Lease upon the Company's first firm commitment public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended.
SECTION 5. TRANSFER RESTRICTIONS
The following provisions of this Section 5 (other than the provision set
forth in the first sentence of Section 5.1 (a)) shall terminate immediately
prior to a Qualified Public Offering and shall not apply with respect to any
Qualified Public Offering.
5.1 GENERAL RESTRICTION.
(a) The Company and the Stockholders hereby agree that all
rights and obligations of the Company and such Stockholders under the Agreement
Among the Shareholders of Invitrogen Corporation and the Corporation, dated
October 1, 1989, shall terminate as of the date hereof and shall be of no
further force or effect. Each Stockholder agrees that neither he nor any of his
permitted transferees as contemplated below will directly or indirectly offer,
transfer, donate, sell, assign, pledge, hypothecate or otherwise dispose of (any
such action a "Transfer") all or any portion of the shares of capital stock of
the Company now owned or hereafter acquired by him or them, except (i) to
permitted transferees as permitted by Section 5.1(b) and (ii) in bona fide sales
to third parties for value following compliance with Section 5.
(b) Permitted Transfers by a Stockholder shall include Transfers
(i) to the Stockholder's spouse or children (including adopted children), to a
trust of which he is the settlor or a trustee for the benefit of his spouse or
children (including adopted children) or to charitable institutions, (ii)
Transfers upon a Stockholder's death to his heirs, executors or administrators
or to a trust under his or her will or to his or her guardian or conservator,
and (iii) Transfers aggregating less than ten percent (10%) of the Common Stock
held by such Stockholder; PROVIDED that in any such case the transferee shall
have entered into an enforceable written agreement providing that all shares so
Transferred shall continue to be subject to all provisions of this Agreement as
if such shares were still held by the Stockholder, and provided further that
such permitted transferee shall not be permitted to make any further Transfers
without complying with the provisions of this Section 5. Anything to the
contrary in this Agreement notwithstanding, Transfers under this Section 5.1(b)
shall not be subject to Section 5.2 or 5.3 and transferees permitted by this
Section 5.1(b) shall take any shares so Transferred subject to all obligations
under this Agreement as if such shares were still held by the Stockholder
whether or not they so expressly agree.
5.2 RIGHT OF FIRST REFUSAL. If at any time on or after the date hereof
a Stockholder (including for all purposes of this Section 5.2, any permitted
transferee of his shares pursuant to Section 5.1(b)) receives a bona fide offer
to purchase any or all of his shares (the "Offer") from
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an unaffiliated third party (the "Offeror") which such Stockholder wishes to
accept, the Stockholder may Transfer such shares pursuant to and in accordance
with the following provisions of this Section 5.2:
(a) Such Stockholder shall cause the Offer to be reduced to
writing and shall notify the Company, the Investors and the other Stockholder in
writing of his desire to accept the Offer and otherwise comply with the
provisions of this Section 5. The Stockholder's notice shall constitute an
irrevocable offer to sell such shares to the Company, the Investors and the
other Stockholder, at a purchase price equal to the price contained in, and on
the same terms and conditions of, the Offer. The notice shall be accompanied by
a true copy of the Offer (which shall identify the Offeror).
(b) The Company shall have the right to offer to purchase all,
but not less than all of the shares covered by the Offer. To exercise such
right, the Company shall, within ten (10) days of receipt of such written notice
(the "Company Notice Period"), communicate in writing such election to the
transferring Stockholder (with copies to the Investors). Such written election
to purchase shall constitute a valid, legally binding and enforceable agreement
for the sale and purchase of all of the shares covered by the Offer.
(c) In the event the Company does not exercise its right
pursuant to Section 5.2(b), the transferring Stockholder shall notify the
Investors in writing of such fact (the "Investor Notice"). At any time within
20 days after receipt by the Investors of the Investor Notice (the "Investor
Notice Period"), one or more of the Investors holding at least ten percent (10%)
of the Securities and the other Stockholder may, subject to the terms hereof,
choose to accept the Offer with respect to all of the shares covered thereby by
giving written notice to the Stockholder proposing to sell to such effect;
provided that if two or more of the Investors and/or the other Stockholder
choose, in the aggregate, to accept such Offer with respect to an aggregate
number of shares which exceeds the number of shares subject to such Offer and
available for purchase, the number of shares for which the Offer may be accepted
by each such Investor and Stockholder shall, in each case, be reduced by the
smallest number of shares as shall be necessary to reduce the aggregate number
of shares for which the Offer may be accepted by the electing Investors and
Stockholder as contemplated herein to the number of shares for which the Offer
was made and which are available for purchase by them; provided further, that
the number of shares for which any Investor or Stockholder may accept such Offer
as contemplated herein shall in no event be reduced to less than the number of
shares which bears the same proportion to the total number of shares which are
available for purchase as the number of shares of Common Stock then held by such
Investor or Stockholder (on an as converted basis as contemplated by the
Certificate of Incorporation) bears to the total number of shares of Common
Stock then held by all Investors and Stockholders (on an as converted basis as
contemplated by the Certificate of Incorporation) accepting such Offer.
(d) If shares covered by any Offer are purchased pursuant to
Sections 5.2(b) or (c) , such purchase shall be (i) at the same price and on the
same terms and conditions as the Offer if the Offer is for cash and/or notes or
(ii) if the Offer includes any consideration other than
20
cash and notes, then at the equivalent all cash price for such other
consideration. The closing of the purchase of the shares subject to an Offer
pursuant to this Section 5.2 shall take place within 15 days after the
expiration of the Company Notice Period or Investor Notice Period, as
applicable, or upon satisfaction of any governmental approval requirements, if
later, by delivery by the respective purchasers of the purchase price for shares
being purchased as provided above to the selling Stockholder against delivery of
the certificates representing the shares so purchased, appropriately endorsed
for Transfer by such Stockholder.
5.3 RIGHT OF CO-SALE.
(a) In the event either Stockholder (including for all purposes
of this Section 5.3 any permitted transferees of a Stockholder as contemplated
by Section 5.1(b)) proposes to sell any shares or receives an Offer and any of
such shares are not purchased pursuant to Section 5.2, such Stockholder (a
"Transferring Stockholder") may Transfer the shares subject thereto only
following compliance with this Section 5.3 and Section 5.4 below. In such
event, immediately following the last day of the Notice Period, the Transferring
Stockholder shall give an additional notice of the proposed sale to the
Investors and other Stockholder, once again enclosing a copy of the Offer, if
applicable, which shall identify the Offeror and the number of shares proposed
to be sold (the "Co-Sale Notice"). Upon the election of an Investor or
Investors holding at least ten percent (10%) of the Securities or such other
Stockholder, each of the Investors and such other Stockholder shall have the
right, exercisable upon written notice to the Transferring Stockholder and any
such permitted transferee within 20 days after delivery to it of the Co-Sale
Notice (the "Co-Sale Notice Period"), to participate in the sale on the terms
and conditions stated in the Co-Sale Notice, except that any Investor who holds
Convertible Preferred Shares shall be permitted to sell to the relevant
purchaser shares of Common Stock acquired upon conversion thereof or, at its
election, either (i) an option to acquire such Common Stock when it receives the
same upon such conversion at the election of such Investor or as otherwise
provided in the Company's Certificate of Incorporation with the same effect as
if Common Stock were being conveyed, or (ii) shares of Convertible Preferred
Stock provided the acquiror pays the full liquidation preference of the shares
being sold plus the relevant price per share for the underlying Common Stock.
Each of the Investors and such other Stockholder shall have the right to sell
all or any portion of its or his shares on the terms and conditions in the
Co-Sale Notice (subject to the foregoing), with the maximum number of shares
equal to the product obtained by multiplying the number of shares proposed to be
sold by the relevant Transferring Stockholder and any of his permitted
transferees as described in the Co-Sale Notice by a fraction, the numerator of
which is the number of shares of Common Stock owned by such Investor or other
Stockholder on the date of the Co-Sale Notice on an as converted basis, and the
denominator of which is the sum of the number of shares of Common Stock owned by
the Stockholders and their permitted transferees and the number of shares of
Common Stock owned by all of the Investors (including all assignees of the
Investors) as of the date of the Co-Sale Notice on an as converted basis. To
the extent one or more Investors elect not to sell the full amount of shares
which they are entitled to sell pursuant to this Section 5.3(a), the other
participating Investors' rights to sell shares shall be increased
proportionately to their relative holdings of Securities, such that the
Investors shall have the right to sell the full number of shares allocable to
them in any transaction subject to this Section 5.3(a)
21
even if some Investors elect not to participate. Within five days after the
expiration of the Co-Sale Notice Period, the Transferring Stockholder shall
notify each participating Investor and Stockholder of the number of shares held
by such Investor or Stockholder that will be included in the sale and the date
on which the sale will be consummated, which shall be no later than the later of
(i) 30 days after the delivery of the Co-Sale Notice and (ii) the satisfaction
of all governmental approval requirements, if any. Each of the Investors and
Stockholders may effect its participation in any sale hereunder by delivery to
the purchaser, or to the Transferring Stockholder for transfer to the purchaser,
of one or more instruments, certificates and/or option agreements, properly
endorsed for transfer, representing the shares it elects to sell therein,
provided that no Investor or Stockholder shall be required to make any
representations or warranties or to provide any indemnities in connection
therewith other than with respect to title to the stock being conveyed. At the
time of consummation of the sale, the purchaser shall remit directly to each
Investor and Stockholder that portion of the sale proceeds to which each such
Investor or Stockholder is entitled by reason of its participation therein. No
shares may be purchased by a purchaser from the Transferring Stockholder or any
of his permitted transferees unless the purchaser simultaneously purchases from
the Investors and other Stockholder all of the shares that they have elected to
sell pursuant to this Section 5.3(a).
(b) Any shares held by a Transferring Stockholder or any of his
permitted transferees that the Transferring Stockholder or transferee desires to
sell following compliance with Section 5.3(a) may be sold to the purchaser only
during the 90-day period after the expiration of the Co-Sale Notice Period and
only on terms no more favorable to the Transferring Stockholder and such
transferees than those contained in the Co-Sale Notice. Promptly after such
sale, such Transferring Stockholder shall notify the Investors and other
Stockholder of the consummation thereof and shall furnish such evidence of the
completion and time of completion of such sale and of the terms thereof as may
reasonably be requested by the Investors and other Stockholder. So long as the
purchaser is neither a party, nor an affiliate or relative of a party, to this
Agreement, such purchaser shall take the shares so Transferred free and clear of
any further restrictions of this Section 5. If, at the end of such 90-day
period, such Transferring Stockholder and any of his transferees have not
completed the sale of such shares as aforesaid, all the restrictions on Transfer
contained in this Section 5 shall again be in effect with respect to such
shares.
5.4 ASSIGNMENT. If both Stockholders (and their permitted transferees,
if any) propose concurrent Transfers which are subject to Section 5.2 or Section
5.3, then the provisions of Sections 5.2 and Section 5.3 shall apply to each
such proposed Transfer independently. Each Investor and Stockholder shall have
the right to assign its rights under this Section 5 in connection with any
transaction or series of related transactions involving the Transfer to one or
more transferees of at least 220,000 shares of capital stock of the Company
(subject to adjustments for stock splits, stock dividends and the like and
aggregating all contemporaneous Transfers by two or more Investors), or to any
TA Funds or permitted transferees of a Stockholder. Upon any such Transfer such
transferee or TA Fund thereupon shall be deemed an "Investor" or "Stockholder,"
as the case may be, for purposes of this Section 5.
22
SECTION 6. RIGHTS TO PURCHASE
Notwithstanding anything herein to the contrary, the following provisions
of this Section 6 shall terminate immediately prior to the closing of a
Qualified Public Offering and shall not apply with respect to any Qualified
Public Offering.
6.1 RIGHT TO PARTICIPATE IN CERTAIN SALES OF ADDITIONAL SECURITIES. The
Company agrees that it will not sell or issue any shares of capital stock of the
Company, or other securities convertible into or exchangeable for capital stock
of the Company, or options, warrants or rights carrying any rights to purchase
capital stock of the Company unless the Company first submits a written offer to
the Investors and the Stockholders (including for all purposes of this Section 6
each permitted transferee of a Stockholder pursuant to Section 5.1(b))
identifying the terms of the proposed sale (including price, number or aggregate
principal amount of securities and all other material terms), and offers to each
Investor and Stockholder the opportunity to purchase its Pro Rata Share (as
hereinafter defined) of the securities (subject to increase for over-allotment
if some Investors or Stockholders do not fully exercise their rights) on terms
and conditions, including price, not less favorable to the Investors and
Stockholders than those on which the Company proposes to sell such securities to
a third party or parties. Each Investor's or Stockholder's "Pro Rata Share" of
such securities shall be based on the ratio which the shares of Common Stock
held by he or it bears to all the issued and outstanding shares of Common Stock
calculated on a fully-diluted basis giving effect to the conversion of
convertible securities as of the date of such written offer. The Company's
offer to the Investors and Stockholders shall remain open and irrevocable for a
period of 30 days, and Investors and Stockholders who elect to purchase shall
have the first right to take up and purchase any shares or other securities
which other Investors or Stockholders do not elect to purchase, based on the
relative holdings of the electing purchasers. Any securities so offered which
are not purchased pursuant to such offer may be sold by the Company but only on
the terms and conditions set forth in the initial offer to the Investors and
Stockholders, at any time within 90 days following the termination of the
above-referenced 30-day period but may not be sold to any other person or on
terms and conditions, including price, that are more favorable to the purchaser
than those set forth in such offer or after such 90-day period without renewed
compliance with this Section 6.1.
Notwithstanding the foregoing, the Company may (i) issue options and shares
of its Common Stock to its officers, employees, advisors, consultants, directors
and the ESOP with respect to up to an aggregate 609,685 shares pursuant to the
1997 Stock Option Plan as in effect as of the date hereof, (ii) reissue to its
officers and employees under the 1997 Stock Option Plan 1,218,000 canceled,
terminated or expired options which were originally granted under the 1995 Stock
Option Plan and issue stock upon the exercise of such options, (iii) reissue to
its officers and employees under the 1997 Stock Option Plan, upon cancellation,
termination or expiration, up to 1,907,794 options that were originally granted
under the 1995 Stock Option Plan which are currently outstanding and issue stock
upon the exercise of such options and (iv) issue Conversion Shares upon the
conversion of the Convertible Preferred Shares, and this Section 6 shall not
apply with respect to such issuances.
23
6.2 ASSIGNMENT OF RIGHTS. Each Investor or Stockholder may assign its
rights under this Section 6 in connection with any transaction or series of
related transactions involving the transfer to one or more transferees of at
least 220,000 shares of capital stock of the Company (subject to adjustments for
stock splits, stock dividends and the like and aggregating all contemporaneous
transfers by Investors), or to any TA Fund or permitted transferee of a
Stockholder. Upon any such transfer such transferee or TA Fund shall be deemed
an "Investor" or "Stockholder," as the case may be, for purposes of Sections 6.1
and 6.2 with the rights set forth in such Sections.
SECTION 7. REGISTRATION RIGHTS
7.1 OPTIONAL REGISTRATIONS. If at any time or times after the date
hereof, the Company shall seek to register any shares of its capital stock or
securities convertible into capital stock under the Securities Act (whether in
connection with a public offering of securities by the Company (a "primary
offering"), a public offering of securities by stockholders of the Company (a
"secondary offering"), or both), the Company will promptly give written notice
thereof to each Investor and Stockholder (including any permitted transferee
thereof) (the "Holders," subject to Section 7.7) holding Registrable Securities
as hereinafter defined in Section 7.3 below. If within 20 days after their
receipt of such notice one or more Holders request the inclusion of some or all
of the Registrable Securities owned by them in such registration, the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which such Holders may request in a writing delivered
to the Company within 20 days after their receipt of the notice given by the
Company. In the case of the registration of shares of capital stock by the
Company in connection with any underwritten public offering, if the
underwriter(s) determines that marketing factors require a limitation on the
number of Registrable Securities to be offered, the Company shall not be
required to register Registrable Securities of the Holders in excess of the
amount, if any, of shares of the capital stock which the principal underwriter
of such underwritten offering shall reasonably and in good faith agree to
include in such offering in excess of any amount to be registered for the
Company; provided, however, that the number of shares of Registrable Securities
of the Holders included in any such offering subsequent to the Company's first
Qualified Public Offering shall in no event be less than thirty percent (30%) of
the aggregate number of shares of capital stock to be registered, unless the
aggregate number of shares of Registrable Securities the Holders requested in
writing to be in such offering is less than thirty percent (30%) of the
aggregate number of shares of capital stock to be registered. If any limitation
of the number of shares of Registrable Securities to be registered by the
Holders is required pursuant to this Section 7.1, the number of shares that may
be included in the registration on behalf of the Holders shall be allocated
among the Holders or the holders of any other registration rights in proportion,
as nearly as practicable, to the respective holdings of Registrable Securities
of all Holders requesting registration. The provisions of this Section will not
apply to a registration effected solely to implement (i) an employee benefit
plan, or (ii) a transaction to which Rule 145 or any other similar rule of the
Securities and Exchange Commission (the "SEC"or the "Commission") under the
Securities Act is applicable.
7.2 REQUIRED REGISTRATIONS.
24
(a) DEMAND REGISTRATION. On one or more occasions at any time
after the earlier of June 16, 1999 or the effective date of the Company's first
registration statement under the Securities Act, an Investor or Investors
holding at least 50% of the Registrable Securities held by the Investors may
request that the Company register under the Securities Act all or a portion of
the Registrable Securities held by such requesting Investors.
(b) FORM S-3. After the first public offering of its securities
registered under the Securities Act, the Company shall use its best efforts to
qualify and remain qualified to register securities on Form S-3 (or any
successor form) under the Securities Act. Any Investor or Investors shall have
the right to request any number of registrations on Form S-3 (or any successor
form) for the Registrable Securities held by such requesting Investor, including
registrations for the sale of such Registrable Securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act. Such requests
shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of such
shares by such Investor or Investors.
(c) REGISTRATION REQUIREMENTS. Following a request pursuant to
Section 7.2(a) or (b) above, the Company will notify all of the Holders who
would be entitled to notice of a proposed registration under Section 7.1 above
and any other holder of piggyback registration rights of its receipt of such
notification from such Investor or Investors. Upon the written request of any
such Holder or other holder of the Company's securities delivered to the Company
within 20 days after receipt from the Company of such notification, the Company
will either (i) elect to make a primary offering, in which case the rights of
such Holders shall be as set forth in Section 7.1 above (in which case the
registration shall not count as one of the Investors' permitted demand
registrations hereunder), or (ii) use its best efforts to cause such of the
Registrable Securities as may be requested by any Holders and any other holders
of piggyback registration rights to be registered under the Securities Act in
accordance with the terms of this Section 7.2; provided, however, that the
number of shares of Registrable Securities of the Holders included in any such
offering shall in no event be less than thirty percent (30%) of the aggregate
number of shares of capital stock to be registered, unless the aggregate number
of shares of Registrable Securities the Holders requested in writing to be in
such offering is less than thirty percent (30%) of the aggregate number of
shares of capital stock to be registered.
(d) LIMITATIONS ON REGISTRATION OBLIGATIONS. The Company will
not be obligated pursuant to this Section 7.2 to effect more than two (2)
registration statements pursuant to Section 7.2(a), but shall be obligated to
file an unlimited number of registration statements on Form S-3. The Company
shall not be obligated to effect any registration on Form S-3 pursuant to
Section 7.2(a) if: (i) Form S-3 is not available for such offering by the
holders (in which case the Company shall be obligated to effect such
registration on either Form S-1 or S-2 and such registration shall not be
counted as a registration pursuant to Section 7.2(a) hereof for purposes of the
limitations set forth in the first sentence of this Section 7.2(d)), (ii) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public of less than $500,000 or (iii) if the Company has, within the four (4)
month period
25
preceding the date of such request, already effected one (1) registration of its
securities either pursuant to Section 7.2(a) or pursuant to which the Holders
had rights (which they exercised) to include their shares in such registration
pursuant to Section 7.1.
(e) POSTPONEMENT. The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed 90 days in the aggregate during any seven-month period, if the Company
has been advised by legal counsel that such filing would require a special audit
or the disclosure of a material impending transaction or other matter or the
Company's Board of Directors determines reasonably and in good faith that such
disclosure would have a Material Adverse Effect. The Company shall not be
required to cause a registration statement requested pursuant to this Section
7.2 to become effective prior to 90 days following the effective date of a
registration statement initiated by the Company, if the request for registration
has been received by the Company subsequent to the giving of written notice by
the Company, made in good faith, to the Investors that the Company is commencing
to prepare a Company-initiated registration statement (other than a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 or any other similar rule of the SEC under the Securities Act is
applicable); provided, however, that the Company shall use its best efforts to
achieve such effectiveness promptly.
(f) SUSPENSION. In the case of a registration for the sale of
Registrable Securities, upon receipt of any notice (a "Suspension Notice") from
the Company of the happening of any event which makes any statement made in the
registration statement or related prospectus untrue or which requires the making
of any changes in such registration statement or prospectus so that they will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
each holder of Registrable Securities registered under such registration
statement shall forthwith discontinue disposition of such Registrable Securities
pursuant to such registration statement until such holder's receipt of the
copies of the supplemented or amended prospectus or until it is advised in
writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the prospectus; PROVIDED, HOWEVER, that the
Company shall not give a Suspension Notice until after the registration
statement has been declared effective and shall not give more than one
Suspension Notice to the Holders in respect to all Registrable Securities and
pursuant to this Section 7 during any period of twelve (12) consecutive months
and in no event shall the period from the date on which any Holder receives a
Suspension Notice to the date on which any Holder receives either the Advice or
copies of the supplemented or amended prospectus (the "Suspension Period")
exceed 90 days. In the event that the Company shall give any Suspension Notice,
the Company shall use its best efforts and take such actions as are reasonably
necessary to render the Advice and end the Suspension Period as promptly as
practicable.
7.3 REGISTRABLE SECURITIES. For the purposes of this Section 7, the
term "Registrable Securities" shall mean any shares of Common Stock held by a
Holder or subject to acquisition by a Holder upon conversion of Convertible
Preferred Shares, as applicable, including any shares
26
issued by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; PROVIDED, HOWEVER, that if an Investor owns Convertible
Preferred Shares, the Investor may exercise its registration rights hereunder by
converting the shares to be sold publicly into Common Stock as of the closing of
the relevant offering and shall not be required to cause such Convertible
Preferred Shares to be converted to Common Stock until and unless such Closing
occurs, it being understood that the Company shall at the request of the
relevant Investor effect the reconversion of Common Stock and any Redeemable
Preferred Stock to Convertible Preferred Stock if such a conversion occurs
notwithstanding the foregoing and a public offering does not close; and
PROVIDED, FURTHER, that any Common Stock that is sold in a registered sale
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 thereunder, or that may be sold without restriction as to
volume or otherwise pursuant to Rule 144 under the Securities Act (as confirmed
by an unqualified opinion of counsel to the Company), shall not be deemed
Registrable Securities.
7.4 FURTHER OBLIGATIONS OF THE COMPANY. Whenever the Company is
required hereunder to register any Registrable Securities, it agrees that it
shall also do the following:
(a) Pay all expenses of such registrations and offerings
(exclusive of underwriting discounts and commissions) and the reasonable fees
and expenses of not more than one independent counsel for the Holders
satisfactory to the Investors in connection with any registrations pursuant to
Section 7.1, up to one registration on Form S-1 or S-2 designated by the
Investors and up to three registrations on Form S-3 designated by the Investors,
provided that the Investors shall pay all such expenses in connection with any
other demand registrations. Notwithstanding the foregoing, the Company shall
not be required to pay for expenses of any registration proceeding begun
pursuant to Section 7.2, the request for which has been subsequently withdrawn
by the initiating Holders, in which case, such expenses shall be borne by the
Holders requesting such withdrawal and such registration shall not be counted as
a registration pursuant to Section 7.2(a) hereof for purposes of the limitations
set forth in the first sentence of Section 7.2(d) hereof. The preceding
sentence shall not apply, and the Company shall bear the expenses of such
registration if, at the time of such withdrawal, (i) the Holder has learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holder at the time of its request, and (ii) the Company
knew or had reason to know of the likelihood of such Material Adverse Change at
the time of its request and did not inform the Holder thereof;
(b) Use its best efforts (with due regard to management of the
ongoing business of the Company and the allocation of managerial resources)
diligently to prepare and file with the SEC a registration statement and such
amendments and supplements to said registration statement and the prospectus
used in connection therewith as may be necessary to keep said registration
statement effective for at least 180 days or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs, and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by said
registration statement for the period necessary to complete the proposed public
offering;
27
(c) Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such Holder may
reasonably request to facilitate the public offering of its Registrable
Securities;
(d) Enter into any reasonable underwriting agreement required by
the proposed underwriter (which underwriter shall be selected by the selling
Investors in connection with any registration requested pursuant to Section
7.2), if any, in such form and containing such terms as are customary; PROVIDED,
HOWEVER, that no Holder shall be required to make any representations or
warranties other than with respect to its title to the Registrable Securities
and any written information provided by the Holder to the Company, and if the
underwriter requires that representations or warranties be made and that
indemnification be provided, the Company shall make all such representations and
warranties and provide all such indemnities, including, without limitation, in
respect of the Company's business, operations and financial information and the
disclosures relating thereto in the prospectus;
(e) Use its best efforts (with due regard to management of the
ongoing business of the Company and the allocation of managerial resources) to
register or qualify the securities covered by said registration statement under
the securities or "blue sky" laws of such jurisdictions as any selling Holder
may reasonably request, provided that the Company shall not be required to
register or qualify the securities in any jurisdictions which require it to
qualify to do business therein;
(f) Immediately notify each selling Holder, at any time when a
prospectus relating to his Registrable Securities is required to be delivered
under the Securities Act, of the happening of any event as a result of which
such prospectus contains an untrue statement of a material fact or omits any
material fact necessary to make the statements therein not misleading, and,
subject to Section 7.2(f) hereof, at the request of any such selling Holder,
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(g) Cause all such Registrable Securities to be listed on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed or quoted;
(h) Otherwise use its best efforts to comply with the securities
laws of the United States and other applicable jurisdictions and all applicable
rules and regulations of the SEC and comparable governmental agencies in other
applicable jurisdictions and make generally available to its holders, in each
case as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company which will satisfy
the provisions of Section 11(a) of the Securities Act;
(i) Obtain and furnish to each selling Holder, immediately prior
to the effectiveness of the registration statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable Securities
sold pursuant thereto), a cold comfort letter from the
28
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters as the Holders
of a majority of the Registrable Securities being sold may reasonably request;
and
(j) Otherwise cooperate with the underwriter or underwriters,
the Commission and other regulatory agencies and take all actions and execute
and deliver or cause to be executed and delivered all documents necessary to
effect the registration of any Registrable Securities under this Section 7.
7.5 INDEMNIFICATION; CONTRIBUTION.
(a) Incident to any registration statement referred to in this
Section 7, the Company will indemnify and hold harmless each underwriter, each
Holder who offers or sells any such Registrable Securities in connection with
such registration statement (including its partners (including partners of
partners and stockholders of any such partners), and directors, officers,
employees and agents of any of them (a "Selling Holder"), and each person who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934 (the "Exchange Act") (a
"Controlling Person")), from and against any and all losses, claims, damages,
expenses and liabilities, joint or several (including any investigation, legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, as the same
are incurred), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based on (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
(including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or "blue
sky" laws or any rule or regulation thereunder in connection with such
registration; PROVIDED, HOWEVER, that the Company will not be liable to the
extent that such loss, claim, damage, expense or liability arises from and is
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information furnished in writing to
the Company by such underwriter, Selling Holder or Controlling Person expressly
for use in such registration statement. With respect to such untrue statement
or omission or alleged untrue statement or omission in the information furnished
in writing to the Company by such Selling Holder expressly for use in such
registration statement, such Selling Holder will indemnify and hold harmless
each underwriter, the Company (including its directors, officers, employees and
agents), each other Holder (including its partners (including partners of
partners and stockholders of such partners) and directors, officers, employees
and agents of any of them, and each person who controls any of them within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, expenses and liabilities,
joint or several, to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise
29
to the same extent provided in the immediately preceding sentence. The Company
shall not be obligated hereunder to indemnify any Holder for any amount 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). In no event, however, shall the liability of a
Selling Holder for indemnification under this Section 7.5(a) exceed the lesser
of (i) that proportion of the total of such losses, claims, damages or
liabilities indemnified against equal to the proportion of the total securities
sold under such registration statement which is being sold by such Selling
Holder or (ii) the proceeds received by such Selling Holder from its sale of
Registrable Securities under such registration statement.
(b) If the indemnification provided for in Section 7.5(a) above
for any reason is held by a court of competent jurisdiction to be unavailable to
an indemnified party in respect of any losses, claims, damages, expenses or
liabilities referred to therein, then each indemnifying party under this Section
7.5, 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, expenses or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the other
Selling Holders and the underwriters from the offering of the Registrable
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the other Selling Holders and the underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Selling Holders and the underwriters shall be deemed to be in the same
respective proportions that the net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Holders and the underwriting
discount received by the underwriters, in each case as set forth in the table on
the cover page of the applicable prospectus, bear to the aggregate public
offering price of the Registrable Securities. The relative fault of the
Company, the Selling Holders and the underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Holders or the
underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Holders, and the underwriters agree that
it would not be just and equitable if contribution pursuant to this Section
7.5(b) were determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. In no event, however, shall
a Selling Holder be required to contribute any amount under this Section 7.5(b)
in excess of the lesser of (i) that proportion of the total of such losses,
claims, damages or liabilities indemnified against equal to the proportion of
the total Registrable Securities sold under such registration statement which
are being sold by such Selling Holder or (ii) the proceeds received by such
Selling Holder from its sale of Registrable Securities under such registration
statement. No person found guilty of fraudulent misrepresentation (within the
meaning of Section
30
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not found guilty of such fraudulent misrepresentation.
(c) The amount paid by an indemnifying party or payable to an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in this Section 7.5 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, payable as the same are incurred. The indemnification and
contribution provided for in this Section 7.5 will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
parties or any officer, director, employee, agent or controlling person of the
indemnified parties.
(d) NOTICE; DEFENSE OF CLAIMS. Promptly after receipt by an
indemnified party of notice of any claim, liability or expense to which the
indemnification obligations set forth in this Section 7.5 would apply, the
indemnified party shall give notice thereof in writing to the indemnifying
party, but the omission to so notify the indemnifying party promptly will not
relieve the indemnifying party from any liability except to the extent that the
indemnifying party shall have been prejudiced as a result of the failure or
delay in giving such notice. Such notice shall state the information then
available regarding the amount and nature of such claim, liability or expense
and shall specify the provision or provisions of this Agreement under which the
liability or obligation is asserted. If within twenty (20) days after receiving
such notice the indemnifying party gives written notice to the indemnified party
stating that (a) it would be liable under the provisions hereof for indemnity in
the amount of such claim if such claim were successful and (b) that it disputes
and intends to defend against such claim, liability or expense at its own cost
and expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party, which consent shall not
be unreasonably withheld) and the indemnified party shall not be required to
make any payment with respect to such claim, liability or expense as long as the
indemnifying party is conducting a good faith and diligent defense at its own
expense; PROVIDED, HOWEVER, that the assumption of defense of any such matters
by the indemnifying party shall relate solely to the claim, liability or expense
that is subject or potentially subject to indemnification. The indemnifying
party shall have the right, with the consent of the indemnified party, which
consent shall not be unreasonably withheld, to settle all indemnifiable matters
related to claims by third parties which are susceptible to being settled
provided its obligation to indemnify the indemnifying party therefor will be
fully satisfied. The indemnifying party shall keep the indemnified party
apprised of the status of the claim, liability or expense and any resulting
suit, proceeding or enforcement action, shall furnish the indemnified party with
all documents and information that the indemnified party shall reasonably
request and shall consult with the indemnified party prior to acting on major
matters, including settlement discussions. Notwithstanding anything herein
stated to the contrary, the indemnified party shall at all times have the right
to fully participate in such defense at its own expense directly or through
counsel; PROVIDED, HOWEVER, if the named parties to the action or proceeding
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the expense of separate counsel for the
indemnified party shall be paid by the indemnifying party. If no such notice of
intent to
31
dispute and defend is given by the indemnifying party, or if such diligent good
faith defense is not being or ceases to be conducted, the indemnified party
shall, at the expense of the indemnifying party, undertake the defense of (with
counsel selected by the indemnified party), and shall have the right to
compromise or settle (exercising reasonable business judgment), such claim,
liability or expense. If such claim, liability or expense is one that by its
nature cannot be defended solely by the indemnifying party, then the indemnified
party shall make available all information and assistance that the indemnifying
party may reasonably request and shall cooperate with the indemnifying party in
such defense.
(e) PROSPECTUS DELIVERY. The foregoing indemnity agreements of
the Company and Selling Holders are subject to the condition that, insofar as
they relate to any misstatement or omission in a preliminary prospectus that was
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to Rule 424(b) (the "Final Prospectus"),
such indemnity agreement shall not inure to the benefit of any person if a copy
of the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
7.6 RULE 144 AND RULE 144A REQUIREMENTS. In the event that the Company
becomes subject to Section 13 or Section 15(d) of the Exchange Act, the Company
shall use its best efforts to take all action as may be required as a condition
to the availability of Rule 144 or Rule 144A under the Securities Act (or any
successor or similar exemptive rules hereafter in effect). The Company shall
furnish to any Holder, within 15 days of a written request, a written statement
executed by the Company as to the steps it has taken to comply with the current
public information requirement of Rule 144 or Rule 144A or such successor rules.
7.7 TRANSFER OF REGISTRATION RIGHTS. The registration rights and
related obligations under this Section 7 of the Holders with respect to their
Registrable Securities may be assigned in connection with any transaction or
series of related transactions involving the Transfer to one or more transferees
of at least 220,000 shares of capital stock of the Company, other than pursuant
to an effective registration statement under the Securities Act or pursuant to
Rule 144 thereunder (subject to adjustments for stock splits, stock dividends
and the like and aggregating all contemporaneous transfers by Holders), or to
any TA Funds or permitted transferee, and upon any such transfer such transferee
or TA Fund shall be deemed to be included within the definition of a "Holder"
for purposes of this Section 7 with the rights set forth herein. The relevant
Holder as the case may be, shall notify the Company at the time of such
transfer.
7.8 "MARKET STAND-OFF" AGREEMENT. In connection with any underwritten
public offering by the Company, the Holders, if requested in good faith by the
Company and the managing underwriter of the Company's securities, shall agree
not to sell or otherwise transfer or dispose of any securities of the Company
held by them (except for any securities sold pursuant to such registration
statement) for a period following the effective date of the applicable
registration statement; PROVIDED, HOWEVER that in no event shall such period
exceed 180 days; and
32
PROVIDED FURTHER that such agreement shall not be required unless all officers
and directors and one percent (1%) or greater stockholders of the Company and
all other persons with registration rights enter into similar agreements. In
order to enforce the foregoing, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Holder (and the
shares of securities of every other person subject to the foregoing restriction)
until the end of such period.
SECTION 8 ELECTION OF DIRECTORS
8.1 ADVENT VIII. Each Investor agrees that TA/Advent VIII L.P. as a
holder of Convertible Preferred Stock shall have the exclusive right to elect
the Director of the Company as contemplated under Article IV, Sections A.2 and
B.2 of the Company's Certificate of Incorporation (whether at an annual or
special meeting of stockholders or by written consent of the stockholders).
8.2 VOTING FOR DIRECTORS. The Investors hereby agree that, when voting
their shares of Convertible Preferred Stock, Redeemable Preferred Stock or
Common Stock for directors of the Company under the Company's Certificate of
Incorporation, they shall not vote to cause the election of a greater number of
individuals, including the Convertible Preferred Stock Director Designee or the
Redeemable Preferred Stock Director Designee, as applicable, who are employees
or partners of TA Associates, Inc., than could be elected by the Investors under
cumulative voting assuming all shares of Convertible Preferred Stock were
converted into Common Stock and Redeemable Preferred Stock under the Company's
Certificate of Incorporation and all such shares of Redeemable Preferred Stock
were automatically redeemed upon such conversion.
SECTION 9 GENERAL
9.1 AMENDMENTS, WAIVERS AND CONSENTS. For the purposes of this
Agreement and all agreements executed pursuant hereto, no course of dealing
between or among any of the parties hereto and no delay on the part of any party
hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No provision hereof may be waived
otherwise than by a written instrument signed by the party or parties so waiving
such covenant or other provision. No amendment to this Agreement may be made
without the written consent of the Company and the Investors; provided that the
written consent of the Stockholders shall be required for any amendment of
Sections 5, 6, 7, 8.1 or 9 hereof. Any actions required to be taken or
consents, approvals, votes or waivers required or contemplated to be given by
the Investors or the Stockholders shall require a vote of a two-thirds in
interest of the Investors or two-thirds in interest of the Stockholders, as
applicable, based on the relative holdings of capital stock of the Company of
the Investors as a group or of the Stockholders as a group, as applicable, at
the relevant time, and any such action by such Investors or Stockholders, as
applicable, shall bind all of the Investors, or Stockholders, as applicable.
9.2 [INTENTIONALLY OMITTED]
33
9.3 SURVIVAL OF REPRESENTATIONS; WARRANTIES AND COVENANTS;
ASSIGNABILITY OF RIGHTS. All covenants, agreements, representations and
warranties of the Company, the Stockholders and the Investors made herein and in
the certificates, lists, exhibits, schedules or other written information
delivered or furnished to any Investor in connection herewith (a) are material,
shall be deemed to have been relied upon by the party or parties to whom they
are made and shall survive the Closing regardless of any investigation or
knowledge on the part of such party or its representatives and (b) shall bind
the parties' successors and assigns (including without limitation any successor
to the Company by way of acquisition, merger or otherwise), whether so expressed
or not, and, except as otherwise provided in this Agreement, all such covenants,
agreements, representations and warranties shall inure to the benefit of the
Investors' successors and assigns and to their transferees of Securities,
whether so expressed or not, subject to the provisions of Sections 4.8, 5.4, 6.2
and 7.7, and any such transferee shall be deemed an "Investor" for purposes
hereof.
9.4 LEGEND ON SECURITIES. The Company, the Investors and the
Stockholders acknowledge and agree that the following legend shall be typed on
each certificate evidencing any of the securities issued hereunder held at any
time by an Investor or Stockholder:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE
SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE
ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY
LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A STOCK
PURCHASE AND STOCKHOLDERS AGREEMENT DATED AS OF JUNE 20, 1997, INCLUDING THEREIN
CERTAIN RESTRICTIONS ON TRANSFER. A COMPLETE AND CORRECT COPY OF THIS AGREEMENT
IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
9.5 GOVERNING LAW. This Agreement shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the State of
Delaware, without giving effect to conflict of laws principles thereof.
9.6 SECTION HEADINGS AND GENDER. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or hereof.
The use in this Agreement of the masculine pronoun in reference to a party
hereto shall be deemed to include the feminine or neuter, and vice versa, as the
context may require.
34
9.7 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
9.8 NOTICES AND DEMANDS. Any notice or demand which is required or
provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy, telex or other method of facsimile, or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, or two days after being sent by overnight delivery providing receipt
of delivery, to the following addresses: if to the Company or the Stockholders,
Invitrogen Corporation, 1600 Faraday, Xxxxxxxx, Xxxxxxxxxx 00000, or at any
other address designated by the Company or the Stockholders, respectively, to
the Investors and the other parties hereto in writing; if to an Investor, c/o TA
Associates, Inc. at its mailing address as shown on EXHIBIT A hereto, or at any
other address designated by TA Associates, Inc. to the Company and the
Stockholders in writing.
9.9 DISPUTE RESOLUTION. Except with respect to matters as to which
injunctive relief is being sought, any dispute arising out of or relating to
this Agreement that has not been settled within thirty (30) days (the
"Negotiation Period") by good faith negotiation between the parties to this
Agreement shall be submitted to an arbitrator mutually agreeable to the parties
for final and binding arbitration pursuant to arbitration rules to be determined
by the chosen arbitrator within the limits set forth below. In the event the
parties are unable to agree upon an arbitrator within ten (10) days of
expiration of the Negotiation Period, the Company and the Investors shall,
within five (5) days of the expiration of such ten day period each select one
arbitrator and such arbitrators shall select a third arbitrator within five (5)
days who shall be the arbitrator designated hereunder. Any such arbitration
shall be conducted in San Francisco, California. Such proceedings shall be
guided by the following agreed upon procedures:
(1) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the
initiation of the procedure;
(2) no other discovery;
(3) hearings before the neutral advisor which shall consist
of a summary presentation by each side of not more than
three hours; such hearings to take place on one or two
days at a maximum; and
(4) decision to be rendered not more than ten (10) days
following such hearings.
9.10 REMEDIES; SEVERABILITY. Notwithstanding Section 9.9, it is
specifically understood and agreed that any breach of the provisions of this
Agreement by any person subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy
for such breach, and that, in addition to any other remedies which they may
have, such other parties may enforce their respective rights by actions for
specific performance
35
(to the extent permitted by law). The Company may refuse to recognize any
unauthorized transferee as one of its stockholders for any purpose, including,
without limitation, for purposes of dividend and voting rights, until the
relevant party or parties have complied with all applicable provisions of this
Agreement. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be deemed prohibited or invalid
under such applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of this
Agreement.
9.11 INTEGRATION. This Agreement, including the exhibits, documents and
instruments referred to herein or therein, constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, including, without
limitation, the letter of intent between the parties hereto in respect of the
transactions contemplated herein, which letter of intent shall be completely
superseded by the representations, warranties and covenants of the Company
contained herein.
36
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
COMPANY:
INVITROGEN CORPORATION
By:
-------------------------------------
Xxxx X. Xxxxxx, President
STOCKHOLDERS:
----------------------------------------
Xxxx X. Xxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxx
37
INVESTORS:
TA/ADVENT VIII L.P.
By: TA Associates VIII LLC, its General Partner
By: TA Associates, Inc., its Manager
By:
-------------------------------------
Xxxx X. Xxxxxxx
Attorney-in-Fact
ADVENT ATLANTIC AND PACIFIC III, L.P.
By: TA Associates AAP III Partners,
its General Partner
By: TA Associates, Inc.
By:
-------------------------------------
Xxxx X. Xxxxxxx
Attorney-in-Fact
TA VENTURE INVESTORS L.P.
By:
-------------------------------------
Xxxx X. Xxxxxxx
Attorney-in-Fact
38
EXHIBIT A
LIST OF INVESTORS
Number of
Shares Aggregate
Name and Address Purchased Payment
---------------- --------- -------
TA/Advent VIII, L.P. 1,824,382 $12,422,399.48
Advent Atlantic and Pacific III, L.P. 342,072 2,329,202.46
TA Venture Investors 36,488 248,450.44
Limited Partnership
--------- --------------
Total 2,202,942 $15,000,052.38
--------- --------------
--------- --------------
Notices to:
TA Associates, Inc.
Xxxx Xxxxxx Xxxxx, Xxxxx 0000
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
39
EXHIBIT G
CONSENT OF SPOUSE
I, , spouse of __________________, acknowledge
that I have read the Stock Purchase and Shareholders Agreement dated as of June
20, 1997, to which this Consent is attached as EXHIBIT G (the "Agreement") and
that I know its contents. I am aware that by its provisions, including without
limitation the provisions of Section 5 of the Agreement certain restrictions are
imposed upon the sale or other disposition of any shares of the Company of which
I may become possessed as a result of a gift from my spouse or a court decree
and/or any property settlement in any domestic litigation.
I hereby agree that my interest, if any, in the shares subject to the
Agreement will be irrevocably bound by the Agreement and further understand and
agree that any community property interest I may have in the shares will be
similarly bound by the Agreement.
I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE
AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL
GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH
GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I
WAIVE SUCH RIGHT.
Dated as of the day of June, 1997
---------------------------
Please Print Name:
40
