EXHIBIT 4.3
STOCKHOLDERS' AGREEMENT
-----------------------
THIS STOCKHOLDERS' AGREEMENT, dated this 30th day of March 1999, is entered into
by and among STC TECHNOLOGIES, INC., a Delaware corporation (the "Corporation"),
and those stockholders of the Corporation listed on Schedule 1 hereto
(hereinafter referred to collectively as the "Investors").
W I T N E S S E T H:
-------------------
WHEREAS, the Corporation and the Investors are entering into a
Convertible Preferred Stock Purchase Agreement dated the date hereof (the "Stock
Purchase Agreement") in connection with which the Corporation has agreed to sell
shares of its Series A Convertible Preferred Stock, par value $.000001 per share
("Series A Preferred Stock"), and the Corporation desires to grant to the
Investors certain registration and other rights with respect to such shares.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and undertakings of the Corporation and the Investors
hereunder and under the Stock Purchase Agreement, the parties hereto do hereby
agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following respective meanings:
Authorized Issuance shall mean the sale by the Corporation to
current capital stockholders of the Corporation on or before June 30, 1999 of
Series A Preferred Stock that number of shares with an aggregate consideration
(at a price per share equal to the purchase price per share under the Stock
Purchase Agreement) not to exceed the lesser of (A) $3,000,000, or (B)
$9,500,000 less the aggregate purchase price under the Stock Purchase Agreement
in accordance with definitive written agreements approved by HCV V.
Board shall mean the Board of Directors of the Corporation.
Budget shall have the meaning set forth in Section 2.8 hereof.
Certificate shall mean the Certificate of Designation of Series A
Convertible Preferred Stock of the Corporation.
Commission shall mean the U.S. Securities and Exchange
Commission.
Common Stock shall mean the Common Stock, par value $.000001 per
share, of the Corporation, including both Class A Common Stock and Class B
Common Stock.
Environment shall mean soil, land surface or subsurface strata,
surface waters, groundwaters, drinking water supply, ambient air (including
indoor air), plant and non-human animal life and any natural resource.
Environmental Laws shall mean all applicable federal, state and
local laws, ordinances, rules and regulations that regulate, fix liability for,
or otherwise relate to, the handling, use (including use in industrial
processes, in construction, as building materials, or otherwise), storage and
disposal of hazardous and toxic wastes and substances, and to the discharge,
leakage, presence, migration, threatened Release or Release (whether by
disposal, a discharge into any water source or system or into the air, or
otherwise) of any pollutant or effluent. Without limiting the preceding
sentence, the term "Environmental Laws" shall specifically mean the following
federal laws, as amended: Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601 et. seq.; Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901 et. seq.; Federal Water Pollution Control
Act, 33 U.S.C. 1251 et. seq.; and Clean Air Act, 42 U.S.C. 7401 et. seq.; and
any other federal, state, local, municipal, foreign, international,
multinational or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute or treaty, regulating the following
activities:
(i) advising governmental authorities, employees or the
public of threatened or actual releases of pollutants or hazardous substances or
Hazardous Materials, violations of environmental discharge limits and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(ii) preventing or reducing the releases of pollutants or
hazardous substances or Hazardous Materials into the Environment;
(iii) reducing the quantities, preventing the release or
minimizing the hazardous characteristics of wastes that are generated;
(iv) assuring that products are designed, formulated and
packaged so that they do not present unreasonable risks or to the Environment
when used or disposed of or to human health when disposed of;
(v) protecting natural resources or species;
(vi) reducing to acceptable levels the risks of the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances; or
(vii) cleaning up pollutants that have been released or
preventing the threat of such release.
Equity Percentage shall mean, as to any Investor, that percentage
figure which expresses the ratio that (a) the number of shares of issued and
outstanding Common Stock then owned by such Investor bears to (b) the aggregate
number of shares of issued and
2
outstanding Common Stock then owned by all stockholders on a fully diluted
basis. For purposes solely of the computation set forth in clauses (a) and (b)
above, all issued and outstanding securities held by the Investors that are
convertible into or exercisable or exchangeable for shares of Common Stock
(including any issued and issuable shares of Preferred Stock) or for any such
convertible, exercisable or exchangeable securities, shall be treated as having
been so converted, exercised or exchanged at the rate or price at which such
securities are convertible, exercisable or exchangeable for shares of Common
Stock in effect at the time in question (which, for purposes of Section 2.3 of
this Agreement, shall be at the time of delivery by the Corporation of the
notice of the Offer contemplated by Section 2.3(b)), whether or not such
securities are at such time immediately convertible, exercisable or
exchangeable.
Exchange Act shall mean the Securities Exchange Act of 1934, as
amended.
Exchange Act Registration Statement shall have the meaning set
forth in Section 2.5 hereof.
Excess Securities shall have the meaning set forth in Section
2.3(d) hereof.
Excess Securities Notice shall have the meaning set forth in
Section 2.3(d) hereof.
Excess Securities Period shall have the meaning set forth in
Section 2.3(d) hereof.
Excluded Forms shall have the meaning given such term in Section
3.5 hereof.
Excluded Securities shall mean, collectively:
(i) the Reserved Shares;
(ii) Common Stock issued or issuable to officers, directors
or employees of or consultants or independent contractors to the
Corporation, pursuant to any written agreement, plan or arrangement to
purchase, or rights to subscribe for, such Common Stock, including Common
Stock issued pursuant to any options granted under the Corporation's 1996
Employee Incentive and Non-Qualified Stock Option Plan of the Corporation
to purchase, or rights to subscribe for, such Class B Common Stock, that
has been approved by the holders of Common Stock then outstanding or that
may be approved by the holders of a majority of the combined voting power
of the Investors holding Series A Preferred Shares, calculated in
accordance with Section 6(a) of the Certificate (including, in such
calculation, any outstanding Restricted Shares held by such holders), and
which, as a condition precedent to the issuance of such shares, provides
for the vesting of such shares and subjects such shares to restrictions on
transfers and rights of first offer in favor of the Corporation; provided,
however, that the maximum number
3
of shares of Class B Common Stock heretofore or hereafter issuable pursuant
to the Corporation's 1996 Employee Incentive and Non-Qualified Stock Option
Plan and all such agreements, plans and arrangements shall not exceed
327,281 shares (subject to adjustment as required to comply with any anti-
dilution rights set forth in any such agreement, plan or arrangement);
(iii) Common Stock issued as a stock dividend payable in
shares of Common Stock, or capital stock of any class issuable upon any
subdivision, recombination, split-up or reverse stock split of all the
outstanding shares of such class of capital stock of the Corporation;
(iv) any securities issued pursuant to the acquisition by
the Corporation of any other corporation, partnership, joint venture, trust
or other entity by any merger, stock acquisition, reorganization, purchase
of substantially all assets or otherwise in which the Corporation, or its
stockholders of record immediately prior to the effective date of such
transaction, directly or indirectly, own at least a majority of the voting
power of the acquired entity or the resulting entity after such
transaction.
Group shall mean: (i) as to an Investor that is a limited
partnership: (A) any and all of the venture capital limited partnerships now
existing or hereafter formed that are affiliated with or under common control
with one or more of the general partners or one or more general partners of the
general partner of such Investor and any predecessor or successor thereto, (B)
any limited partner of such Investor, and (C) in the case of HCV V, the HCV
Group; (ii) in the case of any investment trust, any grantor or beneficiary
thereof, or any other trust, corporate entity or partnership under common
control with such investment trust for which Rho Management Company, Inc. or
Summit Asset Management acts as investment adviser; and (iii) as to any
Investor, any other Investor.
Hazardous Materials shall include without limitation, any
flammable explosives, petroleum products, petroleum byproducts, radioactive
materials, hazardous wastes, hazardous substances, toxic substances or other
similar materials regulated by Environmental Laws.
HCV Group shall mean, collectively, (i) HCV I, (ii) HCV II, (iii)
HCV III, (iv) HCV IV, (v) HCV V, (vi) any venture capital limited partnership
now existing or hereafter formed which is affiliated with or under common
control with one or more general partners of any general partner of HCV V (an
"HCV Fund"); (vii) any limited partners or affiliates of HCV I, HCV II, HCV III,
HCV IV, HCV V, or any other HCV Fund; and (viii) any successors or assigns of
any of the foregoing persons.
HCV I shall mean HealthCare Ventures I, L.P., a Delaware limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV I under this Agreement.
4
HCV II shall mean HealthCare Ventures II, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV II under this Agreement.
HCV III shall mean HealthCare Ventures III, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV III under this Agreement.
HCV IV shall mean HealthCare Ventures IV, L.P., a Delaware
limited partnership, including any successor thereto or any assignee of the
interest, in whole or in part, of HCV IV under this Agreement.
HCV V shall mean HealthCare Ventures V, L.P., a Delaware limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV V under this Agreement.
Investors shall mean each of the persons listed on Schedule 1
hereto, severally, but not jointly and severally.
Notice of Acceptance shall have the meaning set forth in Section
2.3(c) hereof.
Offer shall have the meaning set forth in Section 2.3(b) hereof.
Offered Securities shall mean, except for Excluded Securities,
(i) any shares of Common Stock, Preferred Stock or any other equity security of
the Corporation, (ii) any debt security or capitalized lease with any equity
feature with respect to the Corporation, or (iii) any option, warrant or other
right to subscribe for, purchase or otherwise acquire any such equity security,
debt security or capitalized lease.
Option Shares shall have the meaning set forth in Section
5.2(a)(iii) of the Stock Purchase Agreement.
Other Shares shall have the meaning set forth in Section 3.5(e)
hereof.
Preferred Directors shall mean the two (2) members of the Board
of Directors of the Corporation appointed by the holders of a majority in voting
power of the Series A Preferred Stock, voting as a separate class, as described
in Section 6(b)(i) of the Certificate.
Preferred Stock shall mean the Preferred Stock, par value
$.000001 per share, of the Corporation.
Preferred Stockholders shall mean, collectively, all holders of
shares of Preferred Stock of the Corporation.
5
Property shall include, without limitation, land, buildings and
laboratory facilities owned or leased by the Corporation or as to which the
Corporation now has any duties, responsibilities (for clean-up, remedy or
otherwise) or liabilities under any Environmental Laws, or as to which the
Corporation or any subsidiary of the Corporation may have such duties,
responsibilities or liabilities because of past acts or omissions of the
Corporation or any such subsidiary or their predecessors, or because the
Corporation or any such subsidiary or their predecessors in the past was such an
owner or operator of, or bore some other relationship with, such land, buildings
and/or laboratory facilities.
Qualified IPO shall have the meaning given it in Section 5.5.
Refused Securities shall have the meaning set forth in Section
2.3(f) hereof.
Reserved Shares shall mean shares of Class A Common Stock
reserved by the Corporation for issuance upon the conversion of the Series A
Preferred Shares.
Restricted Securities shall mean any of the Series A Preferred
Shares and the Class A Common Stock issued or issuable upon the conversion of
the Series A Preferred Shares, all shares of Common Stock issued or issuable in
respect thereof by way of stock splits, stock dividends, stock combinations,
recapitalizations or like occurrences, and any other shares of Common Stock or
other securities of the Corporation which may be issued hereafter to any of the
Investors or any member of their Group which are convertible into or exercisable
for shares of Common Stock (including, without limitation, other classes or
series of Convertible Preferred Stock, warrants, options or other rights to
purchase Common Stock or convertible debentures or other convertible debt
securities) and the Common Stock issued or issuable upon such conversion or
exercise of such other securities, which have not been sold (a) in connection
with an effective registration statement filed pursuant to the Securities Act,
or (b) pursuant to Rule 144 or Rule 144A promulgated by the Commission under the
Securities Act.
Restricted Shares shall mean the shares of Common Stock issued or
issuable upon the conversion or exchange of the Restricted Securities or
otherwise constituting a portion of the Restricted Securities.
Securities Act shall mean the Securities Act of 1933, as amended.
Series A Preferred Shares shall mean shares of Series A Preferred
Stock issued or issuable pursuant to the Stock Purchase Agreement.
Series A Preferred Stock shall mean Series A Convertible
Preferred Stock, par value $.000001 per share, of the Corporation.
6
Stock Purchase Agreement shall mean the Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof, among the Corporation and
the Investors listed on Schedule 1 thereto.
Stockholders shall mean all holders of capital stock of the
Corporation.
Target Month shall have the meaning set forth in Section 2.7(a)
hereof.
30-Day Period shall have the meaning set forth in Section 2.3(b)
hereof.
Transfer shall include any disposition of any Restricted
Securities or of any interest therein which would constitute a sale thereof
within the meaning of the Securities Act.
SECTION 2. Certain Covenants of the Corporation.
2.1 Meetings of the Board of Directors. The Corporation shall call,
and use its best efforts to have, regular meetings of the Board not less often
than quarterly. The Corporation shall pay all reasonable and appropriately
documented travel expenses and other out-of-pocket expenses incurred by
directors who are not employed by the Corporation in connection with attendance
at meetings to transact the business of the Corporation or attendance at
meetings of the Board or any committee thereof.
2.2 Reservation of Shares of Common Stock and Preferred Stock, Etc.
The Corporation shall at all times have authorized and reserved out of its
authorized but unissued shares of Class A Common Stock, a sufficient number of
shares of Class A Common Stock to provide for the conversion of the Series A
Preferred Shares. Neither the issuance of the Series A Preferred Shares nor the
shares of Class A Common Stock issuable upon the conversion of the Series A
Preferred Shares shall be subject to a preemptive right of any other
Stockholder.
2.3 Right of First Refusal.
(a) The Corporation shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
any Offered Securities unless in each case the Corporation shall have first
offered to sell to each Investor an amount of such Offered Securities equal to
that amount of Offered Securities which the Investor would be entitled to
purchase based on each Investor's Equity Percentage, on the terms set forth
herein. Each Investor may delegate its rights and obligations with respect to
such Offer to one or more members of its Group, which members shall thereafter
be deemed to be "Investors" for the purpose of applying this Section 2.3 to such
Offer.
(b) The Corporation shall deliver to each Investor written notice
of the offer to sell the Offered Securities, specifying the price and terms and
conditions of the offer (the "Offer"). The Offer by its terms shall remain open
and irrevocable for a period of twenty (20
7
days from the date of its delivery to such Investor (the "20-Day Period"),
subject to extension to include the Excess Securities Period (as such term is
hereinafter defined).
(c) Each Investor shall evidence its intention to accept the
Offer by delivering a written notice signed by the Investor setting forth the
number of shares that the Investor elects to purchase (the "Notice of
Acceptance"). The Notice of Acceptance must be delivered to the Corporation
prior to the end of the 20-Day Period.
(d) If any Investor fails to exercise its right hereunder to
purchase its Equity Percentage of the Offered Securities, the Corporation shall
so notify the other Investors in a written notice (the "Excess Securities
Notice"). The Excess Securities Notice shall be given by the Corporation
promptly after it learns of any Investor's intention not to purchase all of its
Equity Percentage of the Offered Securities, but in no event later than ten (10)
days after the expiration of the 20-Day Period. The Investors who or which have
agreed to purchase their Equity Percentage of the Offered Securities shall have
the right to purchase the portion not purchased by such Investor (the "Excess
Securities"), on a pro rata basis, by giving notice within ten (10) days after
receipt of the Excess Securities Notice from the Corporation. The twenty (20)
day period during which (i) the Corporation must give the Excess Securities
Notice to the other Investors, and (ii) each of the other Investors must give
the Corporation notice of its intention to purchase all or any portion of its
pro rata share of the its Excess Securities, is hereinafter referred to as the
"Excess Securities Period."
(e) If the Investors tender their Notice of Acceptance prior to
the end of the 20-Day Period indicating their intention to purchase all of the
Offered Securities or, if prior to the termination of the Excess Securities
Period, the Investors tender Excess Securities Notices to purchase all of the
Excess Securities, the Corporation shall schedule a closing of the sale of all
such Offered Securities. Upon the closing of the sale of the Offered Securities
to be purchased by the Investors, each Investor shall (i) purchase from the
Corporation that portion of the Offered Securities (including the Excess
Securities) for which it tendered a Notice of Acceptance and an Excess
Securities Notice, if applicable, upon the terms specified in the Offer, and
(ii) execute and deliver an agreement further restricting transfer of such
Offered Securities substantially as set forth in Section 3.1, 3.2 and 3.3 of
this Agreement. In addition, with respect to the Offered Securities being
purchased by the Investors, the Corporation shall provide each such Investor
with the rights and benefits set forth in this Agreement. The obligation of the
Investors to purchase such Offered Securities is further conditioned upon the
preparation of a purchase agreement embodying the terms of the Offer, which
shall be reasonably satisfactory in form and substance to such Investor and the
Investor's counsel.
(f) The Corporation shall have one hundred twenty (120) days from
the expiration of the 20-Day Period, or the Excess Securities Period, if
applicable, to sell the Offered Securities (including the Excess Securities)
refused by the Investors (the "Refused Securities") to any other person or
persons, but only upon terms and conditions which are in all material respects
(including, without limitation, price and interest rate) no more favorable to
such other person or persons, and no less favorable to the Corporation, than
those set forth in the Offer. Upon and subject to the closing of the sale of all
of the Refused Securities (which shall
8
include full payment to the Corporation), each Investor shall (i) purchase from
the Corporation those Offered Securities (including the Excess Securities) for
which it tendered a Notice of Acceptance and an Excess Securities Notice, if
applicable, upon the terms specified in the Offer, and (ii) execute and deliver
an agreement restricting transfer of such Offered Securities (including the
Excess Securities) substantially as set forth in Sections 3.1, 3.2 and 3.3 of
this Agreement. In addition, with respect to the Offered Securities being
purchased by the Investors, the Corporation shall provide each such Investor
with the rights and benefits set forth in this Agreement. The Corporation
agrees, as a condition precedent to accepting payment for and making delivery of
any Refused Securities to any executive officer, employee, consultant or
independent contractor of or to the Corporation, or to any other person, to have
each and every such person execute and deliver a Registration Rights Agreement
substantially in the form attached hereto as Exhibit A, or as may be modified or
amended from time to time with the prior approval of the holders of a majority
of the combined voting power of the Investors holding Series A Preferred Shares,
calculated in accordance with Section 6(a) of the Certificate (including in such
calculation, any outstanding Restricted Shares held by such holders), to the
extent such purchaser has not already executed such Agreement. The obligation of
the Investor to purchase such Offered Securities (including the Excess
Securities) is further conditioned upon the preparation of a purchase agreement
embodying the terms of the Offer, which shall be reasonably satisfactory in form
and substance to such Investor and the Investor's counsel.
(g) In each case, any Offered Securities not purchased either by
the Investors or by any other person in accordance with this Section 2.3 may not
be sold or otherwise disposed of until they are again offered to the Investors
under the procedures specified in Paragraphs (a), (b), (c), (d), (e) and (f)
hereof.
(h) Each Investor may, by prior written consent, waive its rights
under this Section 2.3. Such a waiver shall be deemed a limited waiver and
shall only apply to the extent specifically set forth in the written consent of
such Investor.
(i) Notwithstanding the foregoing, the Corporation may issue
shares in connection with the Authorized Issuance without being subject to the
right of first refusal set forth in this Section 2.3.
2.4 Negative Covenants.
(a) Majority Investor Approvals. Except in connection with the
Authorized Issuance, the Corporation shall not, directly or indirectly, take any
of the actions specified in subsections 2.4(a)(i) through (xxiii) below, without
the prior written consent of the Investors holding a majority of the then
outstanding Series A Preferred Stock held by all Investors (determined in
accordance with Section 6(a) of the Certificate), voting separately from the
holders of Common Stock or any other securities of the Corporation. Such
consent shall be given by written consent in lieu of a meeting or by vote at a
meeting called for such purpose, for which timely and specific notice shall have
been given to each Investor. Written consent in lieu of a meeting must be
signed by not less than that number of Investors having the minimum number of
votes which would be necessary to authorize such action at a meeting.
9
(i) Sell, abandon, transfer, lease or otherwise dispose of
all or substantially all of the Corporation's (or any of the its subsidiaries')
properties or assets other than in the ordinary course of its business.
(ii) Purchase, lease or otherwise acquire all or
substantially all of the assets of another entity.
(iii) Except as otherwise required by the Certificate,
declare or pay any dividend or make any distribution with respect to shares of
its capital stock (whether in cash, shares of capital stock or other securities
or property) other than to the Series A Preferred Stock.
(iv) Except as otherwise required by the Certificate or in
any agreement approved by the Board of Directors with a director, officer,
employee, consultant or independent contractor of or to the Corporation
providing for the repurchase of any of its capital stock owned by such director,
officer, employee, consultant or independent contractor at the option of the
Corporation, provided that any such agreement is either: (A) set forth on
Schedule 5.2 of the Stock Purchase Agreement, or (B) entered into pursuant to
the Corporation's 1996 Employee Incentive and Non-Qualified Stock Option Plan,
make any payment on account of the purchase, redemption or other retirement of
any share of capital stock of the Corporation.
(v) Merge or consolidate with or into, or permit any
subsidiary to merge or consolidate with or into, any other corporation,
corporations or other entity or entities.
(vi) Voluntarily dissolve, liquidate or wind-up or carry out
any partial liquidation or distribution or transaction in the nature of a
partial liquidation or distribution.
(vii) In any manner alter or change the designations,
powers, preferences, rights, qualifications, limitations or restrictions of the
Series A Preferred Stock.
(viii) Take any action to cause any amendment, alteration or
repeal of any of the provisions of the Certificate, the Certificate of
Incorporation of the Corporation, or any of its subsidiaries with the exception
of ministerial amendments which would not have any adverse affect on the Series
A Preferred Stock.
(ix) Except for the issuance of capital stock or other
securities constituting Excluded Securities, authorize, designate, create,
reclassify, issue or agree to issue any equity or debt security of the
Corporation (or any of its subsidiaries) or any security, right, option or
warrant convertible into, or exercisable or exchangeable for, shares of the
capital stock of the Corporation (or any of its subsidiaries) or any capitalized
lease with an equity feature with respect to the capital stock of the
Corporation (or any of its subsidiaries).
10
(x) Adopt, approve, amend or modify any stock option plan of
the Corporation or adopt, approve, amend or modify the form of any stock option
agreement or restricted stock purchase agreement, or amend or modify any stock
option agreement or restricted stock purchase agreement entered into between the
Corporation and its employees, directors or consultants, except for immaterial
changes made thereto from time to time by officers of the Corporation.
(xi) Accelerate the vesting schedule or exercise date or
dates of any such options or in any stock option agreement or restricted stock
purchase agreement entered into between the Corporation and its directors,
officers, employees, consultants or independent contractors, or waive or modify
the Corporation's repurchase rights with respect to any shares of the
Corporation's stock issuable pursuant to any restricted stock purchase agreement
entered into between the Corporation and its directors, officers, employees,
consultants or independent contractors.
(xii) Grant any stock options with an exercise price per
share of less than the fair market value of such share on the date of such grant
(as determined by the Board of Directors of the Corporation) or issue or sell
capital stock of the Corporation pursuant to restricted stock awards or
restricted stock purchase agreements at a price per share less than the fair
market value of such share on the date of such issuance or sale (as determined
by the Board of Directors of the Corporation).
(xiii) Increase the number of directors of which the Board
of Directors consists.
(xiv) Enter into any financing arrangement in excess of
$300,000 ("Financing Limitation") including, without limitation, loan
agreements, credit lines, letters of credit or capitalized leases, other than to
refinance the amounts identified under the "Present Balance" column on Schedule
2.4(a)(xiv) or to finance the amounts identified under the "Requested Amount"
column on Schedule 2.4(a)(xiv).
(xv) Except as specifically described in a budget previously
approved by the Investors, enter into any contract, agreement or license or
series of related contracts, agreements or licenses in excess of $500,000
whether in a single disbursement or a series of related disbursements.
(xvi) Except for the sale of shares included in the
Authorized Issuance, enter into any transaction or agreement with any officer or
director of the Corporation or with any corporation, partnership or other
organization (an "Outside Entity") in which one or more of the officers or
directors of the Corporation is an officer or director of, or has a financial
interest in, such Outside Entity.
(xvii) Initiate, enter into or amend any agreement or
arrangement pertaining to employment with or engagement by the Corporation where
such agreement or arrangement provides for either the employment of any officer
of the Corporation regardless of
11
compensation, or compensation for any single individual greater than or equal to
$150,000 in the aggregate, on an annual or annualized basis.
(xviii) Enter into or become subject to any agreement which
restricts or purports to restrict the Corporation from engaging or otherwise
competing in any material aspect of its business other than pursuant to a duly
authorized license agreement of the Corporation's intellectual property.
(xix) Take any action or enter into any other transaction
outside the ordinary course of business or effect any material change in the
conduct or operation of the Corporation's business.
(xx) Establish or approve of any Corporation policies
delegating or delineating the authority of any officer or employee to act on
behalf of the Corporation outside of the ordinary course of business.
(xxi) Appoint, terminate or remove the Chief Executive
Officer or President or the Chief Financial Officer, Treasurer or Vice
President-Finance without the approval of the Board of Directors.
(xxii) Adopt and amend the budgets of the Corporation and
authorize budget variances for expenditures in excess of ten percent (10%)
without the approval of the Board of Directors.
(xxiii) Adopt and materially amend the strategic or business
plan of the Corporation without the approval of the Board of Directors.
(xxiv) Take any action to cause any amendment, alteration or
repeal of any of the provisions of the By-laws of the Corporation, or any of its
subsidiaries with the exception of ministerial amendments which would not have
any adverse affect on the Series A Preferred Stock.
(b) Stock and Option Agreements. Without the prior written
consent of the Investors holding a majority of the outstanding Series A
Preferred Stock held by all Investors, determined in accordance with Section
6(a) of the Certificate (including, in such calculation, any outstanding
Restricted Shares held by such holders), the Corporation shall not issue any
shares of Common Stock or options, warrants or other rights to acquire Common
Stock or other securities of the Corporation to any employee, officer, director,
consultant, independent contractor or other person or entity except for Excluded
Securities.
(c) Registration Rights. The Corporation shall not hereafter
grant to any persons any rights to register or qualify stock of the Corporation
under federal or state securities laws, unless it shall have first obtained the
written consent of the Investors holding a majority of the outstanding Series A
Preferred Stock held by all Investors, determined in
12
accordance with Section 6(a) of the Certificate (including, in such calculation,
any outstanding Restricted Shares held by such holders).
2.5 Filing of Reports Under the Exchange Act.
(a) The Corporation shall give prompt notice to the holders of
Series A Preferred Stock of (i) the filing of any registration statement (an
"Exchange Act Registration Statement") pursuant to the Exchange Act, relating to
any class of equity securities of the Corporation, (ii) the effectiveness of
such Exchange Act Registration Statement, and (iii) the number of shares of such
class of equity securities outstanding, as reported in such Exchange Act
Registration Statement, in order to enable the Investors to comply with any
reporting requirements under the Exchange Act or the Securities Act. Upon the
written request of the Investors holding a majority in interest of the Series A
Preferred Shares held by all Investors, the Corporation shall, at any time after
the Corporation has registered any shares of Common Stock under the Securities
Act, file an Exchange Act Registration Statement relating to any class of equity
securities of the Corporation then held by the holders of Series A Preferred
Shares or issuable upon conversion or exercise of any class of debt or equity
securities or warrants or options of the Corporation then held by the Investors,
whether or not the class of equity securities with respect to which such request
is made shall be held by the number of persons which would require the filing of
a registration statement under Section 12(g)(1) of the Exchange Act.
(b) If the Corporation shall have filed an Exchange Act
Registration Statement or a registration statement (including an offering
circular under Regulation A promulgated under the Securities Act) pursuant to
the requirements of the Securities Act, which shall have become effective (and
in any event, at all times following the initial public offering of any of the
securities of the Corporation), then the Corporation shall comply with all of
the reporting requirements of the Exchange Act (whether or not it shall be
required to do so) and shall comply with all other public information reporting
requirements of the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any of the Restricted
Securities by any holder of Restricted Securities (including any such exemption
pursuant to Rule 144 or Rule 144A thereof, as amended from time to time, or any
successor rule thereto or otherwise). The Corporation shall cooperate with each
holder of Restricted Securities in supplying such information as may be
necessary for such holder of Restricted Securities to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act (under
Rule 144 or Rule 144A thereunder or otherwise) for the sale of any of the
Restricted Securities by any holder of Restricted Securities.
2.6 Access to Records. The Corporation shall afford to each of the
Investors and such Investor's employees, counsel and other authorized
representatives, free and full access, at all reasonable times and for
reasonable periods of time, to all of the books, records and properties of the
Corporation and to all officers and employees of the Corporation.
2.7 Financial Reports. Until such time that the Corporation has a
class of its equity securities registered under the Exchange Act and is required
to file reports thereunder
13
pursuant to Sections 13 or 15(d) of the Exchange Act, except with respect to the
obligation set forth in Section 2.7(e)(i) hereunder which shall survive such
time, the Corporation shall furnish each of the Investors with the financial
information described below:
(a) Within 20 days after the last day of each month (the "Target
Month") (or such other calendar period as is approved by the Board), financial
statements, including a balance sheet as of the last date of such Target Month,
a statement of income (or monthly operating expenses) for such month, together
with a cumulative statement of income from the first day of the current year to
the last day of such month, which statements shall be prepared from the books
and records of the Corporation, a cash flow analysis, together with cumulative
cash flow analyses from the first day of the current year to the last day of
such month, and a comparison between the actual monthly operating expenses and
the projected figures for such month and the comparable figures for the prior
year, subject to the provisions of Section 2.9 hereof.
(b) Upon receipt of a request from any of the Investors prior to
the end of a quarterly accounting period, the Corporation shall deliver to each
of the Investors, within 45 days after the end of such quarterly accounting
period, unaudited financial statements for such quarterly accounting period,
certified by the Chief Financial Officer or the Treasurer of the Corporation, as
presenting fairly the financial condition and results of operations of the
Corporation and as having been prepared on a basis consistent with the
accounting principles reflected in the Corporation's annual audited financial
statements, accompanied by a report, signed by the Chief Financial Officer or
the Treasurer of the Corporation, summarizing the operating and financial
highlights of the Corporation for such quarterly accounting period, which report
shall include (a) a comparison between the actual quarterly operating and
financial results, the Budget (as defined in Section 2.8 hereof) and the results
of the similar quarterly accounting period for the prior fiscal year of the
Corporation, together with an explanation of material variances from the Budget
and such similar quarterly accounting period, as the case may be, and (b) a
narrative analysis of operations and trends in the business of the Corporation
during such quarterly accounting period.
(c) Within 90 days after the end of each fiscal year of the
Corporation, audited financial statements of the Corporation, which shall
include an income statement and a statement of cash flow for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance with
generally accepted accounting principles consistently applied, and accompanied
by the report of such independent certified public accountants as shall have
been approved by the Board.
(d) If for any period the Corporation shall have any subsidiary
or subsidiaries whose accounts are consolidated with those of the Corporation,
then the financial statements delivered for such period pursuant to paragraphs
(a), (b) and (c) of this Section 2.7 shall be the consolidated and consolidating
financial statements of the Corporation for all such consolidated subsidiaries.
(e) Promptly upon becoming available:
14
(i) copies of all financial statements, reports, press
releases, notices, proxy statements and other documents sent by the Corporation
to its Stockholders or released to the public and copies of all regular and
periodic reports, if any, filed by the Corporation with the Commission or any
securities exchange or self-regulatory organization; and
(ii) any other financial or other information available to
management of the Corporation that any of the Investors shall have reasonably
requested on a timely basis.
2.8 Budget and Operating Forecast. The Corporation shall prepare and
submit to the Board and each of the Investors an operating plan with monthly and
quarterly breakdowns (the "Budget") for each fiscal year by January 15th of each
fiscal year of the Corporation. The Budget shall be deemed accepted as the
Budget for such fiscal year only when it has been approved by the Board. The
Budget shall be reviewed by the Corporation periodically and all changes
therein, and all material deviations therefrom, shall be reviewed by the Board
on at least a quarterly basis.
2.9 System of Accounting. The Corporation shall maintain, and cause
each of its subsidiaries, when and if any shall exist, to maintain, its books of
accounts, related records and system of accounting in accordance with good
business practices and generally accepted accounting principles, and shall cause
the matters contained therein to be appropriately and accurately reflected in
the financial reports (which shall be prepared in accordance with generally
accepted accounting principles) furnished pursuant to this Agreement.
2.10 Restriction on Transfer Rights; Confidentiality. The rights
granted to each of the Investors pursuant to Sections 2.6 through 2.8 hereof
shall not be transferred or assigned by any Investor to, and shall not inure to
the benefit of, any successor, transferee or assignee of any Investor, which is
engaged in any live business directly competitive with the Corporation. Each
Investor agrees to use, and to use its best efforts to insure that its
authorized representatives use, the same degree of care as such Investor uses to
protect its own confidential information to keep confidential any information
furnished to it (so long as such information is not in the public domain),
except that such Investor may disclose such proprietary or confidential
information to its Group or to any partner, subsidiary or parent of such
Investor for the purpose of evaluation its investment in the Company as long as
such Group member, partner, subsidiary or parent is advised of the
confidentiality provisions of this Section 2.10.
2.11 Confidentiality and Non-Competition Agreements for Key
Employees. The Corporation shall cause each person who is presently an employee
of or a consultant or independent contractor to the Corporation or who becomes
an employee of or a consultant to the Corporation subsequent to the date hereof
and who shall have or be proposed to have access to confidential or proprietary
information of the Corporation, who has not already done so, to execute a
confidentiality and non-competition agreement in form and substance attached
hereto or otherwise approved by the Board prior to the commencement of such
person's employment by the Corporation in such capacity.
15
2.12 Marketing and Promotional Material. Each of the Investors will
have the right to review and approve, in advance of publication, distribution or
dissemination, any reference to such Investor or any entity affiliated with such
Investor (other than the Corporation), contained in any document, instrument,
report or filing or in any advertising, marketing, promotional and similar
materials other than those reports or filings required by law. Nevertheless, to
the extent that any such report or filing is made, the Corporation will provide
a copy thereof to the Investor prior to the filing, release or dissemination
thereof.
2.13 Environmental Matters. The Corporation shall promptly advise
the Investors in writing of any pending or threatened claim, demand or action by
any governmental authority or third party relating to any Hazardous Materials
affecting the Property of which it has knowledge. The Corporation shall not
discharge, place, release, spill or dispose of any Hazardous Materials or any
other pollutants or effluents upon the Property or elsewhere (including, but not
limited to, underground injection of such substances), and the Corporation shall
not discharge into the air any emission which would require a permit under the
Clean Air Act or its state counterparts or any other Environmental Laws, except
in compliance with the Environmental Laws. The Stockholders of the Corporation
shall have no control over, or authority with respect to, the waste disposal
operations of the Corporation. The Corporation hereby indemnifies, defends and
holds harmless the Investors from and against any and all manner of actions,
causes of action, suits, debts, accounts, controversies, judgments, claims,
demands, losses or liabilities of any nature (including reasonable attorneys'
fees) directly or indirectly arising out of or attributable to (a) any
misrepresentation or breach of the representations and covenants set forth in
Section 5.18 of the Stock Purchase Agreement, or (b) the use, generation,
storage, release, threatened release, discharge, disposal or presence of
Hazardous Materials on, under or about the Property by any person during the
period that the Corporation was the legal or equitable owner of the Property or
which occurred prior to such time and was otherwise actually known by, or should
have been known by, the Corporation. The obligation of the Corporation to
indemnify the Investors shall specifically cover and include, without
limitation, all fines and penalties imposed by federal, state or local
authorities, costs of removing or neutralizing the Hazardous Materials, injury
to the property adjoining the Property, injury to persons living or working on
or about the Property or adjoining or otherwise affecting property, and all
other indirect or consequential damages incurred by the Investors.
2.14 Board of Directors Observer. For as long as the Preferred
Directors serve on the Board of Directors, Pennsylvania Early Stage Partners may
designate an observer acceptable to the Corporation (the "Observer"). Such
Observer shall be compensated in the same manner as all other non-employee
Directors, shall have no voting rights, and shall be reimbursed for all travel
expenses and other out-of-pocket expenses incurred in attending meetings of the
Board of Directors. The Observer shall be indemnified by the Corporation
against any claims arising out of his participation at Board meetings. The
Investors consent to the grant of a right by the Corporation to Allstate Venture
Capital to appoint an Observer if such right is in connection with an Authorized
Issuance.
16
2.15 Elimination of Redemption Restrictions. At such time as the
Corporation refinances its principal first-tier bank financing in existence as
of the date of this Agreement, it shall use its reasonable good faith efforts
under the circumstances to enter into new financing arrangement that would not
restrict, in any way, the Corporation's right to timely redeem the Series A
Preferred Stock in accordance with Section 5 of the Certificate.
2.16 Duration of Section. (a) Sections 2.3, 2.4 (a)(i)-(ix), 2.4
(xiv), 2.4 (xvi), 2.4 (xxiii), 2.6, 2.8, 2.11, 2.13, 2.14, 2.15 and 2.17 and the
rights and obligations of the parties thereunder shall automatically terminate
on the first to occur of: (a) the consummation of a firm commitment underwritten
public offering of Common Stock registered under the Securities Act pursuant to
which (X) Common Stock is offered to the public at a price of at least $17.00
per share of Common Stock (subject to adjustment for stock splits, stock
dividends, stock combinations, recapitalizations and like occurrences) and (Y)
the offering size is at least $20 million (a "Qualified IPO"), or (b) that date
on which eighty (80%) of the Series A Preferred Shares issued to the Investors,
subject to proportional adjustment for events described in Sections 7(d)(iii)
and 7(d)(iv), is no longer outstanding. Prior to any such termination, the
rights and obligations of any Investor under such sections set forth above shall
terminate upon the date on which such Investor no longer owns any Series A
Preferred Stock, whereupon the obligations of the remaining Investors to vote in
favor of the designee of such Investor shall also terminate.
(b) On the first to occur of: (a) the consummation of a Qualified
IPO, or (b) that date on which HCV V, an HCV Fund or any current or future
general partner of an HCV Fund shall no longer be in control of a majority of
the then outstanding series A Preferred Stock held by all Investors (determined
in accordance with Section 6(a) of the Certificate) or eighty (80%) of the
Series A Preferred Shares issued to the Investors, subject to proportional
adjustment for events described in Sections 7(d)(iii) and 7(d)(iv), is no longer
outstanding, then (X) Sections 2.4(a)(x)-(xxiv) (excluding 2.4(xiv), 2.4 (xvi),
and 2.4(xxiii)) and the rights and obligations of the parties thereunder shall
automatically terminate, and (Y) section 2.4 (xiv) shall be revised such that
the Financing Limitation shall increase to a number equal to the greater of (A)
$1,250,000 or (B) 20% of the existing indebtedness of the Company on the date
that condition (b) above is satisfied. Prior to any such termination, the rights
and obligations of any Investor under such sections set forth above shall
terminate upon the date on which such Investor no longer owns any Series A
Preferred Stock, whereupon the obligations of the remaining Investors to vote in
favor of the designee of such Investor shall also terminate.
2.17 Board of Directors' Committees. At least one of the Preferred
Directors designated by HCV V shall serve on each committee of the Board of
Directors.
SECTION 3. Transfer of Securities.
3.1 Restriction on Transfer. The Restricted Securities shall not be
transferable, except upon the conditions specified in this Section 3, which
conditions are intended solely to ensure compliance with the provisions of the
Securities Act in respect of the Transfer thereof.
17
3.2 Restrictive Legend. Each certificate evidencing any Restricted
Securities and each certificate evidencing any such securities issued to
subsequent transferees of any Restricted Securities shall (unless otherwise
permitted by the provisions of Section 3.3 or 3.10 hereof) be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT
BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAW OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY, THE TRANSFER
OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
STOCKHOLDERS' AGREEMENT DATED ______________, 1999, AMONG STC
TECHNOLOGIES, INC. AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF STC TECHNOLOGIES, INC.
3.3 Notice of Transfer. By acceptance of any Restricted Securities,
the holder thereof agrees to give prior written notice to the Corporation of
such holder's intention to effect any Transfer and to comply in all other
respects with the provisions of this Section 3.3. Each such notice shall
describe the manner and circumstances of the proposed Transfer and shall be
accompanied by: (a) the written opinion of counsel for the holder of such
Restricted Securities, or, at such holder's option, a representation letter of
such holder, addressed to the Corporation (which opinion and counsel, or
representation letter, as the case may be, shall be reasonably acceptable to the
Corporation), as to whether, in the case of a written opinion, in the opinion of
such counsel, such proposed Transfer involves a transaction requiring
registration of such Restricted Securities under the Securities Act and
applicable state securities laws or an exemption thereunder is available, or, in
the case of a representation letter, such letter sets forth a factual basis for
concluding that such proposed transfer involves a transaction requiring
registration of such Restricted Securities under the Securities Act and
applicable State Securities laws or that an exemption thereunder is available,
or (b) if such registration is required and if the provisions of Section 3.4
hereof are applicable, a written request addressed to the Corporation by the
holder of such Restricted Securities, describing in detail the proposed method
of disposition and requesting the Corporation to effect the registration of such
Restricted Shares pursuant to the terms and provisions of Section 3.4 hereof;
provided, however, that (y) in the case of a Transfer by a holder to a member of
such holder's Group, no such opinion of counsel or representation letter of the
holder shall be necessary, provided that the transferee agrees in writing to be
subject to Sections 3.1, 3.2, 3.3 and 3.10 hereof to the same extent as if such
transferee were originally a
18
signatory to this Agreement, and (z) in the case of any holder of Restricted
Securities that is a partnership, no such opinion of counsel or representation
letter of the holder shall be necessary for a Transfer by such holder to a
partner of such holder, or a retired partner of such holder who retires after
the date hereof, or the estate of any such partner or retired partner if, with
respect to such Transfer by a partnership, (i) such Transfer is made in
accordance with the partnership agreement of such partnership, and (ii) the
transferee agrees in writing to be subject to the terms of Sections 3.1, 3.2,
3.3 and 3.10 hereof to the same extent as if such transferee were originally a
signatory to this Agreement. If in such opinion of counsel or as reasonably
concluded from the facts set forth in the representation letter of the holder
(which opinion and counsel, or representation letter, as the case may be, shall
be reasonably acceptable to the Corporation), the proposed Transfer may be
effected without registration under the Securities Act and any applicable state
securities laws or "blue sky" laws, then the holder of Restricted Securities
shall thereupon be entitled to effect such Transfer in accordance with the terms
of the notice delivered by it to the Corporation. Each certificate or other
instrument evidencing the securities issued upon such Transfer (and each
certificate or other instrument evidencing any such securities not Transferred)
shall bear the legend set forth in Section 3.2 hereof unless: (a) in such
opinion of such counsel or as can be concluded from the representation letter of
such holder (which opinion and counsel or representation letter shall be
reasonably acceptable to the Corporation) the registration of future Transfers
is not required by the applicable provisions of the Securities Act and state
securities laws, or (b) the Corporation shall have waived the requirement of
such legend; provided, however, that such legend shall not be required on any
certificate or other instrument evidencing the securities issued upon such
Transfer in the event such Transfer shall be made in compliance with the
requirements of Rule 144 (as amended from time to time or any similar or
successor rule) promulgated under the Securities Act. The holder of Restricted
Securities shall not effect any Transfer until such opinion of counsel or
representation letter of such holder has been given to and accepted by the
Corporation (unless waived by the Corporation) or until registration of the
Restricted Shares involved in the above-mentioned request has become effective
under the Securities Act. In the event that an opinion of counsel is required by
the registrar or transfer agent of the Corporation to effect a transfer of
Restricted Securities in the future, the Corporation shall seek and obtain such
opinion from its counsel, and the holder of such Restricted Securities shall
provide such reasonable assistance as is requested by the Corporation (other
than the furnishing of an opinion of counsel) to satisfy the requirements of the
registrar or transfer agent to effectuate such transfer.
3.4 Required Registration. After a Qualified IPO by the Corporation,
if the Corporation shall be requested (i) by holders of at least 50% of the
outstanding Restricted Securities (based on the underlying Class A Common Stock
for which the Restricted Securities are convertible or exercisable) to effect
the registration under the Securities Act of Restricted Shares, or (ii) after
the first registration pursuant to this Section 3.4, by one or more of the
holders of Restricted Securities to effect the registration under the Securities
Act of Restricted Shares having a proposed aggregate offering price equal to or
greater than $5,000,000, then the Corporation shall promptly give written notice
of such proposed registration to all holders of Restricted Securities, and
thereupon the Corporation shall promptly use its best efforts to effect the
registration under the Securities Act of the Restricted Shares that the
Corporation has been requested to register for disposition as described in the
request of such holders of Restricted
19
Securities and in any response received from any of the holders of Restricted
Securities within 30 days after the giving of the written notice by the
Corporation; provided, however, that the Corporation shall not be obligated to
effect any registration under the Securities Act except in accordance with the
following provisions and Section 3.7:
(a) Subject to Section 3.6, the Corporation shall not be
obligated to file and cause to become effective more than two (2) registration
statements in which Restricted Shares are registered under the Securities Act
pursuant to this Section 3.4, if all of the Restricted Shares offered pursuant
to such registration statements are sold thereunder upon the price and terms
offered.
(b) Notwithstanding the foregoing, the Corporation may include in
each such registration requested pursuant to this Section 3.4 any authorized but
unissued shares of Common Stock (or authorized treasury shares) for sale by the
Corporation or any issued and outstanding shares of Common Stock for sale by
others; provided, however, that, if the number of shares of Common Stock so
included pursuant to this clause (b) exceeds the number of Restricted Shares
requested by the holders of Restricted Shares requesting such registration, then
such registration shall be deemed to be a registration in accordance with and
pursuant to Section 3.5; and provided further, however, that the inclusion of
such previously authorized but unissued shares by the Corporation or issued and
outstanding shares of Common Stock by others in such registration does not
adversely affect, in the sole opinion of the holders of Restricted Securities
requesting such registration, the ability of the holders of Restricted
Securities requesting such registration to market the entire number of
Restricted Shares requested by them.
3.5 Piggyback Registration.
(a) Each time that the Corporation proposes for any reason to
register any of its securities under the Securities Act, other than pursuant to
(i) a registration statement on Form S-4 or Form S-8 or similar or successor
forms (collectively, "Excluded Forms") or (ii) in connection with a Qualified
IPO by the Corporation, the Corporation shall promptly give written notice of
such proposed registration to all holders of Restricted Securities, which shall
offer such holders the right to request inclusion of any Restricted Shares in
the proposed registration.
(b) Each holder of Restricted Securities shall have 30 days from
the receipt of such notice to deliver to the Corporation a written request
specifying the number of Restricted Shares such holder intends to sell and the
holder's intended method of disposition.
(c) In the event that the proposed registration by the
Corporation is, in whole or in part, an underwritten public offering of
securities of the Corporation, any request under Section 3.5(b) may specify that
the Restricted Shares be included in the underwriting (i) on the same terms and
conditions as the shares of Common Stock, if any, otherwise being sold through
underwriters under such registration, or (ii) on terms and conditions comparable
to those normally applicable to offerings of common stock in reasonably similar
circumstances in the event that no shares of Common Stock other than Restricted
Shares are being sold through underwriters under such registration.
20
(d) Upon receipt of a written request pursuant to Section 3.5(b),
the Corporation shall promptly use its best efforts to cause all such Restricted
Shares to be registered under the Securities Act, to the extent required to
permit sale or disposition as set forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter of
any such proposed registration determines and advises in writing that the
inclusion of all Restricted Shares proposed to be included in the underwritten
public offering, together with any other issued and outstanding shares of Common
Stock proposed to be included therein by holders other than the holders of
Restricted Securities (such other shares hereinafter collectively referred to as
the "Other Shares"), would interfere with the successful marketing of the
Corporation's securities, then the total number of such securities proposed to
be included in such underwritten public offering shall be reduced, (i) first by
the shares requested to be included in such registration by the holders of Other
Shares, and (ii) second, if necessary, (A) one-half (1/2) by the securities
proposed to be issued by the Corporation, and (B) one-half (1/2) by the
Restricted Shares proposed to be included in such registration by the holders
thereof, on a pro rata basis, based upon the number of Restricted Shares sought
to be registered by each such holder. The shares of Common Stock that are
excluded from the underwritten public offering pursuant to the preceding
sentence shall be withheld from the market by the holders thereof for a period,
not to exceed 180 days from the closing of such underwritten public offering,
that the managing underwriter reasonably determines as necessary in order to
effect such underwritten public offering.
3.6 Registrations on Form S-2 and S-3. At such time as the Corporation
shall have qualified for the use of Form S-2 or Form S-3 (or any successor form
promulgated under the Securities Act), each holder of Restricted Securities
shall have the right to request in writing an unlimited number (but not more
than two (2) annually) of registrations on Form S-2 or Form S-3. Each such
request by a holder shall: (a) specify the number of Restricted Shares which the
holder intends to sell or dispose of, (b) state the intended method by which the
holder intends to sell or dispose of such Restricted Shares, and (c) request
registration of Restricted Shares having a proposed aggregate offering price of
at least $5 Million (unless such request covers all remaining Restricted Shares
held by Investors in which event this restriction shall not apply). Upon
receipt of a request pursuant to this Section 3.6, the Corporation shall use its
best efforts to effect such registration or registrations on Form S-2 or Form S-
3. Notwithstanding the foregoing, the Corporation may delay filing a
registration statement on Form S-2 or Form S-3 and may withhold efforts to cause
the registration statement to become or remain effective, if the Corporation
determines in good faith that such registration might (i) interfere with or
affect the negotiation or completion of any transaction that is being
contemplated by the Corporation at the time the right to delay is exercised, or
(ii) involve initial or continuing disclosure obligations that might not be in
the best interest of the Corporation's shareholders. Notwithstanding the
foregoing, the Corporation shall not be entitled to exercise its right to defer
filing or effectiveness of or to update a registration pursuant to a Form S-2 or
Form S-3 registration request for more than one hundred eighty (180) consecutive
days.
21
3.7 Preparation and Filing. If and whenever the Corporation is under
an obligation pursuant to the provision of this Section 3 to use its best
efforts to effect the registration of any Restricted Shares, the Corporation
shall, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective in accordance with Section
3.7(b) hereof;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the earlier of (i) the sale of all Restricted Shares covered thereby or
(ii) nine months, and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Restricted Shares covered by
such registration statement;
(c) furnish to each holder whose Restricted Shares are being
registered pursuant to this Section 3 such number of copies of any summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such holder may reasonably request in order to facilitate the public sale or
other disposition of such Restricted Shares;
(d) use its best efforts to register or qualify the Restricted
Shares covered by such registration statement under the securities or blue sky
laws of such jurisdictions as each holder whose Restricted Shares are being
registered pursuant to this Section 3 shall reasonably request and do any and
all other acts or things which may be necessary or advisable to enable such
holder to consummate the public sale or other disposition in such jurisdictions
of such Restricted Shares; provided, however, that the Corporation shall not be
required to consent to general service of process for all purposes in any
jurisdiction where it is not then subject to process, qualify to do business as
a foreign corporation where it would not be otherwise required to qualify or
submit to liability for state or local taxes where it is not otherwise liable
for such taxes;
(e) at any time when a prospectus covered by such registration
statement and relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 3.7(b) hereof, notify
each holder whose Restricted Shares are being registered pursuant to this
Section 3 of the happening of any event as a result of which the prospectus
included in such registration, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and, at the request of such holder, prepare,
file and furnish to such holder a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
22
(f) if the Corporation has delivered preliminary or final
prospectuses to the holders of Restricted Shares that are being registered
pursuant to this Section 3 and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Corporation shall
promptly notify such holders and, if requested, such holders shall immediately
cease making offers of Restricted Shares and return all prospectuses to the
Corporation. The Corporation shall promptly provide such holders with revised
prospectuses and, following receipt of the revised prospectuses, such holders
shall be free to resume making offers of the Restricted Shares; and
(g) furnish, at the request of any holder whose Restricted Shares
are being registered pursuant to this Section 3, on the date that such
Restricted Shares are delivered to the underwriters for sale in connection with
a registration pursuant to this Section 3, if such securities are being sold
through underwriters, or, on the date that the registration statement with
respect to such securities becomes effective, if such securities are not being
sold through underwriters, (i) an opinion, dated such date, of the counsel
representing the Corporation for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the holder or holders
making such request, and (ii) a letter dated such date, from the independent
certified public accountants of the Corporation, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the holder or holders making such request.
3.8 Expenses. The Corporation shall pay all expenses incurred by the
Corporation in complying with this Section 3, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), fees and expenses of
complying with the securities and blue sky laws of all such jurisdictions in
which the Restricted Shares are proposed to be offered and sold, printing
expenses and fees and disbursements of counsel (including with respect to each
registration effected pursuant to Sections 3.4, 3.5 and 3.6, the reasonable fees
and disbursements of one counsel for the holders of Restricted Shares that are
being registered pursuant to this Section 3); provided, however, that all
underwriting discounts and selling commissions applicable to the Restricted
Shares covered by registrations effected pursuant to Section 3.4, 3.5 or 3.6
hereof shall be borne by the seller or sellers thereof, in proportion to the
number of Restricted Shares sold by each such seller or sellers.
3.9 Indemnification.
(a) In the event of any registration of any Restricted Shares
under the Securities Act pursuant to this Section 3 or registration or
qualification of any Restricted Shares pursuant to Section 3.7(d) hereof, the
Corporation shall indemnify and hold harmless the seller of such shares, each
underwriter of such shares, if any, each broker or any other person acting on
behalf of such seller and each other person, if any, who controls any of the
foregoing persons, within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which any of the foregoing
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
23
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
Restricted Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any document incident to registration or qualification of any
Restricted Shares pursuant to Section 3.7(d) hereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or any violation by the Corporation of the Securities Act or any
state securities or blue sky laws applicable to the Corporation and relating to
action or inaction required of the Corporation in connection with such
registration or qualification under the Securities Act or such state securities
or blue sky laws. The Corporation shall reimburse on demand such seller,
underwriter, broker or other person acting on behalf of such seller and each
such controlling person for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Corporation
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary or final prospectus or amendment or
supplement thereto or any document incident to registration or qualification of
any Restricted Shares pursuant to Section 3.7(d) hereof, in reliance upon and in
conformity with written information furnished to the Corporation by such seller,
underwriter, broker, other person or controlling person specifically for use in
the preparation thereof.
(b) Before Restricted Shares held by any prospective seller shall
be included in any registration pursuant to this Section 3, such prospective
seller and any underwriter acting on its behalf shall have agreed to indemnify
and hold harmless (in the same manner and to the same extent as set forth in
paragraph (a)) the Corporation, each director of the Corporation, each officer
of the Corporation who signs such registration statement and any person who
controls the Corporation within the meaning of the Securities Act, with respect
to any untrue statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, if such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the Corporation
through an instrument duly executed by such seller or such underwriter
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus or amendment or supplement; provided,
however, that the maximum amount of liability in respect of such indemnification
shall be limited, in the case of each prospective seller, to an amount equal to
the net proceeds actually received by such prospective seller from the sale of
Restricted Shares effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in Section 3.9(a)
or (b) hereof, such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 3.9, give written
notice to the latter of the commencement of such action. In case any such action
is brought against an indemnified party, the indemnifying party will be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying
24
party similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and, after notice to such indemnified
party from the indemnifying party of its election to assume the defense thereof,
the indemnifying party shall be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof;
provided, however, that, if any indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to such
indemnified party which are different from or additional to those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 3.9, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, and such
indemnifying party shall reimburse such indemnified party and any person
controlling such indemnified party for the fees and expenses of counsel retained
by the indemnified party which are reasonably related to the matters covered by
the indemnity agreement provided in this Section 3.9. The indemnifying party
shall not make any settlement of any claims indemnified against hereunder
without the written consent of the indemnified party or parties, which consent
shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Restricted Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 3.9, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 3.9 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 3.9; then, in each such case, the Corporation and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject as is appropriate to reflect the relative fault of the
Corporation and such holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, it being understood
that the parties acknowledge that the overriding equitable consideration to be
given effect in connection with this provision is the ability of one party or
the other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation which does not take into consideration the
foregoing equitable considerations. Notwithstanding the foregoing, (i) no such
holder will be required to contribute any amount in excess of the proceeds to it
of all Restricted Shares sold by it pursuant to such registration statement, and
(ii) no person or entity guilty of fraudulent misrepresentation, within the
meaning of Section 11(f) of the Securities Act, shall be entitled to
contribution from any person or entity who is not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding any of the foregoing, if, in connection with
an underwritten public offering of any Restricted Shares, the Corporation, the
holders of such Restricted Shares and the underwriters enter into an
underwriting or purchase agreement relating to such offering which contains
provisions covering indemnification among the parties, then the
25
indemnification provision of this Section 3.9 shall be deemed inoperative for
purposes of such offering.
3.10 Removal of Legends, Etc. Notwithstanding the foregoing
provisions of this Section 3, the restrictions imposed by this Section 3 upon
the transferability of any Restricted Securities shall cease and terminate when
(a) any such Restricted Securities are sold or otherwise disposed of in
accordance with the intended method of disposition by the seller or sellers
thereof set forth in a registration statement or such other method contemplated
by Section 3.3 hereof that does not require that the securities transferred bear
the legend set forth in Section 3.2 hereof, including a Transfer pursuant to
Rule 144 or a successor rule thereof (as amended from time to time), or (b) the
holder of Restricted Securities has met the requirements for transfer of such
Restricted Securities pursuant to subparagraph (k) of Rule 144 or a successor
rule thereof (as amended from time to time) promulgated by the Commission under
the Securities Act. Whenever the restrictions imposed by this Section 3 have
terminated, a holder of a certificate for Restricted Securities as to which such
restrictions have terminated shall be entitled to receive from the Corporation,
without expense, a new certificate not bearing the restrictive legend set forth
in Section 3.2 hereof and not containing any other reference to the restrictions
imposed by this Section 3.
SECTION 4. Securities Act Registration Statements. Except for securities
of the Corporation registered on Excluded Forms, the Corporation shall not file
any registration statement under the Securities Act covering any securities
unless it shall first have given each holder of Restricted Securities written
notice thereof. The Corporation further covenants that each holder of
Restricted Securities shall have the right, at any time when it may be deemed to
be a controlling person of the Corporation, within the meaning of the Securities
Act, to participate in the preparation of such registration statement and to
request the insertion therein of material furnished to the Corporation in
writing which in such holder's judgment should be included. In connection with
any registration statement referred to in this Section 4, the Corporation shall
indemnify, to the extent permitted by law, each holder of Restricted Securities,
its officers, partners and directors and each person, if any, who controls any
such holder within the meaning of the Securities Act in the same manner and to
the same extent as the Corporation is required to indemnify a seller of
Restricted Securities in Section 3.9 hereof. If, in connection with any such
registration statement, any holder of Restricted Securities shall furnish
written information to the Corporation expressly for use in the registration
statement, then such holder shall indemnify the Corporation, each director of
the Corporation, each officer of the Corporation who signs such registration
statement and each person, if any, who controls the Corporation within the
meaning of the Securities Act to the same extent as a seller of Restricted
Securities is required to indemnify such persons in Section 3.9 hereof.
SECTION 5. Election of Directors.
5.1 Voting for Directors. At each annual meeting of the stockholders
of the Corporation and at each special meeting of the stockholders of the
Corporation called for the purposes of electing directors of the Corporation,
and at any time at which stockholders of the Corporation shall have the right
to, or shall, vote for or consent to the election of directors, then,
26
in each such event, each Investor shall vote all shares of Series A Preferred
Stock and any other shares of voting stock of the Corporation then owned (or
controlled as to voting rights) by it, whether by purchase, exercise of rights,
warrants or options, stock dividends or otherwise:
(a) to fix and maintain the number of directors on the Board of
Directors of the Corporation at not more than eight (8);
(b) pursuant to Section 6(b)(i) of the Certificate, to elect to
the Board two (2) directors designated by HCV V as the Preferred Directors;
(c) to allow Pennsylvania Early Stage Partners to appoint an
Observer (as defined in Section 2.14 hereof) to attend all meetings of the Board
of Directors.
5.2 Cooperation of the Corporation. The Corporation shall use its
best efforts to effectuate the purposes of this Section 5, including promoting
the adoption of any necessary amendment of the By-laws and the Certificate of
Incorporation of the Corporation.
5.3 Notices. The Corporation shall provide the Investors with at
least twenty (20) days' prior notice in writing of any intended mailing of
notice to the Investors of the Corporation for a meeting at which directors are
to be elected, and such notice shall include the names of the persons designated
by the Corporation pursuant to this Section 5. HCV V shall notify the
Corporation in writing at least three (3) days prior to such mailing of the
persons designated by it pursuant to Section 6(b)(i) of the Certificate and
Section 5.1 above as nominees for election to the Board. In the absence of any
notice from HCV V, the director(s) then serving and previously designated by HCV
V shall be renominated.
5.4 Removal. Except as otherwise provided in this Section 5, no
Investor shall vote to remove any member of the Board designated in accordance
with the foregoing provisions of this Section 5 unless the party who designated
such director (the "Designating Party") shall so vote or otherwise consent, and,
if the Designating Party shall so vote or otherwise consent, then the non-
designating Investors shall likewise so vote. Any vacancy on the Board created
by the resignation, removal, incapacity or death of any person designated under
the foregoing provisions of this Section 5 shall be filled by another person
designated by the original Designating Party. Each Investor shall vote all
voting shares of Series A Preferred Stock of the Corporation and all other
shares of voting stock of the Corporation owned or controlled by such Investor
in accordance with each such new designation, and no such vacancy shall be
filled in the absence of a new designation by the original Designating Party.
5.5 Duration of Section. This Section 5 and the rights and
obligations of the parties hereunder shall automatically terminate on the first
to occur of: (a) the consummation of a firm commitment underwritten public
offering of Common Stock registered under the Securities Act pursuant to which
(X) Common Stock is offered to the public at a price of at least $17.00 per
share of Common Stock (subject to adjustment for stock splits, stock dividends,
stock combinations, recapitalizations and like occurrences) and (Y) the offering
size is at least $20 million (a "Qualified IPO"), or (b) that date on which
eighty percent (80%) of the Series A
27
Preferred Shares originally issued to the Investors, subject to proportional
adjustment for events described in Sections 7(d)(iii) and 7(d)(iv) of the
Certificate, is no longer outstanding. Prior to any such termination, the rights
and obligations of any Investor under this Section 5 shall terminate upon the
date on which such Investor no longer owns any Series A Preferred Stock,
whereupon the obligations of the remaining Investors to vote in favor of the
designee of such Investor shall also terminate.
SECTION 6. Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may proceed to protect and enforce its or their rights, either by
suit in equity and/or action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement.
Notwithstanding the generality of the foregoing, in the event that the
Corporation breaches any of its covenants and/or agreements set forth herein,
the Investors shall have the additional remedy, in their sole discretion,
provided that such breach has not been cured by the later to occur of 15 days
after receipt of notice of such breach by the Corporation or 30 days after the
occurrence of such breach, of electing to immediately exercise their right of
redemption set forth in Section 5 of the Certificate, as provided therein,
irrespective of whether such right of redemption otherwise is mature. The
rights, powers and remedies of the parties under this Agreement are cumulative
and not exclusive of any other right, power or remedy which such parties may
have under any other agreement or law. No single or partial assertion or
exercise of any right, power or remedy of a party hereunder shall preclude any
other or further assertion or exercise thereof.
SECTION 7. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall bind and inure to the benefit of the Corporation
and each of the Investors and the respective successors and assigns of the
Corporation and each of the Investors. Subject to the requirements of Section 3
hereof, this Agreement and the rights and duties of the Investors set forth
herein may be freely assigned, in whole or in part, by each Investor to any
member of such Investor's Group or to any other person or entity acquiring at
least $500,000 of Restricted Securities, such value to be determined pursuant to
the provisions set forth in Section 7 of the Certificate. Any transferee (other
than an Investor) to whom rights under Section 3 are transferred shall, as a
condition to such transfer, deliver to the Corporation a written instrument by
which such transferee identifies itself, gives the Corporation notice of the
transfer of such rights, identifies the securities of the Corporation owned or
acquired by it and agrees to be bound by the obligations imposed hereunder to
the same extent as if such transferee were an Investor hereunder. A transferee
to whom rights are transferred pursuant to this Section 7 will be thereafter
deemed to be an Investor for the purpose of the execution of such transferred
rights and may not again transfer such rights to any other person or entity,
other than as provided in this Section 7. Neither this Agreement nor any of the
rights or duties of the Corporation set forth herein shall be assigned by the
Corporation, in whole or in part, without having first received the written
consent of the Investors holding a majority of the voting power of the
outstanding Series A Preferred Shares held by all Investors, with each such
holder entitled to the number of votes for each such share of Series A Preferred
Stock as equals the number of shares of Common Stock
28
(including fractional shares) into which each such share of Series A Preferred
Stock is then convertible, rounded up to the nearest one-tenth of a share.
SECTION 8. Duration of Agreement. The rights and obligations of the
Corporation and each Investor set forth herein shall survive indefinitely,
unless and until, by their respective terms, they are no longer applicable.
SECTION 9. Entire Agreement. This Agreement, together with the other
writings referred to herein or delivered pursuant hereto which form a part
hereof, contains the entire agreement among the parties with respect to the
subject matter hereof and amends, restates and supersedes all prior and
contemporaneous arrangements or understandings with respect thereto.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered, certified or overnight mail, postage prepaid, or telecopied
with a confirmation copy by regular mail, addressed or telecopied, as the case
may be, to such party at the address or telecopier number, as the case may be,
set forth below or such other address or telecopier number, as the case may be,
as may hereafter be designated in writing by the addressee to the addressor
listing all parties:
(i) If to the Corporation, to:
STC Technologies, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx, President
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
(ii) If to the Investors, as set forth on Schedule 1:
with a copy to:
Xxxxxxx, Del Deo, Dolan, Griffinger & Xxxxxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
29
All such notices, requests, consents and communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the third business day following the
date of such mailing, (c) in the case of overnight mail, on the first business
day following the date of such mailing, and (d) in the case of facsimile
transmission, when confirmed by facsimile machine report.
SECTION 11. Changes. The terms and provisions of this Agreement may not
be modified or amended, additional signatories added, or any of the provisions
hereof waived, temporarily or permanently, except pursuant to the written
consent of the Corporation and the Investors holders of a majority of the Series
A Preferred Shares held by all Investors, determined in accordance with Section
6(a) of the Certificate (including, in such calculation, any outstanding
Restricted Shares held by such holders).
SECTION 12. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 13. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 14. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
SECTION 15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding choice
of law rules thereof.
SECTION 17. Effectiveness. Notwithstanding any other provision of this
Agreement, this Agreement shall not be effective until the Closing (as such term
is defined in the Stock Purchase Agreement).
30
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date first above written.
STC TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
INVESTORS:
HEALTHCARE VENTURES V, L.P.
By: HealthCare Partners V,
L.P., as General Partner
By: /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
Title: General Partner
RHO MANAGEMENT TRUST II
By: Rho Management Company, Inc., as
Investment Advisor
By: /s/ Xxxxxx Xxxx
-----------------------
Name: Xxxxxx Xxxx
Title: President
XXXXXX TRUST
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxx
Title: Trustee
31
PENNSYLVANIA EARLY STAGE
PARTNERS, L.P.
By: Pennsylvania Early Stage Partners GP,
L.L.C, its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
32
SCHEDULE 1
INVESTORS
---------
AMOUNT OF SHARES OF SERIES A
INVESTOR INVESTMENT PREFERRED STOCK
-------- ---------- ---------------
HealthCare Ventures V, L.P. $4,354,499.00 512,294
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Rho Management Trust II $ 483,998.50 56,941
c/o Rho Management Company, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Xxxxxx Trust $ 161,500.00 19,000
c/o Summit Asset Management
Xxx Xxxxxx Xxxxxx
Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Pennsylvania Early Stage Partners, L.P. $1,500,003.50 176,471
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
TOTAL $6,500,001.00 764,706
33
