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EXHIBIT 4.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 24th
day of February, 1999 by and between IXSYS, INC, a Delaware corporation (the
"Company"), and MedImmune, Inc. ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and Purchaser have entered into a License Agreement
dated as of even date herewith (the "License Agreement") pursuant to which the
Company has granted the Purchaser a license to certain technology; and
WHEREAS, pursuant to Section 6.13 of the License Agreement, the
Purchaser has agreed to purchase the Common Stock described in this Agreement on
the terms and conditions set forth herein:
NOW, THEREFORE, the parties hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase and the Company
agrees to sell and issue to Purchaser 907,143 shares of the Company's Common
Stock at the Closing for a purchase price (the "Purchase Price") of $7.00 per
share.
1.2 Closing. The purchase and sale of the Common Stock shall take place
at the offices of the Company at 0000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx, at
10:00 A.M. on February 24, 1999 (the "Closing"). At the Closing the Company
shall deliver to Purchaser a certificate representing the Common Stock which
Purchaser is purchasing against delivery to the Company by Purchaser of a bank
wire in the amount of $6,350,001.00 payable to the Company's order.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser that:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which
qualification is necessary under applicable law, except where the failure to be
so qualified would not have a material adverse effect on its business.
2.2 Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and
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the authorization, issuance and delivery of the Common Stock being sold
hereunder, to the extent that the foregoing requires performance on or prior to
the Closing, has been taken or will be taken on or prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms.
2.3 Valid Issuance of Common Stock. The Common Stock which is being
purchased by Purchaser hereunder, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable.
2.4 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for any post-sale filings pursuant to
applicable state securities laws, which filings will be effected within the
applicable time periods.
2.5 No Conflicts. Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will result in the breach or violation of any
of the terms and provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any of its
properties, (ii) any agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the properties of the Company
is subject or (iii) the certificate of incorporation or by-laws or other
organizational documents of the Company, which breach or violation would be
materially adverse to the Company.
2.6 Capitalization. At the Closing, the authorized capital stock of the
Company will be (i) 22,450,000 shares of Common Stock and (ii) 11,810,666 shares
of Preferred Stock. Immediately prior to the Closing, 1,660,978 shares of common
stock and 11,640,124 shares of preferred stock (convertible as of the Closing
into 11,640,124 shares of Common Stock) were issued and outstanding.
3. Representations, Warranties and Covenants of Purchaser. Purchaser
hereby represents, warrants and covenants that:
3.1 Authorization. This Agreement constitutes its valid and legally
binding obligation.
3.2 No Conflicts. Neither the execution, delivery and performance of
this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated hereby will result
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in the breach or violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
Purchaser or any of its properties, (ii) any agreement or instrument to which
Purchaser is a party or by which Purchaser is a party or by which Purchaser is
bound or to which any of the properties of Purchaser is subject or (iii) the
certificate of incorporation or by-laws or other organizational documents of
Purchaser, which breach or violation would be materially adverse to Purchaser.
3.3 Purchase Entirely for Own Account. This Agreement is made with
Purchaser in reliance upon Purchaser's representation to the Company, which by
Purchaser's execution of this Agreement Purchaser hereby confirms, that the
Common Stock will be acquired for investment for Purchaser's own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, Purchaser further represents that Purchaser does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Common Stock. Purchaser represents that it has full power
and authority to enter into this Agreement.
3.4 Investment Experience. Purchaser acknowledges that it is able to
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Common Stock.
3.5 Restricted Common Stock. Purchaser understands that the shares of
Common Stock it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Securities Act"), only in certain
limited circumstances. In this connection Purchaser represents that it is
familiar with Securities and Exchange Commission (the "SEC") Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
3.6 Accredited Investor. Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D of the SEC under the Securities Act.
3.7 Confidentiality. Purchaser hereby represents, warrants and covenants
that it shall maintain in confidence, and shall not use or disclose without the
prior written consent of the Company, any information identified as
confidential that is furnished to it by the Company in connection with this
Agreement (as opposed to information furnished pursuant to the License
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Agreement or other agreements between the parties). This obligation of
confidentiality shall not apply, however, to any information (a) in the public
domain through no unauthorized act or failure to act by Purchaser, (b) lawfully
disclosed to Purchaser by a third party who possessed such information without
any obligation of confidentiality, (c) known previously by Purchaser or lawfully
developed by Purchaser independent of any disclosure by the Company or (d)
required to be disclosed by applicable law, regulation or bona fide legal
process provided Purchaser takes reasonable steps to restrict and maintain the
confidentiality of such disclosure and provides reasonable prior notice to the
Company. Purchaser further covenants that Purchaser shall return to the Company
all tangible materials containing such information upon request by the Company.
This confidentiality covenant shall expire, as to any particular disclosure,
five years after such disclosure.
3.8 Right of First Offer in Favor of the Company. Before any shares of
the Common Stock purchased hereunder may be sold or transferred, such shares
shall first be offered to the Company as follows:
(a) Purchaser shall promptly deliver a notice to the Company
stating (i) its bona fide intention to sell or transfer such shares, (ii) the
number of such shares to be sold or transferred, and the basic terms and
conditions of such sale or transfer, (iii) the price for which it proposes to
sell or transfer such shares, and (iv) proof satisfactory to the Company that
the proposed sale or transfer will not violate any applicable federal or state
securities laws. The notice shall be signed by Purchaser and state that
Purchaser has a binding commitment to sell the number of shares specified in
such notice to a third party on the terms stated in such notice.
(b) Within 30 days after the receipt of the notice (the "Notice
Period"), the Company may elect to purchase all or a portion of the shares to
which such notice refers, at the price per share specified in the notice. The
election to purchase shall be made by written notice to Purchaser. If the
Company elects not to purchase all such shares, the Company may assign its
rights to purchase any shares not purchased by the Company.
(c) If all of the shares to which the notice refers are not
elected to be purchased, as provided in subparagraph 3.8(b) hereof, Purchaser
may sell the shares to the purchaser or transferee disclosed to the Company as
provided below at a price not less than the price specified in the notice,
provided that (i) Purchaser has disclosed to the Company the identity of the
proposed purchaser or transferee within five (5) business days of expiration of
the Notice Period and prior to consummation of the sale or transfer, (ii) such
sale or transfer is consummated within three months of the date of said notice
to the Company, and (iii) any such sale is made in compliance with applicable
federal and state securities laws and not in violation of any other contractual
restrictions to which Purchaser is bound. The
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third-party purchaser shall acquire the shares of stock subject to the Company's
rights of first offer and shall require compliance with the procedures described
in this Section 3.8.
(d) Any proposed transfer on terms and conditions different from
those set forth in the notice, as well as any subsequent proposed transfer shall
again be subject to the Company's rights of first offer and shall
require compliance with the procedures described in this Section 3.8.
(e) Notwithstanding anything to the contrary contained in this
Agreement, this Section 3.8 shall be terminated and shall have no further force
and effect six (6) months after the effective date of the Company's registration
of its common equity securities pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "34 Act Registration").
3.9 Further Limitations on Disposition. Without in any way limiting the
representations set forth above and notwithstanding the provisions of Section
3.8, Purchaser further agrees that:
(a) Purchaser shall not directly or indirectly sell, offer to
sell, contract to sell, grant any option to purchase or otherwise transfer or
dispose of all or any portion of the Common Stock purchased hereunder, in
violation of the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or the rules of the Commission promulgated thereunder,
including Rule 144 under the Securities Act. If reasonably requested by the
Company, Purchaser shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company and its counsel, that any permitted
transfer or disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144, as currently in existence,
except in unusual circumstances.
(b) During the period commencing as of the Closing until three
months following the conclusion of the last research and development program
conducted pursuant to the Research and Assignment and License Agreements entered
into between Purchaser and the Company simultaneously herewith or which may
later be entered into pursuant to the Selection Agreement entered into between
Purchaser and the Company simultaneously herewith the number of shares of Common
Stock of the Company purchased hereunder which Purchaser may, directly or
indirectly, sell, offer to sell, contract to sell, grant any option to purchase
or otherwise transfer or dispose of during the preceding one hundred eighty
(180) days shall not exceed six percent (6%) of the Company's outstanding Common
Stock or Common Stock into which outstanding Preferred Stock of the Company is
then convertible.
(c) During the period commencing as of the effective date of the
Company's 34 Act Registration until two hundred
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seventy (270) days thereafter Purchaser shall not, directly or indirectly sell,
offer to sell, contract to sell, grant any option to purchase or otherwise
transfer or dispose of (i) any of the Common Stock purchased hereunder pursuant
to this Agreement at any time during the first one hundred eighty (180) day(s)
of such period and (ii) not more than ninety (90) day(s) of the Common Stock
purchased hereunder at any time during the succeeding fifty percent (50%) of
such period.
(d) Prior to Purchaser entering into any agreement or commitment
to sell, grant options to purchase or otherwise transfer or dispose of any
shares of Common Stock purchased hereunder, Purchaser agrees to provide the
Board of Directors or President of the Company at least fourteen (14) days prior
written notice of Purchaser's intent to transfer or dispose of such shares and
to discuss with the Company in good faith a plan for transferring or disposing
of the shares in any orderly fashion.
(e) Without limiting the foregoing, prior to the effective date
of the Company's 34 Act Registration, Purchaser shall not, without the prior
written consent of the Company, directly or indirectly sell, offer to sell,
grant an option to purchase or otherwise transfer or dispose of any of the
Common Stock to any person engaged in any business directly competitive with the
Company. For purposes of this subsection 3.9(d) "directly competitive" shall
mean the field of protein engineering, or such other technology field in which
at least twenty-five percent (25%) of the Company's work force (on a full time
equivalent basis) is engaged at the time of the proposed transfer.
3.10 Standstill Provisions. Commencing as of the Closing and until the
first anniversary of the effective date of the Company's 34 Act Registration,
Purchaser (including all affiliates or agents of Purchaser) shall not acquire
beneficial ownership of any shares of common stock of the Company, any
securities convertible into or exchangeable for common stock, or any other right
to acquire common stock, except by way of stock dividends or other distributions
to Purchaser as a holder of the Common Stock generally, from the Company or any
other person or entity, without the prior written consent of the Company, which
consent may be withheld in the Company's sole discretion, if such acquisition
should cause Purchaser (including all affiliates of Purchaser) to beneficially
own more than ten percent (10%) of the Company's outstanding voting stock
(assuming the full conversion of all convertible securities of the Company held
by Purchaser and its affiliates); provided, however, that in no event shall (i)
the original purchase of the Common Stock pursuant to this Agreement, (ii) the
purchase of additional shares of Common Stock in lieu of milestone payments
payable pursuant to the License Agreement or (iii) any reduction in the
outstanding shares of the Company's capital stock (or rights or options), cause
a violation of this Section 3.10. In order to facilitate Purchaser's compliance
with this Section 3.10, upon the written request of Purchaser the Company shall
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inform Purchaser of the number of outstanding shares of the Company's voting
stock, and Purchaser may rely on such information in any purchase it makes
within 30 days of the receipt of such information.
3.11 Voting Agreement. Purchaser agrees that it shall, so long as it
holds shares of the Company's Common Stock, vote such shares with respect to any
proposed sale of all or substantially all of the assets, merger, combination or
reorganization of the Company in the same manner as stockholders holding a
majority of the voting securities of the Company and who are not themselves a
party to any such sale, merger, combination or reorganization. This Section 3.11
shall terminate and shall have no further force and effect twelve (12) months
after the effective date of the Company's 34 Act Registration.
3.12 Legends. It is understood that the certificates evidencing the
Common Stock may bear one or all of the following legends:
(a) "The securities represented by this certificate have not been
registered under the Securities Act of 1933. They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) "The securities represented by this certificate are subject
to certain rights of first offer and repurchase and certain restrictions on
resale set forth in the Stock Purchase Agreement dated February 24, 1999 between
the Company and MedImmune, Inc. A copy of such restrictions and rights of first
offer and repurchase may be obtained from the Company upon request."
(c) Any legend required by the laws of the State of California or
other jurisdiction.
3.13 Stop-Transfer Instructions. In order to enforce the provisions of
Sections 3.8 and 3.9 hereof, the Company may impose stop-transfer instructions
with respect to the shares of the Common Stock held by Purchaser (and the shares
or securities of every other person subject to the foregoing restrictions).
3.14 Transfers to Affiliates. Notwithstanding the provisions of Sections
3.8 and 3.9(b) and (c) hereof, Purchaser may transfer the Common Stock to any
affiliate of Purchaser who agrees to be bound by the terms of this Agreement.
For purposes of this Section 3.14, "affiliate" shall mean any entity which
controls or is controlled by Purchaser, and "control" shall mean ownership of at
least fifty percent (50%) of the voting stock or other ownership interest.
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4. California Commissioner of Corporations.
4. 1 Corporate Securities Law. THE SALE OF THE COMMON STOCK WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH COMMON STOCK OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF COMMON STOCK IS EXEMPT FROM
QUALIFICATIONS BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5. Covenants.
5.1 Delivery of Financial Statements. The Company shall deliver to
Purchaser such financial statements of the Company which the Company from time
to time distributes to other holders of the Company's Common Stock, concurrently
with such distribution.
5.2 Registration Rights. Purchaser shall have such registration rights
with respect to the Common Stock as are set forth on EXHIBIT A attached hereto;
provided, however, that Purchaser shall agree to be bound by the provisions of
such EXHIBIT A as a condition precedent to the enjoyment of any such rights and,
at the written request of the Company in connection with any request by
Purchaser to exercise such rights, Purchaser shall execute a specific
acknowledgment and agreement to be so bound (or else Purchaser shall be deemed
to have forfeited such rights).
6. Miscellaneous
6.1 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California (irrespective of its choice of law
principles).
6.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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6.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified (or upon the date of
attempted delivery where delivery is refused) or, if sent by telecopier, telex,
telegram, or other facsimile means, upon receipt of appropriate confirmation of
receipt, or upon deposit with the United States Postal Service, by registered or
certified mail, or next day air courier, with postage and fees prepaid and
addressed to the party entitled to such notice at the address indicated for such
party on the signature page hereof, or at such other address as such party may
designate by 10 days, advance written notice to the other parties to this
Agreement.
6.6 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Purchaser agrees to indemnify and hold harmless the Company from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Purchaser or any of its officers, partners, employees or
representatives is responsible.
The Company agrees to indemnify and hold harmless Purchaser from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or is
responsible.
6.7 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and
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either retroactively or prospectively), only with the written consent of the
Company and the holders of a majority of the Common Stock purchased under this
Agreement. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of Common Stock purchased under this Agreement
at the time outstanding, each future holder of such Common Stock, and the
Company.
6.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
6.9 Entire Agreement. This Agreement and the Related Agreements embody
the entire agreement and understanding of the parties hereto and thereto in
respect of the subject matter contained herein and therein and supersede all
prior agreements and understandings between the parties with respect to such
subject matter. No party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IXSYS, INC.
By /s/ XXXXXX XXXXXX
-------------------------------------
Xxxxxx Xxxxxx
President
Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
MEDIMMUNE, INC.
By /s/ [Signature Illegible]
-------------------------------------
Address: 00 Xxxx Xxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000
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EXHIBIT A
REGISTRATION RIGHTS
Subject to each Holder (as defined below) acknowledging and agreeing to
be bound by the terms of this Exhibit A such Holder shall have the rights set
forth herein with respect to such Holder's Registrable Securities (as defined
below).
1. Definitions. For purposes of this Exhibit A:
1.1 The term "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document;
1.2 The term "REGISTRABLE SECURITIES" means (a) the shares of the
Common Stock issued pursuant to the Stock Purchase Agreement dated February 24
1999 between the Company and MedImmune, Inc. ("MedImmune"), (b) any shares of
Common Stock purchased by MedImmune pursuant to Section 6.12(d) of the License
Agreement, effective as of February 24, 1999, between the Company and MedImmune
and (c) any Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Common Stock, excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which such person's registration rights are not
assigned;
1.3 The term "HOLDER" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 10 below; and
1.4 The term "PREFERRED REGISTRABLE SECURITIES" means (a) the
Common Stock issued upon the conversion of the Company's currently outstanding
Convertible Preferred Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
and (b) any Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Preferred Stock or Common Stock.
1.5 The term "Combined Registrable Securities" means the
Registrable Securities and the Preferred Registrable Securities in the
aggregate.
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2. Request for Registration.
2.1 If the Company shall receive at any time after one year after
the effective date of the first registration statement for a public offering of
securities of the Company (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or a SEC Rule 145 transaction), a written
request from the Holders of at least twenty-five percent (25%) of the
Registrable Securities and holders of at least 25% of the Preferred Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act covering the registration of at least 20% of the Combined
Registrable Securities then outstanding (or a lesser percent if the anticipated
aggregate offering price, net of underwriting discounts and commissions, would
exceed $7,500,000), then the Company shall, within 10 days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations of subsection 2.2 and Section 8, file as soon as practicable,
and in any event within 60 days of the receipt of such request, a registration
statement under the Securities Act covering all Registrable Securities which the
Holders request to be registered within 20 days of the mailing of such notice by
the Company. To facilitate a Holder's exercise of the rights granted under this
Section 2, upon request the Company shall furnish to such Holder the names and
addresses (if in the Company's possession) of the holders of the Preferred
Registrable Securities.
2.2 If the holders of the Combined Registrable Securities
initiating the registration request hereunder ("Initiating Holders") intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2 and the Company shall include such information in the
written notice referred to in subsection 2.1. In such event, the right of any
Holder to include such Holder's Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in subsection 4.5) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders and consented
to by the Company (which consent shall not be unreasonably withheld).
Notwithstanding any other provision of this Section 2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall advise all Holders of Registrable Securities which would otherwise
be underwritten pursuant hereto of the number of shares of Registrable
Securities, if any, that may be included in the
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underwriting after giving effect to the superior rights of the holders of
Preferred Registrable Securities as set forth in Section 8, which shares shall
be allocated among all Holders thereof, in proportion (as nearly as practicable)
to the amount of Registrable Securities of the Company owned by each Holder.
2.3 The Company is obligated to effect only one such registration
pursuant to this Section 2 on behalf of the Holders; provided, however, that the
Company shall not be obligated to effect a registration pursuant to this Section
2 if within the 12 months immediately preceding a request hereunder the Company
has effected a demand registration on behalf of holders of Preferred Registrable
Securities pursuant to registration rights granted to such holders.
2.4 Notwithstanding the foregoing, if the Company shall furnish
to Initiating Holders requesting a registration statement pursuant to this
Section 2 a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any 12-month period.
3. Company Registration. If at any time (but without any obligation to
do so) the Company proposes to register any of its stock or other securities
under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or an SEC Rule 145
transaction, or a registration on any form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within 20 days after mailing of
such notice by the Company to the address for each such Holder as reflected in
the records of the Company, the Company shall, subject to the provisions of
Sections 7 and 8 below, cause to be registered under the Securities Act all of
the Registrable Securities that each such Holder has requested to be registered.
In the event a Holder determines not to include any or all of the Registrable
Securities held by such Holder in any such registration, such Holder shall
continue to have the right to include such Registrable Securities in any
subsequent registration, pursuant to the terms of this Section 3.
4. Obligations of the Company. Whenever required under this Exhibit A to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
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4.1 Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days.
4.2 Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the-Securities Act with respect to the disposition of all securities covered by
such registration statement.
4.3 Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
4.4 Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
4.5 In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Any Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
4.6 Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
4.7 Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Exhibit A on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Exhibit A if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the
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Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Exhibit A that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of the Registrable Securities.
6. Expenses of Registration.
6.1 All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or qualifications
pursuant to Section 2, including (without limitation) all registration, filing
and qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel for the Initiating Holders shall be borne by the Company; provided,
however, that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2 if the registration request
is subsequently withdrawn at the request of the holders of a majority of the
Combined Registrable Securities to be registered (in which case all
participating Holders shall bear their pro rata share of such expenses), unless
the holders of a majority of the Registrable Securities agree to forfeit their
right to one demand registration pursuant to Section 2; provided, however, that
if at the time of such withdrawal, the Initiating Holders have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 2.
6.2 The Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of Registrable
Securities with respect to registrations pursuant to Section 3 above for each
Holder (which right may be assigned as provided in Section 12 below), including
(without limitation) all registration, filing and qualification fees, printers,
and accounting fees relating or apportionable thereto but excluding underwriting
discounts and commission relating to Registrable Securities. The Holders may
select their own counsel but any fees and disbursements of such counsel shall be
paid for by the Holders, and the Company shall have no obligation for such fees
and disbursements.
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7. Underwritings and Cut-Backs.
(a) In connection with any offering involving an underwriting of
shares being issued by the Company, the Company shall not be required under
Section 3 above to include any of the Holders, securities in such underwriting
unless they accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it, and then only in such quantity as
will not, in the opinion of the underwriters, jeopardize the success of the
offering by the Company. Notwithstanding the foregoing, the Holders may at any
time upon notice to the Company withdraw from registration any Registrable
Securities previously requested to be included in such registration, subject to
any custody arrangements that may have been subsequently agreed to.
(b) If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering pursuant
to Section 3 exceeds the amount of securities sold other than by the Company
that the underwriters reasonably believe is compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities requested and entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders).
Notwithstanding the foregoing, the rights of the Holders of Registrable
Securities hereunder shall be subject to the prior right of the selling holders
of Preferred Registrable Securities to have registered at least 20% of the total
amount of securities included in such offering (to the exclusion of the
Registrable Securities). For purposes of the above parenthetical phrase
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of such persons shall be deemed to be a single "selling stockholder," and
any pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals deemed hereby to be such "selling stockholder.
8. Superior Rights. Any and all rights of Holders and/or rights relating
to Registrable Securities pursuant to Section 2 shall be subject to, and
qualified in their entirety by, the registration rights of the holders of
Preferred Registrable Securities including, without limitation, the rights of
such holders of Preferred Registrable Securities to have Preferred Registrable
Securities included in a registration requested by
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holders of Preferred Registrable Securities (or holders of Registrable
Securities and Preferred Registrable Securities) to the exclusion of Holders
and/or Registrable Securities (i.e., because inclusion would reduce the number
of Preferred Registrable Securities otherwise included).
9. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of the PROVISIONS of this Exhibit A.
10. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Exhibit A:
10.1 To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "VIOLATION"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and, within 30 days after the
Company receives a written request containing a description in reasonable detail
of the expenses incurred, the Company will advance to each Holder, officer,
director, underwriter or controlling person any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, whether prior to or after final
disposition of any claim or action (unless there has been a final determination
that such Holder, officer, director, underwriter or controlling person is not
entitled to be indemnified for such expenses); provided, however, that at the
time of such advance, such Holder, officer, director, underwriter or controlling
person shall agree to repay the amounts advanced if it is ultimately determined
that he or she is not entitled to be indemnified pursuant to the terms of this
Agreement; provided, further, that the indemnity agreement contained in this
Section 10.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is
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effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by any such Holder, officer, director, underwriter or controlling
person.
10.2 To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities in such registration statement or any of
its directors or officers or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, or underwriter or controlling
person, or other such Holder or director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse as incurred any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter or
controlling person, other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 10.2 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided, further that in no event shall any indemnity under this Section 10.2
exceed the net proceeds from the offering received by such Holder.
10.3 Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain its own counsel, with
the fees and expenses to
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be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement, of any such action, if prejudicial to its ability to defend such
Action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 10 to the extent such delay is prejudicial,
but the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 10.
10.4 The obligations of the Company and Holders under this
Section 10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Exhibit A, termination of the
registration rights granted under this Exhibit A, and otherwise.
10.5 If the indemnification provided for in this Section 10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
11. Reports Under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to (i) at all times after the Company first becomes subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, comply with
the current public information
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requirements of Rule 144(c)(1) under the Securities Act; and (ii) at all such
times as Rule 144 is available for use by a Holder, furnish any Purchaser upon
request with-all information within the possession of the Company required for
the preparation and filing of Form 144;
12. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Exhibit A may be assigned by
(a) a Holder to a transferee or assignee of an amount of such securities
representing not less than twenty-five percent of the aggregate number of shares
of Registrable Securities or (b) any Holder who transfers all of such Holder's
shares; provided, that in each case the Company is, within a reasonable time
after such transfer, furnished with (x) written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned and (y) an undertaking by the assignee to
be bound by the provisions of this Exhibit A; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
13. Amendment of Registration Rights. Any provision of this Exhibit A
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 13
shall be binding upon all Holders and all Registrable Securities.
14. Market Stand-Off Agreement. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, a Holder shall
not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Holder (other than those included in the
registration) during the period of duration specified by the Company and the
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act, provided that:
(a) Such agreement shall not exceed 180 days for the first
registration statement of the Company, which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) Such agreement shall not exceed ninety (90) days for any
subsequent registration statement of the Company which covers Common Stock (or
other securities) to be sold on its behalf to the public in an underwritten
offering; and
(c) Senior Management of the Company shall have agreed to
transfer restrictions no less restrictive than those requested by the Company
and the underwriter.
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00. Termination of Registration Rights. The Company's rights and
obligations pursuant to this Exhibit A shall terminate as to any Holder and any
Registrable Securities on the earlier of (a) when the Holder can sell all of
such Holder's shares pursuant to Rule 144 under the Securities Act during any
95-day period or (b) the third anniversary of the closing of the first Company
initiated registered public offering.
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