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EXHIBIT 10.9
COMBICHEM, INC.
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
November 15, 1996
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TABLE OF CONTENTS
Page
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SECTION 1 RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
REGISTRATION RIGHTS.................................................. 1
1.1 Certain Definitions.................................................. 1
1.2 Requested Registration............................................... 3
1.3 Company Registration................................................. 6
1.4 Expenses of Registration............................................. 7
1.5 Registration on Form S-3............................................. 8
1.6 Registration Procedures.............................................. 8
1.7 Indemnification...................................................... 10
1.8 Information by Holder................................................ 12
1.9 Limitations on Registration of Issues of Securities.................. 13
1.10 Rule 144 Reporting................................................... 13
1.11 Transfer or Assignment of Registration Rights........................ 13
1.12 Restrictions on Transfer............................................. 14
1.13 "Market Stand-Off" Agreement......................................... 15
1.14 Allocation of Registration Opportunities............................. 15
1.15 Delay of Registration................................................ 16
1.16 Termination of Registration Rights................................... 16
SECTION 2 COVENANTS OF THE COMPANY............................................. 16
2.1 Basic Financial Information.......................................... 16
2.2 Additional Information and Rights.................................... 17
2.3 Right of First Refusal............................................... 18
2.4 Key Person Life Insurance............................................ 20
2.5 Representation on Board of Directors................................. 21
2.6 Termination of Covenants............................................. 21
SECTION 3 MISCELLANEOUS........................................................ 21
3.1 Governing Law........................................................ 21
3.2 Successors and Assigns............................................... 21
3.3 Entire Agreement; Amendment; Waiver.................................. 21
3.4 Notices, etc......................................................... 22
3.5 Delays or Omissions.................................................. 22
3.6 Rights; Separability................................................. 22
3.7 Information Confidential............................................. 22
3.8 Titles and Subtitles................................................. 23
3.9 Counterparts......................................................... 23
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AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (this
"Agreement") is made and entered into as of the 15th day of November, 1996 by
and among CombiChem, Inc., a California corporation (the "Company"), and the
persons identified on Exhibit A attached hereto (the "Investors").
RECITALS
WHEREAS, certain of the Investors possess registration rights
pursuant to that certain Investors' Rights Agreement dated August 17, 1995, as
amended through the date hereof between the Company and such Investors (the
"Rights Agreement") and certain of the Investors possess information rights,
rights of first refusal and other rights, and the Company is obligated
thereunder, pursuant to the Rights Agreement; and
WHEREAS, the Rights Agreement may be modified or amended with the
written consent of the Company and the holders of a majority of the Registrable
Securities (as defined in the Rights Agreement) then outstanding; and
WHEREAS, the Investors which are parties thereto, which Investors
hold at least a majority of the Registrable Securities, desire to amend and
restate the Rights Agreement and to accept the rights created pursuant hereto in
lieu of the rights granted to them under the Rights Agreement; and
WHEREAS, certain Investors are parties to the Series D Preferred
Stock Purchase Agreement dated as of the date hereof among the Company and such
Investors (the "Series D Agreement"), certain of the Investors' obligations
under which are conditioned upon the execution and delivery by such Investors
and the Company of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Investors who are parties to the Rights
Agreement agree that the Rights Agreement shall be amended and restated in its
entirety as set forth herein, and all parties hereto further agree as follows:
SECTION 1
RESTRICTIONS ON TRANSFERABILITY OF
SECURITIES; REGISTRATION RIGHTS
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
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(a) "Closing" shall mean the date of the initial sale of
shares of the Company's Series D Preferred Stock.
(b) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(c) "Holder" shall mean any Investor who holds Registrable
Securities and any holder of Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with
Section 1.11 hereof.
(d) "Initial Offering" shall mean the Company's first firm
commitment underwritten public offering of its Common Stock registered under the
Securities Act.
(e) "Initiating Holders" shall mean any Holder or Holders
who in the aggregate hold not less than fifty percent (50%) of the outstanding
Registrable Securities. For purposes of such calculation, Holders of Shares
shall be considered to hold the shares of Common Stock then issuable upon
conversion of such Shares.
(f) "JAFCO Funds" shall mean Japan Associated Finance Co.,
Ltd. ("JAFCO") and certain Investment Enterprise Partnerships affiliated with
JAFCO which are holders of Shares.
(g) "Other Shareholders" shall mean persons other than
Holders who, by virtue of agreements with the Company, are entitled to include
their securities in certain registrations.
(h) "Registrable Securities" shall mean (i) shares of
Common Stock issued or issuable pursuant to the conversion of the Shares and
(ii) 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 the shares
referenced in (i) above; provided, however, that Registrable Securities shall
not include any such securities sold by a person to the public either pursuant
to a registration statement or Rule 144 or sold in a private transaction in
which the transferor's rights under this Section 1 are not assigned.
(i) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
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(j) "Registration Expenses" shall mean all expenses
incurred in effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, fees
and disbursements of one counsel for the Holders (solely with respect to
registrations pursuant to Sections 1.2 and 1.3 hereof), blue sky fees and
expenses, expenses of any regular or special audits incident to or required by
any such registration, but shall not include Selling Expenses (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company).
(k) "Rule 144" shall mean Rule 144 as promulgated by the
SEC under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the SEC.
(l) "Rule 145" shall mean Rule 145 as promulgated by the
SEC under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the SEC.
(m) "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(n) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time,
corresponding to such act.
(o) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder (other than
the fees and disbursements of the one counsel included in Registration
Expenses).
(p) "Shares" shall mean shares of the Company's Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series Z Preferred Stock, Series A-1 Preferred Stock, Series
B-1 Preferred Stock, Series C-1 Preferred Stock and Series D-1 Preferred Stock
held by the Investors.
1.2 Requested Registration.
(a) Request for Registration. If the Company shall receive
from Initiating Holders at any time or times not earlier than the earlier of (i)
January 1, 1998 or (ii) six (6) months after the effective date of the first
registration statement filed by the Company covering an underwritten offering of
any of its securities to the general public, a written request specifying that
it is made pursuant to this Section 1.2 that the Company effect a registration
with respect to all or a part of the Registrable Securities having a reasonably
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anticipated aggregate offering price, net of underwriting discounts and
commissions, that exceeds $12,000,000, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its diligent best
efforts to effect such registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws and appropriate compliance with the Securities
Act) as would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after such written notice from the
Company is effective.
The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 1.2:
(A) In any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process in effecting such registration, qualification or compliance, unless
the Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act; or
(B) After the Company has effected
two such registrations pursuant to this Section 1.2(a) and such registrations
have been declared or ordered effective; or
(C) During the period starting with
the date of filing of and ending on a date one hundred eighty (180) days after
the effective date of a registration pursuant to Section 1.3 hereof; provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or
(D) If the Initiating Holders
propose to dispose of shares of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made under Section 1.5 hereof.
(b) Subject to the foregoing Section 1.2(a)(ii) (A)
through (D), the Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable
after receipt of the request or requests of the Initiating Holders; provided,
however, that if (i) in the good faith judgment of the Board of Directors of the
Company, such registration would be seriously detrimental to the Company and the
Board of Directors of the Company concludes, as a result, that it is essential
to defer the filing of such registration statement at such time, and (ii) the
Company shall furnish to such Holders a
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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 for such registration statement to be filed in the
near future and that it is, therefore, essential to defer the filing of such
registration statement, then the Company shall have the right to defer such
filing for the period during which such disclosure would be seriously
detrimental, provided, that the Company may not defer the filing for a period of
more than ninety (90) days after receipt of the request of the Initiating
Holders, and, provided further, that (except as provided in Section
1.2(a)(ii)(C) above) the Company shall not defer its obligation in this manner
more than once in any twelve-month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 1.2(b) and 1.14
hereof, include other securities of the Company and may include securities of
the Company being sold for the account of the Company.
(c) Underwriting. If the 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 Section 1.2 and the Company shall include such information in the
written notice referred to in Section 1.2(a)(i) above. The right of any Holder
to registration pursuant to Section 1.2 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 with respect to
such participation and inclusion) to the extent provided herein. A Holder may
elect to include in such underwriting all or a part of the Registrable
Securities he holds.
(d) Procedures. If the Company shall request inclusion in
any registration pursuant to Section 1.2 of securities being sold for its own
account, or if other persons shall request inclusion in any registration
pursuant to Section 1.2, the Initiating Holders shall, on behalf of all Holders,
offer to include such securities in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this Section 1
(including Section 1.13). The Company shall (together with all Holders, and
other persons proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders, which underwriter(s) are
reasonably acceptable to the Company. Notwithstanding any other provision of
this Section 1.2, if the representative of the underwriters advises the
Initiating Holders in writing that marketing factors require a limitation on the
number of shares to be underwritten, the number of shares to be included in the
underwriting or registration shall be allocated as set forth in Section 1.14
hereof. If the person who has requested inclusion in such registration as
provided above does not agree to the terms of any such underwriting, such person
shall be excluded therefrom by written notice from the Company, the underwriter
or the Initiating Holders. The securities so excluded shall also be withdrawn
from
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registration. Any Registrable Securities or other securities excluded shall also
be withdrawn from such registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to this Section
1.2(d), then the Company shall offer to all holders who have retained rights to
include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares withdrawn, with such shares to be allocated among such Holders requesting
additional inclusion in accordance with Section 1.14.
1.3 Company Registration.
(a) Company Registration. If the Company shall determine
to register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights (other than pursuant to Section 1.2 hereof), other than a registration
relating solely to employee benefit plans, or a registration relating solely to
a Rule 145 transaction, or a registration on any registration form which does
not permit secondary sales, or the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public,
the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 1.3(b) below, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder within twenty (20) days after
the written notice from the Company described in Section 1.3(a)(i) above is
effective. Such written request may specify all or a part of a Holder's
Registrable Securities for inclusion.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the holders of other securities of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable
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Securities to be included in, the registration and underwriting. The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter as set forth in Section
1.14. If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number
of shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion in accordance
with Section 1.14 hereof.
1.4 Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Sections 1.3 and 1.5 hereof, and the first two registrations pursuant to Section
1.2 hereof shall be borne by the Company; provided, however, that if the Holders
bear the Registration Expenses for any registration proceeding begun pursuant to
Section 1.2 and subsequently withdrawn by the Holders registering shares
therein, such registration proceeding shall not be counted as a requested
registration pursuant to Section 1.2 hereof, except in the event that such
withdrawal is based upon material adverse information relating to the Company
that is different from the information known or available (upon request from the
Company or otherwise) to the Holders requesting registration at the time of
their request for registration under Section 1.2, in which event such
registration shall not be treated as a counted registration for purposes of
Section 1.2 hereof even though the Holders do not bear the Registration Expenses
for such registration. All Selling Expenses relating to securities so registered
shall be borne by the holders of such securities pro rata on the basis of the
number of shares of securities so registered on their behalf.
1.5 Registration on Form S-3.
(a) After the Initial Offering, the Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms. After the Company has qualified for the use of Form
S-3, in addition to the rights contained in the foregoing provisions of this
Section 1, the Holders of Registrable Securities shall have the right to request
registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
methods of disposition of such shares by such Holder or Holders), provided,
however, that the Company shall not be obligated to effect any such registration
if (i) the Holders, together with the
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holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) on Form S-3 at an aggregate price to the public of less than $500,000,
or (ii) in the event that the Company shall furnish the certification described
in paragraph 1.2(a)(ii) (but subject to the limitations set forth therein) or
(iii) in a given twelve-month period, after the Company has effected one (1)
such registration in any such period.
(b) If a request complying with the requirements of
Section 1.5(a) hereof is delivered to the Company, the provisions of Sections
1.2(a)(i) and (ii) and Section 1.2(b) hereof shall apply to such registration.
If the registration is for an underwritten offering, the provisions of Sections
1.2(c) and 1.2(d) hereof shall apply to such registration.
1.6 Registration Procedures. In the case of each registration
effected by the Company pursuant to Section 1, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that (i) such 120-day period shall be extended
for a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be extended,
if necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement;
(b) 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;
(c) Furnish such number of prospectuses and other
documents incident thereto, including any preliminary prospectus or amendment of
or supplement to the prospectus, as a Holder from time to time may reasonably
request;
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(d) Notify each seller 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 on 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 or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the 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 or
incomplete in the light of the circumstances then existing;
(e) Use all reasonable efforts to register and qualify the
securities covered by the registration statement under such other securities or
Blue Sky laws of such jurisdiction as shall be reasonably requested by the
Holders; provided, however, 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 state or jurisdiction;
(f) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(g) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration;
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
II(a) of the Securities Act;
(i) In connection with any underwritten offering pursuant
to a registration statement filed pursuant to Section 1.2 hereof, the Company
will enter into an underwriting agreement reasonably necessary to effect the
offer and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary contribution
provisions; and
(j) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the
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underwriters for sale, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the date that
such registration statement with respect to such securities becomes effective,
(A) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (B) a letter dated as of 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 and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and if permitted by applicable accounting standards, to
the Holders requesting registration of Registrable Securities.
1.7 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners, legal counsel and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification or compliance has been
effected pursuant to this Section 1 and each underwriter, if any, and each
person who controls within the meaning of Section 15 of the Securities Act any
underwriter, against all expenses, claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors, partners, legal
counsel and accountants and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein. It is agreed that the indemnity agreement contained in this Section
1.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent has not been unreasonably withheld).
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(b) Each Holder will, if Registrable Securities held by
him are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its directors,
officers, partners, legal counsel and accountants and each underwriter, if any,
of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, each other such Holder and Other Shareholder
and each of their officers, directors and partners, and each person controlling
such Holder or Other Shareholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Holders, Other Shareholders,
directors, officers, partners, legal counsel and accountants, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated specifically for use therein,
provided, however, that the obligations of such Holder hereunder shall not apply
to amounts paid in settlement of any such claims, losses, damages or liabilities
(or actions in respect thereof) if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld).
(c) Each party entitled to indemnification under this
Section 1.7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
1, to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
-11-
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(d) If the indemnification provided for in this Section
1.7 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 which 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.
(e) 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.
1.8 Information by Holder. Each Holder of Registrable Securities
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.9 Limitations on Registration of Issues of Securities. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of a majority in interest of the Holders, enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder any registration rights the terms of
which are more favorable than the registration rights granted to the Holders
hereunder.
1.10 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times from and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
-12-
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(b) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements;
(c) So long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration.
1.11 Transfer or Assignment of Registration Rights. The rights to
cause the Company to register securities granted to a Holder by the Company
under Sections 1.2, 1.3 and 1.5 may be transferred or assigned by a Holder only
to a transferee or assignee of not less than 25,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits and the like), and only
provided that the Company is given written notice at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned, and provided
further that the transferee or assignee of such rights assumes the obligations
of such Holder under this Article 1.
1.12 Restrictions on Transfer.
(a) Each Holder agrees not to transfer or dispose of all
or any portion of the Registrable Securities unless and until the proposed
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 1.12, provided and to the extent this Section 1.12 is then
applicable and:
(i) There is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(ii) (A) Such Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (B) if requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, to
the effect that such disposition will not require registration of such shares
under the Securities Act.
-13-
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Notwithstanding the provisions of subsections (i) and (ii) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
(A) by a Holder which is a partnership to its partners or retired partners in
accordance with partnership interests, (B) to a Holder's family member or trust
for the benefit of an individual Holder, provided that the transferee will be
subject to the terms of this Section 1.12 to the same extent as if he were an
original Holder hereunder, or (C) pursuant to Rule 144(k); provided, however,
that the Company must be satisfied in its reasonable discretion that the
proposed sale of securities fully qualifies with all Rule 144 requirements.
(b) Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
1.13 "Market Stand-Off" Agreement. If requested by the Company
and an underwriter of Common Stock (or other securities) of the Company, an
Investor shall not sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Investor (other than those
included in the registration) during the one hundred eighty (180) day period
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that all Holders and officers and directors
of the Company enter into similar agreements.
The obligations described in this Section 1.13 shall not apply to
a registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms which may be promulgated in the future, or a registration
relating solely to a Rule 145 transaction on Form S-4, Form S-14 or Form S-15 or
similar forms which may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of said one hundred eighty (180) day
period.
1.14 Allocation of Registration Opportunities. In any
circumstance in which all of the Registrable Securities and other shares of
Common Stock of the Company (including shares of Common Stock issued or issuable
upon conversion of shares of any currently unissued series of Preferred Stock of
the Company) with registration rights (the "Other Shares") requested to be
included in a registration on behalf of the Holders or other
-14-
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selling shareholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares which may
be so included, the number of shares of Registrable Securities and Other Shares
which may be so included shall be allocated among the Holders and other selling
shareholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by such
Holders and other selling shareholders, assuming conversion; provided, however,
that, so that such allocation shall not operate to reduce the aggregate number
of Registrable Securities and Other Shares to be included in such registration,
if any Holder or other selling shareholder does not request inclusion of the
maximum number of shares of Registrable Securities and Other Shares allocated to
him pursuant to the above-described procedure, the remaining portion of his
allocation shall be reallocated among those requesting Holders and other selling
shareholders whose allocations did not satisfy their requests pro rata on the
basis of the number of shares of Registrable Securities and Other Shares that
would be held by such Holders and other selling shareholders, assuming
conversion, and this procedure shall be repeated until all of the shares of
Registrable Securities and Other Shares that may be included in the registration
on behalf of the Holders and other selling shareholders have been so allocated.
The Company shall not limit the number of Registrable Securities to be included
in a registration pursuant to this Agreement in order to include shares held by
shareholders with no registration rights or to include Founder's Stock or any
other shares of stock issued to employees, officers, directors or consultants
pursuant to the Company's stock option plan, or with respect to registrations
under Sections 1.2 or 1.5 hereof, in order to include in such registration
securities registered for the Company's own account or included at the request
of the Company pursuant to Section 1.3 hereof without the prior written consent
of seventy percent (70%) of the Holders; provided, further, that in no event
will the amount of securities of the selling Holders included in a registration
pursuant to Section 1.3 hereof be reduced below twenty percent (20%) of the
total amount of securities included in such offering, unless such offering is
the Initial Offering of the Company's securities in which case the selling
shareholders may be excluded entirely if the underwriters make the determination
described above and no other shareholder's securities are included. For purposes
of determining allocation hereunder, (a) for any selling shareholder which is a
Holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and shareholders 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 the foregoing persons will be deemed to be a single "selling
shareholder," and (b) all of the JAFCO Funds together shall be deemed to be a
"selling shareholder." Any pro-rata reduction with respect to any such "selling
shareholder" will be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling shareholder."
1.15 Delay of Registration. No Holder shall have any right to
take any, action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
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1.16 Termination of Registration Rights. The right of any Holder
to request registration or inclusion in any registration pursuant to Sections
1.2, 1.3 or 1.5 shall terminate on the closing of the first Company-initiated
registered public offering of Common Stock of the Company, provided that all
shares of Registrable Securities held or entitled to be held upon conversion by
such Holder may immediately be sold under Rule 144 during any 90-day period, or
on such date after the closing of the first Company-initiated registered public
offering of Common Stock of the Company as all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period.
SECTION 2
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees, so long as any Holder
owns any Registrable Shares as follows:
2.1 Basic Financial Information. The Company will furnish the
following reports to each Holder:
(a) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days thereafter, a
consolidated balance sheet of the Company and its subsidiaries, if any, as at
the end of such fiscal year, and consolidated statements of income and sources
and applications of funds of the Company and its subsidiaries, if any, for such
year, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and certified by
independent public accountants of recognized national standing selected by the
Company.
(b) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of the
Company, and in any event within forty-five (45) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as of the end of each
such quarterly period, and consolidated statements of income and sources and
applications of funds of the Company and its subsidiaries for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in
comparative form the figures for the corresponding periods of the previous
fiscal year and to the Company's operating plan then in effect and approved by
its Board of Directors, subject to changes resulting from normal year-end audit
adjustments, all in reasonable detail and certified by the principal financial
or accounting officer of the Company, except that such balance sheet need not
contain the notes required by generally accepted accounting principles.
2.2 Additional Information and Rights.
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(a) The Company will permit any Investor, so long as such
Investor or its representative (treating all the JAFCO Funds as a single
Investor) owns at least 500,000 Shares, or such number of shares of Common Stock
issued upon conversion of 500,000 or more Shares, or any combination thereof (as
presently constituted and subject to subsequent adjustment for stock splits,
stock dividends, reverse stock splits, recapitalizations and the like) (a
"Significant Holder") (or a representative of any Significant Holder) to visit
and inspect any of the properties of the Company, including its books of account
and other records (and make copies thereof and take extracts therefrom), and to
discuss its affairs, finances and accounts with the Company's officers and its
independent public accountants, all at such reasonable times and as often as any
such person may reasonably request.
(b) Until the earlier to occur of (i) the date on which
the Company is subject to the reporting requirements of Sections 13(a) or 15(d)
of the Exchange Act, or (ii) the date on which quotations for the Common Stock
of the Company are reported by the automated quotations systems operated by the
National Association of Securities Dealers, Inc., or by an equivalent quotations
system, the Company will deliver the reports described below in this Section 2.2
to each Significant Holder:
(i) As soon as practical after the end of each
month and in any event within thirty (30) days thereafter a consolidated balance
sheet of the Company and its subsidiaries, if any, as at the end of such month
and consolidated statements of income and of sources and applications of funds
of the Company and its subsidiaries, for each month and for the current fiscal
year of the Company to date, all subject to normal year-end audit adjustments,
prepared in accordance with generally accepted accounting principles
consistently applied and certified by the principal financial or accounting
officer of the Company, together with a comparison of such statements to the
corresponding periods of the prior fiscal year and to the Company's operating
plan then in effect and approved by its Board of Directors.
(c) The provisions of Section 2.1 and this Section 2.2
shall not be in limitation of any rights which any Holder or Significant Holder
may have with respect to the books and records of the Company and its
subsidiaries, or to inspect their properties or discuss their affairs, finances
and accounts, under the laws of the jurisdictions in which they are
incorporated.
(d) Anything in Section 2 to the contrary notwithstanding,
no Holder or Significant Holder by reason of this Agreement shall have access to
any trade secrets or classified information of the Company. Each Significant
Holder hereby agrees to hold in confidence and trust and not to misuse or
disclose any confidential information provided pursuant to this Section 2.2.
(e) Each Holder who represents to the Company that it is a
"venture capital operating company" for purposes of Department of Labor
Regulation Section 2510.3-101
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shall in addition have the right to consult with and advise the officers of the
Company as to the management of the Company.
2.3 Right of First Refusal. The Company hereby grants to each
Holder and its affiliates who own any shares of Series A, Series B, Series C,
Series D, Series A-1, Series B-1, Series C-1 or Series D-1 Preferred Stock (the
"Cash Preferred") or any shares of Common Stock issued upon conversion of the
Cash Preferred (the "Rights Holder") the right of first refusal to purchase a
Pro Rata Share (as defined in this Section 2.3) of New Securities (as defined in
this Section 2.3) which the Company may, from time to time, propose to sell and
issue. A Rights Holder's Pro Rata Share, for purposes of this right of first
refusal, is the ratio of the number of shares of Common Stock owned by such
Rights Holder immediately prior to the issuance of New Securities, assuming full
conversion of the Shares, to the total number of shares of Common Stock
outstanding immediately prior to the issuance of New Securities, assuming full
conversion of the Shares and exercise of all outstanding rights, options and
warrants to acquire Common Stock of the Company. For purposes of this Section
2.3, each of the JAFCO Funds shall be deemed to have purchased its Pro Rata
Share if one or more of the JAFCO Funds shall have purchased an amount of New
Securities equal to the Pro Rata Share of the JAFCO Funds in the aggregate. Each
Rights Holder shall have a right of over-allotment such that if any Rights
Holder fails to exercise its right hereunder to purchase its pro rata share of
New Securities, the other Rights Holders may purchase the non-purchasing Rights
Holder's portion on a pro rata basis within ten (10) days from the date such
non-purchasing Rights Holder fails to exercise its right hereunder to purchase
its Pro Rata Share of New Securities. This right of first refusal shall be
subject to the following provisions:
(a) "New Securities" shall mean any capital stock
(including Common Stock and/or Preferred Stock) of the Company whether now
authorized or not, and rights, options or warrants to purchase such capital
stock, and securities of any type whatsoever that are, or may become,
convertible into capital stock; provided that the term "New Securities" does not
include (i) securities purchased under the Series D Agreement; (ii) securities
issued upon conversion of the Shares; (iii) securities issued pursuant to the
acquisition of another business entity or business segment of any such entity by
the Company by merger, purchase of substantially all the assets or other
reorganization whereby the Company will own not less than fifty-one percent
(51%) of the voting power of such business entity or business segment of any
such entity; (iv) any borrowings, direct or indirect, from financial
institutions or other persons by the Company, whether or not presently
authorized, including any type of loan or payment evidenced by any type of debt
instrument, provided such borrowings do not have any equity features including
warrants, options or other rights to purchase capital stock and are not
convertible into capital stock of the Company; (v) securities issued to
employees, consultants, officers or directors of the Company pursuant to any
stock option, stock purchase or stock bonus plan, agreement or arrangement
approved by the Board of Directors; (vi) securities issued to vendors or
customers or to other persons in similar commercial situations with the Company
if such issuance is approved by the Board of
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Directors; (vii) securities issued in connection with obtaining lease financing,
whether issued to a lessor, guarantor or other person; (viii) securities issued
in a firm commitment underwritten public offering pursuant to a registration
under the Securities Act with an aggregate offering price to the public in
excess of $5.0 million; (ix) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company; and (x) any right,
option or warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to subsections (i)
through (ix) above.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Rights Holder written notice of
its intention, describing the type of New Securities, and their price and the
general terms upon which the Company proposes to issue the same. Each Rights
Holder shall have twenty (20) days after any such notice is effective to agree
to purchase such Rights Holder's Pro Rata Share of such New Securities for the
price and upon the terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
(c) In the event the Rights Holders fail to exercise fully
the right of first refusal within said twenty (20)-day period and after the
expiration of the ten (10)-day period for the exercise of the over-allotment
provisions of this Section 2.3, the Company shall have one hundred twenty (120)
days thereafter to sell or enter into an agreement (pursuant to which the sale
of New Securities covered thereby shall be closed, if at all, within one hundred
twenty (120) days from the date of said agreement) to sell the New Securities
respecting which the Rights Holders' right of first refusal option set forth in
this Section 2.3 was not exercised, at a price and upon terms no more favorable
to the purchasers thereof than specified in the Company's notice to Rights
Holders pursuant to Section 2.3(b). In the event the Company has not sold within
said one hundred twenty (120)-day period or entered into an agreement to sell
the New Securities within said one hundred twenty (120)-day period (or sold and
issued New Securities in accordance with the foregoing within one hundred twenty
(120) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities, without first again offering such securities
to the Rights Holders in the manner provided in Section 2.3(b) above.
(d) At any time following the date of this Agreement, if
the Company has complied with its notice obligations pursuant to this Section
2.3, or such obligations have been waived, and the Company thereafter proceeds
to issue or sell New Securities and a Rights Holder does not acquire his, her or
its Pro Rata Share (a "NonParticipating Rights Holder"), then all of such
Non-Participating Rights Holder's Cash Preferred shall automatically and without
further action on the part of such holder be converted, in accordance with the
provisions of Article III(B)(4)(m) of the Company's Amended and Restated
Articles of Incorporation.
(e) The right of first refusal granted under this
Agreement shall expire upon, and shall not be applicable to, the first sale of
Common Stock of the Company
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to the public effected pursuant to a registration statement filed with, and
declared effective by, the SEC under the Securities Act, with proceeds of more
than $5,000,000.
(f) The right of first refusal set forth in this Section
2.3 may not be assigned or transferred, except that (i) such right is assignable
by each Rights Holder to any wholly owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Securities Act,
controlling, controlled by or under common control with, any such Rights Holder,
and (ii) such right is assignable between and among any of the Rights Holders.
2.4 Key Person Life Insurance. The Company has as of the date
hereof obtained from financially sound and reputable insurers term life
insurance on the life of Xxxxx Xxxx in the amount of [$2,000,000] (the "Xxxx
Insurance"), and shall maintain with financially sound and reputable insurers
the Xxxx Insurance except as otherwise decided in accordance with policies
adopted by the Company's Board of Directors. Such policy shall name the Company
as loss payee and shall not be cancelable by the Company without prior approval
of the Board of Directors.
2.5 Representation on Board of Directors. So long as any Shares
remain outstanding, the Company will use its best efforts to cause and maintain
the election to the Board of Directors of (a) two people designated by the
holders of a majority of the Series C Preferred Stock outstanding, including
Common Stock issued upon conversion of such Series C Preferred Stock (each a
"Series C Director"), and (b) two people designated by the holders of a majority
of the Series A and Series B Preferred Stock outstanding, including Common Stock
issued upon conversion of such Series A and B Preferred Stock. One Series C
Director shall be designated by The Sprout Group and the other Series C Director
shall be designated, subject to the consent of The Sprout Group, by a holder of
at least 2,419,355 shares of Series C Preferred Stock in the aggregate. In the
event that two or more holders of Series C Preferred Stock, other than The
Sprout Group, each hold in excess of 2,419,355 shares of Series C Preferred
Stock, then that holder holding the greatest number of shares of Series C
Preferred Stock shall have the right to designate the remaining Series C
Director. In the event that two or more such holders hold an equal number of
Series C Preferred Stock, then The Sprout Group shall determine which of them
shall designate the remaining Series C Director. For the purposes of this
paragraph, a "holder" shall include the affiliates of any holder.
2.6 Termination of Covenants. The covenants set forth in this
Section 2 shall terminate and be of no further force and effect after the time
of effectiveness of the Company's first firm commitment underwritten public
offering registered under the Securities Act.
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23
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California, as if entered into by and
between California residents exclusively for performance entirely within
California.
3.2 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
3.3 Entire Agreement; Amendment; Waiver. This Agreement
(including the Exhibits hereto) constitutes the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated, except by a written instrument signed by the Company
and the holders of at least fifty percent (50%) of the Registrable Shares and
any such amendment, waiver, discharge or termination shall be binding on all the
Holders, but in no event shall the obligation of any Holder hereunder be
materially increased, except upon the written consent of such Holder.
3.4 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally addressed by hand or
special courier (a) if to a Holder, as indicated on the list of Holders attached
hereto as Exhibit A, or at such other address as such Investor or permitted
assignee shall have furnished to the Company in writing, or (b) if to the
Company, at 0000 Xxxxxx Xxxxx Xx, Xxx Xxxxx, Xxxxxxxxxx 00000, or at such other
address as the Company shall have furnished to each holder in writing. All such
notices and other written communications shall be effective (i) if mailed, five
(5) days after mailing and (ii) if delivered, upon delivery.
3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy of
such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Holder of any breach or default under this Agreement or any
waiver on the part of any Holder of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any Holder, shall be cumulative and
not alternative.
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3.6 Rights; Separability. Unless otherwise expressly provided
herein, a Holder's rights hereunder are several rights, not rights jointly held
with any of the other Holders. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
3.7 Information Confidential. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its use
only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees or agents having a need to know the contents of
such information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company has made such information
available to the public generally or such Holder is required to disclose such
information by a governmental body.
3.8 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
3.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Title:
------------------------------
HOLDER:
------------------------------------
[Name of Holder]
By:
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
26
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
FORWARD VENTURES II., L.P.
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxxxx
---------------------------------
Title: Xxxx Xxxxxxx, General Partner
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
27
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA XXIV
SEQUOIA 1995
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Title: General Partner
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
28
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXX XXXXXXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxxxxx
---------------------------------
Title: Vice President
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
29
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXX XXXXXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
30
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
SPROUT CAPITAL VII, L.P.
------------------------------------
[Name of Holder]
By: /s/ X. Xxxxxxx
---------------------------------
Title: Vice President, Sprout Group
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
31
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
DLJ CAPITAL CORPORATION
------------------------------------
[Name of Holder]
By: /s/ X. Xxxxxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
32
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
C.V. SOFINNOVA VENTURES PARTNERS III
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxxxx
--------------------------------
Title: Xxxx Xxxxxxx, M.D.
------------------------------
General Partner
Sofinnova Management L.P.
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
33
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
SINGAPORE BIO-INNOVATIONS PTE LTD
------------------------------------
[Name of Holder]
By: /s/ Yong-Sea Teoh
---------------------------------
Title: Director & General Manager
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
34
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXX XXXXXX, CUST, FBO
XXXXXXX XXXXXXXX, XXX R/O
------------------------------------
[Name of Holder]
By: /s/ Illegible
---------------------------------
Title: Branch Director
------------------------------
By: /s/ Xxxxxxx Xxxxxxxx
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
35
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXX X. XXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
36
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
Xxxxx X. Xxxxxxx
------------------------------------
[Name of Holder]
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
37
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
THE X.X. XXXXXXXX TRUST
------------------------------------
[Name of Holder]
By: /s/ Xxxxxxx Xxxx
---------------------------------
Title: Trustee
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
38
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXX INC.
------------------------------------
[Name of Holder]
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Title: Chief Financial Officer
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
39
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
------------------------------------------
Title:
---------------------------------------
HOLDER:
SORRENTO VENTURES II, L.P.
----------------------------------------------
[Name of Holder]
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Title: President, Sorrento Associates, Inc.
----------------------------------------
General Partner, Sorrento Equity Partners L.P.
General Partner, Sorrento Ventures II L.P.
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
40
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
SORRENTO GROWTH PARTNERS I, L.P.
----------------------------------------------
[Name of Holder]
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Title: President, Sorrento Growth, Inc.
-----------------------------------------
General Partner, Sorrento Equity Growth
Partners I, L.P.
General Partner, Sorrento Growth Partners I, L.P.
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
41
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
COMDISCO, INC.
------------------------------------
[Name of Holder]
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Title: Assistant Vice President
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
42
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
------------------------------------
Title:
---------------------------------
HOLDER:
HOLDER:
XXXXXXX VENTURE CAPITAL FUND III, L.P.
BY ITS GENERAL PARTNER, XXXXXXX
PARTNERS , INC.
---------------------------------------
[Name of Holder]
By: /s/ Xxxxx Xxxxx
-----------------------------------
Title: Partner, Xxxxxxx Partners, Inc.
---------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
43
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXXX TRUST COMPANY AS TRUSTEE
OF THE XXXXXXX MAP VENTURE CAPITAL
FUND III
------------------------------------
[Name of Holder]
By: /s/ Xxxxx Xxxxx
---------------------------------
Title: Assistant Trust Officer
------------------------------
Xxxxxxx Trust Company
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
44
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
JAPAN ASSOCIATED FINANCE CO., LTD.
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Title: Xxxxxx Xxxxxxx, President
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
45
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
JAFCO G-5 INVESTMENT ENTERPRISE
PARTNERSHIP
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Title: Xxxxxx Xxxxxxx, President
------------------------------------------
Japan Associated Finance Co., Ltd. Its Executive
Partner
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
46
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
JAFCO R-1 (A) INVESTMENT ENTERPRISE
PARTNERSHIP
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Title: Xxxxxx Xxxxxxx, President
-----------------------------------------
Japan Associated Finance Co., Ltd. Its Executive
Partner
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
47
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
JAFCO R-1(B) INVESTEMENT ENTERPRISE
PARTNERSHIP
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Title: Xxxxxx Xxxxxxx, President
------------------------------------------
Japan Associated Finance Co., Ltd. Its Executive
Partner
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
48
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
JAFCO R-2 INVESTMENT ENTERPRISE
PARTNERSHIP
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Title: Xxxxxx Xxxxxxx, President
------------------------------------------
Japan Associated Finance Co., Ltd. Its Executive
Partner
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
49
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
BRENTWOOD ASSOCIATES VII, L.P. BY:
BRENTWOOD VII VENTURES
ITS GENERAL PARTNER
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxx
---------------------------------
Title: General Partner
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
50
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
S.R. ONE, LIMITED
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: Vice President
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
51
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXXX XXXXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
52
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXX XXXXXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxxxx
--------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
53
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXXXXX XXXXX, XX.
------------------------------------
[Name of Holder]
By: /s/ Xxxxxxx Xxxxx, Xx.
---------------------------------
Title: President & CEO
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
54
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXX X. XXXXXXXX
------------------------------------
[Name of Holder]
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Title: Anido Designee
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
55
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
THE XXXXX X. XXXXXXXXX TRUST,
DATED 6/21/91
------------------------------------
[Name of Holder]
By: /s/ Xxx XxXxxxxxx
---------------------------------
Title: Trustee
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
56
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
Xxxxxx Xxxx
------------------------------------
[Name of Holder]
By: /s/ Xxxxxx Xxxx
---------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
57
IN WITNESS WHEREOF, the parties hereto have executed this
Investors Rights Agreement effective as of the day and year first above written.
COMBICHEM, INC.
By:
---------------------------------
Title:
------------------------------
HOLDER:
XXXX XXXXXX XXXXXXX TRUST
U/A DTD 7/11/88
------------------------------------
[Name of Holder]
By: /s/ Xxxx Xxxxxx Xxxxxxx
---------------------------------
Title: Trustee
------------------------------
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
58
EXHIBIT A
INVESTORS
Forward Ventures II, L.P.
Sequoia Capital VI
Sequoia Technology Partners VI
Sequoia XXIV
Sequoia 1995
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxxx
Sprout Capital VII, L.P.
DLJ Capital Corporation
C. V. Sofinnova Ventures Partners III
Singapore Bio-Innovations Pte, Ltd
PaineWebber Incorporated as Custodian of the Xxxxxxx Xxxxxxxx Rollover XXX
Xxxxxx X. Xxxx First Interstate Bank as Trustee for SK International Securities
Corp.
401(k)PS em Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
XXX FBO Xxxxx X. Xxxxxxx
The X.X. Xxxxxxxx Trust
Xxxxxx Inc.
Sorrento Ventures II, L.P.
Sorrento Growth Partners I, L.P.
Comdisco, Inc.
Xxxxxxx Venture Capital Fund III, L.P. (The First National Bank of Chicago as
Custodian to the Xxxxxxx Venture Capital Fund III, L.P.)
Xxxxxxx Trust Company as Trustee of the Xxxxxxx MAP Venture Capital Fund III
(The First National Bank of Chicago as Custodian to the Xxxxxxx Trust Company
as Trustee of the Xxxxxxx MAP Venture Capital Fund III)
Japan Associated Finance Co., Ltd.
JAFCO G-5 Investment Enterprise Partnership
JAFCO R-1(A) Investment Enterprise Partnership
JAFCO R-1(B) Investment Enterprise Partnership
JAFCO R-2 Investment Enterprise Partnership
Brentwood Associates VII, L.P.
S.R. One Limited
Xxxxxxx X. Xxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxx
Xxxx X. Xxxxxxxx
The Xxxxx X. XxXxxxxxx Trust, dated 6/21/91
Xxxxx Xxxx
Xxxx Xxxxxx Xxxxxxx Trust U/A Dtd 7/11/88
Exhibit A
