EX-4.2 7 dex42.htm THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT Execution Copy ZOGENIX, INC. THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT December 2, 2009 Page -i- (Continued) Page -ii- ZOGENIX, INC. THIRD AMENDED AND RESTATED...
Exhibit 4.2
Execution Copy
ZOGENIX, INC.
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
December 2, 2009
TABLE OF CONTENTS
| Page | ||||
| Section 1 Definitions | 1 | |||
| 1.1 | Certain Definitions | 1 | ||
| Section 2 Registration Rights | 5 | |||
| 2.1 | Requested Registration. | 5 | ||
| 2.2 | Company Registration. | 7 | ||
| 2.3 | Registration on Form S-3. | 8 | ||
| 2.4 | Expenses of Registration | 9 | ||
| 2.5 | Registration Procedure | 10 | ||
| 2.6 | Indemnification | 11 | ||
| 2.7 | Information by Holder | 13 | ||
| 2.8 | Restrictions on Transfer | 13 | ||
| 2.9 | Rule 144 Reporting | 15 | ||
| 2.10 | Market Stand-Off Agreement | 16 | ||
| 2.11 | Delay of Registration | 16 | ||
| 2.12 | Transfer or Assignment of Registration Rights | 16 | ||
| 2.13 | Limitations on Subsequent Registration Rights | 16 | ||
| 2.14 | Termination of Registration Rights | 17 | ||
| Section 3 Covenants of the Company | 17 | |||
| 3.1 | Basic Financial Information and Inspection Rights | 17 | ||
| 3.2 | Confidentiality | 18 | ||
| 3.3 | Proprietary Information and Inventions Agreements | 18 | ||
| 3.4 | Employee Agreements | 18 | ||
| 3.5 | Board of Directors Reimbursement | 18 | ||
| 3.6 | Board of Directors Compensation | 18 | ||
| 3.7 | D&O Insurance | 19 | ||
| 3.8 | Section 1202(c) Compliance | 19 | ||
| 3.9 | Series B Most Favored Nation | 19 | ||
| 3.10 | Termination of Covenants | 19 | ||
| Section 4 Right of First Refusal | 19 | |||
| 4.1 | Right of First Refusal to Significant Holders | 19 | ||
| Section 5 Miscellaneous | 21 | |||
| 5.1 | Amendment | 21 | ||
| 5.2 | Amendment and Termination of Prior Rights Agreement | 22 | ||
| 5.3 | Notices | 22 | ||
| 5.4 | Governing Law | 23 |
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TABLE OF CONTENTS
(Continued)
| Page | ||||
| 5.5 | Successors and Assigns | 23 | ||
| 5.6 | Entire Agreement | 23 | ||
| 5.7 | Delays or Omissions | 23 | ||
| 5.8 | Severability | 23 | ||
| 5.9 | Titles and Subtitles | 24 | ||
| 5.10 | Counterparts | 24 | ||
| 5.11 | Telecopy Execution and Delivery | 24 | ||
| 5.12 | Jurisdiction; Venue | 24 | ||
| 5.13 | Further Assurances | 24 | ||
| 5.14 | Termination Upon Change of Control | 24 | ||
| 5.15 | Attorneys’ Fees | 25 | ||
| 5.16 | Aggregation of Stock | 25 |
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ZOGENIX, INC.
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
This Third Amended and Restated Investors’ Rights Agreement (this “Agreement”) is made as of December 2, 2009, by and among Zogenix, Inc., a Delaware corporation (the “Company”), and the persons and entities (each, an “Investor” and collectively, the “Investors”) listed on Exhibit A hereto. Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings ascribed to them in Section 1.
RECITALS
WHEREAS: The Company and certain of the Investors are parties to that certain Second Amended and Restated Investors’ Rights Agreement dated as of September 22, 2009 (the “Prior Rights Agreement”).
WHEREAS: Certain of the Investors have previously purchased and/or will purchase shares of the Company’s Series B Preferred Stock, par value $0.001 per share ( the “Series B Preferred”), pursuant to the Amended and Restated Series B Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”), and certain other Investors have previously purchased shares of the Company’s Series A-1 Preferred Stock, par value $0.001 per share (the “Series A-1 Preferred”), or the Company’s Series A-2 Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred,” and together with the Series B Preferred and the Series A-1 Preferred, the “Preferred Stock”).
WHEREAS: It is a condition to the Second Closing (as defined in the Purchase Agreement) of the sale of the Series B Preferred to the Investors listed on the Schedule of Investors to the Purchase Agreement that the Investors and the Company execute and deliver this Agreement.
WHEREAS: The parties to the Prior Rights Agreement desire to hereby amend and restate the Prior Rights Agreement in its entirety.
NOW, THEREFORE: In consideration of the mutual promises and covenants set forth herein, and other consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:
Section 1
Definitions
1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
(a) “CIT” shall mean The CIT Group/Equity Investments, Inc.
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(b) “CIT Shares” means the shares of the Series A-2 Preferred issuable upon exercise of the CIT Warrant.
(c) “CIT Warrant” shall mean that certain warrant dated June 30, 2008, issued to CIT Healthcare LLC and subsequently assigned to CIT.
(d) “Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
(e) “Common Stock” means the Company’s common stock, par value $0.001 per share.
(f) “Conversion Stock” shall mean shares of Common Stock issued upon conversion of the Series A-1 Preferred, the Series A-2 Preferred and the Series B Preferred.
(g) “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.
(h) “GE Shares” shall mean the shares of the Series A-1 Preferred issuable upon exercise or conversion of the GECC Warrant.
(i) “GECC” shall mean General Electric Capital Corporation.
(j) “GECC Warrant” shall mean that certain warrant dated March 5, 2007, issued to GECC.
(k) “Holder” shall mean (i) any Investor holding Registrable Securities, (ii) solely for purposes of Sections 2.1(e), 2.2, 2.3(d), 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 and 5 of this Agreement, GECC to the extent that it holds Registrable Securities (iii) solely for purposes of Sections 2.1(e), 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 and 5 of this Agreement, CIT to the extent it holds Registrable Securities, and (iv) any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been duly and validly transferred in accordance with Section 2.12 of this Agreement.
(l) “Indemnified Party” shall have the meaning set forth in Section 2.6(c) hereto.
(m) “Indemnifying Party” shall have the meaning set forth in Section 2.6(c) hereto.
(n) “Initial Public Offering” shall mean the closing of the Company’s first firm commitment underwritten public offering of the Company’s Common Stock registered under the Securities Act.
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(o) “Initiating Holders” shall mean any Holder or Holders who in the aggregate hold at least thirty percent (30%) of the outstanding Registrable Securities.
(p) “Investor Warrants” shall mean collectively those warrants issued to certain of the Investors (i) pursuant to that certain Note and Warrant Purchase Agreement, dated as of February 27, 2009, by and between the Company and the Investors who are signatories thereto, and/or (ii) pursuant to the Purchase Agreeement.
(q) “Investors” shall mean the persons and entities listed on Exhibit A hereto.
(r) “New Securities” shall have the meaning set forth in Section 4.1(a) hereto.
(s) “Other Selling Stockholders” shall mean persons other than Holders who, by virtue of agreements with the Company, are entitled to include their Other Shares in certain registrations hereunder.
(t) “Other Shares” shall mean shares of Common Stock, other than Registrable Securities (as defined below), with respect to which registration rights have been granted.
(u) “Oxford” shall mean Oxford Finance Corporation.
(v) “Oxford Shares” means the shares of the Series A-2 Preferred issuable upon exercise of the Oxford Warrant.
(w) “Oxford Warrant” shall mean that certain warrant dated June 30, 2008, issued to Oxford.
(x) “Registrable Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of the Shares or exercise of the Investor Warrants or the Oxford Warrant, and solely for purposes of Sections 2.1(e), 2.2, 2.3(d), 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 and 5 of this Agreement, shares of Common Stock issuable pursuant to the conversion of the GE Shares or exercise of the GECC Warrant and solely for purposes of Sections 2.1(e), 2.2, 2,3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 and 5 of this Agreement, shares of Common Stock issuable pursuant to the conversion of the CIT Shares or exercise of the Warrant, and (ii) any Common Stock of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of the Shares referenced in clause (i) above (or the shares of Common Stock referenced in clause (i) above); provided, however, that Registrable Securities shall not include any shares of Common Stock described in clause (i) or (ii) above which have previously been registered or which have been sold to the public either pursuant to a registration statement or Rule 144, or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not validly assigned in accordance with this Agreement; provided further, that for the avoidance of doubt the shares of Common Stock issuable pursuant to the conversion of the GE Shares, CIT Shares or Oxford Shares, or exercise of the GECC Warrant, CIT Warrant or Oxford Warrant, shall not be Registrable Securities for purposes of Section 2.8 of this Agreement.
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(y) 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.
(z) “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 and one special counsel for the Holders, blue sky fees and expenses, and expenses of any regular or special audits incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of other counsel for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.
(aa) “Restricted Securities” shall mean any Registrable Securities required to bear the first legend set forth in Section 2.8(c) hereof.
(bb) “Rule 144” shall mean Rule 144 as promulgated by the Commission 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 Commission.
(cc) “Rule 145” shall mean Rule 145 as promulgated by the Commission 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 Commission.
(dd) “Rule 415” shall mean Rule 415 as promulgated by the Commission 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 Commission.
(ee) “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.
(ff) “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of one special counsel to the Holders included in Registration Expenses).
(gg) “Shares” shall mean the Preferred Stock.
(hh) “Significant Holders” shall have the meaning set forth in Section 4.1 hereof.
(ii) “Withdrawn Registration” shall mean a forfeited demand registration under Section 2.1 in accordance with the terms and conditions of Section 2.4.
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Section 2
Registration Rights
2.1 Requested Registration.
(a) Request for Registration. Subject to the conditions set forth in this Section 2.1, if the Company shall receive from Initiating Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to all or a part of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Initiating Holders), the Company will:
(i) promptly give written notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, file and use its best efforts to have such registration statement declared effective (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) and to 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 mailed or delivered.
(b) Limitations on Requested Registration. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 2.1:
(i) Prior to the earlier of (A) the five (5) year anniversary of the date of this Agreement or (B) one hundred eighty (180) days following the effective date of the Initial Public Offering;
(ii) If the Initiating Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration statement, propose to sell Registrable Securities and such other securities (if any) and the aggregate proceeds of which (after deduction for underwriter’s discounts and expenses related to the issuance) are less than $10,000,000;
(iii) 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;
(iv) After the Company has initiated three such registrations pursuant to this Section 2.1;
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(v) During the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration (or ending on the subsequent date on which all market stand-off agreements applicable to the offering have terminated); provided that the Company is actively employing in good faith best efforts to cause such registration statement to become effective; or
(vi) If the Initiating Holders propose to dispose of shares of Registrable Securities which may be immediately registered on Form S-3 pursuant to a request made under Section 2.3 hereof.
(c) Deferral. If (i) in the good faith judgment of the Board of Directors of the Company, the filing of a registration statement covering the Registrable Securities would be detrimental to the Company and the Board of Directors of the Company concludes, as a result, that it is in the best interests of the Company to defer the filing of such registration statement at such time, and (ii) the Company shall furnish to such Holders 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 detrimental to the Company for such registration statement to be filed in the near future and that it is, therefore, in the best interests of the Company to defer the filing of such registration statement, then (in addition to the limitations set forth in Section 2.1(b)(v) above) the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders, and, provided further, that the Company shall not defer its obligation in this manner more than once in any twelve-month period.
(d) Other Shares. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2.1(e), include Other Shares and securities of the Company being sold for the account of the Company.
(e) 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 this Section 2.1 and the Company shall include such information in the written notice given pursuant to Section 2.1(a)(i). In such event, the right of any Holder to include all or any portion of its Registrable Securities in such registration pursuant to this Section 2.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities to the extent provided herein. If the Company shall request inclusion in any registration pursuant to Section 2.1 of securities being sold for its own account, or if other persons shall request inclusion in any registration pursuant to Section 2.1, the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and such offer shall be conditioned upon the participation of the Company or such other persons in such underwriting and the inclusion of the Company’s and such person’s other securities of the Company and their acceptance of the further applicable provisions of this Section 2 (including Section 2.10). 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 underwriters are reasonably acceptable to the Company.
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Notwithstanding any other provision of this Section 2.1, if the underwriters advise the Initiating Holders in writing that market factors require a limitation on the number of shares to be underwritten, the number of Registrable Securities and Other Shares that may be so included shall be allocated as follows: (i) first, among all the Holders (excluding GECC and CIT) requesting to include Registrable Securities held by such Holders, assuming conversion; (ii) second, to GECC and CIT; (iii) third, to the Other Selling Stockholders; and (iv) fourth, to the Company, which the Company may allocate, at its discretion, for its own account, or for the account of other holders or employees of the Company.
If a 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 registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting 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 2.1(e), then the Company shall then offer to all Holders and Other Selling Stockholders who have retained rights to include securities in the registration the right to include additional Registrable Securities or Other Shares in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders and Other Selling Stockholders requesting additional inclusion, as set forth above.
2.2 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, other than a registration pursuant to Section 2.1 or 2.3, a registration relating solely to employee benefit plans, a registration relating to the offer and sale of debt securities, a registration relating to a corporate reorganization or other Rule 145 transaction, or a registration on any registration form that does not permit secondary sales, the Company will:
(i) promptly give written notice of the proposed registration to all Holders; 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 2.2(b) below, and in any underwriting involved therein, all of such Registrable Securities as are specified in a written request or requests made by any Holder or Holders received by the Company within ten (10) days after such written notice from the Company is mailed or delivered. Such written request may specify all or a part of a Holder’s Registrable Securities.
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(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 2.2(a)(i). In such event, the right of any Holder to registration pursuant to this Section 2.2 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 Other Selling Stockholders) 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 2.2, if the underwriters advise the Company in writing that marketing factors require a limitation on the number of shares to be underwritten, the underwriters may (subject to the limitations set forth below) exclude all Registrable Securities from, or limit the number of Registrable Securities to be included in, the registration and underwriting; provided that the number of Registrable Securities included in such registration and underwriting shall not be reduced below 30% of the securities included in such registration unless such offering is the Company’s Initial Public Offering in which case the Holders may be excluded entirely if the underwriters make the determination described above and no securities other than those of the Company are included in such registration. 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, as follows: (i) first, to the Company for securities being sold for its own account, (ii) second, to the Holders requesting to include Registrable Securities in such registration statement based on the pro rata percentage of Registrable Securities held by such Holders, assuming conversion and (iii) third, to the Other Selling Stockholders requesting to include Other Shares in such registration statement based on the pro rata percentage of Other Shares held by such Other Selling Stockholders, assuming conversion.
If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall also be excluded therefrom by written notice from the Company or the underwriter. The Registrable Securities or other securities so excluded shall also be withdrawn from such registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company.
2.3 Registration on Form S-3.
(a) Request for Form S-3 Registration. After its Initial Public 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 2 and subject to the conditions set forth in this Section 2.3, if the Company shall receive from a Holder or Holders of Registrable Securities
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a written request that the Company effect any registration on Form S-3 or any similar short form registration statement with respect to all or part of the Registrable Securities (such request 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), the Company will take all such action with respect to such Registrable Securities as required by Section 2.1(a)(i) and (ii).
(b) Limitations on Form S-3 Registration. The Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2.3:
(i) In the circumstances described in either Sections 2.1(b)(i), 2.1(b)(iii) or 2.1(b)(v);
(ii) If the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) on Form S-3 at an aggregate price to the public of less than $5,000,000; or
(iii) If, in a given twelve-month period, the Company has effected two (2) such registrations in such period.
(c) Deferral. The provisions of Section 2.1(c) shall apply to any registration pursuant to this Section 2.3.
(d) Underwriting. If the Holders of Registrable Securities requesting registration under this Section 2.3 intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of Sections 2.1(e) shall apply to such registration. Notwithstanding anything contained herein to the contrary, registrations effected pursuant to this Section 2.3 shall not be counted as requests for registration or registrations effected pursuant to Section 2.1.
2.4 Expenses of Registration. All Registration Expenses incurred in connection with registrations pursuant to Sections 2.1, 2.2 and 2.3 hereof 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 Sections 2.1 and 2.3 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered or because a sufficient number of Holders shall have withdrawn so that the minimum offering conditions set forth in Sections 2.1 and 2.3 are no longer satisfied (in which case all participating Holders shall bear such expenses pro rata among each other based on the number of Registrable Securities requested to be so registered), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to a demand registration pursuant to Section 2.1. Notwithstanding the foregoing, if at the time of such withdrawal, the 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 and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Sections 2.1 and 2.3. All Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the holders of securities included in such registration pro rata among each other on the basis of the number of Registrable Securities so registered.
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2.5 Registration Procedures. In the case of each registration effected by the Company pursuant to Section 2, 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) Have such registration declared effective and keep such registration effective for a period of ending on the earlier of the date which is one hundred twenty (120) days from the effective date of the registration statement or such time as the Holder or Holders have completed the distribution described in the registration statement relating thereto;
(b) Prepare and file with the Commission 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 for the period set forth in subsection (a) above;
(c) Furnish such number of prospectuses, including any preliminary prospectuses, and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder from time to time may reasonably request;
(d) 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 jurisdiction 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;
(e) 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 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 or incomplete in light of the circumstances then existing, and following such notification promptly 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 light of the circumstances then existing;
(f) Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
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(g) 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; and
(h) In connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 2.1 hereof, enter into an underwriting agreement in form reasonably necessary to effect the offer and sale of Common Stock, provided such underwriting agreement contains reasonable and customary provisions, and provided further, that each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
2.6 Indemnification.
(a) To the extent permitted by law, the Company will indemnify and hold harmless 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 2, 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: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference 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, (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation (or alleged violation) by the Company of the Securities Act, any state securities laws or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any offering covered by such registration, qualification or compliance, and the Company 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 action arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder, any of such Holder’s officers, directors, partners, legal counsel or accountants, any person controlling such Holder, such underwriter or any person who controls any such underwriter, and stated to be specifically for use therein; and provided, further that, the indemnity agreement contained in this Section 2.6(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 shall not be unreasonably withheld).
(b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors,
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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 each of their officers, directors and partners, and each person controlling each other such Holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference 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 (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holders, 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 to be 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); and provided that in no event shall any indemnity under this Section 2.6 exceed the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section 2.6 (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 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 be unreasonably 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 2.6, 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 that 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.
(d) If the indemnification provided for in this Section 2.6 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 herein, then the Indemnifying Party, in lieu of indemnifying
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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. No Holder will be required under this Section 2.6(d) to contribute any amount, when combined with any amounts paid by such Holder pursuant to Section 2.6(b), in excess of the net proceeds from the offering received by such person or entity, except in the case of fraud or willful misconduct by such person or entity. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.
(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.
2.7 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 2.
2.8 Restrictions on Transfer.
(a) The holder of each certificate representing Registrable Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 2.8. Each Holder agrees not to make any sale, assignment, transfer, pledge or other disposition of all or any portion of the Restricted Securities, or any beneficial interest therein, unless and until (x) the transferee thereof has agreed in writing for the benefit of the Company to take and hold such Restricted Securities subject to, and to be bound by, the terms and conditions set forth in this Agreement, including, without limitation, this Section 2.8 and Section 2.10, except for transfers permitted under Section 2.8(b), and (y):
(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) Such Holder shall have given prior written notice to the Company of such Holder’s intention to make such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition, and, if requested
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by the Company, such Holder shall have furnished the Company, at its expense, with (i) an opinion of counsel, reasonably satisfactory to the Company, to the effect that such disposition will not require registration of such Restricted Securities under the Securities Act or (ii) a “no action” letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.
(b) Permitted transfers include (i) a transfer not involving a change in beneficial ownership, or (ii) transactions involving the distribution of Restricted Securities by any Holder to (x) a parent, subsidiary or other affiliate of Holder that is a corporation, (y) any of its partners, members or other equity owners, or retired partners, retired members or other equity owners, or to the estate of any of its partners, members or other equity owners or retired partners, retired members or other equity owners, or (z) a venture capital fund that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, such Holder, or (iii) transfers permitted without restriction pursuant to Rule 144, as long as the Company is furnished with satisfactory evidence of compliance with such Rule; provided, in each case, that the Holder thereof shall give written notice to the Company of such Holder’s intention to effect such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition.
(c) 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 SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO (1) RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC
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OFFERING, AS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT, AND (2) VOTING RESTRICTIONS AS SET FORTH IN A VOTING AGREEMENT AMONG THE COMPANY AND THE ORIGINAL HOLDERS OF THESE SHARES, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.
The Holders consent to the Company making a notation on its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer established in this Section 2.8.
(d) The first legend referring to federal and state securities laws identified in Section 2.8(c) hereof stamped on a certificate evidencing the Restricted Securities and the stock transfer instructions and record notations with respect to such Restricted Securities shall be removed and the Company shall issue a certificate without such legend to the holder of such Restricted Securities if (i) such securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably acceptable to the Company to the effect that a public sale or transfer of such securities may be made without registration under the Securities Act, or (iii) such holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel satisfactory to the Company, that such securities can be sold without restriction pursuant to Rule 144 under the Securities Act.
2.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information regarding the Company available as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after 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;
(b) File with the Commission 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; and
(c) So long as a Holder owns any Restricted 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 Commission allowing a Holder to sell any such securities without registration.
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2.10 Market Stand-Off Agreement. Each Holder hereby agrees that such Holder shall not sell or otherwise transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, of any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) during the one hundred eighty (180) day period following the effective date of the Company’s Initial Public Offering filed under the Securities Act (or such other period as may be requested by an underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto). The obligations described in this Section 2.10 shall not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions and may stamp each such certificate with the second legend set forth in Section 2.8(c) hereof with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of such one hundred eighty (180) day (or other) period. Each Holder agrees to execute a market standoff agreement with said underwriters in customary form consistent with the provisions of this Section 2.10. The foregoing provisions of this Section 2.10 shall only be applicable to the Holders if all officers, directors and greater than two percent (2%) stockholders of the Company enter into similar agreements. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply to all Holders subject to such agreements pro rata based on the number of shares subject to such agreements.
2.11 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 2.
2.12 Transfer or Assignment of Registration Rights. The rights to cause the Company to register securities granted to a Holder by the Company under this Section 2 may be transferred or assigned by a Holder only to a transferee or assignee of not less than 1,000,000 shares of Registrable Securities (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits, and the like) or an acceptable Transferee in accordance with Section 2.8(b); provided that (i) such transfer or assignment of Registrable Securities is effected in accordance with the terms of Section 2.8 hereof, the Right of First Refusal and Co-Sale Agreement, and applicable securities laws, (ii) the Company is given written notice prior to said transfer or assignment, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are intended to be transferred or assigned and (iii) the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement, including without limitation the obligations set forth in Section 2.10.
2.13 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of sixty seven percent (67%) in interest of the Holders, enter into any agreement with any holder or prospective holder of any
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securities of the Company giving such holder or prospective holder any registration rights the terms of which are senior to the registration rights granted to the Holders hereunder or can be included in a demand registration.
2.14 Termination of Registration Rights. The right of any Holder to request registration or inclusion in any registration pursuant to Section 2.1, 2.2 or 2.3 shall terminate on the earlier of (i) such date, on or after the closing of the Company’s first registered public offering of Common Stock, on which all shares of Registrable Securities held or entitled to be held upon conversion by such Holder (together with its affiliates) may immediately be sold under Rule 144 during any ninety (90)-day period, and (ii) five (5) years after the closing of the Company’s Qualifying IPO (as defined in the Fourth Amended and Restated Certificate of Incorporation, as may be amended from time to time).
Section 3
Covenants of the Company
The Company hereby covenants and agrees, as follows:
3.1 Basic Financial Information and Inspection Rights.
(a) Basic Financial Information. The Company will furnish the following reports to each Holder who owns at least 3,000,000 Shares and/or Conversion Stock (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits, and the like):
(i) As soon as practicable after the end of each fiscal year of the Company, and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, 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 cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with U.S. generally accepted accounting principles consistently applied, audited and certified by independent public accountants of recognized national standing selected by the Company.
(ii) As soon as practicable after the end of each calendar month, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such monthly period, and unaudited consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject to changes resulting from normal year-end audit adjustments.
(iii) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company commencing after the first full quarterly period ending on March 31, 2007, and in any event within forty-five (45) days after the end of the first, second, and third quarterly accounting periods in each fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of
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each such quarterly period, and unaudited consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject to changes resulting from normal year-end audit adjustments.
(iv) As soon as practicable, but in any event at least thirty (30) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly basis, including balance sheets, income statements and statements of cash flows for such months and, as soon as prepared, any other budgets or revised budgets prepared by the Company.
(b) Inspection Rights. The Company shall permit each Significant Holder, at such Significant Holder’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Significant Holder; provided, however, that the Company shall not be obligated pursuant to this Section 3.1(b) to provide access to any information that it reasonably considers to be a trade secret or similar confidential information.
3.2 Confidentiality. Anything in this Agreement to the contrary notwithstanding, no Holder by reason of this Agreement shall have access to any trade secrets of the Company. The Company shall not be required to comply with any information rights of Section 3 in respect of any Holder whom the Board of Directors of the Company reasonably determines to be a competitor or an officer, employee, director or holder of more than ten percent (10%) of a competitor.
3.3 Proprietary Information and Inventions Agreements. The Company shall require all employees and consultants with access to confidential information to execute and deliver a Proprietary Information and Inventions Agreement in substantially the form approved by the Company’s Board of Directors.
3.4 Employee Agreements. Unless approved by the Board of Directors of the Company, all future employees of the Company who shall purchase, or receive options to purchase, shares of the Company’s Common Stock following the date hereof shall be required to execute stock purchase or option agreements providing for (i) vesting of shares over a four-year period with the first 25% of such shares vesting following twelve (12) months of continued employment or services, and the remaining shares vesting in equal monthly installments over the following 36 months thereafter and (ii) a 180-day lockup period in connection with the Company’s Initial Public Offering. The Company shall retain a right of first refusal on transfers until the Company’s Initial Public Offering and the right to repurchase unvested shares at cost.
3.5 Board of Directors Reimbursement. The Company shall reimburse reasonable documented costs incurred by non-employee directors in attending meetings of the Board of Directors or otherwise supporting Company activities.
3.6 Board of Directors Compensation. Except in the case of Cam Xxxxxx and except for reimbursement of expenses pursuant to Section 3.5, each non-employee director shall be compensated, if at all, in the same manner and in the same amounts as all other non-employee directors.
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3.7 D&O Insurance . The Company shall maintain a D&O insurance policy on the Board of Directors and officers of the Company in an amount reasonably equivalent to similarly situated companies.
3.8 Section 1202(c) Compliance. The Company shall make reasonable efforts to comply with Section 1202(c) of the Internal Revenue Code (“IRC”) and shall make all filings required under Section 1202(D)(1)(c) of the IRC and any related treasury regulations.
3.9 Series B Most Favored Nation. The Company shall not authorize or create any new class or series of equity security having rights, preferences, privileges or powers senior to the Series B Preferred, unless contemporaneously with such authorization or creation, the terms of the Series B Preferred set forth in the Corporation’s Certificate of Incorporation, as may be amended from time to time, are amended such that the Series B Preferred have the same rights, preferences, privileges and powers as such new class or series.
3.10 Termination of Covenants. The covenants set forth in this Section 3 shall terminate and be of no further force and effect after the earlier of (i) closing of the Company’s Initial Public Offering or (ii) the date when none of the Shares and Conversion Stock remains outstanding.
Section 4
Right of First Refusal
4.1 Right of First Refusal to Significant Holders. The Company hereby grants to each Holder who, together with its affiliates, owns at least 1,000,000 Shares or Conversion Stock (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits and the like) (the “Significant Holders”), the right of first refusal to purchase its pro rata share of New Securities (as defined in this Section 4.1(a)) which the Company may, from time to time, propose to sell and issue after the date of this Agreement. A Significant Holder’s pro rata share, for purposes of this right of first refusal, is equal to the ratio of (a) the number of shares of Common Stock owned by such Significant Holder immediately prior to the issuance of New Securities (assuming full conversion of the Shares and exercise of all outstanding convertible securities, rights, options and warrants, directly or indirectly, into Common Stock held by said Significant Holder) to (b) 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 convertible securities, rights, options and warrants, directly or indirectly).
(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, convertible securities, options or warrants to purchase such capital stock, and securities of any type whatsoever that are, or may become, exercisable or convertible into capital stock; provided that the term “New Securities” does not include:
(i) the Shares and the Conversion Stock;
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(ii) securities issued or issuable to officers, employees, directors, consultants, placement agents, and other service providers of the Company (or any subsidiary) pursuant to stock grants, option plans, purchase plans, agreements or other employee stock incentive programs or arrangements approved by the Board of Directors of the Company;
(iii) securities issued pursuant to the conversion or exercise of any other outstanding convertible or exercisable securities as of this date of this Agreement;
(iv) securities issued or issuable as a dividend or distribution on Preferred Stock of the Company or pursuant to any event for which adjustment is made pursuant to paragraph 4(e), 4(f) or 4(g) of the Fourth Amended and Restated Certificate of Incorporation of the Company, as may be amended from time to time;
(v) securities offered pursuant to a bona fide, firmly underwritten public offering pursuant to a registration statement filed under the Securities Act;
(vi) securities issued or issuable pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board of Directors of the Company, including a majority of the directors representing the holders of Preferred Stock;
(vii) securities issued or issuable to banks, equipment lessors or other financial institutions pursuant to a commercial leasing or debt financing transaction approved by the Board of Directors of the Company, including a majority of the directors representing the holders of Preferred Stock;
(viii) securities issued or issuable in connection with sponsored research, collaboration, technology license, development, OEM, supply, marketing or other similar agreements approved by the Board of Directors of the Company, including a majority of the directors representing the holders of Preferred Stock;
(ix) securities of the Company which are otherwise excluded by the vote or consent of the holders of at least sixty seven percent (67%) of the shares of Preferred Stock of the Company then outstanding; 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 Significant 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
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same. Each Significant Holder shall have twenty (20) days after any such notice is mailed or delivered to agree to purchase such 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, in substantially the form attached hereto as Schedule 1, and stating therein the quantity of New Securities to be purchased.
(c) In the event the Holders fail to exercise fully the right of first refusal within said twenty (20) day period (the “Election Period”), the Company shall have thirty (30) 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 sixty (60) days from the date of said agreement) to sell that portion of the New Securities with respect to which the Significant Holders’ right of first refusal option set forth in this Section 4.1 was not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company’s notice to Significant Holders delivered pursuant to Section 4.1(b). In the event the Company has not sold within such thirty (30) day period following the Election Period, or such sixty (60) day period following the date of said agreement, the Company shall not thereafter issue or sell any New Securities, without first again offering such securities to the Significant Holders in the manner provided in this Section 4.1.
(d) The right of first refusal granted under this Agreement shall expire upon a Qualified IPO (as defined in the Company’s Fourth Amended and Restated Certificate of Incorporation, as may be amended from time to time).
Section 5
Miscellaneous
5.1 Amendment. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company and the Holders holding sixty seven percent (67%) of the Registrable Securities (excluding any of such shares that have been sold to the public or pursuant to Rule 144) then entitled to registration under Section 2; provided, however, that additional purchasers of Preferred Stock may become parties to this Agreement by executing a counterpart of this Agreement without any amendment of this Agreement pursuant to this paragraph or any consent or approval of any other Holder and such purchasers shall be deemed an “Investor” hereunder and Exhibit A shall be amended accordingly; provided further that no term of this Agreement may be amended, waived, discharged or terminated in a manner that uniquely and materially adversely affects the rights of a series of Preferred Stock, but does not so affect the entire class of Preferred Stock, other than by a written instrument referencing this Agreement and signed by the Company and the Holders holding a majority of such affected series of Preferred Stock; provided further that no term of this Agreement may be amended, waived, discharged or terminated in a manner that uniquely and materially adversely affects the rights of a Holder of any series of Preferred Stock, but does not proportionally affect the other Holders of such series of Preferred Stock, other than by a written instrument referencing this Agreement and signed by the Company and such Holder; provided further that no provision of Sections 2.1(e), 2.2, 2.3(d), 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 or this Section 5 of this Agreement may be amended, waived, discharged or
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terminated in a manner that uniquely and adversely affects the rights of the Holder holding the GECC Warrant or, if the GECC Warrant has been exercised or converted, the GECC Shares, but does not so affect the entire class of Preferred Stock in which the GECC Shares are (or would be upon exercise of the GECC Warrant) included, other than by a written instrument referencing this Agreement and signed by the Company and the Holder holding the GECC Warrant or, if the GECC Warrant has been exercised or converted, holding a majority of the GECC Shares; and provided further that no provision of Sections 2.1(e), 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 2.10, 2.11, 2.12 or this Section 5 of this Agreement may be amended, waived, discharged or terminated in a manner that uniquely and adversely affects the rights of the Holder holding the CIT Warrant or, if the CIT Warrant has been exercised or converted, the CIT Shares, but does not so affect the entire class of Preferred Stock in which the CIT Shares are (or would be upon exercise of the CIT Warrant) included, other than by a written instrument referencing this Agreement and signed by the Company and the Holder holding the CIT Warrant or, if the CIT Warrant has been exercised or converted, holding a majority of the CIT Shares. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each Holder and each future holder of all such securities of Holder. Each Holder acknowledges that by the operation of this paragraph but subject to the terms of this paragraph, the holders of sixty seven percent (67%) of the Registrable Securities (excluding any of such shares that have been sold to the public or pursuant to Rule 144) then entitled to registration under Section 2 will have the right and power to diminish or eliminate all rights of such Holder under this Agreement.
5.2 Amendment and Termination of Prior Rights Agreement. The Prior Rights Agreement is hereby amended in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and Holders holding at least sixty seven percent (67%) of the Registrable Securities under the Prior Rights Agreement. Upon such execution, all provisions of, rights granted and covenants made in the Prior Rights Agreement (including, without limitation, the rights of first refusal set forth in Section 4 of the Prior Rights Agreement) are hereby waived, released and terminated in their entirety and shall have no further force and effect (including, without limitation, with respect to the Series B Preferred issued pursuant to the Purchase Agreement and the shares issued upon conversion or exercise thereof).
5.3 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (only if specifically indicated below), or otherwise delivered by hand or by messenger addressed:
(a) if to an Investor, at the Investor’s address as shown in the Company’s records, as may be updated in accordance with the provisions hereof, which in the case of Chicago Growth Partners II, L.P. shall be initially as set forth in the Purchase Agreement;
(b) if to any Holder, at such address, facsimile number or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address, facsimile number or electronic mail address to the Company, then to and at the address of the last holder of such shares for which the Company has contact information in its records; or
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(c) if to the Company, one copy should be sent to 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attn: Chief Financial Officer, or at such other address as the Company shall have furnished to the Investors, with a copy to Xxxxxxx X. Xxxxxx, Xxxxxx & Xxxxxxx LLP, 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid or, if sent by facsimile, upon confirmation of facsimile transfer or, if sent by electronic mail, when directed to the electronic mail address set forth on the Schedule of Investors.
5.4 Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to principles of conflicts of law.
5.5 Successors and Assigns. This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company, except in connection with any sale, assignment, transfer, pledge or other disposition of Registrable Securities in accordance with this Agreement. Any attempt by an Investor without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
5.6 Entire Agreement. This Agreement and the exhibits hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party hereto shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein.
5.7 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, 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 party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be 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 party to this Agreement, shall be cumulative and not alternative.
5.8 Severability. If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such
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provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.
5.9 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. All references in this Agreement to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.
5.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties that execute such counterparts, and all of which together shall constitute one instrument.
5.11 Telecopy Execution and Delivery. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.
5.12 Jurisdiction; Venue. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in San Diego County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Southern District of California located in San Diego County).
5.13 Further Assurances. Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Agreement.
5.14 Termination Upon Change of Control. Notwithstanding anything to the contrary herein, this Agreement (excluding any then-existing obligations) shall terminate upon (a) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in the Company held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of the Corporation or such surviving entity outstanding immediately after such transaction or series of transactions; or (b) a sale, lease or other conveyance of all or substantially all of the assets of the Company.
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5.15 Attorneys’ Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
5.16 Aggregation of Stock. All securities held or acquired by affiliated entities (including affiliated venture capital funds) or persons shall be aggregated together for purposes of determining the availability of any rights under this Agreement.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.
| COMPANY: |
| ZOGENIX, INC. a Delaware corporation |
| /s/ Xxxxx X. Xxxxxx |
| Xxxxx X. Xxxxxx |
| Chief Executive Officer |
| Address: |
| 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000 Xxx Xxxxx, Xxxxxxxxxx 00000 |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| CLARUS LIFESCIENCES I, L.P. | ||
| By: | Clarus Ventures I GP, L.P. | |
| its general partner | ||
| By: | Clarus Ventures I, LLC | |
| its general partner | ||
| By: | /s/ Xxxx X. Xxxxxxx | |
| Xxxx X. Xxxxxxx | ||
| Managing Director |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| SCALE VENTURE PARTNERS II, LP | ||
| By: | Scale Venture Management II, LLC its General Partner | |
| By: | /s/ Xxxxx X. Xxxx | |
| Xxxxx X. Xxxx | ||
| Managing Director |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| DOMAIN PARTNERS VI, L.P. | ||
| By: | One Xxxxxx Square Associates VI, L.L.C., its General Partner | |
| By: | /s/ Xxxxxxxx X. Xxxxxxxxxx | |
| Xxxxxxxx X. Xxxxxxxxxx | ||
| Managing Member | ||
| DP VI ASSOCIATES, L.P. | ||
| By: | One Xxxxxx Square Associates VI, L.L.C., its General Partner | |
| By: | /s/ Xxxxxxxx X. Xxxxxxxxxx | |
| Xxxxxxxx X. Xxxxxxxxxx | ||
| Managing Member | ||
| DOMAIN PARTNERS VII, L.P. | ||
| By: | One Xxxxxx Square Associates VII, L.L.C., its General Partner | |
| By: | /s/ Xxxxxxxx X. Xxxxxxxxxx | |
| Xxxxxxxx X. Xxxxxxxxxx | ||
| Managing Member | ||
| DP VII ASSOCIATES, L.P. | ||
| By: | One Xxxxxx Square Associates VII, L.L.C., its General Partner | |
| By: | /s/ Xxxxxxxx X. Xxxxxxxxxx | |
| Xxxxxxxx X. Xxxxxxxxxx | ||
| Managing Member |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| XXXXXX, XXXXXXXX & PARTNERS, L.P. | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
| |
| TMP NOMINEE, LLC | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
| |
| TMP ASSOCIATES, L.P. | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
|
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| INVESTORS: | ||
| XXXXXX, XXXXXXXX & PARTNERS II, L.P. | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
| |
| TMP NOMINEE II, LLC | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
| |
| TMP ASSOCIATES II, L.P. | ||
| By: | [illegible] | |
| Print Name: |
| |
| Title: |
|
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: |
| /s/ Xxxxx X. Xxxxxx |
| XXXXX X. XXXXXX |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| XXXXXX INVESTMENTS, LLC | ||
| By: | /s/ Cam X. Xxxxxx | |
| Cam X. Xxxxxx | ||
| President |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| ABINGWORTH BIOVENTURES IV EXECUTIVES LP acting by: | ||
| Its manager Abingworth Management Ltd | ||
| By: | /s/ Xxxxx Xxxxx | |
| Print Name: | Xxxxx Xxxxx | |
| Title: | Director | |
| ABINGWORTH BIOVENTURES IV LP acting by: | ||
| Its manager Abingworth Management Ltd | ||
| By: | /s/ Xxxxx Xxxxx | |
| Print Name: | Xxxxx Xxxxx | |
| Title: | Director |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| OXFORD FINANCE CORPORATION | ||
| By: | /s/ Xxxx X. Xxxxxxxxx | |
| Name: | Xxxx X. Xxxxxxxxx | |
| Its: | Vice President & General Counsel |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| INVESTORS: | ||
| CHICAGO GROWTH PARTNERS II, L.P. | ||
| By: | Chicago Growth Management II, LP | |
| Its: | General Partner | |
| By: | Chicago Growth Management II, LLC | |
| Its: | General Partner | |
| By: | /s/ Xxxx Xxxxxxxxxxxxxx | |
| Print Name: | Xxxx Xxxxxxxxxxxxxx | |
| Title: | Partner |
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
EXHIBIT A
INVESTORS
Clarus Lifesciences I, LP
Scale Venture Partners II, LP
Domain Partners VI, L.P.
DP VI Associates, L.P.
Domain Partners VII, L.P.
DP VII Associates, X.X.
Xxxxxx, XxXxxxxx & Partners, L.P.
TMP Nominee, LLC
TMP Associates, X.X.
Xxxxxx, XxXxxxxx & Partners II, L.P.
TMP Nominee II, LLC
TMP Associates II, L.P.
Xxxxx X. Xxxxxx
Xxxxxx Investments, LLC
Abingworth Bioventures IV LP
Abingworth Bioventures IV Executives LP
Oxford Finance Corporation
Chicago Growth Partners II, L.P.
SCHEDULE 1
NOTICE AND WAIVER/ELECTION OF
RIGHT OF FIRST REFUSAL
I do hereby waive or exercise, as indicated below, my rights of first refusal under the Third Amended and Restated Investors Rights Agreement dated as of December 2, 2009 (the “Agreement”):
1. Waiver of 10 Days’ Notice Period in Which to Exercise Right of First Offer: (please check only one)
| ( ) | WAIVE in full, on behalf of all Holders, the 10-day notice period provided to exercise my right of first refusal granted under the Agreement. |
| ( ) | DO NOT WAIVE the notice period described above. |
2. Issuance and Sale of New Securities: (please check only one)
| ( ) | WAIVE in full the right of first refusal granted under the Agreement with respect to the issuance of the New Securities. |
| ( ) | ELECT TO PARTICIPATE in $ [PLEASE PROVIDE AMOUNT] in New Securities proposed to be issued by Zogenix, Inc., representing less than my pro rata portion of the aggregate of $ in New Securities being offered in the financing. |
| ( ) | ELECT TO PARTICIPATE in $ in New Securities proposed to be issued by Company X, representing my full pro rata portion of the aggregate of $ in New Securities being offered in the financing. |
| ( ) | ELECT TO PARTICIPATE in my full pro rata portion of the aggregate of $ in New Securities being made available in the financing and, to the extent available, the greater of (x) an additional $ [PLEASE PROVIDE AMOUNT] or (y) my pro rata portion of any remaining investment amount available in the event other Significant Holders do not exercise their full rights of first refusal with respect to the $ in New Securities being offered in the financing. |
Date: , 20
|
|
| Signature of Stockholder or Authorized |
| Signatory |
|
|
| Title, if applicable |
This is neither a commitment to purchase nor a commitment to issue the New Securities described above. Such issuance can only be made by way of definitive documentation related to such issuance. Zogenix, Inc. will supply you with such definitive documentation upon request or if you indicate that you would like to exercise your first offer rights in whole or in part.
