INVESTOR RIGHTS AGREEMENT
Exhibit 4.2
This Investor Rights Agreement (this “Agreement”) is made and entered into as of August 31,
2007 among IRIDEX Corporation, a Delaware corporation (the “Company”), and each of the purchasers
executing this Agreement and listed on Schedule 1 attached hereto (collectively, the
“Purchasers”).
This Agreement is being entered into pursuant to the Securities Purchase Agreement, dated as
of the date hereof, by and among the Company and the Purchasers (the “Purchase Agreement”).
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the
following meanings:
“Advice” shall have the meaning set forth in Section 3(o).
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such Person. For the purposes
of this definition, “control,” when used with respect to any Person, means the possession, direct
or indirect, of the power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or otherwise; and the terms
of “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.
“Blackout Period” shall have the meaning set forth in Section 3(p).
“Board” shall have the meaning set forth in Section 3(p).
“Business Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of California generally are
authorized or required by law or other government actions to close.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the Company’s Common Stock, par value $0.01 per share.
“Conversion Shares” means the shares of Common Stock issuable upon conversion of the
shares of Series A Preferred Stock purchased by the Purchasers pursuant to the Purchase Agreement.
“Effectiveness Date” means, with respect to a Registration Statement requested to be
filed pursuant to Section 2(a), the Requested Effectiveness Date and, with respect to a
Registration Statement to be filed pursuant to Section 2(c) the S-3 Filing Date.
“Effectiveness Period” shall have the meaning set forth in Section 2(b)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Filing Date” means, with respect to a Registration Statement requested to be filed
pursuant to Section 2(a), the Requested Filing Date and, with respect to a Registration Statement
to be filed pursuant to Section 2(c) the S-3 Filing Date.
“Holder” or “Holders” means the holder or holders, as the case may be, from
time to time of Registrable Securities, including without limitation the Purchasers and their
successors and assigns.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Losses” shall have the meaning set forth in Section 5(a).
“NASDAQ” shall mean the NASDAQ Stock Exchange.
“Person” means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of any kind.
“Proceeding” means an action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
“Prospectus” means the prospectus included in any Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.
“Purchase Agreement” shall have the meaning set forth in the preamble of this
Agreement.
“Registrable Securities” means (a) the Conversion Shares and the Warrant Shares or
other securities issued or issuable to each Purchaser or its transferee or designee (i) upon
conversion of the Series A Preferred Stock and/or upon exercise of the Warrants, (ii) upon any
dividend or distribution with respect to, any exchange for or any replacement of such Conversion
Shares or Warrant Shares or (iii) upon any conversion, exercise or exchange of any securities
issued in connection with any such distribution, exchange or replacement; (b) securities issued or
issuable upon any stock split,
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stock dividend, recapitalization or similar event with respect to the foregoing; and (c) any
other security issued as a dividend or other distribution with respect to, in exchange for, in
replacement or redemption of, or in reduction of the liquidation value of, any of the securities
referred to in the preceding clauses; provided, however, that such securities shall cease to be
Registrable Securities when such securities have been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction or when such securities may
be sold without any restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent to such effect as
described in Section 2 of this Agreement.
“Registration Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated by reference in such
registration statement.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended.
“Series A Preferred Stock” means the Company’s Series A Preferred Stock, par value
$0.01 per share.
“Shelf Registration Statement” shall have the meaning set forth in Section 2(c).
“Shelf Underwritten Offering” shall have the meaning set forth in Section 2(d).
“Warrants” means the Common Stock purchase warrants issued pursuant to the Purchase
Agreement.
“Warrant Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants issued or to be issued to the Purchasers or their assignees or designees in connection
with the offering consummated under the Purchase Agreement.
2. Registration.
(a) Request for Registration. Subject to the conditions set forth in this Section 2,
if, at any time after February 29, 2008, the Company shall receive from Holders of sixty percent
(60%) of the Registrable Securities a written request signed by such 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
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of such shares by such Holders), the Company will: (i) promptly give written notice of the
proposed registration to all other Holders; and (ii) as soon as practicable, but in any event
within ninety (90) days following the Company’s receipt of notice from such Holders (the date of
expiration of such ninety (90) day period, the “Requested Filing Date”) file and use its reasonable
best efforts to effect such registration within one hundred and twenty (120) days after receipt of
such written request (the later of such dates, the “Requested Effectiveness Date”) (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 thirty (30) days after such written notice from the Company is
mailed or delivered.
(b) Underwriting. In the event the request to effect a registration specifies such
registration is to be underwritten (including a Shelf Underwritten Offering), the right of any
Holder to include all or any portion of its Registrable Securities in such registration shall be
conditioned upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities to the extent provided herein; provided, however that Holders will
have the right to initiate only two (2) such underwritten offerings (including any Shelf
Underwritten Offerings). If the Company shall request inclusion in any registration pursuant to
this section of securities being sold for its own account, the Holders shall, on behalf of all
holders of the Company’s securities, 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 Agreement. The Company shall
(together with all 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. The underwriter or underwriters shall be mutually designated by the Company and a
majority-in-interest of the selling Holders. The selling Holders on whose behalf the Registrable
Securities are to be distributed by such underwriters shall be parties to any such underwriting
agreement and the representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters, shall also be made to and for the benefit of
such selling Holders. Such underwriting agreement shall also contain such representations and
warranties by such selling Holders and such other terms and provisions as are customarily contained
in underwriting agreements with respect to secondary distributions, when relevant. The Company
shall not require any Holder in any such underwriting agreement or related documents to make any
representations or warranties to or agreements with the Company or the underwriters other than
customary representations, warranties or agreements regarding such Holder’s title to Registrable
Securities and any written information provided by the Holder to the Company expressly for
inclusion in the related registration statement.
In connection with the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act pursuant to this section, the Company shall make
available upon reasonable notice at reasonable times and for reasonable periods for inspection by
each selling Holders, by any managing underwriter or underwriters participating in any disposition
to be effected pursuant to such registration statement, and by any attorney, accountant or other
agent retained by any selling Holders or any managing underwriter, all pertinent financial and
other
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records, pertinent corporate documents and properties of the Company, and cause all of the
Company’s officers, directors and employees and the independent public accountants who have
certified the Company’s financial statements to make themselves available to discuss the business
of the Company and to supply all information reasonably requested by any such selling Holders,
managing underwriters, attorneys, accountants or agents in connection with such registration
statement as shall be necessary to enable them to exercise their due diligence responsibility
(subject to entry by each such person into customary confidentiality agreements in a form
reasonably acceptable to the Company).
Notwithstanding any other provision of this Agreement, if the underwriters advise the Company
or the selling Holders that marketing factors require a limitation on the number of shares to be
underwritten, the underwriters may (subject to the limitations set forth below) include in the
offering only that number of such securities, including Registrable Securities, which the
underwriters determine will not jeopardize the success of the offering. 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 Holders requesting to include Registrable Securities in such
registration statement based on the pro rata percentage of Registrable Securities held by such
Holders, (ii) second, to the Company for securities being sold for its own account and (iii) third,
to the other holders of securities of the Company requesting to participate therein distributing
their securities through such underwriting based on the pro rata percentage of securities held by
such other holders.
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 or the underwriter. The Registrable Securities or other securities so excluded
shall also be withdrawn from such registration. If shares are so withdrawn from the registration
and 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 may 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 the manner
set forth above.
(c) S-3 Registration Rights. Promptly, but in no event more than ninety (90) days
following the Company becoming eligible to file a Form S-3 registration statement (the “S-3 Filing
Date”), the Company shall prepare and file with the Commission a “shelf” Registration Statement
covering all Registrable Securities for a secondary or resale offering to be made on a continuous
basis pursuant to Rule 415 (a “Shelf Registration Statement”). The Registration Statement shall be
on Form S-3 (or if such form is not available to the Company on another form appropriate for such
registration in accordance herewith). The Company shall use its reasonable best efforts to cause
the Registration Statement to be declared effective under the Securities Act as soon as practicable
but not later than ninety (90) days after regaining S-3 Registration Statement eligibility
(including filing with the Commission a request for acceleration of effectiveness in accordance
with Rule 461 promulgated under the Securities Act within five (5) Business Days of the date that
the Company is notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be “reviewed,” or not be subject to further review) and to keep
such Registration Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when
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all Registrable Securities covered by such Registration Statement have been sold or (y) with
respect to such Holder, such time as all Registrable Securities held by such Holder may be sold
without any restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent to such effect (the
“Effectiveness Period”). For purposes of the obligations of the Company under this Agreement, no
Registration Statement shall be considered “effective” with respect to any Registrable Securities
unless such Registration Statement lists the Holders of such Registrable Securities as “Selling
Stockholders” and includes such other information as is required to be disclosed with respect to
such Holders to permit them to sell their Registrable Securities pursuant to such Registration
Statement, unless any such Holder is not included as a “Selling Stockholder” pursuant to Section
3(m). Such Registration Statement also shall cover, to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Securities Act Rule 416), such indeterminate
number of additional shares of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.
(d) Shelf Underwritten Offering. At any time that a Shelf Registration Statement is
effective, if any Shareholder delivers a notice to the Company stating that it intends to effect an
underwritten offering of Registrable Securities pursuant a take-down from a Shelf Registration
Statement of all or part of its Registrable Securities included by it on the Shelf Registration
Statement (the “Shelf Underwritten Offering”) and stating the aggregate offering price and/or
number of Registrable Securities to be included in the Shelf Underwritten Offering, then the
Company shall amend or supplement the Shelf Registration Statement as may be necessary in order to
enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering
(taking into account the inclusion of Registrable Securities by any other holders of the Company’s
securities).
(e) Liquidated Damages. If: (i) a Registration Statement is not filed on or prior to
its Filing Date (if the Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall
not be deemed to have satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities
Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not be “reviewed,” or
not subject to further review (unless the failure to make such request for acceleration is the
result of the Company’s determination that events affecting the Company will require the filing of
an amendment to the Registration Statement, which the Company hereby undertakes to file within five
Trading Days after such determination has been made), or (iii) prior to its Effectiveness Date, the
Company fails to file a pre-effective amendment and otherwise respond in writing to comments made
by the Commission in respect of such Registration Statement within fifteen (15) calendar days after
the receipt of comments by or notice from the Commission that such amendment is required in order
for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or
required to be filed hereunder is not declared effective by the Commission by its Effectiveness
Date, or (v) after the Effectiveness Date, a Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required to be effective,
or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such
Registrable Securities for more than fifteen (15) consecutive calendar days or more than an
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aggregate of thirty (30) calendar days during any 12-month period (which need not be
consecutive calendar days) (any such failure or breach being referred to as an “Event”, and
for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause
(ii) the date on which such five (5) Trading Day period is exceeded, or for purposes of clause
(iii) the date which such fifteen (15) calendar day period is exceeded, or for purposes of clause
(v) the date on which such fifteen or thirty (30) calendar day period, as applicable, is exceeded
being referred to as “Event Date”), then in addition to any other rights the Holders may
have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of
each such Event Date (if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial
liquidated damages and not as a penalty, equal to 1% of the aggregate purchase price paid by such
Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder.
The parties agree that the maximum aggregate liquidated damages payable to a Holder under this
Agreement shall be twelve percent (12%) of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date payable, the Company will pay
interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages
are due until such amounts, plus all such interest thereon, are paid in full. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event. Notwithstanding anything herein to the contrary,
to the extent that the registration of any or all of the Shares by the Company on the Registration
Statement is prohibited (the “Non-Registered Shares”) under Rule 415 in the opinion of the
Commission, the liquidated damages described in this Section 2(b) shall not be applicable to such
Non-Registered Shares, in which case the Company will file additional Registration Statements
(each, a “Subsequent Registration Statement”) each registering the Non-Registered Shares
until all of the Registrable Securities have been registered. The Filing Date and Effectiveness
Date of each such Subsequent Registration Statement shall be, respectively, fourteen (14) and
forty-five (45) Business Days after the first day such Subsequent Registration Statement may be
filed without objection by the Commission under Rule 415. The Company’s failure to meet the Filing
Date and Effectiveness Date as they relate to the Subsequent Registration Statements shall subject
it to all liquidated damage provisions set forth in this Section 2(e).
3. Registration Procedures.
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Prepare and file the applicable Registration Statement covering the Registrable Securities
as required by Section 2 hereof, and cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less than three (3) Business Days
prior to the filing of the Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall (i) furnish to the Holders or their counsel, copies of all
such documents proposed to be filed, which documents (other than those incorporated by reference)
will be subject to the review of the Holders or their counsel, and (ii) at the request of any
Holder cause its officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of counsel to such
Holders, to conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall
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not file the Registration Statement or any such Prospectus or any amendments or supplements
thereto (including any documents that would be incorporated or deemed to be incorporated therein by
reference), to which the Holders of a majority of the Registrable Securities or their counsel shall
reasonably object within three (3) Business Days after their receipt thereof. In the event of any
such objection, the Holders shall provide the Company with any requested revisions to such
prospectus or supplement within four (4) Business Days of such objection.
(b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the Effectiveness Period and
to the extent any Registrable Securities are not included in such Registration Statement for
reasons other than the failure of the Holder to comply with Section 3(m) hereof, shall prepare and
file with the Commission such amendments to the Registration Statement or such additional
Registration Statements in order to register for resale under the Securities Act all Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii) respond as promptly
as reasonably practicable to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as reasonably practicable provide
the Holders true and complete copies of all correspondence from and to the Commission relating to
the Registration Statement, but not, without the prior written consent of the Holders, any comments
that would result in the disclosure to the Holders of material and non-public information
concerning the Company; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.
(c) Notify Holders of Registrable Securities to be sold as promptly as reasonably practicable
(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will
be a “review” of such Registration Statement and whenever the Commission comments in writing on
such Registration Statement; and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, and after the effectiveness thereof:
(i) of any request by the Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for additional
information; (ii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iii)
of the receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (iv) if the
financial statements included in the Registration Statement become ineligible for inclusion therein
or of the occurrence of any event that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires any revisions to the Registration Statement, Prospectus or
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other documents so that, in the case of the Registration Statement or the Prospectus, as the
case may be, it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Without limitation to any
remedies to which the Holders may be entitled under this Agreement, if any of the events described
in Section 3(c)(C)(i), 3(c)(C)(ii), 3(c)(C)(iii) or 3(c)(C)(iv) occur, the Company shall use its
reasonable best efforts to respond to and correct the event.
(d) Use its reasonable best efforts to avoid the issuance of, or, if issued, use reasonable
best efforts to obtain the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable time.
(e) If requested by any Holder of Registrable Securities, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the
Company has received notification of the matters to be incorporated in such Prospectus supplement
or post-effective amendment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements and schedules, and all
exhibits to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the Commission.
(g) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Securities, use its reasonable best efforts to
register or qualify or cooperate with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any jurisdiction where
it is not then so subject or subject the Company to any material tax in any such jurisdiction where
it is not then so subject.
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(i) Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by applicable law and the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any Holder may request at least two (2) Business Days
prior to any sale of Registrable Securities.
(j) Following the occurrence of any event contemplated by Section 3(c)(C)(iv), as promptly as
possible, prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus will contain 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, in the light of the circumstances under which they were
made, not misleading.
(k) Cause all Registrable Securities relating to such Registration Statement to be listed on
any United States securities exchange, quotation system, market or over-the-counter bulletin board
on which similar securities issued by the Company are then listed.
(l) Subject to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(m) If NASDR Rule 2710 requires any broker-dealer to make a filing prior to executing a sale
by a Holder, upon notification, the Company shall (i) make an Issuer Filing with the NASDR, Inc.
Corporate Financing Department pursuant to proposed NASDR Rule 2710(b)(10)(A)(i), (ii) respond
within five Trading Days to any comments received from NASDR in connection therewith, and (iii) pay
the filing fee required in connection therewith.
(n) Comply in all material respects with all applicable rules and regulations of the
Commission with respect to the Registration Statement.
(o) Request each selling Holder to furnish to the Company information regarding such Holder
and the distribution of such Registrable Securities as is required by law or the Commission to be
disclosed in the Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such information within a reasonable
time prior to the filing of each Registration Statement, supplemented Prospectus and/or amended
Registration Statement.
If the Registration Statement refers to any Holder by name or otherwise as the holder of any
securities of the Company, then such Holder shall have the right to require (if such reference to
such Holder by name or otherwise is not required by the Securities Act or any similar federal
statute then in force) the deletion of the reference to such Holder in any amendment or supplement
to the
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Registration Statement filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in Section 3(c)(C)(i),
3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv), or 3(n), such Holder will forthwith discontinue disposition
of such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section
3(j), or until it is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus (as it may have been supplemented or amended) may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement. The Company will use
its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company agrees and acknowledges that any periods during which the Holder is
required to discontinue the disposition of the Registrable Securities hereunder shall be subject to
the provisions of Section 2 (c).
(p) If (i) there is material non-public information regarding the Company which the Company’s
Board of Directors (the “Board”) reasonably determines not to be in the Company’s best interest to
disclose and which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger, consolidation, tender offer
or other similar transaction) available to the Company which the Board reasonably determines not to
be in the Company’s best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may (i) postpone or suspend filing or
effectiveness of a registration statement or (ii) notify the Holders that the Registration
Statement may not be used in connection with any sales of the Company’s securities, in each case,
for a period not to exceed thirty (30) consecutive days, provided that the Company may not postpone
or suspend its obligation under this Section 3(p) for more than sixty (60) days in the aggregate
during any 12 month period (each, a “Blackout Period”).
4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with this Agreement by the
Company shall be borne by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with NASDAQ and each other securities exchange,
quotation system, market or over-the-counter bulletin board on which Registrable Securities are
required hereunder to be listed, (B) with respect to filings required to be made with the
Commission, and (C) in compliance with state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Registrable Securities and of
printing or photocopying prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
Securities Act liability insurance, if the Company so desires such insurance, and (v) fees and
expenses of all other Persons retained by the Company in connection with the consummation of the
transactions
-11-
contemplated by this Agreement, including, without limitation, the Company’s independent
public accountants (including, in the case of an underwritten offering, the expenses of any comfort
letters or costs associated with the delivery by independent public accountants of a comfort letter
or comfort letters) and legal counsel. In addition, the Company shall be responsible for all of
its internal expenses incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Registrable Securities on any securities
exchange as required hereunder. The Company shall reimburse the Holders for the reasonable fees
and disbursements of one firm or counsel designated by the Holders of at least a majority of the
Registrable Securities to act as counsel for the Holders in connection with the Registration
Statement or any piggyback registration under Section 7(d); provided, that the Company’s
reimbursement obligation for such reasonable fees and disbursements shall not exceed $10,000.
Notwithstanding the foregoing or anything in this Agreement to the contrary, each Holder shall pay
all underwriting discounts and commissions with respect to any Registrable Securities sold by it.
5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, brokers (including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained or incorporated by reference in the Registration Statement,
any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in the
case of any Prospectus or form of prospectus or amendment or supplement thereto, in the light of
the circumstances under which they were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or to the extent that such
information relates to (x) such Holder and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus or such form of prospectus
or in any amendment or supplement thereto or (y) such Holder’s proposed method of distribution of
Registrable Securities, as such Holder informs the Company in writing; or (ii) in the case of an
occurrence of an event of the type described in Section 3(c)(C)(ii), 3(c)(C)(iii), 3(c)(C)(iv) or
3(n), the use by a Holder of an outdated or defective Prospectus after the delivery to the Holder
of written notice from the Company that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 3(m); provided, however, that the
indemnity agreement contained in this Section 5(a) shall not apply to amounts paid in settlement of
any Losses if such settlement is effected
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without the prior written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party (as defined in Section 5(c) to this Agreement) and
shall survive the transfer of the Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents and employees of such controlling Persons,
to the fullest extent permitted by applicable law, from and against all Losses, as incurred,
arising solely out of or based solely upon any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent, that (i) such untrue
statement or omission is contained in or omitted from any information so furnished in writing by
such Holder to the Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus, or in any amendment or supplement thereto, or to the
extent that such information relates to (x) such Holder and was reviewed and expressly approved in
writing by such Holder expressly for use in the Registration Statement, such Prospectus, or such
form of prospectus or in any amendment or supplement thereto or (y) such Holder’s proposed method
of distribution of Registrable Securities as such Holder otherwise informs the Company in writing,
(ii) in the case of an occurrence of an event of the type described in Section 3(c)(C)(ii),
3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder of an outdated or defective Prospectus after
the delivery to the Holder of written notice from the Company that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in Section 3(m) or
(iii) such Holder’s failure to comply with the Prospectus delivery requirements of the Securities
Act through no fault of the Company; provided, however, that the indemnity agreement contained in
this Section 5(b) shall not apply to amounts paid in settlement of any Losses if such settlement is
effected without the prior written consent of the Holder, which consent shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein, the Holder shall be liable
under this Section 5(b) for only that amount as does not exceed the net proceeds to such Holder as
a result of the sale of Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction (which
-13-
determination is not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) such Indemnified Party shall have been advised in
writing by counsel that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the reasonable expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of
any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability on claims that are
the subject matter of such Proceeding and does not impose any monetary or other obligation or
restriction on the Indemnified Party.
All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party,
which notice shall be delivered no more frequently than on a monthly basis (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to
enforce such indemnification in accordance with its terms (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the
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limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms. Notwithstanding anything to the contrary
contained herein, the Holder shall be required to contribute under this Section 5(d) for only that
amount as does not exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties. The indemnity and
contribution agreements herein are in addition to and not in diminution or limitation of any
indemnification provisions under the Purchase Agreement.
6. Rule 144.
As long as any Holder owns shares of Series A Preferred Stock, Conversion Shares, Warrants or
Warrant Shares, the Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the
date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder owns
shares of Series A Preferred Stock, Conversion Shares, Warrants or Warrant Shares, if the Company
is not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance substantially similar to
those that would otherwise be required to be included in reports required by Section 13(a) or 15(d)
of the Exchange Act, as well as any other information required thereby, in the time period that
such filings would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may reasonably request, all
to the extent required from time to time to enable such Person to sell Conversion Shares or Warrant
Shares, without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act. Upon the request of any Holder, the
Company shall deliver to such Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
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of damages, will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate and the posting of any bond.
(b) No Inconsistent Agreements. Except as otherwise disclosed in the Purchase
Agreement and the disclosure schedule thereto, or in the Company’s SEC filings, neither the Company
nor any of its Subsidiaries is a party to an agreement currently in effect that is inconsistent
with the rights granted to the Holders in this Agreement, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof.
(c) Notice of Effectiveness. Within two (2) Business Days after the Registration
Statement which includes the Registrable Securities is ordered effective by the Commission, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer
agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are
included in such Registration Statement) confirmation that the Registration Statement has been
declared effective by the Commission.
(d) Piggy-Back Registrations. If at any time when there is not an effective
Registration Statement covering all of the Registrable Securities or in the event that the Company
shall initiate any Registration Statement prior to the events contemplated in Section 2, the
Company shall determine to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to each Holder of Registrable
Securities written notice of such determination and, if within eight (8) Business Days after
receipt of such notice, any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Holder), the Company will cause the
registration under the Securities Act of all Registrable Securities which the Company has been so
requested to register by the Holder, to the extent required to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after giving written
notice of its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company shall determine for
any reason not to register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to such Holder and, thereupon, (i) in the case
of a determination not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to pay expenses in
accordance with Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such other securities. The
Company shall include in such registration statement all or any part of such
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Registrable Securities such Holder requests to be registered. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then if the Company after
consultation with the managing underwriter should reasonably determine that the inclusion of such
Registrable Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in such registration
statement of fewer or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement shall be reduced
pro-rata among such Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the underwriter(s) recommends
the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after consultation with
the underwriter(s) recommends the inclusion of none of such Registrable Securities; provided,
however, that if securities are being offered for the account of other persons or entities as well
as the Company, such reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar reductions imposed on
such other persons or entities (other than the Company).
(e) Consent to Jurisdiction. Each of the Company and the Holders (i) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts located in
California for the purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Holders consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section 7(e) shall affect or
limit any right to serve process in any other manner permitted by law.
(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of at least a majority of the Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of the Registrable Securities
to which such waiver or consent relates; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(g) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earlier of (i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., California
time, on a Business Day, (ii) the next Business Day after the date of transmission, if such notice
or
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communication is delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Business Day or later than 5:00 p.m., California time, on any date and earlier
than 11:59 p.m., California time, on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service such as Federal Express or (iv)
actual receipt by the party to whom such notice is required to be given. The addresses for such
communications shall be with respect to each Holder at its address set forth under its name on
Schedule 1 attached hereto, or with respect to the Company, addressed to:
IRIDEX Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
or to such other address or addresses or facsimile number or numbers as any such party may most
recently have designated in writing to the other parties hereto by such notice. Copies of notices
to the Company shall be sent to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Copies of notices to any Holder shall be sent to the addresses, if any, listed on Schedule
1 attached hereto.
(h) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall inure to the benefit of
each Holder and its successors and assigns; provided, that the Company may not assign this
Agreement or any of its rights or obligations hereunder without the prior written consent of each
Holder; and provided, further, that each Holder may assign its rights hereunder in the manner and
to the Persons as permitted under the Purchase Agreement.
(i) Assignment of Registration Rights. The rights of each Holder hereunder, including
the right to have the Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder to any transferee of such
Holder of all or a portion of the shares of Series A Preferred Stock, Conversion Shares, Warrants
or Warrant Shares or the Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement or notice of such
assignment is furnished to the Company within a reasonable time after such assignment, (ii) the
Company is, within a reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv) at or before the
time the Company
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receives the written notice contemplated by clause (ii) of this Section 7(i), the transferee
or assignee agrees in writing with the Company to be bound by all of the provisions of this
Agreement, and (v) such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement. The rights to assignment shall apply to the Holders (and
to subsequent) successors and assigns.
The Company may require, as a condition of allowing such assignment in connection with a
transfer of shares of Series A Preferred Stock, Conversion Shares, Warrants or Warrant Shares or
Registrable Securities (i) that the Holder or transferee of all or a portion of the shares of
Series A Preferred Stock, Conversion Shares, Warrants or Warrant Shares or the Registrable
Securities as the case may be, furnish to the Company a written opinion of counsel that is
reasonably acceptable to the Company to the effect that such transfer may be made without
registration under the Securities Act, (ii) that the Holder or transferee execute and deliver to
the Company an investment letter in form and substance acceptable to the Company and (iii) that the
transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities
Act.
(j) Counterparts; Facsimile. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by electronic means or facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original thereof.
(k) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to principles of conflicts of law thereof.
(l) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(m) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
(o) Registrable Securities Held by the Company and its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its Affiliates (other than any Holder or
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transferees or successors or assigns thereof if such Holder is deemed to be an Affiliate
solely by reason of its holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such required percentage.
(p) Obligations of Purchasers. The Company acknowledges that the obligations of each
Purchaser under this Agreement are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement. The decision of each Purchaser to enter into to this
Agreement has been made by such Purchaser independently of any other Purchaser. The Company
further acknowledges that nothing contained in this Agreement, and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated hereby. Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any proceeding for such
purpose.
Each Purchaser has been represented by its own separate legal counsel in their review and
negotiation of this Agreement and with respect to the transactions contemplated hereby. The
Company acknowledges that such procedure with respect to this Agreement in no way creates a
presumption that the Purchasers are in any way acting in concert or as a group with respect to this
Agreement or the transactions contemplated hereby or thereby.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights Agreement to be duly
executed by their respective authorized persons as of the date first indicated above.
COMPANY:
| IRIDEX CORPORATION |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
[IRIDEX Corporation Investor Rights Agreement Signature Page]
PURCHASERS:
| BLUELINE CAPITAL PARTNERS, LP |
||||
| By: | BlueLine Partners, LLC | |||
| its General Partner | ||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Managing Director | |||
| BLUELINE CAPITAL PARTNERS III, LP |
||||
| By: | BlueLine Partners II, LLC | |||
| its General Partner | ||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Managing Director | |||
| BLUELINE CAPITAL PARTNERS II, LP |
||||
| By: | BlueLine Partners, LLC | |||
| its General Partner | ||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Managing Director | |||
[IRIDEX Corporation Investor Rights Agreement Signature Page]
SCHEDULE 1
PURCHASERS
| Name and Address | Copy of Notice to: | |
BlueLine Capital Partners, LP 000 Xxxxxxxx Xxxxxx Xxxxx 000 Xxxxxxxx, XX 00000 Attn: Xxxxx Xxxxx (000) 000-0000 (fax) |
DLA Piper US LLP 0000 Xxxxxxxxxx Xxxxxx Xxxx Xxxx Xxxx, Xxxxxxxxxx 00000 Attn: Xxxxx X. Xxxxx, Esq. (000) 000-0000 (fax) |
|
BlueLine Capital Partners III, LP 000 Xxxxxxxx Xxxxxx Xxxxx 000 Xxxxxxxx, XX 00000 Attn: Xxxxx Xxxxx (000) 000-0000 (fax) |
DLA Piper US LLP 0000 Xxxxxxxxxx Xxxxxx Xxxx Xxxx Xxxx, Xxxxxxxxxx 00000 Attn: Xxxxx X. Xxxxx, Esq. (000) 000-0000 (fax) |
|
BlueLine Capital Partners II, LP 000 Xxxxxxxx Xxxxxx Xxxxx 000 Xxxxxxxx, XX 00000 Attn: Xxxxx Xxxxx (000) 000-0000 (fax) |
DLA Piper US LLP 0000 Xxxxxxxxxx Xxxxxx Xxxx Xxxx Xxxx, Xxxxxxxxxx 00000 Attn: Xxxxx X. Xxxxx, Esq. (000) 000-0000 (fax) |
