Exhibit 4.2
ROSETTA INPHARMATICS, INC.
SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Sixth Amended and Restated Investors' Rights Agreement (this
"AGREEMENT") is made as of March 15, 2000, by and among Rosetta Inpharmatics,
Inc., a Delaware corporation (the "COMPANY"), and the holders of the outstanding
shares of the Company's Series A Preferred Stock (the "SERIES A PREFERRED")
listed on EXHIBIT A hereto (the "SERIES A HOLDERS"), the holders of the
outstanding shares of the Company's Series B Preferred Stock (the "SERIES B
PREFERRED") listed on EXHIBIT B hereto (the "SERIES B HOLDERS"), the holders of
shares of Series C Preferred Stock (the "SERIES C PREFERRED") listed on EXHIBIT
C hereto (the "SERIES C HOLDERS"), the holder of shares of Series D Preferred
Stock (the "SERIES D PREFERRED") listed on EXHIBIT D hereto (the "SERIES D
HOLDER"), the holders of shares of Series E Preferred Stock (the "SERIES E
PREFERRED") listed on EXHIBIT E hereto (the "SERIES E HOLDERS"), the holders of
certain outstanding shares of the Company's Common Stock (the "COMMON STOCK")
listed on EXHIBIT F-1 hereto (the "FOUNDER COMMON HOLDERS"), the holders of
certain outstanding shares of Common Stock listed on EXHIBIT F-2 hereto (the
"XXXX XXXXXXXXXX COMMON HOLDER") and the holders of certain outstanding shares
of the Common Stock listed on EXHIBIT F-3 hereto (the "ACACIA COMMON HOLDERS"
and, collectively with the Founder Common Holders and Xxxx Xxxxxxxxxx Common
Holder, the "COMMON HOLDERS"), the holders of certain outstanding warrants to
purchase Series A and Series C Preferred listed on EXHIBIT G hereto (the
"PREFERRED WARRANT HOLDERS"), and the holders of certain outstanding warrants to
purchase Common Stock listed on EXHIBIT I hereto (the "COMMON WARRANT HOLDERS").
The Series A Holders, the Series B Holders, the Series C Holders, the Series D
Holders, the Series E Holders, the Founder Common Holders, the Xxxx Xxxxxxxxxx
Common Holder, the Acacia Common Holders, the Preferred Warrant Holders and the
Common Warrant Holders shall sometimes be collectively referred to hereinafter
as the "INVESTORS" and each individually as an "INVESTOR."
RECITALS
A. The Company and the Series A Holders entered into an Investors'
Rights Agreement dated as of June 6, 1997 (the "RIGHTS AGREEMENT") in connection
with the initial issuance and sale by the Company of Series A Preferred pursuant
to the Series A Preferred Stock Purchase Agreement dated as of June 6, 1997 by
and among the Company and certain of the Series A Holders.
B. The Company and the Series A Holders entered into the Amended and
Restated Investors Rights Agreement on October 30, 1997 (the "FIRST RESTATED
RIGHTS AGREEMENT") amending and restating the Rights Agreement in its entirety
to provide certain of the rights set forth therein to the subsequent purchasers
of Series A Preferred in connection with the final closing of the sale of Series
A Preferred Stock on October 30, 1997.
C. The Company, the Series A Holders, the Common Holders and the
Preferred Warrant Holders entered into a second Amended and Restated Investors'
Rights Agreement on December 19, 1997 (the "SECOND RESTATED RIGHTS AGREEMENT")
amending and restating the First
Restated Rights Agreement in its entirety in order to provide certain of the
rights set forth therein to the Preferred Warrant Holders and the Common
Holders.
D. In connection with the closing of the Agreement and Plan of
Reorganization (the "REORGANIZATION AGREEMENT") dated as of January 29, 1999 by
and among the Company, Rosetta Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of the Company ("MERGER SUB"), and Acacia
Biosciences, Inc., a Delaware corporation ("ACACIA"), the Company, and a
majority of the Series A Holders, the Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders agreed to amend and restate the Second
Restated Rights Agreement and enter into a Third Amended and Restated Investors'
Rights Agreement (the "THIRD RESTATED RIGHTS AGREEMENT").
E. The Company, the Series A Holders, the Series B Holders, the Series
C Holders, the Common Holders, the Acacia Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders entered into a Fourth Amended and
Restated Investors' Rights Agreement (the "FOURTH RESTATED RIGHTS AGREEMENT") in
April, 1999.
F. The Company, the Series A Holders, the Series B Holders, the Series
C Holders, the Series D Holders, the Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders entered into a Fifth Amended and Restated
Investors' Rights Agreement (the "FIFTH RESTATED RIGHTS AGREEMENT") in October,
1999.
G. The Company and the Series E Holders are entering into a Series E
Stock Purchase Agreement of even date herewith (the "PURCHASE AGREEMENT")
pursuant to which the Company desires to sell to the Series E Holders and the
Series E Holders desire to purchase from the Company shares of the Company's
Series E Preferred Stock. A condition to the Series E Holders' obligations under
the Purchase Agreement is that the Company and the Series E Holders enter into
this Agreement in order to provide the Series E Holders with (i) certain rights
to register shares of the Company's Common Stock issuable upon conversion of the
Series E Preferred Stock held by the Series E Holders, (ii) certain rights to
receive or inspect information pertaining to the Company, and (iii) a right of
first offer with respect to certain issuances by the Company of its securities.
H. The Company and the holders of at least a majority of Registrable
Securities (as defined in the Fifth Restated Rights Agreement) desire to amend
and restate the Fifth Restated Rights Agreement in its entirety in accordance
with the provisions set forth in Section 4.7 of the Fifth Restated Rights
Agreement and to accept the rights created pursuant hereto in lieu of the rights
granted to such holders under the Fifth Restated Rights Agreement in order to
induce the Company and the Series E Holders to enter into the Purchase Agreement
and to provide certain rights to the Series E Holders, all as set forth in this
Agreement.
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AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Investors covenant
and agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "ACT"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "REGISTRABLE SECURITIES" means
(i) the shares of Common Stock issuable or issued upon conversion of the Series
A Preferred held by the Series A Holders set forth on EXHIBIT A, (ii) the shares
of Common Stock issuable or issued upon conversion of the Series B Preferred
held by the Series B Holders set forth on EXHIBIT B, (iii) the shares of Common
Stock issuable or issued upon conversion of the Series C Preferred held by the
Series C Holders set forth on EXHIBIT C, (iv) the shares of Common Stock
issuable or issued upon conversion of the Series D Preferred held by the Series
D Holders set forth on EXHIBIT D, (v) the shares of Common Stock issuable or
issued upon conversion of the Series E Preferred held by the Series E Holders
set forth on EXHIBIT E, (vi) the 352,000 shares of Common Stock issued to the
Xxxx Xxxxxxxxxx Cancer Research Center as set forth on EXHIBIT F-2, (vii) the
1,973,842 shares of Common Stock held by the Founder Holders set forth on
EXHIBIT F-1, (viii) the 1,860,176 shares of Common Stock held by the Acacia
Common Holders set forth on EXHIBIT F-3, (ix) the shares of Common Stock
issuable or issued upon the conversion of the Preferred Stock issued upon
exercise of those certain warrants issued to the Preferred Warrant Holders set
forth on EXHIBIT G, and (x) the shares of Common Stock issuable or issued upon
the exercise of those certain warrants set forth on EXHIBIT H (the shares of
Common Stock referenced in (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) (ix)
and (x) of this Section 1.1(b) are collectively referred to hereinafter as the
"STOCK") and (xi) any other shares of Common Stock issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the Stock; PROVIDED, HOWEVER, (A) the shares referred to
in clauses (ii) and (viii) above shall not be Registrable Securities for the
purposes of Sections 1.2 and 1.6 hereof and (B) the shares referred to in clause
(vi) above shall not be Registrable Securities for the purposes of Sections 1.2,
1.6 and 1.12 hereof. Notwithstanding the foregoing, Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;
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(c) The number of shares of "REGISTRABLE
SECURITIES THEN OUTSTANDING" shall be determined by the number of shares of
Common Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities;
(d) The term "HOLDER" means any person owning
or having the right to acquire any Registrable Securities or any assignee
thereof in accordance with Section 1.13 hereof;
(e) The term "FORM S-3" means such form under
the Act as in effect on the date hereof or any successor form under the Act; and
(f) The term "SEC" means the Securities and
Exchange Commission.
1.2 REQUEST FOR REGISTRATION
(a) If the Company shall receive at any time
after the earlier of (i) June 1, 2002, or (ii) six (6) months after the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public (other
than a registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or similar
plan or an SEC Rule 145 transaction) (the "IPO"), a written request from the
Holders of a majority of the Registrable Securities then outstanding that the
Company file a registration statement under the Act covering the registration of
at least fifty percent (50%) of the Registrable Securities then outstanding (or
a lesser percent if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $7,500,000), then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best efforts to effect as soon as practicable, and in
any event within 60 days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be registered
within twenty (20) days of the mailing of such notice by the Company in
accordance with Section 4.5.
(b) If the Holders initiating the
registration request hereunder ("INITIATING HOLDERS") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter will be selected by a
majority in interest of the Initiating Holders and shall be reasonably
acceptable to the Company. In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
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underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; PROVIDED, HOWEVER,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the
Company shall furnish to the Initiating 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 seriously detrimental to the Company and
its stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than 120 days after
receipt of the request of the Initiating Holders; PROVIDED, HOWEVER, that the
Company may not utilize this right more than once in any twelve-month period.
(d) Notwithstanding the foregoing, after the
Company has effected one registration pursuant to this Section 1.2 and such
registration has been declared or ordered effective, the second such
registration shall require a written request from Holders of only twenty-five
percent (25%) of the Registrable Securities then outstanding that the Company
file a registration statement under the Act covering the registration of at
least twenty-five percent (25%) of the Registrable Securities then outstanding.
(e) In addition, the Company shall not be
obligated to effect, or to take any action to effect, any registration pursuant
to this Section 1.2:
(i) After the Company has effected
two (2) registrations pursuant to this Section 1.2 and such registrations have
been declared or ordered effective;
(ii) 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 registration subject to Section 1.3 hereof;
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or
(iii) If the Initiating Holders
propose to dispose of shares of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to Section 1.12
below.
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1.3 COMPANY REGISTRATION. If (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for stockholders other than the
Holders) any of its stock under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Act, a registration in which the only stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered, or any registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Company in accordance with Section 4.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever
required under this Section 1 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up to one
hundred twenty (120) days. The Company shall not be required to file, cause to
become effective or maintain the effectiveness of any registration statement
that contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Act.
(b) Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred twenty
(120) days.
(c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them.
(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 jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with
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the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
(f) Notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, such obligation to continue for one hundred twenty (120) days.
(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.
(h) Provide a transfer agent and registrar
for all Registrable Securities registered pursuant hereunder and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration.
(i) Use its best efforts to furnish, at the
request of any Holder requesting registration of Registrable Securities pursuant
to this Section 1, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(a) or subsection 1.12(b)(2), whichever is applicable.
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1.6 EXPENSES OF DEMAND REGISTRATION. All
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Section
1.2, including (without limitation) all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders shall be borne by the Company; PROVIDED, HOWEVER, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The
Company shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 1.3 for each Holder (which right may be
assigned as provided in Section 1.13), including (without limitation) all
registration, filing, and qualification fees, printers' and accounting fees
relating or apportionable thereto and the reasonable fees and disbursements of
one counsel for the selling Holders selected by them with the approval of the
Company, which approval shall not be unreasonably withheld, but excluding
underwriting discounts and commissions relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection
with any offering involving an underwriting of shares of the Company's capital
stock, the Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "SELLING
STOCKHOLDER," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
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1.9 DELAY OF REGISTRATION. No Holder shall
have any right to obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any
Registrable Securities are included in a registration statement under this
Section 1:
(a) To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, any underwriter (as
defined in the Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Act or the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this subsection 1.10(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), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this
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subsection 1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.10(b) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 1.10 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
1.10, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in
this Section 1.10 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations; provided, that, in no event shall any contribution by
a Holder under this subsection 1.10(d) exceed the net proceeds from the offering
received by such Holder, except in the case of willful fraud by such Holder. 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.
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(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.
(f) The obligations of the Company and
Holders under this Section 1.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF
1934. With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times after ninety (90) days after the effective date of the first registration
statement filed by the Company for the offering of its securities to the general
public so long as the Company remains subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the
Exchange Act; and
(d) furnish to any Holder, so long as the
Holder owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
SEC Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the Exchange Act
(at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.12 FORM S-3 REGISTRATION. Beginning 180 days
after the consummation of the IPO, in case the Company shall receive from any
Holder or Holders of not less than twenty percent (20%) of the Registrable
Securities then outstanding a written request or requests that the Company
effect a registration on Form S-3 and any related qualification or
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compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the
proposed registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
the Company; PROVIDED, HOWEVER, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 1.12: (1) if Form S-3 is not available for such offering by the Holders;
(2) 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) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$1,000,000; (3) if the Company shall furnish to the 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 seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than 120 days
after receipt of the request of the Holder or Holders under this Section 1.12;
PROVIDED, HOWEVER, that the Company shall not utilize this right more than once
in any twelve month period; (4) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected one (1) registration
on Form S-3 for the Holders pursuant to this Section 1.12; (5) if the Company
has already effected a total of three (3) registration on Form S-3 for the
Holders pursuant to this Section 1.12; or (6) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company
shall file a registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities,
shall be borne pro rata by the Holder or Holders participating in the Form S-3
Registration. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The
rights to cause the Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations) by a Holder to
a transferee or assignee of at least 100,000 shares of
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such securities, provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, (i) the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession), (ii) the holdings of transferees and assignees of
a corporation that control, are controlled by or under common control with such
corporation, and (iii) the holdings of transferees and assignees of a limited
liability company who are entities managed by the same manager or management
company, or managed or owned by an entity controlling, controlled by, or under
common control with, such manager or management company, shall be aggregated
together and with the partnership, corporation or limited liability company as
the case may be; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under Section 1.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION
RIGHTS. From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any registration
filed under Section 1.2 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of his securities will not
reduce the amount of the Registrable Securities of the Holders which is included
or (b) to make a demand registration which could result in such registration
statement being declared effective prior to the earlier of either of the dates
set forth in subsection 1.2(a) or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Holder
hereby agrees that, during the period of duration (up to, but not exceeding, 180
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the date of the final prospectus
distributed in connection with a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Common Stock included in such registration; PROVIDED, HOWEVER, that:
(a) such agreement shall be applicable only
during the two-year period following the date of the final prospectus
distributed pursuant to the first such
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registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company
and all five-percent securityholders (on a fully diluted basis) enter into
similar agreements.
In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period, and each
Holder agrees that, if so requested, such Holder will execute an agreement in
the form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section 1.15.
Notwithstanding the foregoing, the obligations
described in this Section 1.15 shall not apply to a registration relating solely
to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
1.16 TERMINATION OF REGISTRATION RIGHTS. No
Holder shall be entitled to exercise any right provided for in this Section 1
after the earlier of (i) three (3) years following the consummation of the IPO,
or (ii) such time as Rule 144 or another similar exemption under the Act is
available for the sale of all of such Holder's shares during a three (3)-month
period without registration.
2. COVENANTS OF THE COMPANY.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The
Company shall deliver to each Investor holding, and to transferees of, at least
250,000 shares of Registrable Securities, other than a Holder reasonably deemed
by the Company to be a competitor of the Company:
(a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by an independent public accounting firm of
nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any event
within thirty (30) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, a
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter;
(c) as soon as practicable, but in any event
thirty (30) days prior to the end of each fiscal year, a budget for the next
fiscal year, prepared on a monthly basis,
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including balance sheets and sources and applications of funds statements for
such months and, as soon as prepared, any other budgets or revised budgets
prepared by the Company;
(d) with respect to the financial statements
called for in subsection (b) of this Section 2.1, an instrument executed by the
Chief Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so;
and
(e) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Investor or any assignee of the Investor may from time to time reasonably
request, PROVIDED, HOWEVER, that the Company shall not be obligated under this
subsection (e) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 INSPECTION. The Company shall permit each
Investor who holds not less than 250,000 shares of Registrable Securities,
except for a Holder reasonably deemed by the Company to be a competitor of the
Company, at such Investor'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 Investor; PROVIDED, HOWEVER, that
the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
2.3 TERMINATION OF INFORMATION AND INSPECTION
COVENANTS. The covenants set forth in Sections 2.1 and 2.2 shall terminate as to
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated or when the Company first becomes subject to
the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act,
whichever event shall first occur.
2.4 RIGHT OF FIRST OFFER. Subject to the terms
and conditions specified in this Section 2.4, the Company hereby grants to each
Major Investor (as hereinafter defined) a right of first offer with respect to
future sales by the Company of its Shares (as hereinafter defined). For purposes
of this Section 2.4, a "MAJOR INVESTOR" shall mean any person who holds at least
250,000 shares of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and/or Series E Preferred (or the Common Stock
issued upon conversion thereof); PROVIDED, HOWEVER, a holder of Series D
Preferred shall have such right only in the event the Company is not exercising
its Put Right (as defined in the Series D Purchase Agreement between the Company
and the Purchasers named therein) in connection with such
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sale. For purposes of this Section 2.4, Major Investor includes such shares held
by (i) any general partners and affiliates of a Major Investor and (ii) if the
Major Investor is a limited liability company, any entities managed by the same
manager or management company, or managed or owned by an entity controlling,
controlled by, or under common control with, such manager or management company.
A Major Investor who chooses to exercise the right of first offer may designate
as purchasers under such right itself or its partners or affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares
of, or securities convertible into or exercisable for any shares of, any class
of its capital stock ("SHARES"), the Company shall first make an offering of
such Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by
certified mail ("NOTICE") to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms, if any, upon which it proposes to offer such
Shares.
(b) Within 15 calendar days after delivery of
the Notice, the Major Investor may elect to purchase or obtain, at the price and
on the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Major Investor bears to the total number of shares
of Common Stock then outstanding (assuming conversion of all outstanding
Preferred Stock).
(c) The Company may, during the 60-day period
following the expiration of the period provided in subsection 2.4(b) hereof,
offer the remaining unsubscribed portion of the Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this
paragraph 2.4 shall not be applicable:
(i) to the issuance or sale of
Common Stock (or options therefor) to employees, consultants, directors or
vendors (if, with respect to vendors, in transactions with primarily
non-financing purposes), pursuant to plans or agreements approved by the Board
of Directors for the primary purpose of soliciting or retaining their services,
(ii) to or after consummation of a
bona fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act pursuant to a registration statement,
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(iii) to the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities,
(iv) to the issuance of securities
in connection with a bona fide business acquisition of or by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise,
(v) to the issuance of securities to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, or similar transactions,
(vi) to the issuance or sale of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock or Series D Preferred Stock,
(vii) to the issuance of securities
that, with unanimous approval of the Board of Directors of the Company,
are not offered to any existing stockholder of the Company,
(viii) to the issuance of securities
in connection with any stock split, stock dividend or recapitalization by
the Company,
(ix) to the issuance of Common Stock
upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock, or pursuant to
options, warrants or other securities outstanding as of the date hereof, or
pursuant to conversion of any convertible securities issuable upon exercise of
options, warrants or other securities outstanding as of the date hereof,
(x) the issuance of securities
pursuant to transactions involving technology licensing, research or development
activities or the distribution, manufacture or marketing of the Company's
products, or
(xi) the issuance of securities
pursuant to a collaborative partnering arrangement with another corporation
or entity.
3. TERMINATION OF PRIOR AGREEMENTS.
3.1 TERMINATION OF FIFTH RESTATED RIGHTS
AGREEMENT. Effective upon the consent of holders of a majority of the
Registrable Securities (as defined in the Fifth Restated Rights agreement) and
conditioned upon the purchase and sale of the Series E Preferred Stock pursuant
to the Purchase Agreement, the Fifth Restated Rights Agreement is hereby
terminated and of no further force and effect.
3.2 TERMINATION OF PRIOR RIGHTS. Each Series
B Holder and Acacia Common Holder hereby agrees that such Holder shall have no
rights hereunder or under the Fourth Restated Rights Agreement unless such
Holder has executed the Termination Agreement by and among the Company, Acacia
Biosciences, Inc. and the other parties thereto attached as EXHIBIT K to the
Agreement and Plan and Reorganization dated as of January 29, 1999; PROVIDED,
HOWEVER, notwithstanding the foregoing such Holder shall be subject to Section
1.15 hereof.
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4. MISCELLANEOUS.
4.1 SUCCESSORS AND ASSIGNS. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock or warrants to purchase Common Stock or Preferred Stock (or any
Common Stock issued upon conversion or exercise thereof) or Common Stock subject
to this Agreement). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
4.2 GOVERNING LAW. This Agreement and all acts
and transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Washington, without giving effect to
principles of conflicts of laws.
4.3 COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
4.4 TITLES AND SUBTITLES. The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
4.5 NOTICES. Unless otherwise provided, any
notice required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by overnight
courier or sent by telegram or fax and addressed to the party to be notified at
such party's address as set forth below or on EXHIBITS A, B, C, D, E, F, G, OR H
hereto or as subsequently modified by written notice.
4.6 EXPENSES. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
4.7 AMENDMENTS AND WAIVERS. Any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
4.8 SEVERABILITY. If one or more provisions of
this Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good
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faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (x) such provision shall be
excluded from this Agreement, (y) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (z) the balance of the
Agreement shall be enforceable in accordance with its terms.
4.9 AGGREGATION OF STOCK. All shares of the
Preferred Stock held or acquired by affiliated entities or persons (and with
respect to limited liability companies, any entities managed by the same manager
or management company, or managed or owned by an entity controlling, controlled
by, or under common control with, such manager or management company) shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
[Signature pages follow.]
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The parties have executed this Sixth Amended and Restated Investors'
Rights Agreement as of the date first above written.
COMPANY: INVESTORS:
ROSETTA INPHARMATICS, INC. ------------------------------------
(Investor)
By: /s/ Xxxx X. Xxxx By:
---------------------------------------- ---------------------------------
Xxxx X. Xxxx, XX, Senior Vice President &
Chief Operating Officer Name:
Address: 405 Corporate Center --------------------------------
00000 000xx Xxxxxx XX (print)
Suite 210 Title:
Xxxxxxxx, Xxxxxxxxxx 00000 ------------------------------
Address:
-----------------------------
-----------------------------
-----------------------------
[SIGNATURE PAGE TO ROSETTA INPHARMATICS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
