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EXHIBIT 10.4
ACLARA BIOSCIENCES, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
DECEMBER 30, 1999
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TABLE OF CONTENTS
Page
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1. CERTAIN COVENANTS OF THE COMPANY..................................... 2
(a) Financial Statements........................................... 2
(b) Operating Plan Other Reporting................................. 3
(c) Intellectual Property Rights................................... 3
(d) Payment of Taxes, Compliance with Laws, etc.................... 3
(e) Insurance...................................................... 3
(f) Maintenance of Properties...................................... 4
(g) Affiliated Transactions........................................ 4
(h) Inspection..................................................... 4
(i) Material Changes and Litigation................................ 4
(j) Confidentiality, Invention and Non-Competition
Agreements..................................................... 4
(k) Preemptive Rights.............................................. 4
(l) Employee Shares................................................ 6
2. REGISTRATION RIGHTS.................................................. 6
(a) Certain Definitions............................................ 6
(b) Sale or Transfer of Shares; Legend............................. 10
(c) Required Registrations......................................... 10
(d) Incidental Registration........................................ 12
(e) Registration Procedures........................................ 13
(f) Allocation of Expenses......................................... 17
(g) Indemnification................................................ 17
(h) Indemnification with Respect to Underwritten Offering.......... 19
(i) Information by Holder.......................................... 19
(j) Rule 144 Requirements.......................................... 19
(k) Selection of Underwriter....................................... 20
(1) Restrictions on Other Agreements............................... 20
(m) Lock-Up Agreement.............................................. 20
(n) Restrictions on Sale by the Company and Others................. 20
(o) Termination of Rights.......................................... 21
3. MISCELLANEOUS........................................................ 21
(a) Transfer of Rights............................................. 21
(b) Successors and Assigns......................................... 21
(c) Notices........................................................ 21
4. AMENDMENTS AND WAIVERS............................................... 22
5. COUNTERPARTS......................................................... 22
6. CAPTIONS............................................................. 23
7. SEVERABILITY......................................................... 23
8. GOVERNING LAW........................................................ 23
9. TERMINATION OF PRIOR AGREEMENT; WAIVER OF PREEMPTIVE RIGHTS.......... 23
10. BOARD ATTENDANCE BY J&J.............................................. 24
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AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement (the "Agreement") is
made as of December 30, 1999, by and among ACLARA BioSciences, Inc., a Delaware
corporation (the "Company"), Phoenix Leasing Incorporated, a California
corporation ("Phoenix"), Xxxxxxx & Xxxxxxx Development Corporation ("J&J"), The
Xxxxxx-Xxxxx Corporation ("Xxxxxx-Xxxxx") and the Purchasers set forth on
Schedule A attached hereto (the "Purchasers"). The Purchasers, Xxxxxx-Xxxxx and
J&J are hereinafter collectively referred to as the "Preferred Stockholders."
Capitalized terms used and not defined herein shall have the meaning given in
that Series H Redeemable Preferred Stock Purchase Agreement of even date
herewith by and among the Company and certain of the Purchasers.
RECITALS
The Company and certain of the Purchasers have entered into a Series B
Redeemable Preferred Stock Purchase Agreement dated May 9, 1995, pursuant to
which such Purchasers acquired shares of the Company's Series B Redeemable
Preferred Stock ("Series B Stock");
The Company and Phoenix have entered into a Master Equipment Lease dated
November 15, 1995, pursuant to which the Company issued to Phoenix a warrant to
purchase shares of the Company's Common Stock;
The Company and certain of the Purchasers (the "Series C Purchasers") have
entered into a Series C Redeemable Preferred Stock Purchase Agreement dated as
of November 15, 1996, pursuant to which such Purchasers will acquire shares of
the Company's Series C Redeemable Preferred Stock ("Series C Stock");
The Company and Phoenix have entered into an additional equipment lease
line, pursuant to which the Company has issued to Phoenix a warrant to purchase
shares of the Company's Common Stock;
The Company and J&J have entered into a certain Stock Purchase Agreement
dated as of April 17, 1997 (the "Series D Purchase Agreement"), pursuant to
which J&J acquired shares of the Company's Series D Redeemable Preferred Stock
("Series D Stock");
The Company and certain of the Purchasers have entered into a Note and
Warrant Purchase Agreement dated as of December 15, 1997, pursuant to which the
Company has issued to such Purchasers warrants to purchase shares of Series D
Stock (the "Series D Warrants");
The Company, J&J and Xxxxxx-Xxxxx (the "Series E Purchasers") have entered
into a certain Series E Redeemable Preferred Stock Purchase Agreement dated as
of March 26, 1998
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(the "Series E Purchase Agreement"), pursuant to which J&J and Xxxxxx-Xxxxx have
purchased shares of the Company's Series E Redeemable Preferred Stock ("Series E
Stock");
The Company and certain of the Purchasers (the "Series F Purchasers") have
entered into a certain Series F Redeemable Preferred Stock Purchase Agreement
dated as of January 12, 1999 (the "Series F Purchase Agreement"), pursuant to
which such Purchasers have purchased shares of the Company's Series F Redeemable
Preferred Stock ("Series F Stock");
The Company and Xxxxxx-Xxxxx (the "Series G Purchasers") entered into a
certain Series G Redeemable Preferred Stock Purchase Agreement dated as of April
29, 1999 pursuant to which Xxxxxx-Xxxxx purchased shares of the Company's Series
G Redeemable Preferred Stock ("Series G Stock");
The Company and certain of the Purchasers (the "Series H Purchasers") are
entering into a certain Series H Redeemable Preferred Stock Purchase Agreement
of even date herewith (the "Series H Purchase Agreement"), pursuant to which
such Purchasers will purchase shares of the Company's Series H Redeemable
Preferred Stock ("Series H Stock").
Each of the parties hereto desires to set forth in a single document
certain covenants of the Company and certain of the pre-emptive rights,
registration rights and other rights of the Preferred Stockholders;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:
1. Certain Covenants of the Company. The Company covenants and agrees
that, until the earlier of (i) such time as all outstanding shares of Preferred
Stock have been redeemed by the Company, or (ii) immediately prior to the
closing of a public offering of the Common Stock of the Company which causes a
mandatory conversion of the Preferred Stock pursuant to the Company's
certificate of incorporation, it will perform and observe the following
covenants and provisions:
(a) Financial Statements.
(i) The Company will maintain books of account in accordance
with generally accepted accounting principles applied on a consistent basis,
keep full and complete financial records and furnish to the Preferred
Stockholders the following reports:
(A) within 90 days after the end of each fiscal year, a
balance sheet of the Company as at the end of such year, together with
statements of operations, shareholders' equity and cash flows of the Company for
such year, audited and certified by public accountants of recognized national
standing reasonably satisfactory to the Preferred Stockholders, prepared in
accordance with generally accepted accounting principles and practices
consistently applied;
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(B) at the request of a Preferred Stockholder and in no
event more than 30 days after such request, an unaudited balance sheet of the
Company as at the end of the month immediately preceding the month in which such
request is made, together with statements of operations for such period,
shareholder's equity and statements of changes of cash flows of the Company for
such period and for the current fiscal year to the end of such period, and
summaries of bookings and backlogs; provided, however, that no Preferred
Stockholder may make such request more than 12 times in any 12-month period; and
(C) such other financial information as the Preferred
Stockholders may reasonably request, including, without limitation, certificates
of the principal financial officer of the Company concerning compliance with the
covenants of the Company under this Section 1.
(b) Operating Plan / Other Reporting. The Company will also prepare
and deliver to any holder of at least 250,000 shares (adjusted for stock splits,
combinations, recapitalizations and the like) of Series B Stock, Series C Stock,
Series D Stock, Series E Stock, Series F Stock, Series F-1 Preferred Stock,
Series G Stock or Series H Stock (a "Qualifying Holder") (or to the director of
the Company designated by such Qualifying Holder, if any):
(i) within 30 days after the start of each fiscal year, an
annual Operating Plan prepared on a monthly basis, as well as any material
adopted revisions to such Operating Plan, within a reasonable period of their
adoption; and
(ii) management letters, communications with shareholders,
press releases and registration statements.
(c) Intellectual Property Rights. The Company will keep in full
force and effect its corporate existence and all patents and other Intellectual
Property Rights useful in its business (except such rights as the Board of
Directors, in its reasonable business judgment, has determined are not material
to the Company's continuing operations).
(d) Payment of Taxes, Compliance with Laws, etc. The Company will
pay and discharge all lawful taxes, assessments and governmental charges or
levies imposed upon it or upon its income or property before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if not paid when due, might become a lien or charge upon its
property or any part thereof; provided, however, that the Company shall not be
required to pay and discharge any such tax, assessment, charge, levy, or claim
so long as the validity thereof is being contested by the Company in good faith
by appropriate proceedings and an adequate reserve therefor has been established
on its books. The Company will use its best efforts to comply with all
applicable laws and regulations in the conduct of its business including,
without limitation, all Environmental Laws.
(e) Insurance. The Company will keep its insurable properties
insured, upon reasonable business terms, by financially sound and reputable
insurers against liability, and the
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perils of casualty, fire and extended coverage in amounts of coverage
sufficient in the reasonable business judgment of the Company.
(f) Maintenance of Properties. The Company will maintain all
properties used or useful in the conduct of its business in good repair, working
order and condition as is reasonably necessary to permit such business to be
properly and advantageously conducted.
(g) Affiliated Transactions. All transactions by and between the
Company and any officer, employee or stockholder of the Company or persons
controlled by or affiliated with such officer, employee or stockholder, shall be
conducted on an arms-length basis, shall be on terms and conditions no less
favorable to the Company than could be obtained from unrelated persons and shall
be approved by the Board of Directors after full disclosure of the terms
thereof, for which purpose the interested party, if a Director, and any
affiliate of the interested party who is a Director, shall not be entitled to
vote.
(h) Inspection. The Company shall, upon reasonable prior notice,
permit authorized representatives of any Qualifying Holder to visit and inspect
any of the properties of the Company including its books of account (and to make
copies thereof and take extracts therefrom), and to discuss the affairs,
finances and accounts of the Company with its officers, administrative employees
and independent accountants, all at the expense of such Qualifying Holder and at
such reasonable times, during normal business hours and as often as may be
reasonably requested.
(i) Material Changes and Litigation. The Company promptly (and, in
any event, not later than the date of release of such information to the public
generally) shall notify the Preferred Stockholders or their transferees of any
material adverse change in the business, properties, assets, or condition
(financial or otherwise) of the Company and of any litigation or governmental
proceeding or investigation pending (or, to the best knowledge of the Company,
threatened) against the Company or against any officer, director, key employee,
or principal shareholder of the Company, that materially adversely affects (or
if adversely determined, could materially adversely affect) its present or
proposed business, properties, assets, or condition (financial or otherwise)
taken as a whole.
(j) Confidentiality, Invention and Non-Competition Agreements. The
Company shall require all employees and consultants of the Company to enter into
the Company's standard form of confidentiality and invention agreement.
(k) Preemptive Rights.
(i) The Preferred Stockholders shall be entitled to a right of
first refusal to purchase, on a pro rata basis, all or any part of New
Securities (as defined below) which the Company may, from time to time, propose
to sell and issue, subject to the terms and conditions set forth below. The pro
rata share of each Preferred Stockholder shall equal a fraction, the numerator
of which is the number of shares of Common Stock then held by such Preferred
Stockholder or issuable upon exercise of any options, rights or warrants, and
upon
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conversion or exercise of the Preferred Stock or any other convertible
securities then held by such Preferred Stockholder and the denominator of which
is the total number of shares of Common Stock then outstanding plus the number
of shares of Common Stock issuable upon exercise of then outstanding options,
rights or warrants or upon conversion or exercise of the Preferred Stock or any
other then outstanding convertible securities.
(ii) "New Securities" shall mean any capital stock of the
Company whether now authorized or not, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever which are, or may
become, convertible into capital stock; provided, however, that the term "New
Securities" shall not include (1) the issuance of up to 850,000 shares of Series
H Stock or shares of Common Stock issuable or issued upon conversion of the
Series H Stock; (2) up to 3,342,669 shares of the Company's Common Stock or
options therefor (and the shares of Common Stock issuable upon exercise of such
options), net of repurchases, issuable pursuant to the Company's 1995 Stock
Option Plan, the 1997 Stock Option Plan or another stock plan approved by the
Board of Directors of the Company and the Series F Designee (as defined in the
Company's Amended and Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on December 30, 1999 (the "Restated
Certificate")), to the extent such Series F Designee has been appointed by the
holders of Series F and Series F-1 Preferred Stock; (3) shares of Common Stock
issued upon the exercise of any warrant or option or conversion of any
convertible security outstanding prior to the date hereof, as disclosed in the
Series H Purchase Agreement; (4) securities offered in a firm commitment
underwritten public offering pursuant to an effective registration statement
filed with the Securities and Exchange Commission covering the offer and sale of
Common Stock for the account of the Company at a public offering price of at
least $8.91 per share (with such amount to be appropriately adjusted for stock
splits, stock dividends and the like) and having an aggregate offering price to
the public resulting in gross proceeds to the Company of not less than
$15,000,000; and (5) securities issued as a result of any stock split, stock
dividend or reclassification of Common Stock, distributable on a pro rata basis
to all holders of Common Stock.
(iii) In the event the Company intends to issue New
Securities, it shall give each Preferred Stockholder written notice of such
intention, describing the type of New Securities to be issued, the price thereof
and the general terms upon which the Company proposes to effect such issuance.
Each Preferred Stockholder shall have 30 days from the date of any such notice
to agree to purchase all or part of its pro rata share of such New Securities
for the price and upon the general terms and conditions specified in the
Company's notice by giving written notice to the Company stating the quantity of
New Securities to be so purchased. Each Preferred Stockholder shall have a right
of overallotment such that if any Preferred Stockholder fails to exercise its
right hereunder to purchase its total pro rata portion of New Securities, the
other Preferred Stockholders may purchase such portion on a pro rata basis or on
such other basis as such Preferred Stockholders electing their overallotment
option may agree amongst themselves in writing, by giving written notice to the
Company within 5 days from the date that the Company provides written notice to
the other Preferred Stockholders of the amount of New Securities with respect to
which such non-purchasing Preferred Stockholder has failed to exercise its right
hereunder.
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(iv) In the event the Preferred Stockholders fail to exercise
the foregoing right of first refusal with respect to any New Securities within
such 30-day period (or the additional 5-day period provided for overallotments),
the Company may within 120 days thereafter sell any or all of such New
Securities not agreed to be purchased by the Preferred Stockholders at a price
and upon general terms no more favorable to the purchasers thereof than
specified in the notice given to each Preferred Stockholder pursuant to
paragraph (c) above. In the event the Company has not sold such New Securities
within such 120-day period, the Company shall not thereafter issue or sell any
New Securities without first offering such New Securities to the Preferred
Stockholders in the manner provided above.
(v) For purposes of this Section 1(k), "Preferred
Stockholders" shall include each of the Preferred Stockholders, its general
partners, officers or other affiliates and any person or entity to whom a
Preferred Stockholder transfers Preferred Stock or Common Stock, each of which
may apportion its pro rata share among itself and such general partners,
officers and other affiliates in such proportions as it deems appropriate.
(l) Employee Shares. Stock issued or options granted by the Company
to directors, officers or employees of the Company shall generally be subject to
vesting over not less than four years (unless otherwise unanimously approved by
the Board of Directors of the Company), and stock issued to such persons shall
be subject to repurchase by the Company at the original purchase price per share
upon such person's resignation or termination with or without cause, which
repurchase rights shall lapse as to such stock ratably over four years (unless
otherwise unanimously approved by the Board of Directors of the Company). Such
stock or options shall be issued pursuant to the terms of a Restricted Stock
Agreement or Stock Option Agreement, as appropriate, each as shall be approved
by the directors elected by the holders of the Preferred Stock pursuant to the
Restated Certificate. All such persons acquiring shares of capital stock of the
Company shall be required to become parties to the Amended and Restated
Stockholders' Agreement dated as of the date hereof by and among the Company and
the stockholders named therein.
2. Registration Rights.
(a) Certain Definitions. As used in this Section 2 and elsewhere
in this Agreement, the following terms shall have the following respective
meanings:
"Commission" means the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar United States statute, and the rules and regulations of
the Commission issued under such act, as they each may, from time to time, be in
effect.
"Registration Statement" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for
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a limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
"Registration Expenses" means the expenses described in
Section 2(f).
"Registrable Shares" means the Registrable B Shares, the
Registrable C Shares, the Registrable D Shares, the Registrable E Shares, the
Registrable F Shares, the Registrable G Shares, the Registrable H Shares and the
Registrable Warrant Shares.
"Registrable B Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series B Stock, and (ii) any other
shares of Common Stock of the Company issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, that any such shares registered and sold under the
Securities Act or sold in reliance on Rule 144 under the Securities Act shall no
longer be considered Registrable B Shares. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable B Shares, or to a number or percentage of Registrable B Shares held
by a Series B Stockholder (as defined below), such reference shall include
shares of Common Stock issuable upon conversion of the Series B Stock even
though such conversion has not yet been effected.
"Registrable C Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series C Stock, and (ii) any other
shares of Common Stock of the Company issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, that any such shares registered and sold under the
Securities Act or sold in reliance on Rule 144 under the Securities Act shall no
longer be considered Registrable C Shares. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable C Shares, or to a number or percentage of Registrable C Shares held
by a Series C Stockholder (as defined below), such reference shall include
shares of Common Stock issuable upon conversion of the Series C Stock even
though such conversion has not yet been effected.
"Registrable D Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series D Stock (including the Series D
Stock issued or issuable upon exercise of the Series D Warrants), and (ii) any
other shares of Common Stock of the Company issued in respect of such shares
(because of stock splits, stock dividends, reclassifications, recapitalizations,
or similar events); provided, that any such shares registered and sold under the
Securities Act or sold in reliance on Rule 144 under the Securities Act shall no
longer be considered Registrable D Shares. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable D Shares, or to a number or percentage of Registrable D Shares held
by a Series D Stockholder (as defined below), such reference shall include
shares of Common Stock issuable upon conversion of the Series D Stock even
though such conversion has not yet been effected.
"Registrable E Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series E Stock, and (ii) any other
shares of Common Stock of
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the Company issued in respect of such shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, or similar events); provided,
that any such shares registered and sold under the Securities Act or sold in
reliance on Rule 144 under the Securities Act shall no longer be considered
Registrable E Shares. Wherever reference is made in this Agreement to a request
or consent of holders of a certain percentage of Registrable E Shares, or to a
number or percentage of Registrable E Shares held by a Series E Stockholder (as
defined below), such reference shall include shares of Common Stock issuable
upon conversion of the Series E Stock even though such conversion has not yet
been effected.
"Registrable F Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series F Stock, (ii) the shares of
Common Stock issued or issuable upon conversion of the shares, if any, of Series
F-1 Preferred Stock issued or issuable upon conversion of the Series F Stock,
and (iii) any other shares of Common Stock of the Company issued in respect of
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, that any such shares registered
and sold under the Securities Act or sold in reliance on Rule 144 under the
Securities Act shall no longer be considered Registrable F Shares. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Registrable F Shares, or to a number or percentage of
Registrable F Shares held by a Series F Stockholder (as defined below), such
reference shall include shares of Common Stock issuable upon conversion of the
Series F Stock and Series F-1 Preferred Stock even though such conversion has
not yet been effected.
"Registrable G Shares" means (i) the shares of Common Stock
issued or issuable upon conversion of the Series G Stock, and (ii) any other
shares of Common Stock of the Company issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, that any such shares registered and sold under the
Securities Act or sold in reliance on Rule 144 under the Securities Act shall no
longer be considered Registrable G Shares. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable G Shares, or to a number or percentage of Registrable G Shares held
by a Series G Stockholder (as defined below), such reference shall include
shares of Common Stock issuable upon conversion of the Series G Stock even
though such conversion has not yet been effected.
"Registrable H Shares" means (i) shares of Common Stock issued
or issuable upon conversion of the Series H Stock, and (ii) any other shares of
Common Stock of the Company issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, that any such shares registered and sold under the Securities
Act or sold in reliance on Rule 144 under the Securities Act shall no longer be
considered Registrable H Shares. Wherever reference is made in this Agreement to
a request or consent of holders of a certain percentage of Registrable H Shares,
or to a number or percentage of Registrable H Shares held by a Series H
Stockholder (as defined below), such reference shall include shares of Common
Stock issuable upon conversion of the Series H Stock even though such conversion
has not yet been effected.
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"Registrable Warrant Shares" means (i) the shares of Common
Stock issued or issuable upon exercise of the Warrants, (ii) the shares of
Common Stock issuable upon conversion of shares of Series D Preferred Stock
issued or issuable upon exercise of Warrants to purchase shares of Series D
Preferred Stock, and (iii) any other shares of Common Stock of the Company
issued in respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); provided, that any
such shares registered and sold under the Securities Act or sold in reliance on
Rule 144 under the Securities Act shall no longer be considered Registrable
Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar United States statute, and the rules and regulations of the
Commission issued under such act, as they each may, from time to time, be in
effect.
"Series B Stockholders" means the Series B Purchasers and any
persons or entities to whom the rights granted under this Section 2 are
transferred by the Purchasers and their respective successors or assigns.
"Series C Stockholders" means the Series C Purchasers and any
persons or entities to whom the rights granted under this Section 2 are
transferred by the Series C Purchasers and their respective successors or
assigns.
"Series D Stockholders" means (1) J&J and any person or
entities to whom the rights with respect to the Registrable D Shares granted
under this Section 2 are transferred by J&J and its respective successors or
assigns, and (2) the holders of warrants to purchase Series D Stock.
"Series E Stockholders" means J&J and Xxxxxx-Xxxxx and any
person or entities to whom the rights with respect to the Registrable E Shares
granted under this Section 2 are transferred by J&J or Xxxxxx-Xxxxx and its
respective successors or assigns.
"Series F Stockholders" means the Series F Purchasers and any
person or entities to whom the rights with respect to the Registrable F Shares
(or shares of Series F-1 Preferred Stock issuable or issued upon conversion of
the Registrable F Shares) granted under this Section 2 are transferred by a
Series F Purchaser and its respective successors or assigns.
"Series G Stockholders" means the Series G Purchasers and any
person or entities to whom the rights with respect to the Registrable G Shares
granted under this Section 2 are transferred by such persons and their
respective successors or assigns.
"Series H Stockholders" means the Series H Purchasers and any
person or entities to whom the rights with respect to Registrable H Shares
granted under this Section 2 are transferred by such persons and their
respective successors and assigns.
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"Stockholders" means the Series B Stockholders, the Series C
Stockholders, the Series D Stockholders, the Series E Stockholders, the Series F
Stockholders, the Series G Stockholders, the Series H Stockholders and the
Warrantholders.
"Warrants" means (i) the Warrants, each dated as of November
15, 1995 and February 15, 1997, issued by the Company to Phoenix Leasing
Incorporated, to purchase shares of Common Stock, (ii) the Warrants to purchase
shares of Series D Preferred Stock, dated as of December 15, 1997, issued by the
Company to certain Warrantholders pursuant to the Note and Warrant Purchase
Agreement dated December 15, 1997; (iii) the Warrants to purchase shares of
Series D Preferred Stock, dated as of February 6, 1998; and (iv) the Warrants to
purchase shares of Common Stock, dated December 6, 1996.
"Warrantholder" means the holder or holders of the Warrants.
(b) Sale or Transfer of Shares; Legend.
(i) The Registrable Shares shall not be sold or transferred
unless either (1) they first shall have been registered under the Securities
Act, or (2) the Company first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act.
With respect to a sale or transfer by a Series F Stockholder, the Company will
reimburse such holder for the reasonable legal fees and costs incurred by it in
obtaining such opinion (subject to a maximum of $1,000 for each such opinion).
(ii) Each certificate representing the Registrable Shares
shall bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be transferred or
otherwise disposed of unless and until such shares are registered
under the Act and such laws or (1) registration under applicable
state securities laws is not required and (2) an opinion of counsel
satisfactory to the Company is furnished to the Company to the
effect that registration under the Act is not required."
The foregoing legend shall be removed from the certificates representing
any Registrable Shares at the request of the holder thereof at such time as they
become registered under the Securities Act or eligible for resale pursuant to
Rule 144(k) under the Securities Act.
(c) Required Registrations.
(i) Within 90 days following written notice from either (1)
the holder or holders of at least forty percent (40%) of the then outstanding
Registrable B Shares, (2) the holder or holders of at least fifty-one percent
(51%) of the then outstanding Registrable C Shares, (3) the holder or holders of
at least fifty-one percent (51%) of the then outstanding Registrable D
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Shares, (4) the holder or holders of at least fifty-one percent (51%) of the
then outstanding Registrable E Shares, (5) the holder or holders of at least
fifty-one percent (51%) of the then outstanding Registrable F Shares, (6) the
holder or holders of at least fifty-one percent (51%) of the then outstanding
Registrable G Shares, or (7) the holder or holders of at least fifty-one percent
(51%) of the then outstanding Registrable H Shares, the Company shall use its
best efforts to effect the registration of such Registrable Shares on Form S-1
or Form S-2 (or any successor forms) or other appropriate Registration Statement
designated by such holder or holders; provided, however, that the Company shall
not be required to effect any registration pursuant to this Section 2(c)(i)
prior to the earlier of: (A) three years from the date of this Agreement, or (B)
six months following the closing date of the first Registration Statement
covering an underwritten public offering of the Company's Common Stock, and
provided further, that, if the Company shall furnish the holders of Registrable
Shares requesting any registration pursuant to this subsection subsequent to the
initial public offering by the Company with a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors it would be detrimental to the Company or its stockholders for a
registration statement to be filed in the near future, then the Company's
obligation to use its best efforts to register, qualify or comply under this
Section 2(c)(i) shall be deferred for a period not to exceed 120 days from the
date of receipt of written request from the holders of Registrable Shares
requesting the registration, provided that the Company may not exercise this
deferral right more than once. Notwithstanding the foregoing, the Company may
exercise its deferral right set forth in the immediately preceding sentence with
respect to the Registrable F Shares only if it shall also furnish the holder or
holders of the Registrable F Shares requesting registration with a certificate
signed by the President of the Company stating the existence of material
nonpublic information, the disclosure of which, in the good faith judgment of
the Board of Directors, would be contrary to the best interests of the Company
and its stockholders.
(ii) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), either (1) a Series B Stockholder or Series B Stockholders, (2) a
Series C Stockholder or Series C Stockholders, (3) a Series D Stockholder or
Series D Stockholders, (4) a Series E Stockholder or Series E Stockholders, (5)
a Series F Stockholder or Series F Stockholders, or (6) a Series G Stockholder
or Series G Stockholders, or (7) a Series H Stockholder or Series H Stockholders
may each request the Company, in writing, to effect the registration on Form S-3
(or such successor form), of the Registrable B Shares, Registrable C Shares,
Registrable D Shares, Registrable E Shares, Registrable F Shares, Registrable G
Shares or Registrable H Shares, respectively, of such Stockholder or
Stockholders having a market value at the time of such request of at least
$200,000. Thereupon, the Company shall, as expeditiously as possible, use its
best efforts to effect the registration on Form S-3, or such successor form, of
all Registrable Shares which the Company has been requested to register;
provided, that, if the Company shall furnish the holders of Registrable Shares
requesting the registration a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
detrimental to the Company or its stockholders for a registration statement to
be filed in the near future, then the Company's obligation to use its best
efforts to register, qualify or comply under this Section 2(c)(ii) shall be
deferred for a period not to exceed 120 days from the date of receipt of written
request from the holders of Registrable B Shares, Registrable C Shares,
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Registrable D Shares, Registrable E Shares, Registrable F Shares, Registrable G
Shares or Registrable H Shares, (as applicable) requesting the registration,
provided that the Company may not exercise this deferral right more than once
with respect to each of the Registrable B Shares, Registrable C Shares,
Registrable D Shares, Registrable E Shares, Registrable F Shares, Registrable G
Shares or Registrable H Shares. In no event, however, shall the Company be
required to register Registrable Shares on Form S-3 (or such successor form)
pursuant to this Section 2(c)(ii) more than once in any six-month period.
(iii) The Series B Stockholders, the Series C Stockholders,
the Series D Stockholders, the Series E Stockholders, the Series F Stockholders,
the Series G Stockholders and the Series H Stockholders shall each have the
right to require the Company to effect one demand registration on Form S-1 or
Form S-2 pursuant to Section 2(c)(i) and an unlimited number of registrations on
Form S-3 (or any successor forms) pursuant to Section 2(c)(ii); however, a
registration on Form S-1 or Form S-2 will not count for this purpose (1) unless
it becomes effective and the Series B Stockholders, the Series C Stockholders,
the Series D Stockholders, the Series E Stockholders, the Series F Stockholders,
the Series G Stockholders or the Series H Stockholders requesting such
registration, as the case may be, are able to sell at least 80% of the
Registrable B Shares, the Registrable C Shares, the Registrable D Shares, the
Registrable E Shares, the Registrable F Shares, the Registrable G Shares or the
Registrable H Shares, as the case may be, sought to be included in such
registration, or (2) if the Company elects to sell stock of the Company pursuant
to a Registration Statement at the same time. The Company shall not, however,
register any additional shares of stock of the Company at the same time as a
required registration under this Section 2(c) without the prior written consent
of the holders of a majority of the Registrable Shares to be included in the
required registration.
(d) Incidental Registration.
(i) Whenever the Company proposes to file a Registration
Statement, prior to such filing it shall give written notice to all Stockholders
of its intention to do so, and upon the written request of a Stockholder or
Stockholders given within 30 days after the Company provides such notice, the
Company shall cause all Registrable Shares which the Company has been requested
to register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Stockholder(s).
(ii) In connection with any offering under this Section 2(d)
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the managing underwriter, jeopardize the success of the offering by
the Company. If in the opinion of the managing underwriter the registration of
all, or part of, the Registrable Shares which the holders have requested to be
included would materially and adversely affect such public offering, then the
Company shall be required to include in the underwriting only that number of
Registrable Shares, if any, which the managing underwriter believes may be sold
without causing such adverse effect; provided, however, that, with respect
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to any underwritten public offering other than the Company's initial public
offering, in no event shall less than 35% of the total number of Registrable
Shares requested to be registered be included in the underwriting. In the event
of such a reduction in the number of shares to be included in the underwriting,
all holders of Registrable Shares who have requested registration shall
participate in the underwriting pro rata based upon their total ownership of
Registrable Shares (or in any other proportion as agreed upon by such holders)
and if any such holder would thus be entitled to include more shares than such
holder requested to be registered, the excess shall be allocated among such
other requesting holders pro rata based on their ownership of Registrable
Shares. No other securities requested to be included in a registration for the
account of anyone other than the Company or the Stockholders shall be included
in a registration unless all Registrable Shares requested to be included in such
registration are so included.
(e) Registration Procedures. If and whenever the Company is
required by the provisions of this Agreement to use its best efforts to
effect the registration of any of the Registrable Shares under the Securities
Act, the Company shall:
(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective for a period of not less than 120 days from
the effective date;
(iii) as expeditiously as possible furnish to each selling
Stockholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Stockholder; and
(iv) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or blue sky laws of such states as the selling Stockholder
shall reasonably request, and do any and all other acts and things that may be
reasonably necessary or desirable to enable the selling Stockholder to
consummate the public sale or other disposition in such jurisdictions of the
Registrable Shares owned by the selling Stockholder; provided, however, that the
Company shall not be required in connection with this paragraph (e) to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act.
(v) The Company will, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to each selling
Stockholder, counsel representing such selling Stockholders, and each
Underwriter, if any, of the Registrable Shares covered by such registration
statement copies of such registration statement as proposed to be
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filed, together with exhibits thereto, which documents (solely with respect to
the information required pursuant to Item 507 of Regulation S-K under the
Securities Act) will be subject to review and comment by the foregoing within
five days after delivery thereof, and thereafter furnish to such selling
Stockholder, counsel and Underwriter, if any, for their review and comment such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents or information
as such selling Stockholder, counsel or Underwriter may reasonably request in
order to facilitate the disposition of the Registrable Shares owned by such
selling Stockholder.
(vi) After the filing of the registration statement, the
Company will promptly notify each selling Stockholder of Registrable Shares
covered by such registration statement, and (if requested by any such selling
Stockholder) confirm such notice in writing, (1) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (2) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
registration statement or related prospectus or for additional information
relating to the selling Stockholders, (3) of the issuance by the Commission or
any other Federal or state governmental authority of any stop order suspending
the effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (4) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company contained
in any agreement contemplated by subsection (viii) below (including any
underwriting agreement) cease to be true and correct in all material respects,
(5) 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 Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, (6) of the occurrence of any event which
makes any statement made in such registration statement or related prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or which requires the making of any changes in a
registration statement, prospectus or documents incorporated therein by
reference so that, in the case of the registration statement, 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
not misleading, and that in the case of the prospectus, it will not contain any
untrue statement of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (provided, however, that the foregoing may be
satisfied by the Company through the filing with the Securities and Exchange
Commission of an amendment to such registration statement, an amended
prospectus, a prospectus supplement or a report on Form 10-K, Form 10-Q or Form
8-K which discloses such event), and (7) of the Company's reasonable
determination that a post-effective amendment to a registration statement would
be necessary.
(vii) The Company will take all reasonable actions required to
lift any suspension of the qualification (or exemption from qualification) of
any Registrable Shares for
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sale in any jurisdiction, and to prevent the entry or obtain the withdrawal of
any order suspending the effectiveness of a registration statement.
(viii) The Company and each selling Stockholder will enter
into customary agreements (including, if applicable, an underwriting agreement
in customary form and which is reasonably satisfactory to the Company) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Shares (the selling Stockholders may, at
their option, require that any or all of the representations, warranties and
covenants of the Company to or for the benefit of such Underwriters also be made
to and for the benefit of such selling Stockholders).
(ix) The Company will make available to each selling
Stockholder (and will deliver to their counsel) and each Underwriter, if any,
subject to restrictions imposed by the United States federal government or any
agency or instrumentality thereof, copies of all correspondence between the
Commission and the Company, its counsel or auditors and will also make available
for inspection by any selling Stockholder, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any such selling Stockholder or Underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement; provided, however, that each such Inspector shall enter
into a written nondisclosure agreement with the Company in form and substance
reasonably satisfactory to the Company. Records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (1) the disclosure
of such Records is reasonably necessary to avoid or correct a misstatement or
omission in such registration statement or (2) the disclosure or release of such
Records is requested or required pursuant to oral questions, interrogatories,
requests for information or documents or a subpoena or other order from a court
of competent jurisdiction or other process; provided that prior to any
disclosure or release pursuant to clause (2), the Inspectors shall provide the
Company with prompt notice of any such request or requirement so that the
Company may seek an appropriate protective order or waive such Inspectors'
obligation not to disclose such Records; and, provided further, that if failing
the entry of a protective order or the waiver by the Company permitting the
disclosure or release of such Records, the Inspectors, upon advice of counsel,
are compelled to disclose such Records, the Inspectors may disclose that portion
of the Records which counsel has advised the Inspectors that the Inspectors are
compelled to disclose. Each selling Stockholder agrees that information obtained
by it solely as a result of such inspections (not including any information
obtained from a third party who, insofar as is known to the selling Stockholder
after reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public. Each selling
Stockholder further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the
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Company, at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.
(x) The Company will furnish to each selling Stockholder and
to each Underwriter, if any, a signed counterpart, addressed to such selling
Stockholder or Underwriter, of (1) an opinion or opinions of counsel to the
Company, and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Selling Stockholders or the Underwriters reasonably request.
(xi) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earning statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(xii) The Company will use its best efforts (1) to cause any
class of Registrable Shares to be listed on a national securities exchange (if
such shares are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company are then
listed (if any), if the listing of such Registrable Shares is then permitted
under the rules of such exchange or (2) to secure designation of all such
Registrable Shares covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 of the Commission or,
failing that, to secure NASDAQ authorization for such Registrable Shares and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Shares with
the National Association of Securities Dealers, Inc. (the "NASD").
(xiii) The Company will appoint a transfer agent and registrar
for all such Registrable Shares covered by such registration statement not later
than the effective date of such registration statement.
(xiv) Prior to the effective date of the first demand
registration or the first incidental registration, whichever shall occur first,
the Company shall (1) provide the transfer agent with printed certificates for
the Registrable Shares in a form eligible for deposit with The Depository Trust
Company, and (2) provide a CUSIP number for the Registrable Shares.
(xv) In connection with an underwritten offering, the Company
will participate, to the extent reasonably requested by the managing Underwriter
for the offering or the selling Stockholders, in customary efforts to sell the
securities under the offering, including, without limitation, participating in
"road shows."
If the Company has delivered preliminary or final prospectuses to the
selling Stockholder and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the selling Stockholder and, if requested, the
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selling Stockholder shall immediately cease making offers of Registrable Shares
and shall return all prospectuses to the Company. The Company shall promptly
provide the selling Stockholder with revised prospectuses and, following receipt
of the revised prospectuses, the selling Stockholder shall be free to resume
making offers of the Registrable Shares.
(f) Allocation of Expenses. The Company shall pay the Registration
Expenses for (i) the first demand registration on Form S-1 or Form S-2 (or any
successor forms) requested by each of the Series B Stockholders, the Series C
Stockholders, the Series D Stockholders, the Series E Stockholders, the Series F
Stockholders, the Series G Stockholders and the Series H Stockholders, (ii) the
first two demand registrations on Form S-3 requested by each of the Series B
Stockholders, the Series C Stockholders, the Series D Stockholders, the Series E
Stockholders, the Series F Stockholders, the Series G Stockholders and the
Series H Stockholders, and (iii) with respect to the Series F Stockholders, the
first two Incidental Registrations by Series F Stockholders pursuant to Section
2(d). If a registration on a Registration Statement other than Form S-3 (or any
successor form) requested by the Stockholders pursuant to paragraph (i) of
Section 2(c) is withdrawn at the request of the Stockholders requesting it
(other than as a result of information concerning the business or financial
condition of the Company that is made known to the Stockholders after the date
on which such registration was requested) and if the requesting Stockholders
holding a majority of the Registrable Shares requested to be included in such
registration elect not to have such registration counted as a registration
requested under paragraph (i) of Section 2(c), the requesting Stockholders shall
pay the Registration Expenses of such registration pro rata in accordance with
the number of their Registrable Shares included in such registration. For
purposes of this Section, the term "Registration Expenses" shall mean all
expenses incurred by the Company in complying with this Section 2, including,
without limitation, all registration and filing fees, exchange listing fees,
printing; expenses, fees and disbursements of counsel for the Company and one
counsel for the selling Stockholders, out-of-pocket expenses of the Company and
the underwriters, state blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but excluding
underwriting discount and selling commissions and fees of more than one counsel
for the selling Stockholders. Such underwriting discounts and selling
commissions shall be borne pro rata by the selling Stockholders in accordance
with the number of their Registrable Shares included in such registration.
(g) Indemnification. In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, then to
the extent permitted by law the Company shall indemnify and hold harmless the
seller of such Registrable Shares, each underwriter of such Registrable Shares
and each other person, if any, who controls such seller or underwriter within
the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or
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arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading;
and the Company shall reimburse such seller, underwriter and each such
controlling person for reasonable legal or any other expenses incurred by such
seller, underwriter or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or prospectus, or any such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company, in writing, by or
on behalf of such seller, underwriter or controlling person specifically for use
in the preparation thereof.
In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, then to the extent permitted by
law, each seller of Registrable Shares, severally and not jointly, shall
indemnify and hold harmless the Company, each of its directors and officers and
each underwriter (if any) and each person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities joint or several, to
which the Company, such directors and officers, underwriter or controlling
person may become subject under the Securities Act, Exchange Act, state
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained in
the Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading, if the statement or omission was made solely in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of such seller, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; and such seller
shall reimburse the Company for reasonable legal or other expenses incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the obligations of any
seller of Registrable Shares hereunder shall not exceed an amount equal to the
net proceeds to such seller of the Registrable Shares sold pursuant to the
Registration Statement.
An underwriter shall not be entitled to indemnification pursuant to this
subsection in the event that it fails to deliver to any selling Stockholder any
preliminary or final or revised prospectus, as required by the rules and
regulations of the Commission. Finally, no indemnification shall be provided
pursuant to this subsection in the event that any error in a preliminary
prospectus of the Company is subsequently corrected in the final prospectus of
the Company for a particular offering, and such final prospectus is delivered to
all purchasers in the offering prior to the date of purchase of the securities.
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Each party entitled to indemnification under this Section 2(g) (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
The Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense 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 the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.
(h) Indemnification with Respect to Underwritten Offering. In the
event that Registrable Shares are sold pursuant to a Registration Statement in
an underwritten offering, the Company agrees to enter into an underwriting
agreement containing customary representations and warranties with respect to
the business and operations of an issuer of the securities being registered and
customary covenants and agreements to be performed by such issuer, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
(i) Information by Holder. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
2.
(j) Rule 144 Requirements. With a view to making available to the
Stockholders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit a
Stockholder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act (at any time
after it has become subject to the reporting requirements of the Exchange Act);
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(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(iii) furnish to any holder of Registrable Shares upon request
a written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the closing of
the first sale of securities by the Company pursuant to a Registration
Statement), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as such holder may reasonably request to avail itself of any
similar rule or regulation of the Commission allowing it to sell any such
securities without registration.
(k) Selection of Underwriter. In the case of any registration
effected pursuant to Section 2(c), the requesting Stockholders shall have the
right to designate the managing underwriter, subject to the approval of the
Company, which approval shall not be unreasonably withheld or delayed.
(1) Restrictions on Other Agreements. The Company will not enter
into any agreement with any party which by its terms grants any right relating
to the registration of the Company's Common Stock without the consent of the
holders of (i) a majority of the Registrable Shares (other than the Registrable
F Shares) then outstanding and (ii) a majority of the Registrable F Shares then
outstanding.
(m) Lock-Up Agreement. In connection with any public offering of the
Company's securities in connection with an effective registration statement
under the Securities Act, each holder of Registrable Shares agrees, upon request
of the Company or the underwriters managing any underwritten offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters
(other than those Registrable Shares to be sold in such registration). Each
holder of Registrable Shares further agrees that the Company may instruct its
transfer agent to place stop-transfer notations in its records to enforce the
provisions of this subsection. Notwithstanding the foregoing, no holder of
Registrable Shares shall be obligated pursuant to this subsection unless all
directors, officers and holders of 1% or more of the Company's outstanding
securities also agree to be bound by such agreement described in this
subsection.
(n) Restrictions on Sale by the Company and Others. The Company
agrees and it shall use best efforts to cause its affiliates to agree (i) not to
effect any public sale or distribution of any securities similar to those being
registered in accordance with Section 2 hereof, or any securities convertible
into or exchangeable or exercisable for such securities (other than, with
respect to the Company only, pursuant to a registration statement on Form S-8 or
Form S-4, or their successors, or any other form for a limited purpose, or any
registration
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statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation), during the 14 days prior to, and
during the 180-day period beginning on, the effective date of any registration
statement (except as part of such registration statement), in the case of an
underwritten offering, if, and solely to the extent, reasonably requested by the
managing Underwriter or Underwriters, and (ii) to use its best efforts to ensure
that any agreement entered into after the date hereof pursuant to which the
Company issues or agrees to issue any privately placed securities (other than to
officers, directors, consultants or employees) shall contain a provision under
which holders of such securities agree not to effect any sale or distribution of
any such securities during the periods described in (i) above, in each case
including a sale pursuant to Rule 144 under the Securities Act (except as part
of any such registration, if permitted); provided, however, that the provisions
of this paragraph (n) shall not prevent (x) the conversion or exchange of any
securities pursuant to their terms into or for other securities or (y) the
issuance of any securities to employees of the Company or pursuant to any
employee plan.
(o) Termination of Rights. The rights of the holders of the
Registrable Shares pursuant to this Section 2 shall terminate at such time as
all Registrable Shares have been registered under the Securities Act or sold in
reliance on Rule 144 under the Securities Act.
3. Miscellaneous.
(a) Transfer of Rights.
(i) The rights granted hereunder may be transferred or
succeeded to only by (1) any other Preferred Stockholder or any general or
limited partner, officer or other affiliate (within the meaning of Rule 144
under the Securities Act) of any Preferred Stockholder or Warrantholder, or (2)
any other person or entity that holds (including any shares hereafter acquired)
at least 5 % of the transferors' Registrable Shares and who is not a competitor
of the Company or a partner, officer, director, employee or owner of more than
1% of the outstanding securities of any direct or indirect competitor of the
Company; provided, however, that the Company is given written notice by the
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned.
(ii) A transferee to whom rights are transferred pursuant to
this Section 3(a) may not again transfer such rights to any other person or
entity, other than as provided in subsection 3(a)(i) above.
(b) Successors and Assigns. The provisions of this Agreement shall
bind and inure to the benefit of the respective successors, assigns, heirs,
executors, and administrators of the parties hereto.
(c) Notices. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid or by facsimile if actually received:
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(i) If to the Company:
ACLARA BioSciences, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: President
Fax No.: (000) 000-0000
(or at such other address as may have been furnished in writing by the
Company, as the case may be, to the Purchasers)
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxx Xxxx, Esq.
Fax No.: (000) 000-0000
(ii) If to the Preferred Stockholders, to their respective
addresses set forth on the signature page to this Agreement (or at such other
address as may have been furnished to the Company in writing by the Preferred
Stockholders).
Notices provided in accordance with this Section 3(c) shall be deemed
delivered upon personal delivery or 72 hours after deposit in the mail in
accordance with the above.
4. Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, 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) in a manner which affects
the Registrable B Shares, the Registrable C Shares, the Registrable D Shares,
the Registrable E Shares, the Registrable F Shares, the Registrable G Shares and
the Registrable H Shares, with the written consent of the Company and the
holders of at least fifty-one percent (51%) of the affected series of
Registrable Shares then outstanding, or such percentage of each class, voting
separately, in the case of amendments or waivers which affect all Registrable
Shares. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
5. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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6. Captions. The captions of the sections, subsections and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
7. Severability. Each provision of this Agreement shall be interpreted in
such manner as to validate and give effect thereto to the fullest lawful extent,
but if any provision of this Agreement is determined by a court of competent
.jurisdiction to be invalid or unenforceable under applicable law, such
provision shall not be ineffective only to the extent so determined and such
invalidity or unenforceability shall not affect the remainder of such provision
or the remaining provisions of this Agreement.
8. Governing Law. This Agreement shall be governed by and interpreted and
construed in accordance with the laws of the State of California.
9. Termination of Prior Agreement; Waiver of Preemptive Rights. The
parties hereto expressly agree that this Amended and Restated Investor Rights
Agreement shall supersede the Amended and Restated Investor Rights Agreement
dated April 29, 1999, as amended, by and among the Company and the other parties
thereto (the "Prior Agreement"). Effective upon execution of this Agreement by
the Company and the holders of at least 51% of each of the Registrable B Shares,
the Registrable C Shares, Registrable D Shares, the Registrable E Shares, the
Registrable F Shares and the Registrable G Shares, the Prior Agreement shall be
terminated and restated in its entirety as set forth in this Agreement. In
addition, each of the undersigned Preferred Stockholders who are entitled to
preemptive rights pursuant to Section 1(l) of the Prior Agreement hereby waives
such rights, on behalf of itself and the other holders of such rights, with
respect to the sale and issuance of the Series H Stock to the Series H
Purchasers.
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10. Board Attendance by J&J. Each party hereto agrees that, for so long as
J&J (or an affiliate of J&J) continues to hold at least 50% of the total number
of shares of Series D, Series E and Series F Stock (or Series F-1 Preferred
Stock issuable or issued upon conversion of Series F Stock) originally purchased
by J&J pursuant to the Series D Purchase Agreement, Series E Purchase Agreement
and the Series F Purchase Agreement, J&J shall be entitled to appoint a
representative (the "J&J Representative") to attend all meetings of the Board of
Directors of the Company, and the Company shall provide J&J with copies of all
notices of such meetings and all other written materials provided to the
Directors of the Company at the same time as such notices and written materials
are provided to the Directors of the Company. J&J acknowledges and agrees that
the Company's management shall have the right to exclude the J&J Representative
from all or portions of meetings of the Board of Directors or omit to provide
the J&J Representative with certain information if the Company's management
believes it is necessary in order to preserve the attorney-client privilege or
fulfill the Company's obligations with respect to confidential or proprietary
information of third parties, or if such meeting or information involves matters
concerning the Company's relationship or prospective relationship with J&J or
its affiliates or competitors of J&J or its affiliates or other situations where
a director would customarily not participate in the meeting or be provided such
information. In addition, J&J acknowledges and agrees that J&J and the J&J
Representative will maintain the confidentiality of all information obtained
through the J&J Representative's position as a director of the Company, except
to the extent (a) such information is already in J&J's possession, (b) it
becomes public knowledge other than as a result of J&J's actions or inactions,
(c) J&J rightfully obtains it subsequently from a third party, (d) J&J develops
it independently and without use of the information provided by the Company, or
(e) it is approved in writing for release by the Company.
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The parties have executed this Amended and Restated Investor Rights
Agreement as of the date first written above.
COMPANY:
ACLARA BIOSCIENCES, INC.
By:
--------------------------------------
Xxxxxx X. Xxxxxx, President
Address: 0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
