EXHIBIT 4.3
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (the "Agreement") is made as of the
21st day of January, 2000 by and between DELTAGEN, INC., a Delaware corporation
(the "Company"), and the investors listed on Schedule A attached hereto.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS.
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, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series C Preferred Stock and (ii) any
Common Stock of the Company 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,
such Series C Preferred Stock or Common Stock, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which his
registration rights under this Section 1 are not assigned;
(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 exercisable or
convertible into, Registrable Securities;
(d) The term "Series C Holders" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof;
(e) The term "Form S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the SEC in lieu of Form S-3 which permits inclusion
or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the earlier of
(i) January 21, 2002 or (ii) one hundred eighty (180) days after the effective
date of the first registration statement for a public offering of securities of
the Company (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 a SEC Rule 145 transaction), a written request from
the Series C Holders of at least forty percent (40%) of the Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act covering the registration of at least forty percent
(40%) of the Registrable Securities then outstanding, with anticipated aggregate
proceeds to the Company, net of underwriting discounts and commission, of at
least $5,000,000), then the Company shall, within ten (10) days of the receipt
thereof, give written notice of such request to all Series C Holders and to all
holders ("Prior Holders") of securities registrable pursuant to that certain
Investors' Rights Agreement, dated as of May 27, 1999, between and among the
Company and certain stockholders set forth therein, as amended (the "Prior
Rights Agreement") and shall, subject to the limitations of subsection 1.2(b),
file as soon as practicable, and in any event within sixty (60) days of the
receipt of such request, a registration statement under the Securities Act
covering all Registrable Securities which the Series C Holders and the Prior
Holders request to be registered within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 3.5.
(b) If the Series C Holders initiating the registration request
hereunder ("Initiating Series C 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). In such event, the right of any Series C Holder or Prior
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 Series C
Holders and such holder) to the extent provided herein. All Series C Holders and
Prior 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 underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Series C Holders. Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Initiating Series C Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Series C Holders shall so advise all Series C
Holders and all Prior Holders of registrable securities which would otherwise be
underwritten pursuant hereto or pursuant to the Prior Investors' Rights
Agreement, and the number of shares of registrable securities that may be
included in the underwriting shall be allocated among all Series C Holders and
all Prior Holders hereof, including the Initiating Series C Holders, in
proportion (as nearly as practicable) to the amount of registrable securities of
the Company owned by each Series C Holder and Prior 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) The Company is obligated to effect only two such registrations
pursuant to this Section 1.2 and other similar provisions granting demand
registration rights (excluding registrations pursuant to Section 1.12 hereof).
(d) Notwithstanding the foregoing, if the Company shall furnish to
Series C Holders requesting a registration statement pursuant to this Section
1.2 a certificate signed by the President of the Company stating that, in the
good faith judgment of the Board of Directors, by a vote of at least 2/3 of its
members, 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 sixty (60)
days after receipt of the request of the
2
Initiating Series C Holders; provided, however, that the Company may not utilize
this right more than once in any twelve (12) month period.
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 Series C Holders) any of
its stock or other securities under the Securities 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 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 Series C Holder and each Prior Holder written notice of
such registration. Upon the written request of each Series C Holder and Prior
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Securities Act all of the
registrable securities that each such Series C Holder or Prior 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 Series
C Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to one hundred twenty (120)
days.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Series C Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities 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 Series C
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 the managing underwriter of such offering. Each Series C
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
3
(f) Notify each Series C Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Series C 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 Series C 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 Series C Holders requesting registration of
Registrable Securities.
(h) 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.
(i) 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.
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 Registrable Securities that the selling Series C Holders shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of such Series C
Holders' Registrable Securities.
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 Series C
Holders and one counsel for the Prior 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 Series C
Holders of a majority of the Registrable Securities to be registered (in which
case all participating Series C Holders shall bear such expenses), unless the
Series C Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal, the
4
Series C Holders have learned of a material adverse change in the condition,
business or prospects of the Company that was unknown to the Series C Holders at
the time of their request, then the Series C Holders shall not be required to
pay any of such expenses and shall retain their rights 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 Series C 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 fees and disbursements of one counsel for the
selling Series C Holders and one counsel for the selling Prior Holders selected
by them, but excluding underwriting discounts and commissions relating to
Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 1.3 to include any of the Series C Holders'
or Prior 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, and then only in such quantity as will not, in the opinion of
the underwriters, 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 reasonably believe
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 believe 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)
but in no event shall (a) the amount of securities of the selling Series C
Holders and Prior Holders included in the offering be reduced below thirty
percent (30%) of the total amount of securities included in such offering,
unless such offering is the initial public offering of the Company's securities
in which case the selling stockholders may be excluded if the underwriters make
the determination described above and no other stockholder's securities are
included or (b) notwithstanding (a) above, any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 1.2 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder that is a
Series C Holder of Registrable Securities and that 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 Registrable
Securities owned by all entities and individuals included in such "selling
stockholder," as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Series C Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any
5
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, the officers, directors and legal counsel of each
Holder, any underwriter (as defined in the Securities Act) for such Series C
Holder and each person, if any, who controls such Series C Holder 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 they may
become subject under the Securities Act, the Exchange Act or other federal or
state securities 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 Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will reimburse, as incurred, each such Holder, officer, director, legal
counsel, underwriter or controlling person for 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, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Series C 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 Securities Act, any underwriter,
any other Series C Holder selling securities in such registration statement, any
of such Holder's directors or officers and any person who controls such Holder,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any of the foregoing persons may become subject, under the
Securities Act, the Exchange Act or other federal or state securities 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 Series C Holder
expressly for use in connection with such registration; and each such Series C
Holder will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company or any person intended to be indemnified pursuant to
this 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
6
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 proceeds (net of underwriting discounts and commissions) from
the offering received 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 that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the 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. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Series C 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.
7
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Series C Holders the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit a Series C 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 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;
(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
Series C 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 Securities Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Series C Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Securities 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 Series C 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. In case the Company shall receive from
any Series C Holder a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Series C
Holder, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Series C 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
Series C Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Series C Holders joining in such request as are specified in a written request
given within fifteen (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: (i) if Form S-3 is not available for such offering by the Series C
Holders; (ii) if the Series C Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and
8
such other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,500,000; (iii) if the
Company shall furnish to the Series C Holders a certificate signed by the
President or Chief Executive Officer 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 sixty (60) days after receipt of the request of the Series C Holders under
this Section 1.12; provided, however, that the Company shall not utilize this
right more than once in any twelve (12) month period; or (iv) 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 Series C Holders. All expenses incurred in connection
with a registration requested pursuant to Section 1.12, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling Series
C Holders and counsel for the Company, shall be borne by the Company.
Registrations effected pursuant to this Section 1.12 shall not be counted as
demands for registration effected pursuant to Section 1.2.
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) a Series C Holder to a
transferee or assignee of an amount of such securities representing not less
than ten percent (10%) of the aggregate number of shares of Common Stock then
outstanding (including for purposes of such calculation the shares of Common
Stock then issuable upon conversion of all then outstanding Preferred Stock) or
(b) any Investor who transfers all of its shares purchased hereunder; provided,
in each case, (i) 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; (ii) such transferee or assignee agrees in writing to assume the
obligations of such Series C Holder under and be bound by and subject to the
terms and conditions of Sections 1 and 3 of this Agreement; and (iii) 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 Securities Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee, 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) shall be aggregated together
and with the partnership; 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 this 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 Series C Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or
9
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 or Section 1.3 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 in any manner reduce the amount of the Registrable Securities of the Series
C 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 or Section 1.3.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Investor hereby agrees, and
any future holder of such Investor's shares of Preferred Stock (or the Common
Stock issued upon conversion thereof) shall agree, that it shall not, to the
extent requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, sell or otherwise transfer or dispose (other than to
donees who agree to be similarly bound) of any Common Stock issued upon
conversion of such Investor's Preferred Stock during a reasonable and customary
period of time, as agreed to by the Company and the underwriters, not to exceed
one hundred eighty (180) days, following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however,
that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers shares (or 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 other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Common Stock issued upon
conversion of the Preferred Stock of such Investor (or assignee of such
Investor), and the shares or securities of every other person subject to the
foregoing restriction, until the end of such reasonable and customary period.
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 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Section 1 may be amended and the observance thereof 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
at least 66-2/3% of the Registrable Securities then outstanding; provided,
however, that any such amendment or waiver that adversely affect the rights
granted to the Prior Rights Holders hereunder shall also require the written
consent of Prior Rights Holders holding at least 66-2/3% of the securities
subject to the Prior Rights Agreement that are then outstanding. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities at the time outstanding (including
securities into which such
10
Registrable Securities are convertible), each future holder of all such
Registrable Securities, and the Company.
1.17 TERMINATION OF REGISTRATION RIGHTS. The Company's obligations
pursuant to this Section 1 shall terminate with respect to each Series C Holder
severally upon the earlier of (a) five (5) years from the date of consummation
of the Initial Public Offering or (b) after the closing of the Initial Public
Offering, at such time as such Series C Holder is able to sell all of such
Holder's Registrable Securities under Rule 144 within a single three (3) month
period.
2. COVENANTS.
2.1 DELIVERY OF FINANCIAL STATEMENTS.
(a) The Company shall deliver to the Investors and each
assignee of each Investor who acquires (i) all of such Investor's shares of
Preferred Stock or (ii) an aggregate amount of Common Stock and Preferred Stock
which together represent at least ten percent (10%) of the aggregate amount of
Common Stock then outstanding and the Common Stock issuable upon conversion of
the then outstanding Preferred Stock:
(i) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, a
statement of operations for such fiscal year, a balance sheet of the
Company 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 "Big Five" independent public
accountants mutually agreed to by the Company and the holders of Series
C Preferred Stock;
(ii) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three quarters
of the fiscal year, the Company's unaudited statement of operations,
statement of cash flows and balance sheet for and as of the end of such
quarter;
(iii) within sixty (60) days prior to the close of each
fiscal year, an updated five year strategic plan and a comprehensive
operating budget for the next fiscal year forecasting the Company's
revenues, expenses and cash position, prepared on a monthly basis,
including balance sheets and statements of cash flows for such months
and, as soon as prepared, any other budgets or revised budgets prepared
by the Company;
(iii) with respect to the financial statements called for
in subsection (ii) of this Section 2.1(a), an instrument executed by
the Treasurer, Chief Financial Officer, Chief Executive Officer or the
President of the Company and certifying that such financials were
prepared in accordance with internally consistent accounting methods
consistently applied with prior practice for earlier periods and fairly
present the financial condition of the Company and its results of
operations for the period specified, subject to year-end audit
adjustment.
11
(b) The Company shall deliver to each Major Investor (as defined
herein):
(i) within thirty (30) days of the end of each month, an
unaudited statement of operations, statement of cash flows and balance
sheet for and as of the end of such month, in reasonable detail; such
monthly statements shall also contain the foregoing information on a
year-to-date basis and shall also compare actual performance to budget;
(ii) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as
the Investor or any such assignee of the Investor may from time to time
request;
provided, however, that the Company shall not be obligated under this Section
2.1 to provide information which it deems in good faith to be a trade secret,
confidential or of a nature providing a competitive advantage.
(c) The term "Major Investor" means a person or entity which,
together with its affiliates holds at least 100,000 shares (subject to
appropriate adjustments for stock splits, stock dividends, combinations and
other recapitalizations) of the Company's Preferred Stock.
2.2 INSPECTION. The Company shall permit each Major Investor, at
such Major 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 Major 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, confidential or of a nature
providing a competitive advantage.
2.3 TERMINATION OF COVENANTS. The covenants set forth in Sections
2.1 and 2.2 shall terminate and be of no further force or effect when the sale
of securities pursuant to a registration statement filed by the Company under
the Securities 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 section 13(a) or 15(d)
of the Exchange Act, whichever event shall first occur; provided that the
Company shall furnish to each Major Investor copies of its reports on Forms 10-K
and 10-Q within ten (10) days after filing with the SEC.
2.4 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 2.4, the Company hereby grants to the Investors a
right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). Each Investor shall be entitled to apportion the right
of first offer hereby granted it (including without limitation the right to
purchase shares in an initial public offering, as referenced in Section 2.4(d))
to partners and affiliates (including, in the case of a venture capital fund,
partners and funds affiliated with such fund) in such proportions as it deems
appropriate.
12
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for, any class of its capital stock ("Shares"),
the Company shall first make an offering of such Shares to the Investors in
accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Investors stating (i) its bona fide intention to offer or
issue such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and other terms, if any, upon which it proposes to offer such Shares.
(b) Within twenty (20) calendar days after receipt of the Notice,
each 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 (i) 0.75 times the number of shares of Common Stock issued and
held, or issuable upon conversion of the Preferred Stock then held, by such
Investor bears to (ii) the total number of shares of outstanding Common Stock
and Common Stock issuable upon conversion of the Preferred Stock then
outstanding. Each Investor, together with any holders of Preferred Stock with
equivalent rights of first offer (individually, an "Offeree," and, collectively,
the "Offerees"), shall have a right of over-allotment such that if any Offeree
fails to exercise its right of first offer to purchase its pro rata share of
Shares, the other Offerees may purchase the non-exercising Offeree's portion on
the same pro-rata basis described in the previous sentence.
(c) If all such Shares referred to in the Notice are not elected
to be obtained as provided in subsection 2.4(b) hereof, the Company may, during
the sixty (60) day period following the expiration of the periods provided in
subsection 2.4(b) hereof, offer the remaining unsubscribed Shares to any person
or persons at a price not less than that, 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 sixty (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 each Investor in accordance herewith.
(d) The right of first offer granted in this Section 2.4 shall not
be applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) to employees, directors, consultants or advisors of the Company (for
the primary purpose of soliciting or retaining their services) pursuant to any
stock option, stock purchase or stock bonus plan, agreement or arrangement
approved by the Company's Board of Directors, (ii) to the issuance of securities
of the Company in connection with the acquisition by the Company of the stock or
assets of a corporation, partnership or other entity, (iii) to the issuance and
sale of the Company's securities to a corporation, partnership, educational
institution or other entity in connection with an equipment lease, research and
development partnership, licensing, or other collaborative arrangement or
similar transaction between the Company and such institution or entity, which
issuance and sale is approved by the Company's Board of Directors, or (iv) to or
after consummation of a bona fide, firmly underwritten initial public offering
of shares of the Company's Common Stock registered under the Securities Act
pursuant to a registration statement on Form S-1 (an "Initial Public Offering").
Notwithstanding subsection (iv) of the immediately preceding sentence, the
Investors shall have the right, but not the obligation, to purchase in the
Initial Public Offering, at the offering price to public, an aggregate of up to
15%
13
of the shares to be sold in such offering (assuming for such purposes no
exercise of the underwriters' over-allotment option, if any) with a right of
over-allotment for any shares not subscribed for by any Investor.
2.5 KEY-MAN INSURANCE. The Company will use its reasonable
commercial efforts to maintain term life insurance from financially sound and
reputable insurers on the life of Xxxxxxx Xxxxxxxx, the Chief Executive Officer,
in the amount of $2,000,000, except as otherwise decided in accordance with
policies adopted by the Company's Board of Directors. Such policies shall name
the Company as loss payee and shall not be cancelable by the Company without
prior approval of the Board of Directors.
2.6 COMMON STOCK VESTING. All shares of the Company's Common Stock
and all options exercisable for shares of the Company's Common Stock
(collectively, for purposes of this paragraph only, the "Stock") issued or
granted, respectively, after the date of the Closing to employees, directors,
consultants and other service providers of the Company (each referred to herein
as a "Service Provider") shall be subject to a corresponding right of repurchase
in favor of the Company (in the case of any outstanding Common Stock) or shall
be cancelable by the Company (in the case of any outstanding options for Common
Stock), respectively (for purposes of this paragraph only, either such right
shall hereinafter be referred to as the "Company Right"). Unless otherwise
approved by the Board of Directors, the Company Right on all such Stock will
lapse according to the following vesting schedule: twenty-five percent (25%) of
the Stock shall vest, and the Company Right shall lapse accordingly with respect
thereto, upon the Service Provider's completion of one (1) year of continuous
service to the Company from the date of first issuance or grant of the Stock and
the remaining seventy-five percent (75%) of the Stock shall thereafter vest, and
the Company Right shall lapse accordingly with respect thereto, in successive
equal daily installments upon the Service Provider's completion of each of the
next thirty-six (36) months of service to the Company. With respect to any
repurchases of outstanding Common Stock by the Company in accordance with the
foregoing provisions, the Company shall repurchase such Common Stock at cost.
2.7 VOTING ON CORPORATE TRANSACTIONS.
(a) In the event that a Corporate Transaction (as defined below)
is approved by the Company's Board of Directors and the requisite majority of
the holders of the Company's Preferred Stock entitled to approve such Corporate
Transaction pursuant to Section 7 of Part B of Article IV of the Restated
Certificate, then each Investor hereby agrees to (i) vote all voting securities
beneficially owned by such Investor and/or any affiliated entity of such
Investor, either at a meeting of stockholders or pursuant to an action by
written consent of the stockholders, in favor of such Corporate Transaction and
(ii) if such Corporate Transaction is intended by the parties to be accounted
for as a "pooling of interests," to take all actions reasonably deemed necessary
by the Company's Board of Directors to preserve pooling of interest accounting
treatment for such Corporate Transaction. For purposes of this Section 2.7, a
Corporate Transaction shall mean the sale of all or substantially all of the
assets of the Company, or a merger, other combination or acquisition of the
Company by or with another entity in any transaction or series of related
transaction in which more than 50% of the voting power of the Company is
transferred. The Investors and their respective affiliated entities, as holders
of shares of voting securities, shall be present, in person or by proxy, at all
meetings of stockholders
14
of the Company so that all shares of voting securities beneficially owned by
such Investors and/or its affiliated entities may be counted for the purposes of
determining the presence of a quorum at such meetings. Neither an Investor nor
any of its affiliated entities shall deposit any voting securities beneficially
owned by such holders in a voting trust or subject any such securities to any
arrangement or agreement with respect to the voting of such securities.
(b) The voting obligations of the Investors pursuant to Section
2.7(a) above shall terminate upon the consummation of an Initial Public
Offering.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. 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. 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.
3.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California (irrespective of its choice
of law principles).
3.3 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.
3.4 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.
3.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified (or upon
the date of attempted delivery where delivery is refused) or, if sent by
telecopier, telex, telegram, or other facsimile means, upon receipt of
appropriate confirmation of receipt, or five (5) days after deposit with the
United States Postal Service, registered or certified mail, or one (1) day after
deposit with next day air courier, with postage and fees prepaid and addressed
to the party entitled to such notice at the address indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties to this Agreement.
3.6 AMENDMENTS AND WAIVERS. Except as set forth in Section 1.16
hereof, 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 at least 66-2/3% of the Series C Preferred Stock. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
3.7 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and
15
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
3.8 AGGREGATION OF STOCK. All Registrable Securities or shares of
the Company's Preferred stock held or acquired by affiliated entities or persons
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DELTAGEN, INC.
By /s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
[CONFORMED SIGNATURES OF SERIES C PURCHASERS OMITTED FROM FILING]
16
SCHEDULE A
------------------------------------------- ------------------------ ----------------------
INVESTORS NUMBER OF SHARES PURCHASE PRICE
------------------------------------------- ------------------------ ----------------------
Boston Millennia Partners II Limited 2,131,524 $7,630,855.92
Partnership
Boston Millennia Partners II-A Limited 78,225 280,045.50
Partnership
Boston Millennia Associates II 24,887 89,095.46
Partnership
------------------------------------------- ------------------------ ----------------------
Sprout Capital VIII, L.P. 1,183,297 4,236,203.26
------------------------------------------- ------------------------ ----------------------
Stipa Investments, L.P. 837,988 2,999,997.04
------------------------------------------- ------------------------ ----------------------
Lombard Odier & Cie 837,988 2,999,997.04
------------------------------------------- ------------------------ ----------------------
Crossroads Cornerstone Direct/ 698,324 2,499,999.92
Co-Investment Fund V, L.P.
------------------------------------------- ------------------------ ----------------------
DLJ ESC II, L.P. 118,400 423,872.00
------------------------------------------- ------------------------ ----------------------
Sprout Venture Capital, L.P. 70,998 254,172.84
------------------------------------------- ------------------------ ----------------------
DLJ Capital Corp. 18,575 66,498.50
------------------------------------------- ------------------------ ----------------------
Sprout CEO Fund LP 5,378 19,253.24
------------------------------------------- ------------------------ ----------------------
Xxxx X. Xxxxxxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Xxxxxx X. Xxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Xxxxxxxx X. Xxxx 6,983 24,999.14
------------------------------------------- ------------------------ ----------------------
Beveren Company 6,983 24,999.14
------------------------------------------- ------------------------ ----------------------
Xxxxxxxx X. Xxxxx III 27,932 99,996.56
------------------------------------------- ------------------------ ----------------------
Xxxx Xxxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Xxxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx, 27,932 99,996.56
as Trustees of the Xxxxxxx Family Trust
------------------------------------------- ------------------------ ----------------------
A-1
------------------------------------------- ------------------------ ----------------------
Xxx X. Xxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Xxxxxx X. Xxxxxxxx, M.D., Trustee of the 19,553 69,999.74
Camelot Medical Group, Inc. PSP FBO
Xxxxxx X. Xxxxxxxx, M.D.
------------------------------------------- ------------------------ ----------------------
Xxxxxx X. Xxxxxxxx, M.D., 8,379 29,996.82
Trustee U/D/T dated
February 4, 1992 of the Xxxxxxxx Family
Trust
------------------------------------------- ------------------------ ----------------------
Xxxxxxx X. Xxxxxxx, M.D. 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Security Trust Company, 13,966 49,998.28
Custodian FBO Xxxxx
Xxxxxxxx XXX
------------------------------------------- ------------------------ ----------------------
Xxxx X. Xxxxx and Xxxxx 27,932 99,996.56
X. Xxxxx, as Joint Tenants
------------------------------------------- ------------------------ ----------------------
Xxxxx X. Xxxxxxxx/Xxxxx X. Xxxxxxxx, 13,966 49,998.28
Joint Tenants in the Entirety
------------------------------------------- ------------------------ ----------------------
Pacific Rim Capital, LLC 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
Xxxxxx Xxxxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
The Xxxxx Xxxxxxx Xxxxxxxx, Xx. Living 13,966 49,998.28
Trust, Dated May 12, 1995
------------------------------------------- ------------------------ ----------------------
Xxxxx X. May 13,966 49,998.28
Trustee Xxxxx X. May
Revocable Trust Dated May 14, 1991
------------------------------------------- ------------------------ ----------------------
Xxxxxxx Xxxxxxx 13,966 49,998.28
------------------------------------------- ------------------------ ----------------------
TOTAL 6,298,870 $22,549,954.60
------------------------------------------- ------------------------ ----------------------
A-2
