EXHIBIT 10.9
Amended and Restated
Stockholders' Agreement
Dated as of January 25, 1999
by and among
DIVERSA CORPORATION
and
the Stockholders named herein
Table of Contents
Page
1. Definitions............................................ 1
2. Representations and Certain Covenants.................. 10
2.1 By the Company................................. 10
2.2 By the Stockholders............................ 10
2.3 By the Series A Preferred Stockholders......... 10
2.4 Covenants of the Stockholders.................. 11
3. Legend on Shares and Notice of Transfer................ 11
3.1 Restrictive Legends............................ 11
3.2 Notice of Transfer............................. 12
3.3 Prohibited Transfers........................... 13
3.4 Right of First Refusal; Tag-Along Rights....... 13
4. Rights to Purchase Additional Stock.................... 16
5. Board of Directors..................................... 17
5.1 Number of Directors............................. 17
5.2 Agreement to Vote for Directors................. 17
5.3 Default of Agreement to Vote.................... 18
5.4 Board Observation Rights........................ 18
6. Affirmative Covenants of the Company................... 18
6.1 Use of Proceeds................................. 19
6.2 Consent as to Issuance of Common Stock.......... 19
6.3 Financial Information........................... 19
6.4 Other Reports and Inspection.................... 20
6.5 Corporate Existence............................. 21
6.6 Insurance....................................... 21
6.7 Maintenance of Properties....................... 21
6.8 Compliance with Obligations..................... 21
6.9 Taxes........................................... 21
6.10 Compliance with Law............................. 21
6.11 Environmental Matters........................... 22
6.12 Accounting System............................... 22
i.
Table of Contents
(Continued)
Page
6.13 Reservation of Common Stock................................... 22
6.14 Confidentiality Agreements with Employees and Consultants..... 22
6.15 Board of Directors Meetings................................... 22
6.16 Publicity..................................................... 22
6.17 Registration Rights........................................... 22
6.18 Key Man Life Insurance........................................ 23
6.19 Voting Agreement with Common Stockholders..................... 23
6.20 Option Exercises.............................................. 23
6.21 Proprietary Rights............................................ 23
6.22 Approval of Budget............................................ 23
6.23 Repayment of Loan Agreement and Release of Encumbrances....... 23
7. Negative Covenants of the Company.................................... 23
7.1 Indebtedness; Commitments..................................... 24
7.2 Restriction on Dividends...................................... 24
7.3 Restriction on Issuances of Shares............................ 24
7.4 Protective Provisions......................................... 24
7.5 Business...................................................... 24
7.6 Guarantees.................................................... 24
7.7 Conflicting Agreements........................................ 24
7.8 No Acquisitions............................................... 24
7.9 No Dispositions............................................... 24
7.10 Employee Stock and Stock Options.............................. 25
8. Confidentiality...................................................... 25
9. Events of Noncompliance.............................................. 26
9.1 Occurrence of Event of Noncompliance.......................... 26
9.2 Remedies...................................................... 27
10. Filing of Reports Under the Exchange Act............................. 27
11. Registration Rights.................................................. 28
11.1 Demand Registration Rights..................................... 28
ii.
Table of Contents
(Continued)
PAGE
11.2 Registration Requested by Holders......................... 30
11.3 "Piggyback" Registrations................................. 31
11.4 Registrations on S-3...................................... 33
11.5 Company's Obligations in Registration..................... 33
11.6 Payment of Registration Expenses.......................... 35
11.7 Information from Holders of Registrable Securities........ 36
11.8 Indemnification........................................... 36
12. Small Business Matters............................................ 38
12.1 Generally: Certain SBIC Covenants......................... 38
12.2 Regulatory Compliance Cooperation......................... 39
12.3 Information Rights and Related Covenants.................. 40
12.4 Remedies.................................................. 40
13. Duration of Agreement.............................................. 41
14. Additional Remedies................................................ 41
15. Successors and Assigns; Limitation on Assignment................... 41
16. Entire Agreement................................................... 42
17. Notices............................................................ 42
18. Changes............................................................ 43
19. Counterparts....................................................... 43
20. Headings........................................................... 43
21. Nouns and Pronouns................................................. 43
22. Severability....................................................... 43
23. Governing Law; Jurisdiction........................................ 43
24. New York Life Insurance Company Compliance Obligations............. 43
iv.
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
This Amended and Restated Stockholders' Agreement dated as of January 25, 1999
by and among Diversa Corporation, a Delaware corporation (the "Company"), and
those stockholders of the Company whose names appear on the signature pages
hereof.
R E C I T A L S
Whereas, the Company and the holders of the Series A Preferred Stock have
previously entered into a Stockholders' Agreement dated as of December 21, 1994
by and among the Company (formerly known as Industrial Genome Sciences, Inc.)
and those stockholders whose names appear on the signature pages thereof, as
amended by Amendment No. 1 thereto (the "Original Stockholders' Agreement");
Whereas, the Company and the holders of the Series A, Series B, Series C
and Series D Preferred Stock have previously entered into a Stockholders'
Agreement dated as of May 13, 1996, as amended on July 14, 1997 and October 22,
1997, by and among the Company and those stockholders whose names appear on the
signature pages thereof (the "Prior Stockholders' Agreement"), which superceded
and replaced in its entirety the Original Stockholders' Agreement;
Whereas, the Company is entering, or will enter into, a Stock Purchase
Agreement with the Series E Investors pursuant to which the Company will sell
shares of its Series E Preferred Stock to the Series E Investors;
Whereas, in connection with the sale of the Series E Preferred Stock to the
Series E Investors, the Company and the Stockholders desire to (i) amend and
restate the Prior Stockholders' Agreement to make certain covenants with the
Series E Investors and to grant the Series E Investors certain rights and (ii)
terminate the Prior Stockholders' Agreement in its entirety with such Prior
Stockholders' Agreement being superseded and replaced in its entirety with this
Agreement;
Now, Therefore, in consideration of the foregoing and of the respective
covenants and undertakings hereunder, the parties hereto do hereby agree as
follows:
1. Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"1997 Plan" shall mean the Company's 1997 Equity Incentive Plan.
"Affiliate" shall mean, with respect to any Person, (i) a director, officer
or stockholder of such Person, (ii) a spouse, parent, sibling or descendant of
such Person (or spouse, parent, sibling or descendant of any director or
executive officer of such Person), and (iii) any other Person that,
1.
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"Applicable Environmental Law" shall mean CERCLA, RCRA, the Federal Waste
Pollution Control Act, 33 U.S.C. (S) (S) 1261 et seq., the Clean Air Act, 42
U.S.C. (S) (S) 7401 et seq., any similar provisions of state or local law in the
countries and jurisdictions where the properties of the Company are located and
where the Company conducts its business and the regulations thereunder and any
other local, state and/or federal laws or regulations, whether currently in
existence or hereafter enacted, that govern:
(a) the existence, cleanup and/or remediation of contamination on
property;
(b) the protection of the environment from spilled, deposited or
otherwise emplaced contamination;
(c) the control of hazardous wastes; or
(d) the use, generation, transport, handling, treatment, storage,
disposal, removal or recovery of Hazardous Materials, including building
materials.
"Board of Directors" shall mean the Board of Directors of the Company.
"Budget" shall have the meaning set forth in Section 6.3(d).
"Business" shall have the meaning set forth in Section 12.1.
"Business and Condition" shall mean the business, operations, properties,
assets, prospects or condition (financial or otherwise) of the Company.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
"By-laws" shall mean the By-laws of the Company, as amended.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. (S)(S) 6901 et seq.
"Capital Stock" shall mean any (i) shares of Common Stock, Preferred Stock
or any other equity security of the Company, (ii) debt securities convertible
into or exchangeable for any equity security of the Company, (iii) any debt
security or capitalized lease with any equity feature with respect to the
Company, or (iv) options, warrants or other rights to subscribe for, purchase or
otherwise acquire any such equity security or debt security of the Company.
"Charter" shall mean the Seventh Restated Certificate of Incorporation of
the Company, as filed on December 30, 1998 with the Secretary of State of
Delaware, as the same may be restated and amended from time to time.
"CIT/VC" shall mean The CIT Group/Venture Capital, Inc. and any successor
thereto.
2
"CIT/VC Group" shall mean any entity or Person now existing or hereafter
formed which is affiliated with The CIT Group/Venture Capital, Inc. and any
successors or assigns of any of the foregoing Persons.
"Commission" shall mean the Securities and Exchange Commission or any other
Federal agency administering the Securities Act at the applicable time.
"Commitment" shall mean all obligations of the Company and its Subsidiaries
pursuant to long-term leases or similar agreements relating to the use of
personal property.
"Common Shares" shall mean the issued and outstanding shares of the
Company's Common Stock, $.001 par value per share, at the applicable time.
"Common Stock" shall mean the Company's authorized Common Stock, $.001 par
value per share.
"Common Stockholder" shall mean each Person who has purchased Common Stock
from the Company or who acquires Common Stock upon the conversion of preferred
stock, by Transfer or otherwise and who becomes a party to this Agreement.
"Control" shall mean, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Covenant Preferred Shares" shall mean the issued and outstanding shares of
the Company's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, and, for purposes of Section 6
only with respect to Sections 6.1, 6.2, 6.3(a) and (b), 6.4 and 6.13, the Series
E Preferred Stock.
"Covenant Preferred Stockholders" shall mean any holder of Covenant
Preferred Shares and any person to whom Covenant Preferred Shares (or the Common
Stock issued upon conversion thereof) are Transferred.
"Equity Stock" shall have the meaning set forth in Rule 3a11-l under the
Exchange Act.
"Event of Noncompliance" shall have the meaning set forth in Section 9.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any successor statute and the rules and regulations thereunder, as shall be
in effect from time to time.
"Excluded Stock" shall mean (a) the Preferred Shares, (b) the Option
Shares, (c) Common Stock issuable upon conversion of the Preferred Shares, (d)
securities issued pursuant to the acquisition of another corporation,
partnership, joint venture, trust or other entity by the Company by merger,
consolidation, stock acquisition, reorganization, or otherwise, (e) Common Stock
issuable upon exercise of options granted pursuant to the Restricted Stock
Option Agreements, (f) Common Stock issuable as a result of stock dividends,
stock splits, stock combinations or other similar transactions by the Company
and (g) securities issued in connection with bank credit facilities, equipment
financing transactions, other leasing lines of
3.
credit or collaborative arrangements not primarily intended to provide equity
financing to the Company.
"GAAP" shall mean generally accepted accounting principles of the United
States.
"Governmental Body" shall mean any United States or state government body,
any agency, commission or authority thereof, or any quasi-governmental or
private body exercising any regulatory or taxing authority thereunder.
"Group" shall mean as to (a) a Preferred Stockholder that is a limited
partnership, any and all of the venture capital limited partnerships now
existing or hereafter arising that are "affiliates" (as defined by Rule 405
promulgated under the Securities Act), in whole or in part, of one or more
general partners or of one or more general partners of a general partner of such
Stockholder and any predecessor or successor partnership and any limited and
general partners of any such partnership; (b) a Preferred Stockholder that is a
trust, any of the beneficiaries, settlors or grantors now existing or hereafter
arising of, or any Person under common control with, such trust; (c) in the case
of HCV I, HCV II, HCV III and HCV IV, the HCV Group; (d) in the case of Everest
Trust, any grantor or beneficiary thereof, or any other trust, corporate entity
or partnership under common control with Everest Trust for which Rho Management
Company, Inc. acts as investment adviser; (e) in the case of APA Excelsior IV,
L.P., APA Excelsior IV/Offshore, L.P., The P/A Fund, L.P., and the Patricof
Private Investment Club, L.P., the Patricof Group; (f) in the case of the Series
E Investors, any affiliates, in whole or in part, of such Series E Investor; and
(g) any Preferred Stockholder, any other Preferred Stockholder.
"Hazardous Materials" shall mean any substance which as of the date of this
Agreement shall be identified as "hazardous" or "toxic" or otherwise regulated
under CERCLA or RCRA or which has been or shall be determined at any time by any
agency or court to be a hazardous or toxic substance under Applicable
Environmental Law. The term "Hazardous Material" shall also include, without
limitation, raw materials, building components (including asbestos), the
products of any manufacturing or other activities on the properties, wastes,
petroleum, and source, special nuclear or by-product material as defined by the
Atomic Energy Act of 1954, as amended (42 U.S.C. (S)(S) 3011 et seq., as
amended.)
"HCV Group" shall mean, collectively, (i) HCV I, (ii) HCV II, (iii) HCV
III, (iv) HCV IV, (v) any venture capital limited partnership now existing or
hereafter formed which is affiliated with or under common control with one or
more general partners of any general partner of HCV I, HCV II, HCV III and HCV
IV (an "HCV Fund") (including, without limitation, the other HCV Funds); (vi)
any limited partners or affiliates of HCV I, HCV II, HCV III, HCV IV or any
other HCV Fund; and (vii) any successors or assigns of any of the foregoing
persons.
"HCV I" shall mean HealthCare Ventures I, L.P., a Delaware limited
partnership, including any successor thereto.
"HCV II" shall mean HealthCare Ventures II, L.P., a Delaware limited
partnership, including any successor thereto.
"HCV III" shall mean HealthCare Ventures III, L.P., a Delaware limited
partnership, including any successor thereto.
4.
"HCV IV" shall mean HealthCare Ventures IV, L.P., a Delaware limited
partnership, including any successor thereto.
"Initial Public Offering" shall mean the Company's initial distribution of
Common Stock in an underwritten Public Offering to the general public pursuant
to a registration statement filed with and declared effective by the Commission
pursuant to the Securities Act at a price per share which is not less than 300%
of the Conversion Price (as defined in the Charter) of the Series B Preferred
Stock in effect at the time of such public offering and resulting in gross
proceeds (before underwriting commissions and offering expenses) to the Company
of not less than $15 million.
"Indebtedness" shall mean all liabilities for money borrowed, or for the
deferred portion of the purchase price, payable by the Company or its
Subsidiaries.
"Key Man Life Insurance" shall have the meaning set forth in Section 6.19.
"Non-Scientific Founders" shall mean Xx. Xxxxx Xxxx and Xxxx Xxxxxxxx.
"Offer" shall have the meaning set forth in Section 4(b) hereof.
"Offered Shares" shall have the meaning set forth in Section 4(a) hereof.
"Option Shares" shall mean up to 11,275,624 shares of Common Stock issued,
available for issuance or subject to options, warrants, awards or rights granted
or authorized to be granted to employees, consultants and others who provide
services to the Company pursuant to any Stock Plan.
"Patricof Group" shall mean, collectively, (i) APA Excelsior IV, L.P., (ii)
APA Excelsior IV/Offshore, L.P., (iii) The P/A Fund, L.P., (iv) the Patricof
Private Investment Club, L.P., (v) any venture capital limited partnership or
entity (a "Patricof Fund") now existing or hereafter formed which is affiliated
with or under common control with (x) one or more general partners of any
general partner of APA Excelsior IV, L.P., APA Excelsior IV/Offshore, L.P., The
P/A Fund, L.P., or the Patricof Private Investment Club, L.P., or (y) managed
or advised by Patricof & Co. Ventures, Inc. or any affiliate thereof (including,
without limitation, the other Patricof Funds); (vi) any limited partners or
affiliates of APA Excelsior IV, L.P., APA Excelsior IV/Offshore, L.P., The P/A
Fund, L.P., or the Patricof Private Investment Club, L.P., or any other Patricof
Fund; and (vii) any successors or assigns of any of the foregoing persons. Any
reference to APA Excelsior IV, L.P., APA Excelsior IV/Offshore, L.P., The P/A
Fund, L.P., and the Patricof Private Investment Club, L.P., shall mean such
entity and any successor to such entity.
"Person" shall mean any individual, corporation, partnership, a limited
liability company, joint venture, trust, association, unincorporated
organization, other entity, or Governmental Body.
"Preferred Shares" shall mean the issued and outstanding shares of the
Company's Series A Preferred Stock, $.001 par value per share, Series B
Peferred Stock, $.001 par value
5
per share, Series C Preferred Stock, $.001 par value per share, Series D
Preferred Stock, $.001 par value per share, and Series E Preferred Stock, $.001
par value per share.
"Preferred Stockholder" shall mean any holder of Preferred Shares and any
Person to whom Preferred Shares (or the Common Stock issued upon conversion
thereof) are Transferred.
"Pro Rata Fraction" shall have the meaning set forth in Section 3.4(b).
"Public Offering" shall mean a distribution of Common Stock in an
underwritten public offering to the general public pursuant to a registration
statement filed with and declared effective by the Commission pursuant to the
Securities Act.
"RCRA" shall mean Resource Conservation and Recovery Act, 42 U.S.C. (S)(S)
6901 et seq.
"Registrable Securities" shall mean the aggregate of Series A Registrable
Securities, the Series B Registrable Securities, the Series C Registrable
Securities, the Series D Registrable Securities and the Series E Registrable
Securities.
"Regulated Holder" shall mean any holder of the Company's Securities that
is (or that is a subsidiary of a bank holding company that is) subject to the
various provisions of Regulation Y of the Board of Governors of the Federal
Reserve Systems, 12 C.F.R., Part 225 (or any successor to Regulation Y).
"Regulatory Problem" shall mean (i) any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency (or CIT/VC
reasonably believes that there is a significant risk of such assertion) that
such Person (or any bank holding company that controls such Person) is not
entitled to hold, or exercise any material right with respect to, all or any
portion of the Securities of the Company which such Person holds or (ii) when
such Person and its Affiliates would own, control or have power (including
voting rights) over a greater quantity of Securities of the Company than is
permitted under any law or regulation or any requirement of any governmental
authority applicable to a Person or to which such Person is subject.
"Restricted Securities" shall mean the aggregate of Series A Restricted
Securities, the Series B Restricted Securities, the Series C Restricted
Securities, the Series D Restricted Securities and the Series E Restricted
Securities.
"Restricted Stock Option Agreements" shall mean the Restricted Stock Option
Agreements dated December 21, 1994 between the Company and each of the
Scientific Founders and the Non-Scientific Founders (except Xxxxx Xxxxx) and the
Restricted Stock Option Agreement dated December 19, 1994 between the Company
and Xxxxx Xxxxx.
"SBA" shall have the meaning set forth in Section 12.1.
"SBIA" shall have the meaning set forth in Section 12.1.
"SBIC" shall have the meaning set forth in Section 12.1.
6
"Scientific Founders" shall mean Dr. Xxxxxx Xxxxx, Xx. Xxxxxxx X. Xxxxxx,
Xx. Xxxxx Xxxxx and Xx. Xxxx Xxxxxxx.
"Securities" shall mean, with respect to any Person, such Person's capital
stock or any options, warrants or other Securities which are directly or
indirectly convertible into, or exercisable or exchangeable for, such Person's
capital stock (whether or not such derivative Securities are issued by the
Company). Whenever a reference herein to Securities refers to any derivative
Securities, such reference shall apply to such derivative Securities and all
underlying Securities directly or indirectly issuable upon conversion, exchange
or exercise of such derivative Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended, and any
successor statute and the rules and regulations of the Commission thereunder, as
shall be in effect at the applicable time.
"Series A Preferred Stock" shall mean the Series A Preferred Stock, $.001
par value per share, of the Company.
"Series A Registrable Securities" shall mean the shares of Common Stock
issued or issuable on conversion or exercise of Series A Restricted Securities,
or constituting a portion of the Series A Restricted Securities.
"Series A Restricted Securities" shall mean the Series A Preferred Stock
and the Common Stock issued or issuable upon the conversion of the Series A
Preferred Stock, and any other securities of the Company which may be heretofore
or hereafter issued to any of the holders of the Series A Preferred Stock (other
than Series B Preferred Stock) which are convertible into or exercisable or
exchangeable for shares of Common Stock (including, without limitation, other
classes or series of preferred stock, warrants, options or other rights to
purchase Common Stock or convertible debentures or other convertible debt
securities) and any Common Stock (howsoever acquired) by any holder of Series A
Preferred Stock or any Common Stock which has been issued on conversion of
Series A Preferred Stock, which have not been sold (a) in connection with an
effective registration statement filed pursuant to the Securities Act, or (b)
pursuant to Rule 144 or Rule 144A promulgated by the Commission under the
Securities Act.
"Series A Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of December 21, 1994 by and among the Company and the
parties thereto, as amended by the Stock Purchase Agreement and Amendment to
Stock Purchase Agreement, dated March 15, 1995 by and among the Company and the
parties thereto, as amended by the Stock Purchase Agreement and Amendment to
Stock Purchase Agreement dated July 28, 1995 by and among the Company and the
parties thereto, as amended by Amendment No. 3 to the Stock Purchase Agreement
dated May 13, 1996 by and among the Company and the parties thereto.
"Series B Preferred Stock" shall mean the Series B Preferred Stock, $.001
par value per share, of the Company.
"Series B Registrable Securities" shall mean the shares of Common Stock
issued or issuable on conversion or exercise of Series B Restricted Securities,
or constituting a portion of the Series B Restricted Securities.
7.
"Series B Restricted Securities" shall mean the Series B Preferred Stock
and the Common Stock issued or issuable upon the conversion of the Series B
Preferred Stock, and any other securities of the Company which may be heretofore
or hereafter issued to any of the holders of the Series B Preferred Stock (other
than Series A Preferred Stock) which are convertible into or exercisable or
exchangeable for shares of Common Stock (including, without limitation, other
classes or series of preferred stock, warrants, options or other rights to
purchase Common Stock or convertible debentures or other convertible debt
securities) and any Common Stock (howsoever acquired) by any holder of Series B
Preferred Stock or any Common Stock which has been issued on conversion of
Series B Preferred Stock, which have not been sold (a) in connection with an
effective registration statement filed pursuant to the Securities Act, or (b)
pursuant to Rule 144 or Rule 144A promulgated by the Commission under the
Securities Act.
"Series B Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of May 13, 1996, by and among the Company and the purchasers
of the Series B Preferred Stock named as Investors therein.
"Series C Preferred Stock" shall mean the Series C Preferred Stock, $.001
par value per share, of the Company.
"Series C Registrable Securities" shall mean the shares of Common Stock
issued or issuable on conversion or exercise of Series C Restricted Securities,
or constituting a portion of the Series C Restricted Securities.
"Series C Restricted Securities" shall mean the Series C Preferred Stock
and the Common Stock issued or issuable upon the conversion of the Series C
Preferred Stock, and any other securities of the Company which may be heretofore
or hereafter issued to any of the holders of the Series C Preferred Stock which
are convertible into or exercisable or exchangeable for shares of Common Stock
(including, without limitation, other classes or series of preferred stock,
warrants, options or other rights to purchase Common Stock or convertible
debentures or other convertible debt securities) and any Common Stock (howsoever
acquired) by any holder of Series C Preferred Stock or any Common Stock which
has been issued on conversion of Series C Preferred Stock, which have not been
sold (a) in connection with an effective registration statement filed pursuant
to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by
the Commission under the Securities Act.
"Series C Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of July 14, 1997 by and among the Company and the parties
thereto.
"Series D Preferred Stock" shall mean the Series D Preferred Stock, $.001
par value per share, of the Company.
"Series D Registrable Securities" shall mean the shares of Common Stock
issued or issuable on conversion or exercise of Series D Restricted Securities,
or constituting a portion of the Series D Restricted Securities.
"Series D Restricted Securities" shall mean the Series D Preferred Stock
and the Common Stock issued or issuable upon the conversion of the Series D
Preferred Stock, and any other securities of the Company which may be heretofore
or hereafter issued to any of the
8.
holders of the Series D Preferred Stock which are convertible into or
exercisable or exchangeable for shares of Common Stock (including, without
limitation, other classes or series of preferred stock, warrants, options or
other rights to purchase Common Stock or convertible debentures or other
convertible debt securities) and any Common Stock (howsoever acquired) by any
holder of Series D Preferred Stock or any Common Stock which has been issued on
conversion of Series D Preferred Stock, which have not been sold (a) in
connection with an effective registration statement filed pursuant to the
Securities Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by the
Commission under the Securities Act.
"Series D Stock Purchase Agreement" shall mean the Stock Purchase Agreement
and Agreement and Plan or Reorganization, dated as of October 22, 1997 by and
among the Company and the parties thereto.
"Series E Investors" shall mean the investor(s) listed on the Schedule of
Series E Investors attached hereto.
"Series E Preferred Stock" shall mean the Series E Preferred Stock, $.001
par value per share, of the Company.
"Series E Registrable Securities" shall mean the shares of Common Stock
issued or issuable on conversion or exercise of Series E Restricted Securities,
or constituting a portion of the Series E Restricted Securities.
"Series E Restricted Securities" shall mean the Series E Preferred Stock
and the Common Stock issued or issuable upon the conversion of the Series E
Preferred Stock, and any other securities of the Company which may be heretofore
or hereafter issued to any of the holders of the Series E Preferred Stock which
are convertible into or exercisable or exchangeable for shares of Common Stock
(including, without limitation, other classes or series of preferred stock,
warrants, options or other rights to purchase Common Stock or convertible
debentures or other convertible debt securities) and any Common Stock (howsoever
acquired) by any holder of Series E Preferred Stock or any Common Stock which
has been issued on conversion of Series E Preferred Stock, which have not been
sold (a) in connection with an effective registration statement filed pursuant
to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by
the Commission under the Securities Act.
"Series E Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of January 25, 1999, or any additional stock purchase
agreement for the purchase and sale of Series E Preferred Stock, by and among
the Company and the parties thereto.
"Shares" shall mean and include all shares of voting capital stock of the
Company now owned or hereafter acquired by any Stockholder or transferee of such
Stockholder.
"Stockholder" shall mean each Person who has purchased Shares from the
Company or who acquires Shares upon conversion of the Preferred Shares, the
exercise of options, Transfer or otherwise and who is a party to this Agreement.
"Stock Plan" shall mean any stock award or option plan, agreement or
arrangement for officers, directors, consultants, employees and others who
render services to the Company.
9.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which securities having the power to elect a majority of that corporation's
Board of Directors (other than securities having that power only upon the
happening of a contingency that has not occurred) are held by such Person or one
or more of its Subsidiaries.
"Taxes" shall mean all taxes, duties, charges, fees, levies, interest,
penalties, additions to tax or other assessments, including, but not limited to,
foreign, federal, state and local income, excise, employment, property, sales,
use, occupation, value added and franchise taxes and customs duties, imposed by
any Governmental Body and any payments with respect thereto required under any
tax-sharing agreement.
"Transfer" shall include any sale, assignment, transfer, pledge,
encumbrance, or other disposition of, or the subjecting to a security interest
of, any Restricted Securities, or any disposition of any Restricted Securities
or of any interest therein which would constitute a sale thereof within the
meaning of the Securities Act.
"Voting Agreement" shall mean the Amended and Restated Voting Agreement
dated as of even date herewith, by and among the Company, the Preferred
Stockholders and certain Common Stockholders, as the same may be amended from
time to time.
2. Representations and Certain Covenants.
2.1 By the Company. The Company represents to each Stockholder that:
(a) The execution, delivery and performance by the Company of this
Agreement and each other agreement to be entered into by the Company in
connection with this Agreement have been duly authorized by all action required
by law, its Charter, its By-laws or otherwise.
(b) This Agreement and such other agreements have been duly executed
and delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable against it in accordance with their
terms.
2.2 By the Stockholders. Each Stockholder, as to itself or himself,
represents to the Company and the other Stockholders that:
(a) The execution, delivery and performance by such Stockholder of
this Agreement and each other agreement to be entered into by such Stockholder
in connection with this Agreement have been duly authorized by all action
required by law, and by the certificate of incorporation and by-laws,
partnership agreement or other governing instrument of such Stockholder.
(b) This Agreement and such other agreements have been duly executed
and delivered by such Stockholder and constitutes the legal, valid and binding
obligations of such Stockholder enforceable against it or him in accordance with
their terms.
2.3 By the Series A Preferred Stockholders. Each holder of the Series A
Preferred Stock agrees to waive any prior breach of the Series A Preferred Stock
Purchase Agreement and
10.
each other agreement between the Company and the holders of Series A Preferred
Stock. The right of the holders of Series A Preferred Stock are as set forth in
this Agreement, the Series A Stock Purchase Agreement and the Charter; for the
avoidance of doubt, the Series A Stockholders shall not be deemed to have waived
any rights available to them in the future under either of said agreements or
the Charter.
2.4 Covenants of the Stockholders. Each of the Stockholders hereby waives
any default or Event of Noncompliance that may have occurred prior to the date
hereof with respect to the late reporting or presentation of financial materials
and/or budgets pursuant to Sections 6.3 and 6.22 herein.
3. Legend on Shares and Notice of Transfer.
3.1 Restrictive Legends.
(a) Each certificate evidencing Shares, and each certificate
evidencing Shares held by subsequent transferees of any such certificate, shall
(unless otherwise permitted by the provisions of Section 3.2 hereof) be stamped
or otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY NOT
BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.
(b) Each certificate evidencing Shares, and each certificate
evidencing Shares held by subsequent transferees of any such certificate, shall
also be stamped or otherwise imprinted with a legend in substantially the
following form:
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
TERMS AND CONDITIONS OF AN AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT, BY AND AMONG DIVERSA CORPORATION, THE HOLDER OF RECORD
OF THIS CERTIFICATE AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE EXCEPT IN
ACCORDANCE WITH SUCH AGREEMENT AND UNTIL SUCH TERMS AND
CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD
11.
OF THIS CERTIFICATE TO THE SECRETARY OF DIVERSA CORPORATION.
3.2 Notice of Transfer.
(a) Each of the Stockholders, and any other holder of any Shares by
acceptance thereof, agrees that, prior to any Transfer of any Shares, such
holder will give written notice to the Company of such holder's intention to
effect such Transfer and to comply in all other respects with the provisions of
this Section 3.2 and all of the provisions of Section 3.4 hereof. Each such
notice shall contain (i) a statement setting forth the intention of said
holder's prospective transferee with respect to its retention or disposition of
said Shares, and (ii) unless waived by the Company, an opinion of counsel
(reasonably satisfactory to the Company and its counsel) for said holder (who
may be the inside or staff counsel employed by said holder), as to the necessity
or non-necessity for registration under the Securities Act and applicable state
securities laws in connection with such Transfer and stating the factual and
statutory bases relied upon by counsel. The following provisions shall then
apply:
(i) If the proposed Transfer of Shares may be effected without
registration or qualification under the Securities Act and any applicable state
securities laws, then the registered holder of such Shares shall be entitled to
Transfer such Shares in accordance with Section 3.3 and the intended method of
disposition specified in the statement delivered by said holder to the Company.
(ii) If the proposed Transfer of such Shares may not be effected
without registration under the Securities Act or registration or qualification
under any applicable state securities laws, the registered holder of such Shares
shall not be entitled to Transfer such Shares until the requisite registration
or qualification is effective.
(b) Notwithstanding the provisions of Section 3.2, (i) in the case of
a Transfer by a holder to a member of such holder's Group, no such opinion of
counsel shall be necessary, provided that the transferee agrees in writing to be
subject to Section 3 hereof to the same extent as if such transferee were
originally a signatory to this Agreement, and (ii) in the case of any holder of
Restricted Securities that is a partnership, no such opinion of counsel shall be
necessary for a Transfer by such holder to a partner of such holder, or a
retired partner of such holder who retires after the date hereof, or the estate
of any holder who retires after the date hereof, or the estate of any such
partner or retired partner if, with respect to such Transfer by a partnership,
such Transfer is made in accordance with the partnership agreement of such
partnership, and the transferee agrees in writing to be subject to the terms of
Section 3 hereof to the same extent as if such transferee were originally a
signatory to this Agreement. Transfers pursuant to this Section 3.3(b) are not
subject to the provisions of Section 3.4.
(c) Each certificate evidencing the Shares issued upon such Transfer
(and each certificate evidencing any untransferred balance of such Shares) shall
bear the legends set forth in Section 3.1 hereof unless the Shares are no longer
subject to this Stockholders' Agreement and (i) in the opinion of counsel
(reasonably acceptable to the Company) addressed to the Company the registration
of future Transfers is not required by the applicable provisions of the
Securities Act or applicable state securities laws; (ii) the Company shall have
waived the
12.
requirement of such legend; or (iii) in the reasonable opinion of counsel to the
Company, such Transfer shall have been made in connection with an effective
registration statement filed pursuant to the Securities Act or in compliance
with the requirements of Rule 144 or Rule 144A (or any similar or successor
rule) promulgated under the Securities Act, and in compliance with applicable
state securities laws, to a person who is not an affiliate (as such term is
defined in the Securities Act) of the Company.
3.3 Prohibited Transfers.
(a) Each Stockholder agrees that it or he shall not Transfer any of
its or his Shares without the prior written consent of the holders of at least
75% in interest of the Preferred Shares, voting together as a class (without
counting the Shares held by such transferring Stockholder) except as provided
for in Section 3.
(b) Notwithstanding anything to the contrary contained herein, a
Stockholder may Transfer all or any of its Shares to a member of its Group and,
in the case of any stockholder which is a partnership, to a partner of such
holder, or a retired partner of such holder who retires after the date hereof,
or the estate of any holder who retires after the date hereof, or the estate of
any such partner or retired partner if, with respect to such Transfer by a
partnership, such Transfer is made in accordance with the partnership agreement
of such partnership provided that any such transferee shall agree in writing
with the Company, prior to and as a condition precedent to such transfer, to be
bound by all of the provisions of this Agreement.
(c) If requested in writing by the managing underwriters, if any, of
any Public Offering, each Stockholder agrees not to offer, sell, contract to
sell or otherwise dispose of any Shares except as part of such Public Offering
within thirty (30) days before or one hundred and eighty (180) days after the
effective date of the registration statement filed with respect to said
offering, and the Company hereby also so agrees; provided, however, that this
restriction will not apply to transfers permitted under Section 3.3(b).
(d) Each Transfer of Shares which is permitted by Section 3 of this
Stockholders' Agreement shall be by written agreement (the "Transfer
Agreement"), in a form reasonably satisfactory to the Company and its counsel,
pursuant to which the transferee (other than a Stockholder who is already a
party to this Stockholders' Agreement) agrees to execute a counterpart copy of
this Stockholders' Agreement, and to abide by, and hold the transferred Shares
subject to, the terms of this Agreement that are applicable to the transferring
Stockholder as of the time of the Transfer and that would have been applicable
to such transferring Stockholder had the transferring Stockholder retained such
transferred Shares.
3.4 Right of First Refusal; Tag-Along Rights.
(a) If a Stockholder (for purposes of this Section, the "Selling
Stockholder") desires to sell all or any part of his Shares pursuant to a bona
fide, arm's-length offer from a creditworthy third party (the "Proposed
Transferee"), the Selling Stockholder shall submit a written offer (the "Offer")
to sell such Shares (the "Offered Shares") to the other Stockholders and the
Company, on terms and conditions, including price, not less favorable to the
other Stockholders and the Company than those on which the Selling Stockholder
proposes to sell the
13.
Offered Shares to the Proposed Transferee. The Offer shall disclose the identity
of the Proposed Transferee, the number of Offered Shares proposed to be sold,
the total number of Shares owned by the Selling Stockholder, the terms and
conditions, including price, of the proposed sale, the address of the Selling
Stockholder and any other material facts relating to the proposed sale.
(b) Subject to and in accordance with the priorities of rights
established in subsection (c) below, each Stockholder shall have the right (the
"Right of First Refusal") to purchase that number of Offered Shares as shall be
equal to the number of Offered Shares multiplied by a fraction, the numerator of
which shall be the number of Shares then owned by such Stockholder and the
denominator of which shall be the aggregate number of Shares then owned by all
of the Stockholders less those owned by the Selling Stockholder (the "Pro Rata
Fraction"). For the purpose of calculating the Pro Rata Fraction, each Preferred
Share shall be deemed to represent the number of Common Shares into which the
Preferred Share is then convertible.
(c) Stockholders shall have a right of oversubscription such that if
any Stockholder fails to accept the Offer as to its or his full Pro Rata
Fraction, the other Stockholders, among them, shall have the right to purchase
up to the balance of the Offered Shares not so purchased. Such right of
oversubscription may be exercised by a Stockholder by accepting the Offer as to
more than its or his Pro Rata Fraction. If, as a result thereof, such
oversubscriptions exceed the total number of Offered Shares available in respect
of such oversubscription privilege, the oversubscribing Stockholders shall be
cut back with respect to their oversubscriptions so as to sell the Offered
Shares as nearly as possible in accordance with their respective Pro Rata
Fractions or as they may otherwise agree among themselves.
(d) If a Stockholder desires to purchase all or any part of the
Offered Shares, such Stockholder (a "Purchasing Stockholder") shall communicate
in writing its or his election to purchase (an "Acceptance") to the Selling
Stockholder, which Acceptance shall state the number of Offered Shares the
Purchasing Stockholder desires to purchase and shall be delivered in person or
mailed to the Selling Stockholder at the address set forth in the Offer, with a
copy to the Company and the other Stockholders, within twenty (20) days of the
date the Offer was made.
(e) If the other Stockholders do not accept the Offer for all of the
Offered Shares, the Company shall have the right to purchase all of the
remaining Offered Shares (including any Tag-Along Shares being offered pursuant
to paragraph (j) below). If the Company desires to purchase all of the remaining
Offered Shares it shall seek the approval of the holders of at least 75% in
interest of the Preferred Shares (excluding those Preferred Shares owned or held
by the Selling Stockholder and any Tag-Along Stockholder pursuant to paragraph
(j) below), voting together as a class. Upon obtaining the requisite approval
from the Preferred Stockholders, the Company shall communicate in writing its
acceptance to the Selling Stockholder and the other Stockholders, which
Acceptance shall be delivered in person or mailed to the Selling Stockholder and
the other Stockholders within thirty (30) days of the date the Offer was made.
(f) Sale of the Offered Shares pursuant to this Section 3.4 shall be
made at the offices of the Company no later than the thirtieth (30) day
following the expiration of the 30-day
14.
period after the Offer is made (or if such thirtieth (30) day is not a Business
Day, then on the next succeeding Business Day). Such sales shall be effected by
the Selling Stockholder's delivery to each Purchasing Stockholder or the
Company, as the case may be, of a certificate or certificates evidencing the
Offered Shares to be purchased by it or him, duly endorsed for transfer to the
Purchasing Stockholder or the Company, as the case may be, which Offered Shares
shall be delivered free and clear of all liens, charges, claims and encumbrances
of any nature whatsoever, against payment to the Selling Stockholder of the
purchase price therefor by the Purchasing Stockholder or Company, as the case
may be. Payment for the Offered Shares shall be made as provided in the Offer or
by wire transfer or certified check.
(g) If the Purchasing Stockholders and the Company do not agree to
purchase all of the Offered Shares, then the Offered Shares may be sold by the
Selling Stockholder at any time within 120 days after the date the Offer was
made. Any such sale shall be to the Proposed Transferee, at not less than the
price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those specified in the Offer. Any Offered Shares not
sold within such 120-day period shall continue to be subject to the requirements
of a prior offer pursuant to this Section 3.4.
(h) If any Selling Stockholder becomes obligated to sell any Shares
(a "Defaulting Stockholder") to the Company or any Purchasing Stockholder under
this Agreement and fails to deliver such Shares in accordance with the terms of
this Agreement, the Company or the Purchasing Stockholder, as the case may be,
may, at its or his option, in addition to all other remedies it or he may have,
send to the Defaulting Stockholder the purchase price for such Shares as is
herein specified. Thereupon, the Company, upon written notice to the Defaulting
Stockholder, if applicable, shall (x) cancel on its books the certificate or
certificates representing the Shares to be sold and (y) issue, in lieu thereof,
in the name of the Purchasing Stockholder, a new certificate or certificates
representing such Shares, and thereupon all of the Defaulting Stockholder's
rights in and to such Shares shall terminate, except for the right to receive
payment of the purchase price therefor.
(i) Notwithstanding anything herein to the contrary, the Selling
Stockholder shall not be obligated to sell any Shares to the Company or the
other Stockholders, and will be free to sell all of the Shares to the Proposed
Transferee, if the Company and the Stockholders do not elect to buy all of the
Shares specified in the Offer.
(j) In lieu of exercising the Right of First Refusal, each of the
other Stockholders (for the purposes of this paragraph, the "Tag-Along
Stockholder") shall have the irrevocable right (the "Tag-Along Right") to
require the Selling Stockholder to cause the Proposed Transferee to purchase
from such Tag-Along Stockholder that number of Shares held by such Tag-Along
Stockholder as is equal to the product of the Offered Shares, multiplied by a
fraction, the numerator of which is the number of Shares held by such Tag-Along
Stockholder and the denominator of which is the number of Shares owned by such
Tag-Along Stockholder plus the sum of the number of Shares owned by the Selling
Stockholder and all other Tag-Along Stockholders who are exercising their Tag-
Along Rights (the "Tag-Along Shares"). The sale of the Offered Shares (as
reduced by the Tag-Along Shares, the "Remaining Offered Shares") and the Tag-
Along Shares shall be for the same consideration and otherwise on the same terms
and conditions for all holders. The Tag-Along Right shall be exercised by a Tag-
Along Stockholder
15.
by notifying the Selling Stockholder and the Company in writing (the "Tag-Along
Notice") within twenty (20) calendar days of receiving the Offer of his
intention to sell his Tag-Along Shares. Failure by any Stockholder to deliver a
Tag-Along Notice during such twenty (20) calendar day period shall be deemed to
constitute the election of such Stockholder not to exercise his Tag-Along
Rights. If the Proposed Transferee does not consummate the purchase of all of
the Remaining Offered Shares and the Tag-Along Shares within 120 calendar days
from the receipt by the Selling Stockholder of a Tag-Along Notice from each of
the other Stockholders, the Offered Shares and Tag-Along Shares shall again
become subject to the terms of this Section 3.
4. Rights to Purchase Additional Stock.
(a) Except for Excluded Stock, the Covenant Preferred Stockholders
shall have the right to subscribe to any and all issuances of Capital Stock of
the Company ("Company Offered Shares"). Each Covenant Preferred Stockholder
shall have the right to purchase that number of Company Offered Shares as shall
be equal to the number of Company Offered Shares multiplied by a fraction, the
numerator of which shall be the number of Shares then owned by such Covenant
Preferred Stockholder and the denominator of which shall be the aggregate number
of Shares then owned by all of the Covenant Preferred Stockholders (the
"Fraction"). For purposes of calculating the Fraction, all issued and
outstanding securities held by the Covenant Preferred Stockholders that are
convertible into or exercisable or exchangeable for shares of Common Stock
(including any issued and issuable Covenant Preferred Shares) or for any such
convertible, exercisable or exchangeable securities, shall be treated as having
been so converted, exercised or exchanged.
(b) In the event the Company shall propose to issue Capital Stock
except for Excluded Stock, the Company shall give written notice (the "Offer of
Shares") to each Covenant Preferred Stockholder, which shall set forth the
number and kind or class of shares of Capital Stock proposed to be issued, the
terms and conditions thereof and the price therefor. Such notice shall be given
at least twenty (20) days prior to the issuance of such Capital Stock.
(c) The Offer of Shares by its terms shall remain open and
irrevocable for a period of twenty (20) days from the date of its delivery to
such Covenant Preferred Stockholder ("20-Day Period").
(d) Each Covenant Preferred Stockholder shall evidence its acceptance
of the Offer of Shares by delivering a written notice ("Notice of Acceptance"),
signed by the Covenant Preferred Stockholder, setting forth the number of
Company Offered Shares which the Covenant Preferred Stockholder elects to
purchase. The Notice of Acceptance must be delivered to the Company prior to the
end of the 20-Day Period.
(e) If the Covenant Preferred Stockholders do not tender Notices of
Acceptance for all of the Company Offered Shares, the Company shall have ninety
(90) days from the expiration of the 20-Day Period to sell all or any part of
the Company Offered Shares refused by the Covenant Preferred Stockholders to any
Person(s), but only upon terms and conditions which are in all material respects
no more favorable to such other Person(s) than those set forth in the Offer of
Shares.
16.
(f) Upon the closing of the sale of Company Offered Shares to any
third party (which shall include full payment of the purchase price to the
Company), each Covenant Preferred Stockholder shall (i) purchase from the
Company, and the Company shall issue and sell to such Covenant Preferred
Stockholder, any Company Offered Shares for which such Covenant Preferred
Stockholder tendered a Notice of Acceptance upon the terms specified in the
Offer of Shares and (ii) execute and deliver an agreement restricting transfer
of such Company Offered Shares substantially as set forth in Section 3 of this
Agreement.
(g) In each case, any Company Offered Shares not purchased either by
the Covenant Preferred Stockholders or by any other Person in accordance with
this Section 4 may not be sold or otherwise disposed of until they are again
offered to the Covenant Preferred Stockholder under the procedures specified in
this Section 4.
(h) If the Capital Stock to be issued by the Company is to be issued
pursuant to a Public Offering (i) notwithstanding the time periods set forth
above, the Company may require that the Covenant Preferred Stockholders make an
election to either (A) commit to purchase shares of Capital Stock from the
Company at a price no higher than the public offering price at the closing of
the Public Offering or (B) waive their rights to subscribe for additional shares
of Common Stock to be issued in the Public Offering, (ii) the subscription right
shall not be applicable to shares issuable if the underwriters exercise their
over-allotment option; and (iii) the amount to be purchased pursuant to this
Section 4(h) may be reduced if in the written opinion of the managing
underwriters of the Public Offering, the purchase of such number of shares by
the Covenant Preferred Stockholders would adversely impact the Public Offering.
Such election shall be made sufficiently in advance of the filing of the
registration statement relating to the Public Offering as shall be reasonably
requested by the Company.
(i) The rights provided by this Section 4 may be assigned by any
Covenant Preferred Stockholder which is a limited partnership or a trust to any
and all members of its Group, provided, that all such rights of any assignee to
purchase Company Offered Shares will be subject to receipt of appropriate
representations from such assignee as reasonably requested by the Company to
ensure compliance with all applicable securities laws.
5. Board of Directors.
5.1 Number of Directors. In accordance with Section A.6(b)(i) of the
Charter of the Company, the holders of a majority in voting power of the
Covenant Preferred Shares, voting together as a separate class, have been
granted the exclusive right to elect to the Board of Directors that number of
the directors which shall equal a majority of the total number of directors on
the Board of Directors. The Company and each of the other parties hereto hereby
agree to take such actions as are necessary, so that the whole Board of
Directors consists of nine members.
5.2 Agreement to Vote for Directors. The Company hereby agrees to take
such actions as are necessary, and each of the other parties hereto agrees to
vote his, her or its Covenant Preferred Shares (and any other shares of the
Capital Stock of the Company over which he, she or it exercises voting control),
and take such other actions as are necessary, so as to elect and thereafter
continue in office as Directors of the Company (i) two nominees of the
17.
holders of the Series A Preferred Stock, (ii) one nominee of the holders of the
Series B Preferred Stock, (iii) one nominee of APA Excelsior IV, L.P., and (iv)
one nominee mutually agreed upon by the holders of at least 75% in interest of
the Covenant Preferred Shares, voting together as a class. Each nominating
Stockholder may replace any nominee designated by such nominating Stockholder
who has been elected to the Board of Directors with a new nominee upon notice to
the Board of Directors and to the other stockholders of the Company. If there is
any increase in size of the Board of Directors, such that there shall be more
than five Preferred Directors (as such term is defined in the Charter of the
Company), then, with respect to such additional directors ("Additional Preferred
Directors"), the Company hereby agrees to take such actions as are necessary,
and each of the other parties hereto agrees to vote his, her or its Covenant
Preferred Shares (and any other shares of the Capital Stock of the Company over
which he, she or it exercises voting control), and take such other actions as
are necessary, so as to elect and thereafter continue in office as Directors of
the Company (i) the nominee(s) of the holders of the Series A Preferred Stock
with respect to one-half of the Additional Preferred Directors, (ii) the
nominee(s) of the holders of the Series B Preferred Stock with respect to one-
half of the Additional Preferred Directors, and (iii) if there is an odd number
of Additional Preferred Directors, a nominee mutually agreed upon by the holders
at least 75% in interest of the Covenant Preferred Shares, voting together as a
class.
5.3 Default of Agreement to Vote. In case any of the covenants set forth
in this Section 5 shall have been breached by any party hereto, the party or
parties entitled to the benefit of such covenants or agreements may proceed to
protect and enforce their rights either by proceeding in equity and/or by action
at law, including, but not limited to, an action for damages as a result of any
such breach and/or an action for specific performance of any such covenant or
agreement contained in this Section 5 and/or a temporary or permanent
injunction, in any case without showing any actual damage and without
establishing, in the case of an equitable proceeding, that the remedy at law is
inadequate.
5.4 Board Observation Rights. For so long as CIT/VC or any member of the
CIT/VC Group is a holder of Shares, CIT/VC shall have the right to appoint a
designee as an observer to the Board of Directors. For so long as Benefit
Capital Management Corporation is a holder of Shares, Benefit Capital Management
Corporation shall have the right to appoint a designee as an observer to the
Board of Directors. For so long as New York Life Insurance Company is a holder
of Shares, New York Life Insurance Company shall have the right to appoint a
designee as an observer to the Board of Directors. For so long as they hold
observation rights under this Section 5.4, each of CIT/VC, Benefit Capital
Management and New York Life Insurance Company shall be given notice of all such
meetings at the same time and in the same manner as Directors of the Company are
informed.
6. Affirmative Covenants of the Company.
Subject to Sections 13 and 15, the Company covenants and agrees that, so
long as any Covenant Preferred Shares are outstanding, except to the extent the
Company receives the approval of the holders at least 75% in interest of the
Covenant Preferred Shares, voting together as a class:
18.
6.1 Use of Proceeds. The proceeds of the sale of the Preferred Stock sold
in connection with this Agreement and the Original Stockholders' Agreement shall
be used by the Company to continue the identification and commercialization of
products and processes by genomic analysis of diverse microbes and for working
capital purposes related thereto.
6.2 Consent as to Issuance of Common Stock. The Company will use its best
efforts to obtain any authorization, consent, approval or other action by and
make any filing with any court or Governmental Body that may be required under
applicable state securities laws in connection with the issuance of any shares
of Common Stock upon conversion of the holder of Covenant Preferred Shares.
6.3 Financial Information. The Company, except as otherwise indicated,
will deliver to each Covenant Preferred Stockholder:
(a) As soon as practicable and in any event within 90 calendar days
after the close of each fiscal year of the Company, copies of (i) the balance
sheet of the Company as of the end of such fiscal year, (ii) statements of
operations of the Company for such fiscal year, and (iii) statements of changes
in cash flows of the Company for such fiscal year, setting forth in each case in
comparative form the corresponding figures of the previous annual period and the
most recent Budget (as defined in clause (d) below), all in reasonable detail,
prepared in accordance with GAAP consistently applied throughout the periods
involved and certified (except for the comparison to the most recent Budget),
without qualification, by Coopers & Xxxxxxx, LLP or another firm of independent
certified public accountants of recognized national standing.
(b) As soon as practicable, and in any event within 45 calendar days
after the end of each of the first three fiscal quarters of the Company, an
unaudited balance sheet of the Company as at the end of each such fiscal quarter
and unaudited statements of operations, and changes in cash flows for such
fiscal quarter, setting forth in each case in comparative form corresponding
figures for the preceding year's respective fiscal quarter and for the Budget,
all in reasonable detail, prepared in accordance with GAAP consistently applied
throughout the period involved and certified as being correct and complete and
fairly presenting the results of operations of the Company for the quarter
indicated, subject to year-end audit adjustment, by the principal financial
officer of the Company. In addition, as soon as practicable, and in any event
within 20 calendar days after the end of each fiscal quarter of the Company, the
principal financial officer of the Company will complete and sign a quarterly
financial summary in the form attached hereto as Exhibit A.
(c) For each calendar month, as soon as practicable and in any event
within 20 calendar days after the close of each month, copies of (i) the balance
sheet of the Company as of the end of such month, (ii) statements of operations
of the Company for such month, and (iii) statements of changes in cash flows of
the Company for such month setting forth in each case in comparative form the
corresponding figures for the preceding month and for the Budget, for the year
to date and for the comparable periods in the preceding year, all in reasonable
detail, prepared in accordance with GAAP consistently applied throughout the
periods involved and certified as being correct and complete and fairly
presenting the results of operations of the
19.
Company for the month indicated, subject to year-end audit adjustment, by the
principal financial officer of the Company.
(d) As soon as practicable and in any event no later than the end of
each fiscal year of the Company (or by January 30, 1999 for fiscal year 1999), a
proposed annual operating budget for the Company for the succeeding fiscal year,
containing forecasts of profit and loss and cash flow with monthly and quarterly
breakdowns and management's reasonably estimated projections of Indebtedness and
Commitments for the succeeding fiscal year (the "Budget"). The portions of the
Budget relating to Indebtedness, Commitments, acquisitions and dispositions
shall be approved by at least 75% of the Board of Directors. If less than 75% of
the Board of Directors vote to approve the portions of the Budget relating to
Indebtedness, Commitments, acquisitions and dispositions, then those portions of
the Budget shall be adopted if approved by the vote of (i) more than 50% of the
Board of Directors, and (ii) the holders of at least 75% in interest of the
Covenant Preferred Shares, voting as a class. Furthermore, any acquisition
described in Section 7.8 and any disposition described in Section 7.9 shall
require approval in accordance with those Sections.
(e) Simultaneously with the delivery of the monthly statements
required by clause (c), copies of a certificate of the principal financial
officer of the Company giving a narrative analysis of operations and trends in
the business of the Company during such month.
(f) Promptly upon, and in any event within 10 calendar days after,
their becoming available, a copy of (i) all reports, proxy statements, financial
statements and other materials delivered or sent by the Company to its
stockholders, (ii) all minutes of the proceedings of the Board of Directors of
the Company and all committees thereof and all written consents signed by
directors in lieu of meetings of the Board of Directors and committees thereof,
and (iii) all management letters reviewing the Company's accounting and control
procedures that the Company receives from its independent certified public
accountants.
(g) Concurrently with the furnishing of the reports pursuant to
Section 6.3(a) and (b) hereof, an Officer's Certificate stating that the Company
is not in default under, and has not breached, any material agreements or
obligations, including, without limitation, this Agreement, or if any such
default or breach exists, specifying the nature thereof and what actions the
Company has taken and proposes to take with respect thereto.
If for any period the Company shall have any Subsidiary or Subsidiaries
whose accounts are consolidated with those of the Company, then the financial
statements delivered for such period pursuant to the foregoing clauses (a), (b)
and (c) of this Section 6.3 shall be the consolidated and consolidating
financial statements of the Company and all such consolidated Subsidiaries and
if the financial statements of such Subsidiary or Subsidiaries are not
consolidated with those of the Company, separate financial statements for such
Subsidiary or Subsidiaries shall be provided.
6.4 Other Reports and Inspection. The Company, upon reasonable prior
notice, will make available to each Covenant Preferred Stockholder or its
representatives or designees during normal business hours (a) all assets,
properties and business records of the Company for inspection and copying and
(b) the directors, officers, employees and public accountant (and by
20.
this provision the Company hereby authorizes and instructs said accountants to
discuss with such holder and such designees its affairs, finances and accounts
and the responses of attorneys representing the Company to inquiries made by the
Company on behalf of said accountants in connection with their audit of the
financial affairs of the Company) of the Company for interviews concerning the
business, affairs and finances of the Company.
6.5 Corporate Existence. The Company will, and will cause each of its
Subsidiaries to, maintain preserve and renew its corporate existence and all
material licenses, authorizations and permits necessary to the conduct of its
business.
6.6 Insurance. The Company will maintain policies of insurance, including
but not limited to, fire, liability, worker's compensation, directors' &
officers' and company reimbursement, business interruption, and product
liability, in such amounts and covering such risks as are customarily carried by
businesses comparable to the business conducted by the Company. The Company has
developed and implemented a risk assessment and insurance program appropriate
for its business; and in connection therewith, to the extent that the insurance
referred to in the forgoing sentence is either not currently maintained or not
maintained in appropriate amounts, the Company will obtain such insurance.
6.7 Maintenance of Properties. The Company will, and will cause each of
its Subsidiaries to, maintain and keep its properties in good repair, working
order and condition, and from time to time make all necessary or desirable
repairs, renewals and replacements, so that its businesses may be properly and
advantageously conducted at all times.
6.8 Compliance with Obligations. The Company will, and will cause each of
its Subsidiaries to, comply with all other material obligations which it incurs
pursuant to any contract or agreement, whether oral or written, express or
implied, as such obligations become due to the extent to which the failure to so
comply would reasonably be expected to have a material adverse effect upon the
Business and Condition of the Company and its Subsidiaries taken as a whole,
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance with
GAAP consistently applied) have been established on its books with respect
thereto.
6.9 Taxes. The Company will, and will cause each of its Subsidiaries to,
pay when due (i) all Taxes imposed upon it or any of its properties or income,
other than Taxes which are being contested in good faith and which Taxes in the
aggregate do not involve material amounts, and (ii) all claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like persons
which, if unpaid, might result in the creation of a lien upon any of its
properties other than claims or demands which are being contested in good faith.
6.10 Compliance with Law. The Company will, and will cause each of its
Subsidiaries to, comply, in all material respects, with all applicable statutes,
rules, regulations and orders of all Governmental Bodies, with respect to the
conduct of its business and the ownership of its properties, provided that the
Company shall not be deemed to be in violation of this Section 6.10 as a result
of any failure to comply with any provisions of such statutes, rules,
regulations and orders, the noncompliance with which would not result in fines,
penalties, injunctive relief or other civil or criminal liabilities which, in
the aggregate, would materially and
21.
adversely affect the Business and Condition of the Company and its Subsidiaries
taken as a whole.
6.11 Environmental Matters. The Company shall promptly advise each
Covenant Preferred Stockholder in writing of any pending or threatened claim,
demand or action by any governmental authority or third party relating to any
Hazardous Materials affecting any properties owned or leased by the Company of
which it has knowledge. The Company shall not discharge, place, release, spill
or dispose of any Hazardous Materials or any other pollutants or effluents upon
any properties owned or leased by the Company or elsewhere (including, but not
limited to, underground injection of such substances) other than in compliance
with the Applicable Environmental Laws and the Company shall not discharge into
the air any emission which would require a permit under the Clean Air Act or its
state counterparts or any other Environmental Laws unless any and all such
permit(s) are obtained prior to any discharge. The stockholders of the Company
shall have no control over, or authority with respect to, the waste disposal
operations of the Company.
6.12 Accounting System. The Company will maintain a system of accounting
and proper books of record and account, in accordance with GAAP, and will set
aside on its books reserves for depreciation, depletion, obsolescence,
amortization, pending and threatened litigation and otherwise as may be
appropriate in conformance with procedures and recommendations of the Company's
independent public accountants.
6.13 Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized but unissued Common Stock the number of shares
of Common Stock required for issuance upon the conversion of all of the
Preferred Stock (including any additional shares of Common Stock which may
become so issuable by reason of the operation of anti-dilution provisions of the
Preferred Stock).
6.14 Confidentiality Agreements with Employees and Consultants. The
Company will enter into confidentiality agreements approved by a majority of the
Board of Directors with employees and consultants of the Company retained after
the date hereof who should have or are proposed to have access to confidential
or proprietary information.
6.15 Board of Directors Meetings. The Company shall call, and use its best
efforts to have, regular meetings of the Board of Directors on a quarterly
basis. The Company shall pay all reasonable travel expenses and other out-of-
pocket expenses incurred by Directors who are not employed by the Company in
connection with attending meetings of the Board or any committee thereof or in
connection with attendance at meetings related to the business of the Company.
6.16 Publicity. The Company shall not identify any of the Covenant
Preferred Stockholders as a stockholder or affiliate of the Company in any
advertising or promotional material without the prior written consent of such
Covenant Preferred Stockholder.
6.17 Registration Rights. The Company shall not hereafter grant to any
persons any rights to register or qualify stock of the Company under Federal or
state securities laws, unless it shall have first obtained the written consent
of the holders of at least 75% in interest of the Covenant Preferred Shares,
voting as a class.
22.
6.18 Key Man Life Insurance. The Company has obtained and will maintain
"key man" life insurance policies (the "Key-Man Life Insurance") covering the
lives of such officers of the Company as are designated by the holders of at
least 75% in interest of the Covenant Preferred Shares, voting as a class, in
the amount of $1,000,000, the sole beneficiary of which shall be the Company.
6.19 Voting Agreement with Common Stockholders.
(a) Upon the exercise of any outstanding option or warrant of the
Company (including, without limitation, any options currently outstanding under
the Company's Restated 1994 Employee Incentive and Non-Qualified Stock Option
Plan (the "1994 Plan")), the Company will request that such exercising optionee
or warrant holder become a signatory to the Voting Agreement with respect to the
Common Stock exercisable thereof.
(b) The Company shall not hereafter issue any Common Stock or other
voting security (excluding Common Stock issuable upon the exercise of currently
outstanding options granted pursuant to the 1994 Plan) or any security
(including any options under any Stock Plan of the Company) which is convertible
into or exercisable for Common Stock or any other voting security unless, as a
condition precedent to such issuance, the holder of such security agrees to
become a signatory to the Voting Agreement.
6.20 Option Exercises. Upon the exercise of any option issued under the
1994 Plan, the optionee shall execute a Stock Purchase and Restriction Agreement
in substantially the form of Exhibit B, as amended, to the 1994 Plan.
6.21 Proprietary Rights. The Company has developed and implemented a
policy, satisfactory to the holders of at least 75% in interest of the Covenant
Preferred Shares, voting together as a class, with regard to noncompetition,
nonsolicitation of employees, suppliers and customers of the Company by current
and future employees of, or consultants to, the Company. It is contemplated that
current and future employees of, or consultants to, the Company will be required
to execute appropriate forms of agreement implementing the foregoing policy.
6.22 Approval of Budget. The Company shall obtain the approval required by
Section 6.3(d) of the portions of the Budget relating to Indebtedness,
Commitments, acquisitions and dispositions prior to the beginning of each fiscal
year beginning with fiscal year 1998.
6.23 Repayment of Loan Agreement and Release of Encumbrances. The Company
shall repay all amounts outstanding under the Loan Agreement prior to May 15,
1996 and in connection therewith shall obtain and promptly file such forms
including, without limitation, UCC-3 termination statements as would be required
to release any liens or encumbrances granted by the Company pursuant to the Loan
Agreement.
7. Negative Covenants of the Company.
Subject to Section 13 hereof, the Company covenants and agrees with the
Covenant Preferred Stockholders and their transferees that, without the approval
of the holders of at least 75% in interest of the Covenant Preferred Shares,
voting together as a class:
23.
7.1 Indebtedness; Commitments. The Company shall not incur any
Indebtedness or Commitments at any time which exceeds by 10% or more of the
amount of Indebtedness or Commitments included in a Budget approved by the Board
of Directors (and the Covenant Preferred Stockholders, if required) in
accordance with Section 6.3(d) hereof. If the Company determines to incur
Indebtedness or Commitments in an amount which exceeds by 10% or more the amount
of Indebtedness or Commitments included in an approved Budget, then the Company
must seek an additional approval in accordance with Section 6.3(d) hereof.
7.2 Restriction on Dividends. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash rights,
obligations or securities on account or in respect of any of its shares of
Common Stock or any shares of preferred stock other than those which are both
(x) required by the Charter, and (y) relate to the Preferred Shares of the
Company.
7.3 Restriction on Issuances of Shares. The Company shall not issue any
shares of Capital Stock; provided, however, that the Company may issue shares of
Capital Stock pursuant to the options, warrants and rights listed on Schedule
7.3 hereof.
7.4 Protective Provisions. The Company shall not engage in any of the
actions specified in Sections A.6(c), B.6(c), C.6(c) or D.6(c) of Article III of
its Charter without the written consent in lieu of a meeting, or the affirmative
vote at a meeting called for such purpose, of the holders of Preferred Stock, as
provided in such Sections.
7.5 Business. The Company will only engage in the businesses of the
identification and commercialization of products and processes by genomic
analysis of diverse microbes and other living materials.
7.6 Guarantees. The Company will not incur any guarantee or similar
contingent obligation in respect of the indebtedness of others, whether or not
classified on the Company's balance sheet as a liability (a "Guarantee").
7.7 Conflicting Agreements. The Company will not enter into any agreement
which by its terms might restrict the performance of the Company's obligations
pursuant to the terms of this Agreement or the provisions relating to the
Preferred Stock included in the Charter, including but not limited to
registration rights, and the payment of dividends on, the redemption, voting or
conversion of, the Preferred Stock.
7.8 No Acquisitions. The Company shall not, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
without the approval of the holders of at least 75% in interest of the Covenant
Preferred Shares, voting together as a class.
7.9 No Dispositions. Other than in the ordinary course of business and
other than dispositions of obsolete assets, the Company will not, nor shall it
permit any of its Subsidiaries to, sell, lease, encumber or otherwise dispose of
or agree to sell, lease, encumber or otherwise dispose of, in any transaction or
series of related transactions, any substantial assets of the
24.
Company without the approval of the holders of at least 75% in interest of the
Covenant Preferred Shares, voting together as a class.
7.10 Employee Stock and Stock Options. Other than options to purchase up
to 11,275,624 shares of Common Stock which may be issued under the 1994 Plan or
the 1997 Plan, the Company will not issue Common Stock or stock options to its
officers, directors, employees or others who render services to the Company (the
"Employees") unless such Common Stock or options, as the case may be, are issued
pursuant to a stock option plan approved by holders of at least 75% in interest
of the Covenant Preferred Shares, voting as a class, and an agreement in form
and substance satisfactory to holders of at least 75% in interest of the
Covenant Preferred Shares, voting as a class, except for immaterial changes
thereto as shall be approved from time to time by officers of the Company.
8. Confidentiality.
The Preferred Stockholders agree to keep the information heretofore or
hereafter furnished to the Preferred Stockholders by the Company or on the
Company's behalf (the "Confidential Material") confidential. Notwithstanding
the foregoing, the term Confidential Material does not include information that
(i) is or becomes publicly available other than through breach of this Agreement
by the Preferred Stockholders; (ii) is already known to the Preferred
Stockholders at the time of disclosure; (iii) is received by the Preferred
Stockholders from a third party not under an obligation of confidentiality to
the Company or (iv) is independently developed by the Preferred Stockholders
without reference to the Confidential Material. The Preferred Stockholders
agree to take reasonable precautions to safeguard the Confidential Material from
disclosure to anyone other than appropriate employees, officers, directors,
partners and representatives, including auditors and attorneys, of the Preferred
Stockholders, which persons shall be advised of the confidential nature of such
information. In the event that any Preferred Stockholder or any of such
Preferred Stockholder's representatives receive a request or demand to disclose
all or any part of the Confidential Material under the terms of a subpoena or
order issued by a court of competent jurisdiction or otherwise, the Preferred
Stockholders shall (i) promptly notify the Company of the existence, terms and
circumstances surrounding such request or demand so that the Company may seek a
protective order or other appropriate relief or remedy or waive compliance with
the terms hereof, (ii) consult with the Company on the advisability of taking
legally advisable steps to resist or narrow such request or demand, and (iii) if
disclosure of such Confidential Material is required, disclose such Confidential
Material and, subject to reimbursement by the Company of Preferred Stockholder's
reasonable expenses, including legal fees, cooperate with the Company in its
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed Confidential
Material which the Company may so designate. If, in the opinion of Preferred
Stockholder's counsel, disclosure by the Preferred Stockholders of all or any
part of the Confidential Material is required by law, the Preferred Stockholders
shall (i) promptly notify the Company of the proposed disclosure, (ii) disclose
only such Confidential Material which is required by law, in the reasonable
opinion of the Preferred Stockholders' counsel, to be disclosed and (iii)
subject to reimbursement by the Company of the Preferred Stockholders'
reasonable expenses, including legal fees, take all legally advisable steps to
obtain an order or other reliable assurance that confidential treatment will be
accorded to the disclosed Confidential Material to the maximum extent possible
or to obtain such other protection under law of the confidential
25.
nature of such Confidential Material to the maximum extent possible. Any
Preferred Stockholder who is entitled to receive information concerning the
Company pursuant to Sections 6.3 and 6.4, shall as a condition to receipt of
such confidential information, agree to be bound by this Section 8.
9. Events of Noncompliance.
9.1 Occurrence of Event of Noncompliance. An event of noncompliance (an
"Event of Noncompliance") hereunder shall occur if:
(a) the Company fails in any material respect to perform or observe
any of the covenants contained in the Company fails in any material respect to
perform or observe any of the covenants contained in this Stockholders'
Agreement, the Series A Stock Purchase Agreement, the Series B Stock Purchase
Agreement, the Series C Stock Purchase Agreement or the Series D Stock Purchase
Agreement, or fails in any material respect to comply with any of the provisions
of this Stockholders' Agreement, the Series A Stock Purchase Agreement, the
Series B Stock Purchase Agreement, the Series C Stock Purchase Agreement, the
Series D Stock Purchase Agreement or of its Charter applicable to the Covenant
Preferred Shares or the Registrable Securities (other than the Series E
Registrable Securities);
(b) the Company's representations and warranties contained in this
Stockholders' Agreement, the Series A Stock Purchase Agreement (including the
Schedules and Exhibits attached thereto), the Series B Stock Purchase Agreement
(including the Schedules and Exhibits attached thereto), the Series C Stock
Purchase Agreement (including the Schedules and Exhibits attached thereto) or
the Series D Stock Purchase Agreement (including the Schedules and Exhibits
attached thereto) shall be untrue or misleading in any material respect as of
the time when made or as of the closings of such agreements;
(c) the Company shall become insolvent, make an assignment for the
benefit of its creditors, call a meeting of its creditors to obtain any general
financial accommodation or suspend business; any material obligation of the
Company shall be accelerated or shall not be paid when due; any judicial
judgment or settlement shall be outstanding, or a case under any provision of
Title 11 of the United States Code, 11 U.S.C. (S) 101 et seq. (the "Bankruptcy
Code"), or any comparable law of any jurisdiction, including provisions for
receivership or reorganization, shall be commenced by or against the Company
which, in the case of an action being commenced against the Company under the
Bankruptcy Code, shall remain unstayed or undismissed for a period of sixty (60)
days;
(d) the Company fails to complete, within five years from the date of
the Series B Stock Purchase Agreement either: (i) an Initial Public Offering,
(ii) a sale, liquidation or dissolution of the Company, or (iii) a sale,
transfer or disposition of substantially all of the assets of the Company;
(e) the Company (x) incurs Indebtedness or Commitments in violation
of Section 7.1 hereto, (y) pays dividends in violation of Section 7.2 hereto,
and/or (z) issues shares of Capital Stock in violation of Section 7.3 hereto;
26.
(f) a default or an event of default shall occur or exist with
respect to any debt or indebtedness of the Company; or
(g) a default or an event of default shall occur or exist with
respect to any material contract of the Company, which default could give rise
to a material claim by a third party against the Company or the Company's
assets.
9.2 Remedies. In the event of the occurrence and continuation of an Event
of Noncompliance, the holders of at least 75% in interest of the Covenant
Preferred Shares, voting as a class, may:
(a) demand, and be entitled to, in accordance with the provision of
Sections A.8, B.8, C.8 and D.8 of Article III of the Charter of the Company, an
immediate (i) redemption of all of the Covenant Preferred Shares held by them
(or a portion of such shares pro rata), and (ii) immediate payment of all
accrued but unpaid dividends and all declared but unpaid dividends;
(b) declare an Event of Noncompliance and elect all members of the
Board of Directors, which Board may sell, dispose of, or liquidate the assets
and/or business of the Company in whatever manner it believes will maximize the
return to the Preferred Stockholders, or cause the Company to issue additional
securities in a private placement or Public Offering.
If the holders of at least 75% in interest of the Covenant Preferred
Shares, voting as a class, declare that an Event of Noncompliance exists, the
Company may, for a period of 30 days after receipt of such declaration of an
Event of Noncompliance, pay the entire redemption amount (including immediate
payment of all accrued but unpaid dividends and all declared but unpaid
dividends), in cash, of the Preferred Stock. The holders of the Preferred Stock
shall, upon receipt of the full payment of the redemption amount (including
immediate payment of all accrued but unpaid dividends and all declared but
unpaid dividends), transfer and surrender all of their Preferred Stock to the
Company, as instructed, and they shall thereafter no longer have any rights as
stockholders of the Company.
If the holders of at least 75% in interest of the Covenant Preferred
Shares, voting together as a class, shall send written notice of their
redemption request to the Company, the Company shall promptly give each of the
other holders of Covenant Preferred Shares written notice of the redemption (the
"Redemption Notice").
The exercise of the foregoing contractual remedies shall be in addition to
all other legal and equitable remedies available to the Preferred Stockholders.
10. Filing of Reports Under the Exchange Act.
(a) The Company shall give prompt notice to the Preferred
Stockholders of (i) the filing of any registration statement (an "Exchange Act
Registration Statement") pursuant to the Exchange Act, relating to any class of
equity securities of the Company, (ii) the effectiveness of such Exchange Act
Registration Statement, and (iii) the number of shares of such class of equity
securities outstanding as reported in such Exchange Act Registration Statement,
in order to enable the Preferred Stockholders to comply with any reporting
requirements under the
27.
Exchange Act or the Securities Act. Upon the written request of a majority in
interest of the holders of Preferred Shares, the Company shall, at any time
after the Company has registered any shares of Common Stock under the Securities
Act, file an Exchange Act Registration Statement relating to any class of equity
securities of the Company then held by the holders of Preferred Shares or
issuable upon conversion or exercise of any class of debt or equity securities
or warrants or options of the Company then held by the holders of Preferred
Shares, whether or not the class of equity securities with respect to which such
request is made shall be held by the number of persons which would require the
filing of a registration statement under Section 12(g)(1) of the Exchange Act.
(b) If the Company shall have filed an Exchange Act Registration
Statement or a registration statement (including an offering circular under
Regulation A promulgated under the Securities Act) pursuant to the requirements
of the Securities Act, which shall have become effective (and in any event, at
all times following the initial public offering of any of the securities of the
Company), then the Company shall comply with all the reporting requirements of
the Exchange Act (whether or not it shall be required to do so) and shall comply
with all other public information reporting requirements of the Commission as a
condition to the availability of an exemption from the Securities Act for the
sale of any of the Restricted Securities by any holder of Restricted Securities
(including any such exemption pursuant to Rule 144 or Rule 144A thereof, as
amended from time to time, or any successor rule thereto or otherwise). The
Company shall cooperate with each holder of Restricted Securities in supplying
such information as may be necessary for such holder of Restricted Securities to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act (under Rule 144 or Rule 144A thereunder or otherwise)
for the sale of any of the Restricted Securities by any holder of Restricted
Securities.
11. Registration Rights.
11.1 Demand Registration Rights.
(a) Upon written request at any time by holders of Series A
Registrable Securities representing in the aggregate at least 50% of the total
number of Series A Registrable Securities at the time of such request, the
Company shall use its best efforts to effect the registration under the
Securities Act and registration or qualification under all applicable state
securities laws of the Series A Registrable Securities, as requested by the
holders of Series A Registrable Securities, all as provided in the following
provisions of this Section 11. Holders of Series A Registrable Securities may
require the Company to effect no more than one registration under the Securities
Act upon the request of the holders of the Series A Registrable Securities
pursuant to this Section 11.1(a). Any registration which is not declared
effective pursuant to the Securities Act and which does not remain effective as
required by Section 11.5(a) below shall not constitute a registration pursuant
to this Section 11.1(a). A request by a holder of Series A Registrable
Securities to have the Company effect the registration of Series A Registrable
Securities shall not obligate the holder to convert them into Common Stock,
whether or not the registration of the Series A Registrable Securities shall
become effective, unless and until the Series A Registrable Securities are sold
pursuant to the registration statement. The registration rights provided for in
this Section 11.1(a) are in addition to those provided for in Section 11.1(e).
28.
(b) Upon written request at any time by holders of Series B
Registrable Securities representing in the aggregate at least 50% of the total
number of Series B Registrable Securities at the time of such request, the
Company shall use its best efforts to effect the registration under the
Securities Act and registration or qualification under all applicable state
securities laws of the Series B Registrable Securities, as requested by the
holders of Series B Registrable Securities, all as provided in the following
provisions of this Section 11. Holders of Series B Registrable Securities may
require the Company to effect no more than one registration under the Securities
Act upon the request of the holders of the Series B Registrable Securities
pursuant to this Section 11.1(b). Any registration which is not declared
effective pursuant to the Securities Act and which does not remain effective as
required by Section 11.5(a) below shall not constitute a registration pursuant
to this Section 11.1(b). A request by a holder of Series B Registrable
Securities to have the Company effect the registration of Series B Registrable
Securities shall not obligate the holder to convert them into Common Stock,
whether or not the registration of the Series B Registrable Securities shall
become effective, unless and until the Series B Registrable Securities are sold
pursuant to the registration statement. The registration rights provided for in
this Section 11.1(b) are in addition to those provided for in Section 11.1(e).
(c) Upon written request at any time by holders of Series C
Registrable Securities representing in the aggregate at least 50% of the total
number of Series C Registrable Securities at the time of such request, the
Company shall use its best efforts to effect the registration under the
Securities Act and registration or qualification under all applicable state
securities laws of the Series C Registrable Securities, as requested by the
holders of Series C Registrable Securities, all as provided in the following
provisions of this Section 11. Holders of Series C Registrable Securities may
require the Company to effect no more than one registration under the Securities
Act upon the request of the holders of the Series C Registrable Securities
pursuant to this Section 11.1(c). Any registration which is not declared
effective pursuant to the Securities Act and which does not remain effective as
required by Section 11.5(a) below shall not constitute a registration pursuant
to this Section 11.1(c). A request by a holder of Series C Registrable
Securities to have the Company effect the registration of Series C Registrable
Securities shall not obligate the holder to convert them into Common Stock,
whether or not the registration of the Series C Registrable Securities shall
become effective, unless and until the Series C Registrable Securities are sold
pursuant to the registration statement. The registration rights provided for in
this Section 11.1(c) are in addition to those provided for in Section 11.1(e).
(d) Upon written request at any time by holders of Series D
Registrable Securities representing in the aggregate at least 50% of the total
number of Series D Registrable Securities at the time of such request, the
Company shall use its best efforts to effect the registration under the
Securities Act and registration or qualification under all applicable state
securities laws of the Series D Registrable Securities, as requested by the
holders of Series D Registrable Securities, all as provided in the following
provisions of this Section 11. Holders of Series D Registrable Securities may
require the Company to effect no more than one registration under the Securities
Act upon the request of the holders of the Series D Registrable Securities
pursuant to this Section 11.1(d). Any registration which is not declared
effective pursuant to the Securities Act and which does not remain effective as
required by Section 11.5(a) below shall not constitute a registration pursuant
to this Section 11.1(d). A request by a holder of Series D Registrable
Securities to have the Company effect the registration of Series D Registrable
Securities shall not obligate the holder to convert them into Common Stock,
whether or not the
29.
registration of the Series D Registrable Securities shall become effective,
unless and until the Series D Registrable Securities are sold pursuant to the
registration statement. The registration rights provided for in this Section
11.1(d) are in addition to those provided for in Section 11.1(e)
(e) Upon written request at any time by holders of Registrable
Securities representing in the aggregate at least 50% of the total number of
Registrable Securities at the time of such request, the Company shall use its
best efforts to effect the registration under the Securities Act and
registration or qualification under all applicable state securities laws of the
Registrable Securities, as requested by the holders of Registrable Securities,
all as provided in the following provisions of this Section 11. Holders of
Registrable Securities may require the Company to effect no more than two
registrations under the Securities Act, in the aggregate, upon the request of
the holders of Registrable Securities pursuant to this Section 11.1(e). Any
registration which is not declared effective pursuant to the Securities Act and
which does not remain effective as required by Section 11.5(a) below shall not
constitute one of the two registrations which the Company is obligated to effect
pursuant to this Section 11.1(e). A request by a holder of Shares to have the
Company effect the registration of Registrable Securities shall not obligate the
holder of Shares to convert them into Common Stock, whether or not the
registration of the Registrable Securities shall become effective, unless and
until the Registrable Securities are sold pursuant to the registration
statement. The registration rights provided for in this Section 11.1(e) are in
addition to those provided for in Sections 11.1(a), (b), (c) and (d).
11.2 Registration Requested by Holders. Whenever the Company shall be
requested, pursuant to Section 11.1 hereof, to effect the registration of any of
the Registrable Securities under the Securities Act (a "Request for
Registration"), the Company shall promptly give notice of such proposed
registration to all holders of Registrable Securities and thereupon shall, as
expeditiously as possible, use its best efforts to effect the registration under
the Securities Act and under all applicable state securities laws of:
(a) all Registrable Securities which the Company has been requested
to register pursuant to the Request for Registration; and
(b) all other Registrable Securities which holders of Registrable
Securities have, within thirty (30) days after the Company has given such
notice, requested the Company to register;
(c) all to the extent requisite to permit the sale or other
disposition by the holders of the Registrable Securities so to be registered. If
the holders of Registrable Securities who requested the registration of
Registrable Securities engage one or more underwriters to distribute such
Registrable Securities, the Company shall permit the managing underwriter(s) and
counsel to the underwriter(s) at the Company's expense to visit and inspect any
of the properties of the Company, examine its books, take copies and extracts
therefrom and discuss the affairs, finances and accounts of the Company with its
officers, employees and public accountants (and by this provision the Company
hereby authorizes said accountants to discuss with such underwriter(s) and such
counsel its affairs, finances and accounts), at reasonable times and upon
reasonable notice, with or without a representative of the Company being
present. The Company shall have the right to include in any registration of
Registrable Securities required
30.
pursuant to this Section 11.2 additional shares of its Common Stock to be issued
by the Company ("Company Securities") or shares of Common Stock ("Third Party
Registrable Securities") that have the benefit of duly exercised registration
rights contractually binding on the Company, provided that if any Registrable
Securities to be so registered for sale are to be distributed by or through
underwriters, then all Registrable Securities to be so registered for sale and
Company Securities and Third Party Registrable Securities, if any, shall be
included in such underwriting on the same terms and provided, however, that if,
in the written opinion of the managing underwriter(s), the total amount of such
securities to be registered will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without otherwise materially and adversely
affecting the entire offering, then the Company shall exclude from such
underwriting (x) first, the maximum number of Company Securities and Third Party
Registrable Securities as is necessary in the opinion of the managing
underwriter(s) to reduce the size of the offering and (y) then, the minimum
number of Registrable Securities, pro rata to the extent practicable, on the
basis of the number of Registrable Securities requested to be registered among
the participating holders of Registrable Securities, as is necessary to reduce
the size of the offering. A registration that covers both Registrable
Securities, Company Securities and Third Party Registrable Securities shall be
deemed to have been requested pursuant to a Request for Registration pursuant to
the applicable subsection Section 11.1 if the Registrable Securities of the type
covered by such subsection constitute at least 50% of the total offering on the
effective date of the registration statement but shall not be deemed to be one
of the registrations referred to in the applicable subsection of Section 11.1
hereof if Registrable Securities of the type covered by such subsection
constitute less than 50% of the total offering on the effective date of the
registration statement.
11.3 "Piggyback" Registrations.
(a) If the Company at any time proposes other than in accordance with
a Request for Registration to register any of its securities under the
Securities Act on Form X-0, X-0 or S-3 or on any other form upon which the
Registrable Securities may be registered for sale to the general public, whether
for its own account or for the account of others, the Company will at each such
time give notice to all holders of Registrable Securities of such proposal at
least thirty (30) days before the Company files a registration statement. Upon
the request of any holder of Registrable Securities given within twenty (20)
days after the Company has given such notice, the Company will cause the
Registrable Securities which the Company has been requested to register by such
holder of Registrable Securities to be registered under the Securities Act, all
to the extent requisite to permit the sale or other disposition by such holder
of Registrable Securities of the Registrable Securities so registered.
(b) If securities are to be registered for sale under a registration
not initiated by a Request for Registration and are to be distributed by or
through a firm of underwriters, then any Registrable Securities which the
Company has been requested to register pursuant to clause (a) of this Section
11.3 shall also be included in such underwriting on the same terms as other
securities of the same class as the Registrable Securities included in such
underwriting, provided that if, in the written opinion of the managing
underwriter(s), the total amount of such securities to be so registered, when
added to the Registrable Securities and the securities held by holders of
securities other than the Registrable Securities, if any, will exceed the
maximum amount of the
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Company's securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without otherwise materially and
adversely affecting the entire offering, then (subject to clause (d) of this
Section 11.3) the Company shall exclude from such underwriting (x) first, the
maximum number of securities, if any, other than Registrable Securities, being
sold for the account of persons other than the Company as is necessary to reduce
the size of the offering and (y) second, the minimum number of Registrable
Securities, if any, as is necessary in the opinion of the managing
underwriter(s) to reduce the size of the offering (any such reduction in
Registrable Securities to be made pro rata to the extent practicable on the
basis of the number of Registrable Securities requested to be registered among
the participating holders of Registrable Securities).
(c) If securities are to be registered for sale under a registration
not initiated by a Request for Registration and are to be distributed for the
account of holders of Third Party Registrable Securities or holders (other than
the Company) of other securities of the Company other than Registrable
Securities by or through a firm of underwriters of recognized standing under
underwriting terms appropriate for such transaction, then any Registrable
Securities which the Company has been requested to register pursuant to clause
(a) of this Section 11.3 shall also be included in such underwriting on the same
terms as other securities included in such underwriting, provided that if, in
the written opinion of the managing underwriter or underwriters, the total
amount of such securities to be so registered, when added to such Registrable
Securities, will exceed the maximum amount of the Company's securities which can
be marketed (i) at a price reasonably related to their then current market
value, or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall exclude from such underwriting the number of
Registrable Securities and other securities, pro rata to the extent practicable,
on the basis of the number of securities requested to be registered, as is
necessary in the opinion of the managing underwriter(s) to reduce the size of
the offering.
(d) Notwithstanding Section 11.3 (a) and (b), the Company shall not
exclude more Registrable Securities from registration than is necessary to
reduce the number of Registrable Securities to be registered to one-fifth of the
total number of securities to be registered, provided, however, that the Company
may exclude all Registrable Securities from registration in connection with the
Company's Initial Public Offering in its sole discretion, whether or not such
exclusion is required in the opinion of the managing underwriter(s).
(e) Notwithstanding anything to the contrary contained herein, the
provisions of clause (y) of Section 11.3(b) and the provisions of Section
11.3(d) limiting the amount of the Registrable Securities requested to be
registered that may be excluded from such registration may be waived by the
affirmative vote of holders of 50% of the Registrable Securities requested to be
registered. If, by reason of the provisions of Section 11.3(b) or Section
11.3(d), in any public offering other than the Company's Initial Public
Offering, more than 10% of the Registrable Securities requested to be registered
are excluded from such registration statement, then, in each such case, the
holders of the Registrable Securities shall be entitled to an additional demand
registration pursuant to Section 11.1(e) and shall be entitled to an additional
registration pursuant to Section 11.1 at the Company's expense, without
reimbursement, in accordance with Section 11.6.
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11.4 Registrations on S-3. At such time as the Company shall have qualified
for the use of Form S-3 (or any successor form promulgated under the Securities
Act), each holder of Registrable Securities shall have the right to request in
writing an unlimited number of registrations on Form S-3 (except that the
holders of Series E Registrable Securities shall only have the right to request
in writing three (3) registrations on Form S-3), provided that the Registrable
Securities proposed to be included in each such registration statement have a
proposed aggregate offering price of at least $500,000 and that no holder shall
have a right to request that Registrable Securities be registered on Form S-3
during any calendar year if Registrable Securities of such holder were included
in a registration statement on Form S-3 pursuant to a request made by such
holder during such calendar year. Each such request by a holder shall: (a)
specify the number of Registrable Securities which the holder intends to sell or
dispose of, and (b) state the intended method by which the holder intends to
sell or dispose of such Registrable Securities. Upon receipt of a request
pursuant to this Section 11.4, the Company shall use its best efforts to effect
such registration or registrations on Form S-3.
11.5 Company's Obligations in Registration. Whenever the Company is
obligated to effect the registration of any Registrable Securities under the
Securities Act, as expeditiously as possible the Company will use its best
efforts to:
(a) prepare and file with the Commission, a registration statement
with respect to such Registrable Securities and cause such registration
statement to become and remain effective, provided, that the Company shall not
be required to keep such registration statement effective, or to prepare and
file any amendments or supplements thereto, after the later of (i) the last
business day of the ninth month following the date on which such registration
statement becomes effective under the Securities Act or such longer period
during which the holders of the Registrable Securities registered thereunder
shall pay all expenses reasonably incurred to keep such registration statement
effective with respect to any of the Registrable Securities so registered or
(ii) the date on which all of the Registrable Securities registered pursuant to
such registration statement have been sold; provided further that in the event
the Commission shall have declared any other registration statement with respect
to an offering of securities of the Company to be effective within four months
prior to the Company's receiving a Request for Registration, the Company may
delay the effective date of the registration statement filed in response to the
Request for Registration until six months after the effective date of the
previous registration statement;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration statement whenever
the holders of Registrable Securities covered by such registration statement
shall desire to dispose of the same;
(c) furnish to the holders of Registrable Securities for whom such
Registrable Securities are registered or are to be registered such number of
copies of a printed prospectus, including a preliminary prospectus and any
amendments or supplements thereto, in conformity with the requirements of the
Securities Act, and such other documents as such holders of
33.
Registrable Securities may reasonably request in order to facilitate the
disposition of such Registrable Securities;
(d) notify each holder of Registrable Securities, at any time when a
prospectus relating to the Registrable Securities covered by such registration
statement is required to be delivered under the Securities Act, of the Company's
becoming aware that the prospectus in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and at the request of any holder of Registrable
Securities, prepare and furnish to such holder any reasonable number of copies
of any supplement to or amendment of such prospectus necessary so that, as
thereafter delivered to any purchaser of the Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) register or qualify the Registrable Securities covered by such
registration statement under such securities or blue sky laws of such
jurisdictions as the holders of Registrable Securities for whom such Registrable
Securities are registered or are to be registered shall reasonably request, and
do any and all other reasonable acts and things which may be necessary or
advisable to enable such holders of Registrable Securities to consummate the
disposition in such jurisdictions of such Registrable Securities; provided,
however, that the Company shall not be required to consent to general service of
process for all purposes in any jurisdiction where it is not then subject to
process, qualify to do business as a foreign corporation where it would not be
otherwise required to qualify or submit to liability for state or local taxes
where it is not otherwise liable for such taxes;
(f) furnish to the holders of Registrable Securities for whom such
Registrable Securities are registered or are to be registered an agreement
satisfactory in form and substance to them by the Company and each of its
officers, directors and holders of 5% or more of any class of capital stock,
that during the thirty (30) days before and the 180 days after the effective
date of any underwritten public offering, the Company and such officers,
directors and 5% security holders shall not offer, sell, contract to sell or
otherwise dispose of any shares of capital stock or securities convertible into
capital stock, except as part of such underwritten public offering and except
that gifts may be made to relatives or their legal representatives upon the
condition that the donees agree in writing to be bound by the restrictions
contained in this clause (f) of Section 11.5;
(g) furnish to the holders of Registrable Securities for whom such
Registrable Securities are registered or are to be registered at the closing of
the sale of such Registrable Securities by such holders of Registrable
Securities a signed copy of (i) an opinion or opinions of counsel for the
Company acceptable to such holders of Registrable Securities in form and
substance as is customarily given to underwriters in public offerings, and (ii)
a "cold comfort" letter from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accounts to underwriters in an underwritten public offering, to the
extent that such "cold comfort" letters are then available to selling
stockholders;
34.
(h) otherwise use its efforts to comply with all applicable rules and
regulations of the Commission, and, if required, make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(i) use its best efforts to cause all Registrable Securities covered
by such registration statement to be listed on the principal securities exchange
on which similar equity securities issued by the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange or, if similar equity securities are not listed, to include the
Registrable Securities on the National Association of Securities Dealers
Automated Quotation System;
(j) in connection with any underwritten offering, enter into an
underwriting agreement with the underwriter(s) of such offering in the form
customary for such underwriter(s) for similar offerings, including such
representations and warranties by the Company, provisions regarding the delivery
of opinions of counsel for the Company and accountants' letters, provisions
regarding indemnification and contribution, and such other terms and conditions
as are at the time customarily contained in such underwriter's underwriting
agreements for similar offerings (and, at the request of any holder of
Registrable Securities that are to be distributed by such underwriter(s), any or
all (as requested by such holder) of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriter(s) shall also be made to and for the benefit of such holder); and
(k) permit any holder of Registrable Securities who, in the sole
judgment, exercised in good faith, of such holder, might be deemed to be a
controlling person of the Company, to participate in the preparation of such
registration statement and to require the insertion therein of material,
furnished to the Company in writing, that in the judgment of such holder, as
aforesaid, should be included, except to the extent that the Company shall
reasonably object to the inclusion of such material.
11.6 Payment of Registration Expenses. The costs and expenses of all
registrations and qualifications under the Securities Act, and of all other
actions which the Company is required to take or effect pursuant to this Section
11, shall be paid by the Company or holders of Third Party Registrable
Securities or other securities of the Company other than Registrable Securities,
if any (including, without limitation, all registration and filing fees,
printing expenses, expenses incident to filings with the National Association of
Securities Dealers, Inc., auditing costs and expenses, and the reasonable fees
and disbursements of counsel for the Company and one special counsel for the
holders of Registrable Securities) and the holders of Registrable Securities
shall pay only the underwriting discounts and commissions and transfer taxes, if
any, relating to the Registrable Securities sold by them; provided that the
Company shall pay without reimbursement such costs and expenses of (i) no more
than two registrations which become effective under the Securities Act as a
result of Requests for Registration pursuant to Section 11.1 and (ii) no more
than three registrations which become effective under the Securities Act as a
result of registrations on Form S-3 pursuant to the request of the holders of
Series E Registrable Securities under Section 11.4, and provided, further, that
in the event more
35.
than two registrations as described in clause (i) above or three registrations
as described in clause (ii) above, as applicable, become effective under the
Securities Act, the holders of Registrable Securities and other securities, if
any, included in such registrations shall reimburse the Company pro rata for all
registration and filing fees, reasonable printing expenses, reasonable auditing
costs and expenses (excluding costs and expenses of the Company's annual audit)
and the reasonable fees and expenses of counsel for the Company and the selling
stockholders and such reimbursement shall be made to the Company within five (5)
business days after the effective date of such a registration statement.
11.7 Information from Holders of Registrable Securities. Notices and
requests delivered by holders of Registrable Securities to the Company pursuant
to this Section 11 shall contain such information regarding the Registrable
Securities to be so registered and the intended method of disposition thereof as
shall reasonably be required in connection with the action to be taken. Each
holder of Registrable Securities hereby agrees to provide the Company, or its
agents or designees, with all information reasonably required in connection with
the registration under the Securities Act or any applicable state securities law
of any Registrable Securities.
11.8 Indemnification. In the event of any registration under the
Securities Act of any Registrable Securities pursuant to this Section 11, the
Company shall indemnify and hold harmless each holder of Registrable Securities
disposing of such Registrable Securities and each other person, if any, which
controls (within the meaning of the Securities Act) such holder of Registrable
Securities and each other person (including underwriters) who participates in
the offering of such Registrable Securities, against any losses, claims, damages
or liabilities, joint or several, to which such holder of Registrable Securities
or controlling person or participating person may become subject under the
Securities Act or otherwise, to the extent that such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in any registration statement under which such
Registrable Securities were registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) or necessary to make the statements therein not
misleading, and will reimburse such holder of Registrable Securities and each
such controlling person or participating person for any legal or any other
expenses reasonably incurred by such holder of Registrable Securities or such
controlling person or participating person in connection with investigating or
defending any such loss, claim, damage, liability or proceeding, provided, that
the Company will 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 an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary or final prospectus or amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such holder of Registrable
Securities or such controlling or participating person, as the case may be,
specifically for use in the preparation thereof. Each such holder of Registrable
Securities will, if requested by the Company prior to the initial filing of any
such registration statement, agree in writing, severally but not jointly, to
indemnify and hold harmless the Company and each person which controls (within
the meaning of the Securities Act) the Company and each other person (including
underwriters) who participates in the offering of such
36.
Registrable Securities against all losses, claims, damages and liabilities to
which the Company or such controlling person or participating person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement of
any material fact contained, on the effective date thereof, in any registration
statement under which such Registrable Securities were registered under the
Securities Act, or in any preliminary prospectus or final prospectus contained
therein, or in any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
a prospectus, in the light of the circumstances under which they were made) not
misleading, to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such statement or omission made in such registration
statement, preliminary or final prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such holder of Registrable Securities
and specifically stated to be for use in the preparation thereof. Each
indemnified party shall cooperate with each indemnifying party in defending any
loss, claim, damage, liability or proceeding.
(a) Indemnification similar to that specified in the preceding clause of
this Section 11.8 (with appropriate modifications) shall be given by the Company
and, at the Company's request, each holder of Registrable Securities with
respect to any registration or other qualification of securities under any state
securities and "blue sky" laws.
(b) If the indemnification provided for in clauses (a) and (b) of this
Section 11.8 is unavailable or insufficient to hold harmless an indemnified
party, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party referred to in clauses (a) and (b) of this
Section 11.8 in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and the indemnified party on the other
hand in connection with statements or omissions which resulted in losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statements or omissions. The parties agree that
it would not be just and equitable if contributions pursuant to this clause were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this clause. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this clause shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any loss, claim, damage, liability or proceeding which is the
subject of this clause. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(c) Each indemnified party shall notify the indemnifying party in writing
within ten (10) days after its receipt of notice of the commencement of any
action against it in respect of which indemnity may be sought from the
indemnifying party pursuant to this
37.
Section 11.8. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party, the indemnifying party will be
entitled to participate in the defense with counsel satisfactory to such
indemnified party. Each indemnified party shall cooperate with each indemnifying
party in defending any loss, claim, damage, liability or proceeding.
(d) Notwithstanding clauses (a) through (c) of this Section 11.8, the
aggregate amount which may be recovered by the Company, controlling persons of
the Company or underwriters from each holder of Registrable Securities pursuant
to the indemnification and contribution provided for in this Section 11.8 shall
be limited to the total net proceeds for which the Registrable Securities were
sold by such holder of Registrable Securities.
(e) Notwithstanding any of the foregoing, if, in connection with an
underwritten public offering of Registrable Securities, the Company, the selling
stockholders and the underwriter(s) enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification and contribution among the parties, the indemnification and
contribution provisions of this Section 11.8 shall be deemed inoperative for
purposes of such offering.
12. Small Business Matters.
12.1 Generally: Certain SBIC Covenants. CIT/VC is a Small Business
Investment Company ("SBIC") licensed by the United States Small Business
Administration ("SBA"). In order for CIT/VC to acquire and hold the Series B
Preferred Stock, it obtained from the Company certain representations and rights
as set forth below. As a material inducement to CIT/VC to purchase the Series B
Preferred Stock pursuant to the Series B Stock Purchase Agreement, the Company
made, and hereby makes the following representations and warranties and agrees
to comply with the following covenants:
(a) Assuming that CIT/VC's investment in the Company satisfies the
requirements of 13 C.F.R. (S)107.865(d), and has complied with the requirements
of 13 C.F.R. (S)107.865(e), the Company, together with its "affiliates" (as that
term is defined in 13 C.F.R. (S)121.103), is a "small business concern" within
the meaning of the Small Business Investment Act of 1958, as amended ("SBIA"),
and the regulations thereunder, including Title 13, Code of Federal Regulations,
(S)121.301(c). The information set forth in the SBA Forms 480, 652 and Part A of
Form 1031 regarding the Company and its affiliates, when it was delivered to
CIT/VC at the closing of the sale of the Series B Preferred Stock under the
Series B Stock Purchase Agreement, was accurate and complete.
(b) The proceeds from the sale of the Series B Preferred Stock were
or will be used by the Company to (1) finance working capital and other
corporate needs and (2) pay expenses related to the transactions contemplated by
the Series B Stock Purchase Agreement. No portion of such proceeds (i) were or
will be used to provide capital to a corporation licensed under the SBIA, (ii)
were or will be used to acquire farm land, (iii) were or will be used to fund
production of a single item or defined limited number of items, generally over a
defined production period, and such production constituted or will constitute
the majority of the activities of the Company and its Subsidiaries (examples
include motion pictures and electric generating
38.
plants), or (iv) were or will be used for any purpose contrary to the public
interest (including, but not limited to, activities which are in violation of
law) or inconsistent with free competitive enterprise, in each case, within the
meaning of 13 C.F.R. (S)107.720.
(c) Neither the Company's nor any of its Subsidiaries' primary
business activity involves, directly or indirectly, providing funds to others,
the purchase or discounting of debt obligations, factoring or long-term leasing
of equipment with no provision for maintenance or repair, and neither the
Company nor any of its Subsidiaries is classified under Major Group 65 (Real
Estate) of the SIC Manual. The assets of the business of the Company and its
Subsidiaries (the "Business") will not be reduced or consumed, generally without
replacement, as the life of the Business progresses, and the nature of the
business does not require that a stream of cash payments be made to the
Business' financing sources, on a basis associated with the continuing sale of
assets (examples of such businesses would include real estate development
projects and oil and gas xxxxx). (See 13 C.F.R. 107.720)
(d) The proceeds from the sale of the Series B Preferred Stock were
not or will not be used substantially for a foreign operation. This subsection
(d) does not prohibit such proceeds from being used to acquire foreign materials
and equipment or foreign property rights for use or sale in the United States.
12.2 Regulatory Compliance Cooperation.
(a) CIT/VC agrees to use commercially reasonable best efforts to
avoid the occurrence of a Regulatory Problem. In the event that CIT/VC
determines that it has a Regulatory Problem, the Company agrees to use
commercially reasonable efforts to take all such actions as are reasonably
requested by CIT/VC in order (A) to effectuate and facilitate any transfer by
CIT/VC of any Securities of the Company then held by CIT/VC to any Person
designated by CIT/VC (subject, however, to compliance with Section 3 of this
Agreement), (B) to permit CIT/VC (or any Affiliate of CIT/VC) to exchange all or
any portion of the voting Securities of the Company then held by such Person on
a share-for-share basis for shares of a class of non-voting Securities of the
Company, which non-voting Securities shall be identical in all respects to such
voting Securities, except that such new Securities shall be non-voting and shall
be convertible into voting Securities on such terms as are requested by CIT/VC
in light of regulatory considerations then prevailing, and (C) to continue and
preserve the respective allocation of the voting interests with respect to the
Company arising out of CIT/VC's ownership of voting Securities of the Company
and/or provided for in this Agreement before the transfers and amendments
referred to above (including entering into such additional agreements as are
requested by CIT/VC to permit any Person(s) designated by CIT/VC to exercise any
voting power which is relinquished by CIT/VC upon any exchange of voting
Securities for nonvoting Securities of the Company); and the Company shall enter
into such additional agreements, adopt such amendments to this Agreement, the
Company's Charter and the Company's By-laws and other relevant agreements and
taking such additional actions, in each case as are reasonably requested by
CIT/VC in order to effectuate the intent of the foregoing. If CIT/VC elects to
transfer Securities of the Company to a Regulated Holder in order to avoid a
Regulatory Problem, the Company shall enter into such agreements with such
Regulated Holder as it may reasonably request in order to assist such Regulated
Holder in complying with applicable laws, and regulations to which it is
subject. Such agreements may include restrictions on the
39.
redemption, repurchase or retirement of Securities of the Company that would
result or be reasonably expected to result in such Regulated Holder holding more
voting securities or total securities (equity and debt) than it is permitted to
hold under such laws and regulations.
(b) In the event CIT/VC has the right to acquire any of the Company's
Securities from the Company or any other Person (as the result of Sections 3 or
4 of this Agreement or otherwise), at CIT/VC's request the Company will offer to
sell to CIT/VC non-voting Securities (or, if the Company is not the proposed
seller, will arrange for the exchange of any voting securities for non-voting
securities immediately prior to or simultaneous with such sale) on the same
terms as would have existed had CIT/VC acquired the Securities so offered and
immediately requested their exchange for non-voting Securities pursuant to
Section 12.1(a) above.
(c) In the event that any Subsidiary of the Company ever offers to
sell any of its Securities to CIT/VC, then the Company will cause such
Subsidiary to enter into agreements with CIT/VC on substantially similar terms
as this Section 12.
12.3 Information Rights and Related Covenants.
(a) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall provide to CIT/VC a
written assessment, in form and substance satisfactory to CIT/VC, of the
economic impact of CIT/VC's financing under the Series B Stock Purchase
Agreement, specifying the full-time equivalent jobs created or retained, the
impact of the financing on the consolidated revenues and profits of the Business
and on taxes paid by the Business and its employees (See 13 C.F.R. 107.630(e)).
(b) Upon the request of CIT/VC (or any Affiliate of CIT/VC to whom
CIT/VC has Transferred any Securities of the Company), the Company will (A)
provide to such Person such financial statements and other information as such
Person may from time to time reasonably request for the purpose of assessing the
Company's financial condition and (B) furnish to such Person all information
reasonably requested by it in order for it to prepare and file SBA Form 468 and
any other information reasonably requested or required by the SBA or any
successor entity thereto.
(c) The Company will at all times comply with the non-discrimination
requirements of 13 C.F.R., Parts 112, 113 and 117.
12.4 Remedies. The Company understands that its violation of this Agreement
may result in CIT/VC being required by the SBA to sell the Series B Preferred
Stock, and such sale may be at depressed prices due to the circumstances and
timing of the sale. Therefore, in addition to all other remedies available to
CIT/VC for the Company's violation of this Agreement, the Company agrees that
CIT/VC shall be entitled to seek specific enforcement or other equitable relief
to prevent a violation by the Company of the terms of this Agreement, and the
Company waives any requirement that CIT/VC posts any bond as a condition to
seeking or obtaining equitable relief. CIT/VC acknowledges and agrees that the
remedies available to CIT/VC for the Company's violation of this Agreement shall
be limited to whatever equitable relief may be available (such as specific
performance, injunctive relief and rescission), damages
40.
resulting from CIT/VC being required to divest the Series B Preferred Stock and
costs of enforcement. CIT/VC expressly waives any claims for damages resulting
from any loss of, or restrictions imposed upon the use of, its SBIC license as a
result of the Company's breach of Section 12 of this Agreement.
13. Duration of Agreement. The rights and obligations of each Stockholder,
except the rights and obligations contained in Sections 3.1, 3.2, 3.3(c), 10, 11
and 12 hereof, and the covenants hereunder to that Stockholder shall terminate
as to each Stockholder upon the closing of the Initial Public Offering by the
Company. The obligations contained in Sections 8, 11 and 12 shall survive
indefinitely until, by their respective terms, they are no longer applicable.
14. Additional Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement, the Series A Stock Purchase Agreement,
the Series B Stock Purchase Agreement, the Series C Stock Purchase Agreement,
the Series D Stock Purchase Agreement and/or the Series E Stock Purchase
Agreement shall have been breached by any party hereto, the party or parties
entitled to the benefit of such covenants or agreements may proceed to protect
and enforce their rights either by proceeding in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach; and/or an action for specific performance of any such covenant or
agreement contained in this Agreement, the Series A Stock Purchase Agreement,
the Series B Stock Purchase Agreement, the Series C Stock Purchase Agreement,
the Series D Stock Purchase Agreement and/or the Series E Stock Purchase
Agreement and/or a temporary or permanent injunction, in any case without
showing any actual damage and without establishing, in the case of an equitable
proceeding, that the remedy at law is inadequate. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other right, power or remedy which such parties may have under any other
agreement or law. No single or partial assertion or exercise of any right, power
or remedy of a party hereunder shall preclude any other or further assertion or
exercise thereof. Any purported Transfer in violation of the provisions of this
Agreement shall be void ab initio.
15. Successors and Assigns; Limitation on Assignment. Except as otherwise
expressly provided herein, this Agreement shall bind and inure to the benefit of
the Company, each of the Stockholders and the respective successors or heirs and
personal representatives and permitted assigns of the Company and each of the
Stockholders. Each Stockholder agrees further that, it shall not sell any Shares
to any Person not a party to this Agreement unless such Person contemporaneously
with such sale executes and delivers to the Company an agreement to be bound by
the Stockholders' obligations hereunder, whereupon such Person shall have the
same obligations as the Preferred Stockholders under this Agreement. The terms,
representations, warranties and covenants contained in Sections 6 and 7 hereof
shall be binding upon and shall inure to the benefit of and be enforceable by,
the Preferred Stockholders and their respective successors, transferees and
assignees, provided, that the rights granted to the Preferred Stockholders by
Sections 6.3 and 6.4 may not be transferred or assigned to, and shall not inure
to the benefit of, a successor, transferee or assignee of the Preferred
Stockholders which is engaged in any business which directly competes with the
Company in any line of business engaged in, or planned to be engaged in, by the
Company. It is understood and agreed among the parties hereto that this
Agreement and the representations, warranties, and covenants made herein are
made expressly and solely for the benefit of the other party or parties hereto
(or their respective
41.
successors or permitted assigns), and that no other person shall be entitled or
be deemed to be a third-party beneficiary of any party's rights under this
Agreement.
16. Entire Agreement. This Agreement, the Series A Stock Purchase Agreement,
the Series B Stock Purchase Agreement, the Series C Stock Purchase Agreement,
the Series D Stock Purchase Agreement, the Series E Stock Purchase Agreement,
the Charter and the By-Laws of the Company and each of the other documents
delivered in connection with the sale by the Company of its Series E Preferred
Stock pursuant to the Series E Stock Purchase Agreement contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior stockholders' agreements, including the Prior Stockholders'
Agreement and the Original Stockholders' Agreement, and all other prior and
contemporaneous arrangements or understandings with respect thereto. The parties
hereto, including the Company and the holders of at least 75% in interest of the
outstanding shares of Series A, B, C and D Preferred Stock, voting together as a
class, hereby agree that all rights granted and covenants made under the Prior
Stockholders' Agreement are hereby waived, released and terminated in their
entirety and shall have no further force or effect whatsoever. The rights and
covenants provided herein set forth the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
17. Notices. All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person, duly sent by first class registered or certified
mail, postage prepaid, or telecopied or telexed, addressed or telecopied to such
party at the address or telecopier number set forth below, or such other address
or telecopier number as may hereafter be designated in writing by the addressee
in a notice complying as to delivery with the terms of this Section 17;
provided, however, that if the Stockholder is foreign, notice shall be sent by
both air courier, and telecopied or telexed to such Stockholder:
If to the Company:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx,
Xxxxx 0000
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: X. Xxxxxxxxxx Xxxxxxxx, Esq.
If to any other party to this Stockholders' Agreement, to the address
listed for such party on Schedule 17 hereto, or for persons who become party to
this Stockholders' Agreement after
42.
its initial execution, to the address listed for such person on the signature
page to this Stockholders' Agreement.
All such notices, requests, consents and communications shall be deemed to
have been given (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of telex or telecopier transmission, on the date on
which the sender receives machine confirmation of such transmission, and (c) in
the case of mailing, on the fifth business day following the date of such
mailing.
18. Changes. The terms and provisions of Sections 5, 6 and 7 of this Agreement
may not be modified or amended, or any of the provisions thereof waived,
temporarily or permanently, except pursuant to the written consent of (a) the
Company, and (b) the holders of at least 75% in interest of the Covenant
Preferred Shares, voting together as a class. Except as expressly set forth in
the preceding sentence and Section 11.3(e), the terms and provisions of this
Agreement may not be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, except pursuant to the written consent of
(i) the Company, and (ii) the holders of at least 75% in interest of the
Preferred Shares, voting together as a class.
19. Counterparts. This Agreement may be executed in any number of counterparts,
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
20. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
21. Nouns and Pronouns. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of names and pronouns shall include the plural and vice-versa.
22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability. Such prohibition or
unenforceability in any one jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
23. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
24. New York Life Insurance Company Compliance Obligations. Nothing in this
Agreement shall diminish the continuing obligations of New York Life Insurance
Company to comply with applicable requirements of law that it maintain
responsibility for the disposition of, and control over its admitted assets,
investments and property, including (without limiting the generality of the
foregoing) the provisions of Section 1411(b) of the New York Insurance Law, as
amended, and as hereinafter from time to time in effect.
43.
In Witness Whereof, the parties hereto have executed this Agreement on the
date first above written, in the case of corporations by their respective
officers thereunto duly authorized.
Diversa Corporation
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
---------------------------
Title: Chief Executive Officer
--------------------------
Stockholders:
HealthCare Ventures III, L.P.
By: HealthCare Partners III, L.P.
its: General Partner
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
---------------------------
Title: General Partner
--------------------------
HealthCare Ventures IV, L.P.
By: HealthCare Partners IV, L.P.
its: General Partner
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
---------------------------
Title: General Partner
--------------------------
HealthCare Ventures V, L.P.
By: HealthCare Partners V, L.P.
its: General Partner
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
---------------------------
Title: General Partner
--------------------------
44.
APA Excelsior IV/Offshore, L.P.
By: Patricof & Co. Ventures, Inc.
its: Investment Advisor
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------
Title: Co. Chairman
--------------------------
APA Excelsior IV, L.P.
By: APA Excelsior IV Partners, L.P.
its: General Partner
By: Patricof & Co. Managers, Inc.
its: General Partner
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------
Title: President
--------------------------
The P/A Fund, L.P.
By: APA Pennsylvania Partners II, L.P.
its: General Partner
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------
Title: General Partner
--------------------------
Patricof Private Investment Club, L.P.
By: Patricof & Co. Managers, Inc.
its: General Partner
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------
Title: President
--------------------------
45.
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxxx
----------------------------------
Aetna Life Insurance Company
By: /s/ [ILLEGIBLE]
-------------------------------
Name:_____________________________
Title: Vice President
----------------------------
Axiom Venture Partners, L.P.
By:_______________________________
Name:_____________________________
Title:____________________________
Xxxxxxx Xxxx
/s/ Xxxxxxx Xxxx
----------------------------------
Benefit Capital Management
Corporation
By: /s/ Xxx Xxxxxxx
-------------------------------
Name: Xxx Xxxxxxx
-----------------------------
Title: Senior Vice President & CFO
----------------------------
Xxxxxxxx X. Xxxxxxxxx
/s/ Xxxxxxxx X. Xxxxxxxxx
----------------------------------
Xxx X. Xxxxx
/s/ Xxx X. Xxxxx
----------------------------------
46.
The Cit Group/Venture Capital, Inc.
By: /s/ [ILLEGIBLE]
-------------------------------
Name: [ILLEGIBLE]
-----------------------------
Title: [ILLEGIBLE]
----------------------------
CSK Venture Capital Co., Ltd
By:_______________________________
Name:_____________________________
Title:____________________________
The Xxxxxx X. Xxxxxxxx Trust
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx, Trustee
Finfeeds International Limited
By:_______________________________
Name:_____________________________
Title:____________________________
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
GC&H Investments
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------
Title: Executive Partner
---------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
---------------------------------
47.
Xxxxxx Trust
By: Xxxxx X. Ciccor
------------------------------
Name: Xxxxx X. Ciccor
----------------------------
Title: Trustee
---------------------------
Xxxxx Xxxxxxxxxxx
/s/ Xxxxx Xxxxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Mentus Money Purchase Plan
By: /s/ Xxx X. Ionnuzzi
-------------------------------
Name: Xxx X. Ionnuzzi
-----------------------------
Title: President
----------------------------
For: New York Life Insurance
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------
Title: Director, Venture Capital
----------------------------
Novartis Agribusiness
Biotechnology Research, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------
Title: Co - President
----------------------------
48.
Rho Management Trust II
By: /s/ Xxxxx Klakanis
------------------------------
Name: Xxxxx Klakanis
----------------------------
Title: C.F.O.
---------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxx
---------------------------------
Xxx X. Short
/s/ Xxx X. Short
---------------------------------
R. Xxxxxxx Xxxxx
/s/ R. Xxxxxxx Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
---------------------------------
State of Michigan
By:______________________________
Name:____________________________
Title:___________________________
Xxxxxxxx X. Xxx Xxxxx
/s/ Xxxxxxxx X. Xxx Xxxxx
---------------------------------
49.
SCHEDULE 17
NOTICES
If to HealthCare Ventures III, L.P., HealthCare Ventures IV, L.P. and HealthCare
Ventures, V, L.P.:
Twin Towers at Metro Park
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
with a copy to:
Pepper, Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
If to APA Excelsior IV, L.P.; APA Excelsior IV/Offshore, L.P.; The P/A Fund,
L.P.; or Patricof Private Investment Club, L.P.:
Patricof & Co. Ventures, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx
with a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Xx. Xxxxx Xxxxxx:
00 Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
If to Aetna Life Insurance Company:
Aetna Life Insurance Company
000 Xxxxxxxxxx Xxxxxx, - XX00
Xxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
If to Axiom Venture Partners, L.P.:
Axiom Venture Partners, X.X.
Xxxx Xxxxx XX, 00/xx/ Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxx
Fax No.: (000) 000-0000
If to Xxxxxxx Xxxx:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to Benefit Capital Management Corporation:
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx XxXxxxx
If to Xxxxxxxx X. Xxxxxxxxx:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to Xx. Xxx X. Xxxxx:
c/o French-American Securities, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xx. 0000
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
If to The CIT Group/Venture Capital, Inc.:
The CIT Group/Venture Capital, Inc.
000 XXX Xxxxx
Xxxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
If to CSK Venture Capital Co., Ltd.:
Kenchiku Kaikan 0/xx/ Xxxxx
0-00-00 Xxxxx
Xxxxxxxx, Xxxxx 000
Xxxxx
Fax No.: 00.00.0000.0000
Attention: Xxxxx Xxxxxxxxx
If to The Xxxxxx X. Xxxxxxxx Trust:
The Xxxxxx X. Xxxxxxxx Trust
00 Xxxxxx Xxxxx Xxxx
Xxxxxx Xxxx Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Trustee
If to Finnfeeds International Limited:
Finnfeeds International Limited
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxx, XX
Fax No.: 00(0)0000000000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxxx
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Xxxxxx X. Xxxxxxxxx:
000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to GC&H Investments:
c/o Cooley Godward llp
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
If to Xxxxx Xxxxxxxx:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to Xxxxxx Trust:
c/o Summit Asset Management Company, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxx 000, Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. March
If to Xxxxx Xxxxxxxxxxx:
Mojave Therpeutic, Inc.
000 Xxxx Xxx Xxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
If to Xxxxxxx X. Xxxxx:
Xxxxx and Xxxx
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
If to Mentus Money Purchase Plan:
Aventine
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxxxxx
If to New York Life Insurance:
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Himi Xxxxxxx
If to Novartis Agribusiness Biotechnology Research, Inc.:
Novartis Agribusiness Biotechnology
Research, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Dr. Juanjo Estruch
with a copy to:
Novartis Seeds, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Rho Management Trust II:
Rho Management Trust II
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx Xxxx
with a copy to:
Xxxxxxx X.X. Xxxx, Esq.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
If to Xxxxxxx X. Xxxx:
Xxxxx and Xxxx
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
If to Xxx X. Short:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to R. Xxxxxxx Xxxxx:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
If to Xxxxxx X. Xxxxx
0000 Xxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Fax No.: (000) 000-0000
If to State of Michigan:
Acting Administrator
State of Michigan
Department of Treasury
Treasury Building
000 Xxxx Xxxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxx
If to Xxxxxxxx X. Xxx Xxxxx:
Diversa Corporation
00000 Xxxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
LIST OF SCHEDULES
Schedule of Series E Investors
Schedule 7.3 - Outstanding Options, Warrants and Rights
Schedule 17 - Notices
LIST OF EXHIBITS
Exhibit A - Quarterly Financial Summary
iv.
SCHEDULE OF SERIES E INVESTORS
Name and Address No. of Shares
Novartis Agribusiness 5,555,556
Biotechnology Research, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000
____________
Total 5,555,556
SCHEDULE 7.3
OUTSTANDING OPTIONS, WARRANTS AND RIGHTS
SCHEDULE 4.2 - CAPITALIZATION
DIVERSA CORPORATION
CAPITALIZATION TABLE
Projected After Series E Closing
Total
Total Shares Fully-Diluted Shares
--------------------------------------------------------------------------------------------------------
Series A Series B Series C Series D Common Warrants(a) Options(b) # %
--------------------------------------------------------------------------------------------------------
PATRICOF FUNDS:
APA Excelsior IV, L.P.
The P/A Fund, L.P.
APA Excelsior IV/Offshore,
L.P.
Patricof Private Investment
Club, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Total Patricof Funds
-----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE FUNDS:
HealthCare Ventures III, L.P.
HealthCare Ventures IV, L.P.
HealthCare Ventures V, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Total HealthCare Funds
-----------------------------------------------------------------------------------------------------------------------------------
OTHER INVESTORS:
Benefit Capital Management
Corporation
New York Life Insurance
Company
CSK Venture Capital Co.,
Ltd.
State of Michigan
GC&H Investments
Mentus Money Purchase Plan
Xxxxx, Xxxxxxx X.
Xxxx, Xxxxxxx X.
Finnfeeds International
Limited
Xxxxxx, Xxxxx
Axiom Venture Partners, L.P.
Comdisco Warrant
Xxxxxxxx, Xxxxxx
Rho Management Trust II
Aetna Life Insurance Company
Xxxxxxxxxxx, Xxxxx
Xxxxx, Xxx
Xxxxxx Trust
The CIT Group/Venture
Capital, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Total Other Investors
-----------------------------------------------------------------------------------------------------------------------------------
FOUNDERS:
The Institute for Genomic
Research, et al.
Xxxxxxxxx, Xx.
Xxxxxx, Xxxxxxx X.
Xxxxx, Xxxxxx X.
Xxxxxxx, Xxxx X.
Kom, Xxxxx, et al.
Friedman, Gary, et al.
-----------------------------------------------------------------------------------------------------------------------------------
Total Founders
-----------------------------------------------------------------------------------------------------------------------------------
EMPLOYEES & CONSULTANTS:
CURRENT EMPLOYEES
Xxxxxxxxx, Xxxxxxxx
Short, Xxx
Xxx Xxxxx, Xxxxxxxx
Xxxxx, Xxxxxxx
Xxxx, Xxxx
-----------------------------------------------------------------------------------------------------------------------------------
Subtotal Management
-----------------------------------------------------------------------------------------------------------------------------------
Other Employees
Pool Available (c)
-----------------------------------------------------------------------------------------------------------------------------------
Total Current Employees
-----------------------------------------------------------------------------------------------------------------------------------
TERMINATED EMPLOYEES
Xxxxx, Xxxxx
Garaventi, Don
Other Terminated Employees
-----------------------------------------------------------------------------------------------------------------------------------
Total Terminated Employees
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx, Xxxx
Xxxxxxx, Xxxxxx (Director)
Other Consultants
-----------------------------------------------------------------------------------------------------------------------------------
Total Employees and
Consultants
-----------------------------------------------------------------------------------------------------------------------------------
Grand Total
===================================================================================================================================
FOOTNOTES:
(a) [****]
(b) [****]
(c) [****]
* CONFIDENTIAL TREATMENT REQUESTED
Exhibit A
FORM OF QUARTERLY FINANCIAL SUMMARY
Request to CFO's for Quarterly Financial Information
Company:_______________________________________________________
Submitted By:_______________ Period Ending:______________
Qtly. Payroll Taxes Paid Yes [ ] No [ ]
------------------------------------------------------------------------------------------------------------------------------
Quarterly Financial Report ($000)
------------------------------------------------------------------------------------------------------------------------------
Current Financial YTD Financial
------------------------------------------------------------------------------------------------------------------------------
Actual Budget Actual YTD Budget YTD
------------------------------------------------------------------------------------------------------------------------------
Current Prior Year Current Prior Year.
Qtr. Qtr. Qtr. Qtr. Current Prior Year Current Prior Year
------------------------------------------------------------------------------------------------------------------------------
Revenues
------------------------------------------------------------------------------------------------------------------------------
Net Income (loss)
------------------------------------------------------------------------------------------------------------------------------
Gross Margin $
------------------------------------------------------------------------------------------------------------------------------
Gross Margin %
------------------------------------------------------------------------------------------------------------------------------
EBITDA
------------------------------------------------------------------------------------------------------------------------------
Cash Flow from Operations
------------------------------------------------------------------------------------------------------------------------------
Current Qtr. Prior Year Qtr. Previous Qtr.
------------------------------------------------------------------------------------------------------------------------------
Cash & Cash Equivalents
------------------------------------------------------------------------------------------------------------------------------
Total Current Assets
------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities
------------------------------------------------------------------------------------------------------------------------------
Long Term Debt
------------------------------------------------------------------------------------------------------------------------------
Backlog
------------------------------------------------------------------------------------------------------------------------------
# of Employees/Stores
------------------------------------------------------------------------------------------------------------------------------
Cash Used (Burn Rate)
------------------------------------------------------------------------------------------------------------------------------
(**If you've attached your cap table, you
don't need to complete this section Current Qtr. Prior Year Qtr. Previous Qtr.
Capitalization
------------------------------------------------------------------------------------------------------------------------------
Common Shares Outstanding
------------------------------------------------------------------------------------------------------------------------------
Common equivalent after conversion
------------------------------------------------------------------------------------------------------------------------------
Common equivalent of Warrants & Options
------------------------------------------------------------------------------------------------------------------------------
Total shares fully diluted
------------------------------------------------------------------------------------------------------------------------------
By: (CFO): __________________________
