IMMUNE DESIGN CORP. AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT OCTOBER 16, 2013
Exhibit 10.1
AMENDED AND RESTATED
OCTOBER 16, 2013
CONTENTS
| Clause | Page | |||||
| SECTION 1. |
GENERAL |
1 | ||||
| 1.1 |
Definitions |
1 | ||||
| SECTION 2. |
REGISTRATION; RESTRICTIONS ON TRANSFER |
4 | ||||
| 2.1 |
Restrictions on Transfer |
4 | ||||
| 2.2 |
Demand Registration |
5 | ||||
| 2.3 |
Piggyback Registrations |
7 | ||||
| 2.4 |
Form S-3 Registration |
8 | ||||
| 2.5 |
Expenses of Registration |
9 | ||||
| 2.6 |
Obligations of the Company |
10 | ||||
| 2.7 |
Delay of Registration; Furnishing Information |
12 | ||||
| 2.8 |
Indemnification |
12 | ||||
| 2.9 |
Assignment of Registration Rights |
14 | ||||
| 2.10 |
Limitation on Subsequent Registration Rights |
15 | ||||
| 2.11 |
“Market Stand-Off” Agreement |
15 | ||||
| 2.12 |
Agreement to Furnish Information |
15 | ||||
| 2.13 |
Rule 144 Reporting |
16 | ||||
| 2.14 |
Termination of Registration Rights |
16 | ||||
| SECTION 3. |
COVENANTS OF THE COMPANY |
16 | ||||
| 3.1 |
Basic Financial Information and Reporting |
16 | ||||
| 3.2 |
Inspection |
17 | ||||
| 3.3 |
Confidentiality of Records |
17 | ||||
| 3.4 |
Reservation of Common Stock |
18 | ||||
| 3.5 |
Equity Grants |
18 | ||||
| 3.6 |
Proprietary Information and Inventions Agreement |
18 | ||||
| 3.7 |
Right of First Offer |
18 | ||||
| 3.8 |
Directors’ Liability and Indemnification |
19 | ||||
| 3.9 |
Market Stand-off Restrictions |
19 | ||||
| 3.10 |
Successor Indemnification |
19 | ||||
| 3.11 |
Board Matters |
19 | ||||
| 3.12 |
Termination of Covenants |
19 | ||||
i.
CONTENTS
| Clause | Page | |||||
| SECTION 4. |
RIGHTS OF FIRST REFUSAL |
20 | ||||
| 4.1 |
Subsequent Offerings |
20 | ||||
| 4.2 |
Exercise of Rights |
20 | ||||
| 4.3 |
Issuance of Equity Securities to Other Persons |
20 | ||||
| 4.4 |
Termination and Waiver of Rights of First Refusal |
21 | ||||
| 4.5 |
Assignment of Rights of First Refusal |
21 | ||||
| 4.6 |
Excluded Securities |
21 | ||||
| 4.7 |
Waiver of Notice and Participation Rights |
21 | ||||
| SECTION 5. |
MISCELLANEOUS |
21 | ||||
| 5.1 |
Governing Law |
21 | ||||
| 5.2 |
Successors and Assigns |
21 | ||||
| 5.3 |
Entire Agreement |
22 | ||||
| 5.4 |
Severability |
22 | ||||
| 5.5 |
Amendment and Waiver |
22 | ||||
| 5.6 |
Delays or Omissions |
22 | ||||
| 5.7 |
Notices |
23 | ||||
| 5.8 |
Titles and Subtitles |
23 | ||||
| 5.9 |
Additional Investors |
23 | ||||
| 5.10 |
Counterparts |
23 | ||||
| 5.11 |
Aggregation of Stock |
23 | ||||
| 5.12 |
Pronouns |
23 | ||||
ii.
AMENDED AND RESTATED
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the “Agreement”) is entered into as of the 16th day of October, 2013, by and among Immune Design Corp., a Delaware corporation (the “Company”), and the investors listed on Exhibit A hereto, referred to hereinafter as the “Investors” and each individually as an “Investor.”
RECITALS
WHEREAS, the Company and certain Investors (the “Existing Investors”) have previously entered into an Amended and Restated Investor Rights Agreement dated as of July 23, 2010 (the “Prior Agreement”).
WHEREAS, the Company and the undersigned holders of the Company’s Series C Preferred Stock (the “Series C Investors”) are parties to that certain Series C Preferred Stock and Warrant Purchase Agreement dated as of the date hereof (as amended from time to time, the “Series C Purchase Agreement”), pursuant to which the Company is selling and such Series C Investors are purchasing shares of the Company’s Series C Preferred Stock (the “Series C Stock”) and warrants exercisable for Series C Stock.
WHEREAS, the amendment and restatement of the Prior Agreement in the manner set forth in this Agreement is a condition of closing under the Series C Purchase Agreement.
WHEREAS, any term of the Prior Agreement may be amended with the written consent of (i) the Company and (ii) the holders of at least sixty-six and two-thirds percent (66 2/3%) of the then-outstanding Registrable Securities (as such term is used in the Prior Agreement).
WHEREAS, the Existing Investors who are signatories to this Agreement hold the requisite number of Registrable Securities (as such term is used in the Prior Agreement) to amend and restate the Prior Agreement in its entirety.
NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Existing Investors hereby agree that the Prior Agreement is amended, restated and superseded in its entirety by this Agreement, and the parties hereto further agree as follows:
| SECTION 1. | GENERAL. |
1.1 Definitions. As used in this Agreement the following terms shall have the following respective meanings:
(a) “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.
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(b) “Amended Charter” means the Company’s Amended and Restated Certificate of Incorporation, as such may be amended from time to time.
(c) “Board of Directors” means the Company’s Board of Directors.
(d) “Common Stock” means the Company’s Common Stock, par value $0.001 per share.
(e) “Convertible Securities” means stock, options, warrants, purchase rights or other securities convertible into shares of Common Stock.
(f) “Co-Sale Agreement” means the Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of even date herewith by and among the Company and certain of its stockholders, as such may be amended from time to time.
(g) “Demand Rights Holder” means each of the following and its respective Affiliates, in each case to the extent then a Holder: (i) Alta Partners VIII, L.P.; (ii) Versant Venture Capital III, L.P.; (iii) The Column Group, L.P.; (iv) ProQuest Investments IV, L.P; and (v) Aventis Holdings Inc.
(h) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute, and the rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
(i) “Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
(j) “Holder” means any Person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.9 hereof.
(k) “Initial Offering” means the Company’s first firm commitment underwritten public offering of its Common Stock registered under the Securities Act.
(l) “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
(m) “Register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.
(n) “Registrable Securities” means (i) Common Stock issuable or issued upon conversion of the Shares, (ii) Shares issuable or issued upon conversion of the Series C
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Warrants, (iii) Common Stock held by an Investor other than as described in the preceding clause (i), and (iv) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the securities described in the preceding clauses (i), (ii) or (iii). Notwithstanding the foregoing, Registrable Securities shall not include any securities (x) sold by a person to the public either pursuant to a registration statement or Rule 144 or (y) sold in a private transaction in which the transferor’s rights under Section 2 of this Agreement are not assigned.
(o) “Registrable Securities then-outstanding” shall be the number of shares of Common Stock that are Registrable Securities and either (i) are then issued and outstanding or (ii) are issuable pursuant to then exercisable or convertible securities.
(p) “Registration Expenses” means all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed fifty thousand dollars ($50,000) of a single special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).
(q) “SEC” or “Commission” means the Securities and Exchange Commission.
(r) “Securities Act” means the Securities Act of 1933, as amended or any similar successor federal statute, and the rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
(s) “Selling Expenses” means all underwriting discounts and selling commissions applicable to the sale.
(t) “Series C Warrants” shall mean the warrants issued pursuant to the Series C Purchase Agreement, as may be amended from time to time.
(u) “Series A Stock” means the Company’s Series A Preferred Stock, par value $0.001 per share.
(v) “Series B Stock” means the Company’s Series B Preferred Stock, par value $0.001 per share.
(w) “Shares” means, collectively the Company’s Series A Stock, Series B Stock and Series C Stock.
(x) “Special Registration Statement” means (i) a registration statement relating to any employee benefit plan or (ii) with respect to any corporate reorganization or transaction under Rule 145 of the Securities Act, any registration statements related to the issuance or resale of securities issued in such a transaction or (iii) a registration related to stock issued upon conversion of debt securities.
3.
(y) “Voting Agreement” means that certain Amended and Restated Voting Agreement dated as of even date herewith by and among the Company and certain holders of the Company’s securities, as such may be amended from time to time.
| SECTION 2. | REGISTRATION; RESTRICTIONS ON TRANSFER. |
2.1 Restrictions on Transfer.
(a) Each Holder and each Investor agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and until:
(i) there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder or Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder or Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144, except in unusual circumstances. After its Initial Offering, the Company will not require any transferee pursuant to Rule 144 to be bound by the terms of this Agreement if the shares so transferred do not remain Registrable Securities hereunder following such transfer.
(b) Notwithstanding the provisions of subsection (a) above, no such restriction shall apply to a transfer by a Holder or an Investor that is (i) a partnership transferring to its partners or former partners in accordance with partnership interests, (ii) a corporation transferring to a wholly-owned subsidiary or a parent corporation that owns all of the capital stock of the Holder or the Investor, (iii) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company, (iv) a venture capital fund to another venture capital fund that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, the Holder or Investor, as applicable, (v) an individual transferring to the Holder’s or Investor’s family member or trust for the benefit of an individual Holder or Investor or (vi) not a change in beneficial ownership; provided that in each case the transferee will agree in writing to be subject to the terms of this Agreement to the same extent as if he were an original Holder or Investor, as applicable, hereunder.
(c) Each certificate representing Shares or Registrable Securities shall be stamped or otherwise imprinted with legends substantially similar to the following (in addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”) AND MAY NOT BE
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OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SALE, PLEDGE, ASSIGNMENT, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
(d) The Company shall be obligated to reissue promptly unlegended certificates at the request of any Holder or Investor, as applicable, thereof if such securities are registered under the Securities Act or the Holder or Investor, as applicable, shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification and legend, provided that the second legend listed above shall be removed only at such time as the holder of such certificate is no longer subject to any restrictions hereunder.
(e) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company shall receive a written request from a Demand Rights Holder (the “Requesting Holder”) that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities with an aggregate offering price of at least five million dollars ($5,000,000), then the Company shall, within thirty (30) calendar days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 2.2, effect, as expeditiously as reasonably practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered.
(b) If the Requesting Holder intends to distribute the Registrable Securities covered by its request by means of an underwriting, it shall so advise the Company as a part of its request made pursuant to this Section 2.2 or any request pursuant to Section 2.4 and the Company shall include such information in the written notice referred to in Section 2.2(a) or Section 2.4(a), as applicable. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such
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underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities held by all Requesting Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.2 or Section 2.4, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (excluding the Requesting Holder). Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration pursuant to this Section 2.2:
(i) prior to the earlier to occur of (A) the fifth anniversary of the date of this Agreement and (B) the expiration of the restrictions on transfer set forth in Section 2.11 following the Initial Offering;
(ii) after the Company has effected one (1) registration for the Requesting Holder pursuant to this Section 2.2, and such registration has been declared or ordered effective; and provided, further, that the Company shall not be required to effect more than five (5) registrations pursuant to this Section 2.2 in aggregate;
(iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) calendar days following the effective date of the registration statement pertaining to the Initial Offering (or such longer period as may be determined pursuant to Section 2.11 hereof); provided that the Company makes reasonable good faith efforts to cause such registration statement to become effective;
(iv) if within thirty (30) calendar days of receipt of a written request from Requesting Holder pursuant to Section 2.2(a), the Company gives notice to the Holders of the Company’s intention to file a registration statement for a public offering, other than pursuant to a Special Registration Statement within ninety (90) calendar days;
(v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2 a certificate signed by the Chairman of the Board of Directors stating that in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than sixty (60) calendar days after receipt of the request of the Requesting Holder; provided that such right to delay a request shall be exercised by the Company not more than twice in any twelve (12) month period;
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(vi) if the Requesting Holder proposes to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below; or
(vii) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.
2.3 Piggyback Registrations. The Company shall notify all Holders in writing at least ten (10) business days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration Statements) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within ten (10) business days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the number of Registrable Securities to be registered and the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement of which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to include Registrable Securities in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any stockholder of the Company (other than a Holder) on a pro rata basis based on the total number of shares of Common Stock held by such stockholders; provided, however, that no such reduction shall reduce the amount of securities of the selling Holders included in the registration below twenty-five percent (25%) of the total amount of securities included in such registration, unless such offering is the Initial Offering, in which event the reduction may exclude any or all of the Registrable Securities of the Holders, provided that, such registration does not include shares of any other selling stockholders. In no event will shares of any other selling stockholder be included in such registration that would reduce the number of shares which may be included by Holders without the written consent of Holders holding not less than a majority of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such
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underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership, limited liability company or corporation, the partners, retired partners, members, retired members and stockholders of such Holder, or the estates and family members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing person shall be deemed to be a single “Holder,” and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence.
(b) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 whether or not any Holder has elected to include securities in such registration, and shall promptly notify any Holder that has elected to include shares in such registration of such termination or withdrawal. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof.
2.4 Form S-3 Registration. In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within fifteen (15) business days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than one million dollars ($1,000,000);
(iii) if within thirty (30) calendar days of receipt of a written request from any Holder or Holders pursuant to this Section 2.4, the Company gives notice to such Holder or Holders of the Company’s intention to make a public offering within ninety (90) calendar days, other than pursuant to a Special Registration Statement;
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(iv) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors stating that in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than sixty (60) calendar days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a request shall be exercised by the Company not more than twice in any twelve (12) month period;
(v) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on Form S-3 for the Holders pursuant to this Section 2.4; or
(vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the requests of the Holders. Registrations effected pursuant to this Section 2.4 shall not be counted as demands for registration or registrations effected pursuant to Section 2.2.
2.5 Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2, 2.3 or 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been subsequently withdrawn by the Requesting Holder unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Requesting Holder were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities agree to deem such registration to have been effected as of the date of such withdrawal for purposes of determining whether the Company shall be obligated pursuant to Section 2.2(c) or 2.4(b)(v), as applicable, to undertake any subsequent registration, in which event such right shall be forfeited by all Holders). If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then such registration shall not be deemed to have been effected for purposes of determining whether the Company shall be obligated pursuant to Section 2.2(c) or 2.4(b)(v), as applicable, to undertake any subsequent registration.
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2.6 Obligations of the Company. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred twenty (120) calendar days or, if earlier, until the Holder or Holders have completed the distribution related thereto; provided, however, that at any time, upon written notice to the participating Holders and for a period not to exceed thirty (30) calendar days thereafter (the “Suspension Period”), the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (and the Requesting Holder hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company reasonably believes that there is or may be in existence material nonpublic information or events involving the Company, the failure of which to be disclosed in the prospectus included in the registration statement could result in a Violation (as defined below). In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. The Company may extend the Suspension Period for an additional consecutive sixty (60) calendar days with the consent of the holders of a majority of the Registrable Securities registered under the applicable registration statement, which consent shall not be unreasonably withheld. No more than two (2) such Suspension Periods shall occur in any twelve (12) month period. If so directed by the Company, all Holders registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the period in which the delay or suspension is in effect after receiving notice of such delay or suspension; and (ii) use their best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in subsection (a) above.
(c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.
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(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will amend or supplement such prospectus in order to cause such prospectus not to include any 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 in the light of the circumstances then existing.
(g) Use its reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters, copies of which shall be provided to each Holder so requesting.
(h) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Company are then listed.
(i) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and, if applicable, a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.
(j) Promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith.
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2.7 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.
(c) The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or Section 2.4 if the number of shares or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the number of shares or the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such registration as specified in Section 2.2 or Section 2.4, whichever is applicable.
2.8 Indemnification. In the event any Registrable Securities are included in a registration statement pursuant to Section 2.2, 2.3 or 2.4:
(a) To the fullest extent permitted by law, the Company will indemnify and hold harmless each selling Holder, the partners, members, officers and directors of each such Holder, legal counsel and accountants for each such Holder, any underwriter (as defined in the Securities Act) for each such Holder and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, underwriter, controlling Person, or other aforementioned Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in
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conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, member, officer, director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder, severally and not jointly, will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers and each Person, if any, who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act (collectively, a “Holder Violation”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company and each other aforementioned Person in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Holder Violation; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.8(b) exceed the net proceeds from the offering received by such Holder, except in the case of willful misconduct or fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses thereof to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party
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within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8 to the extent, and only to the extent, prejudicial to its ability to defend such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) or Holder Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the proceeds from the offering received by such Holder, except in the case of willful misconduct or fraud by such Holder.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under this Section 2.8 shall survive completion of any offering of Registrable Securities in a registration statement and, with respect to liability arising from an offering to which this Section 2.8 would apply that is covered by a registration filed before termination of this Agreement, such termination. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
2.9 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of Registrable Securities (for so long as such shares remain Registrable Securities) that: (a) is a subsidiary, parent, general partner, limited partner, retired partner, member or retired member, of a Holder that is a corporation, partnership or limited liability company; (b) is a venture capital fund that is controlled by or under common control with one or more general partners or managing members or, or shares the same management company with, the Holder; (c) is a Holder’s family member or trust for the benefit of an individual Holder; (d) acquires at least two hundred fifty thousand (250,000) shares of Registrable Securities (subject to adjustment for stock splits, combinations, recapitalizations and the like) on the date of transfer,
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or all of such transferring Holders shares, if less; or (e) is an entity affiliated by common control (or other related entity) with such Holder; provided, however, in each case (i) the transferor shall, within ten (10) business days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (ii) such transferee shall agree to be subject to all restrictions set forth in this Agreement.
2.10 Limitation on Subsequent Registration Rights. Other than as provided in Section 5.9, after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities then-outstanding (as determined on the date of grant of rights) enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights that are senior to or pari passu with the rights granted to the Investors hereunder.
2.11 “Market Stand-Off” Agreement. Each Holder and each Investor hereby agrees that such Holder or Investor, as the case may be, shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock (or other securities) of the Company held by such Holder or Investor (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) calendar days following the effective date of the Initial Offering (or such longer period as the underwriters or the Company shall reasonably request in order to accommodate regulatory restrictions on (1) the publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto); provided, that all officers and directors of the Company and holders of at least one percent (1%) of the Company’s voting securities are bound by and have entered into similar agreements. The obligations described in this Section 2.11 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future.
2.12 Agreement to Furnish Information. Each Holder and each Investor agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter that are consistent with the Holder’s or Investor’s, as the case may be, obligations under Section 2.11 or that are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder and each Investor shall provide, within ten (10) business days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in Section 2.11 and this Section 2.12 shall not apply to a Special Registration Statement. Each Holder and each Investor agrees that any transferee of any shares of Registrable Securities shall be bound by Sections 2.11 and 2.12. The underwriters of the Company’s stock are intended third party beneficiaries of Sections 2.11 and 2.12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
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2.13 Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:
(a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public;
(b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements) or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies); a copy of the most recent annual or quarterly report of the Company filed with the Commission; and such other reports and documents as a Holder may reasonably request in connection with availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.
2.14 Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.2, Section 2.3, or Section 2.4 hereof shall terminate upon the earlier of: (i) the date four (4) years following the Initial Offering; (ii) such time as all Registrable Securities of the Company issuable or issued upon conversion of the Shares held by and issuable to such Holder (and its Affiliates) may be sold pursuant to Rule 144 during any ninety (90) calendar day period; (iii) the completion of an Acquisition, as defined in the Amended Charter; or (iv) the completion of an Asset Transfer, as defined in the Amended Charter. Upon such termination, such Shares shall cease to be “Registrable Securities” hereunder for all purposes.
| SECTION 3. | COVENANTS OF THE COMPANY. |
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied (except as noted therein), and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles in the United States consistently applied.
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(b) So long as an Investor (with its Affiliates) shall own at least five hundred thousand (500,000) shares of Registrable Securities (subject to adjustment for stock splits, combinations, recapitalizations and the like) (a “Major Investor”), the Company will furnish each such Major Investor:
(i) as soon as practicable after the end of each fiscal year of the Company, and in any event within one hundred twenty (120) calendar days thereafter, a balance sheet of the Company, as at the end of such fiscal year, and a statement of income and a statement of cash flows of the Company, for such year, all prepared in accordance with generally accepted accounting principles in the United States consistently applied (except as noted therein or as disclosed to the recipients thereof) and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail. Such financial statements shall be audited and certified and accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Board of Directors;
(ii) as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five (45) calendar days thereafter, a balance sheet of the Company as of the end of each such quarterly period, and a statement of income and a statement of cash flows of the Company for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles in the United States consistently applied (except as noted therein or as disclosed to the recipients thereof), with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made;
(iii) to the extent requested by a Major Investor, (i) as soon as practicable after the end of each month, and in any event within twenty (20) calendar days thereafter, a balance sheet of the Company as of the end of each such month, and a statement of income and a statement of cash flows of the Company for such month and for the current fiscal year to date, including a comparison to plan figures for such period, prepared in accordance with generally accepted accounting principles in the United States consistently applied (except as noted thereon), with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made; and (ii) as soon as practicable, and in any event within seven (7) business days upon such request, a capitalization table of the Company in a form reasonably acceptable to such Major Investor; and
(iv) as soon as practicable, but in any event at least thirty (30) calendar days following approval by the Board of Directors, an annual budget and operating plans for the relevant fiscal year, prepared on a monthly basis, and, as soon as prepared, any other budgets or revised budgets prepared by the Company.
3.2 Inspection. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times, and upon not less than five (5) business days prior notice, as may be convenient to the Company and such Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information.
3.3 Confidentiality of Records. Each Investor agrees to use the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to such Investor pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), that the Company identifies as being
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confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information: (i) to any partner, subsidiary or parent of such Investor as long as such partner, subsidiary or parent is advised of and agrees or has agreed to be bound by the confidentiality provisions of this Section 3.3 or comparable restrictions; (ii) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (iii) with the prior written consent of the Company, to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser is advised of and agrees or has agreed to be bound by the confidentiality provisions of this Section 3.3 or comparable restrictions; (iv) at such time as it enters the public domain through no fault of such Investor; (v) that is communicated to it free of any obligation of confidentiality; (vi) that is developed by Investor or its agents independently of and without reference to any confidential information communicated by the Company; or (vii) as required by applicable law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.
3.4 Reservation of Common Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common Stock issuable from time to time upon such conversion.
3.5 Equity Grants.
(a) Unless otherwise approved by the Board of Directors, all stock options and other stock equivalents issued after the date of this Agreement to employees, directors, consultants and other service providers of the Company (each a “Provider”) shall be subject to vesting as follows: (a) twenty-five percent (25%) of such stock shall vest at the end of the first year following the earlier of the date of issuance or such person’s services commencement date with the Company, and (b) the remaining seventy-five percent (75%) of such stock shall vest over the remaining three (3) years at a rate of one-thirty-sixth (1/36) of such remainder per month such that they vest in their entirety over a period of four (4) years from the earlier of the date of issuance or such person’s services commencement date with the company.
(b) All unvested restricted stock and similar equity grants (to the extent exercised) shall be purchasable by the Company upon the termination of the services of a Provider at a price per share of the lesser of (i) the original purchase price per share paid by the Provider or (ii) the fair market value of such stock as of the date of purchase by the Company, as reasonably determined by the Board of Directors. No stock option, restricted stock or similar grant issued to Providers shall be transferable until such time as such stock option, restricted stock or similar equity grant is fully vested.
3.6 Proprietary Information and Inventions Agreement. The Company shall require all employees and consultants to execute and deliver a Proprietary Information and Inventions Agreement substantially in a form approved by the Company’s counsel or the Board of Directors.
3.7 Right of First Offer. The Company shall require each owner of Common Stock after the date of this Agreement to be subject to a right of first offer in favor of the Company.
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Upon the execution of this Agreement, each Investor who is a party to the Prior Agreement hereby waives on behalf of itself and all Investors any and all rights under Section 3.7(a) of the Prior Agreement with respect to any owner of Common Stock as of the date of this Agreement.
3.8 Directors’ Liability and Indemnification. The Amended Charter and the Company’s Bylaws shall provide (a) for elimination of the liability of director to the maximum extent permitted by law and (b) for indemnification of directors for acts on behalf of the Company to the maximum extent permitted by law. In addition, the Company shall enter into and use its best efforts to at all times maintain indemnification agreements (in form reasonably acceptable to the Board of Directors) with each of its directors to indemnify such directors to the maximum extent permissible under applicable law. The Company shall use best efforts (as determined by the Board of Directors) to maintain directors’ and officers’ liability insurance coverage with an insurer and with such coverage limits as the Board of Directors may determine from time to time.
3.9 Market Stand-off Restrictions. All capital stock issued by the Company, including any capital stock issuable or issued upon exercise or conversion of any Convertible Securities, shall be subject to a market stand-off provision substantially similar to that set forth in Section 2.11 above.
3.10 Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.
3.11 Board Matters.
(a) Committees. The director designated by ProQuest (as defined in the Voting Agreement) shall be entitled to be a member of the Executive Committee and the Compensation Committee of the Board of Directors, to the extent such committee is in existence.
(b) Board Meetings. The Board of Directors shall meet at least once per calendar quarter, unless otherwise agreed by a majority of the directors of the Company.
(c) Expenses. Each non-employee member of the Board of Directors and each Observer (as defined in the Voting Agreement) shall be entitled to have his or her reasonable expenses (including without limitation reasonable travel and lodging expenses) incurred in connection with attending any meeting of the Board of Directors (or in the case of a director, any committee of the Board of Directors), or acting on behalf of the Company, reimbursed by the Company.
3.12 Termination of Covenants. All covenants of the Company contained in Section 3 of this Agreement (other than the provisions of Section 3.3 and Section 3.10) shall expire and terminate as to each Investor upon the earlier of: (a) the effective date of the registration
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statement pertaining to an Initial Offering; (b) when the Company becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act; (c) upon an Acquisition by an entity, subject to and in compliance with the reporting provisions of the Exchange Act; or (d) upon an Asset Transfer.
| SECTION 4. | RIGHTS OF FIRST REFUSAL. |
4.1 Subsequent Offerings. Subject to applicable securities laws, each Major Investor shall have a right of first refusal to purchase its pro rata share of all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.6 hereof. Each Major Investor’s pro rata share is equal to the ratio of (a) the number of shares of Common Stock (including all shares of Common Stock issuable or issued upon conversion of the Shares or upon the exercise of outstanding warrants or options) of which such Major Investor is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of shares of Common Stock outstanding (including all shares of Common Stock issued or issuable upon conversion of the Shares or upon the exercise of any outstanding warrants or options) immediately prior to the issuance of the Equity Securities. The term “Equity Securities” shall mean (i) any Common Stock, Preferred Stock or other security of the Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any Common Stock, Preferred Stock or other security (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant or right.
4.2 Exercise of Rights. If the Company proposes to issue any Equity Securities, it shall give each Major Investor written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Major Investor shall have fifteen (15) business days from the giving of such notice to agree to purchase its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the foregoing, the right of first offer in this Section 4.2 shall not be applicable to any Major Investor with respect to any issuance of Equity Securities if (i) at the time the Company issues such Equity Securities, such Major Investor is not an “accredited investor,” as defined in Rule 501(d) of Regulation D promulgated under the Securities Act, and (ii) such issuance of Equity Securities is only being offered by the Company to accredited investors.
4.3 Issuance of Equity Securities to Other Persons. If not all of the Major Investors elect to purchase their pro rata share of the Equity Securities, then the Company shall promptly notify in writing the Major Investors who do so elect and shall offer such Major Investors the right to acquire such unsubscribed shares on a pro rata basis. Such Major Investors shall have five (5) business days after receipt of such notice to notify the Company of its election to purchase all or a portion thereof of the unsubscribed shares. The Company shall have ninety (90) calendar days thereafter to sell the Equity Securities in respect of which the Major Investors’ rights were not exercised, at a price not lower and upon general terms and conditions not more favorable to the purchasers thereof than specified in the Company’s notice to the Major Investors pursuant to Section 4.2 hereof. If the Company has not sold such Equity Securities
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within ninety (90) calendar days of the notice provided pursuant to Section 4.2, the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Major Investors in the manner provided above.
4.4 Termination and Waiver of Rights of First Refusal. The rights of first refusal established by this Section 4 shall not apply to, and shall terminate upon the earlier of, (i) the effective date of the registration statement pertaining to Qualified IPO (as defined in the Amended Charter) or (ii) an Acquisition or an Asset Transfer.
4.5 Assignment of Rights of First Refusal. The rights of first refusal of each Major Investor under this Section 4 may be assigned to the same parties in the same manner and subject to the restrictions on any transfer of registration rights as provided in Section 2.9.
4.6 Excluded Securities. The rights of first refusal established by this Section 4 shall not apply to issuance of any of the following: (a) any securities excluded from the definition of “Additional Shares of Common Stock” under Article IV, Section D.4(h)(v) of the Amended Charter; (b) shares of Common Stock issued or issuable in the Initial Offering; (c) shares of Series C Stock or Series C Warrants issued or issuable pursuant to the Purchase Agreement; and (d) any securities of the Company that are otherwise excluded by the affirmative vote or written consent of the Major Investors holding at least sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities then-outstanding held by all Major Investors, or as permitted by Section 5.5.
4.7 Waiver of Notice and Participation Rights. Upon the execution of this Agreement, each Investor who is a party to the Prior Agreement and who is a Major Investor under the Prior Agreement hereby waives on behalf of itself and all Major Investors any and all rights under the Prior Agreement to receive notice of the issuance of, or to purchase or otherwise acquire, any Series C Warrants (and the Series C Stock issuable upon conversion of the Series C Warrants) and shares of Series C Stock (and the Common Stock issuable upon conversion of the Series C Stock) issued at any time pursuant to the Purchase Agreement.
| SECTION 5. | MISCELLANEOUS. |
5.1 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware in all respects as such laws are applied to agreements among Delaware residents entered into and to be performed entirely within Delaware, without reference to conflicts of laws or principles thereof. The parties agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state or federal court located in Seattle, Washington.
5.2 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors, and administrators and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the
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transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price.
5.3 Entire Agreement. This Agreement, the Exhibits hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.
5.4 Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
5.5 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be amended or modified, and the obligations of the Company and the rights of the Holders under this Agreement may be waived, only upon the written consent of the Company and the holders of at least sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities then-outstanding. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction).
(b) For the purposes of determining the number of Holders or Investors entitled to vote or exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.
5.6 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any party’s part of any breach, default or noncompliance under the Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
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5.7 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other address or electronic mail address as such party may designate by ten (10) business days advance written notice to the other parties hereto.
5.8 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
5.9 Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company shall issue additional shares of Series C Stock pursuant to the Purchase Agreement, any purchaser of such shares of Series C Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, which counterpart shall be incorporated by delivery, and such purchaser shall be deemed an “Investor” a “Holder” and a party hereunder.
5.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
5.11 Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities or persons or persons or entities under common management or control shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.
5.12 Pronouns. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| COMPANY: | ||
| IMMUNE DESIGN CORP. | ||
| Signature: | /s/ ▇▇▇▇▇▇ ▇▇▇▇ | |
| Print Name: | ▇▇▇▇▇▇ ▇▇▇▇ | |
| Title: | CEO | |
| Address: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| ALTA PARTNERS VIII, L.P. | ||
| By: | Alta Partners Management VIII, LLC | |
| Its: | General Partner | |
| By: | /s/ ▇▇ ▇▇▇▇▇▇▇ | |
| Name: | ▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Director | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| AVENTIS HOLDINGS INC. | ||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Title: | President | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| THE COLUMN GROUP, L.P. | ||
| By: | The Column Group GP, LP | |
| Its: | General Partner | |
| By: | The Column Group, LLC | |
| Its: | General Partner | |
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |
| Title: | Managing Partner | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| OSAGE UNIVERSITY PARTNERS I, L.P. | ||
| By: | Osage University GP, LP | |
| By: | Osage Partners LLC | |
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇▇ | |
| Title: | Member | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| PROQUEST INVESTMENTS IV, L.P. | ||
| By: | ProQuest Associates IV LLC | |
| Its: | General Partner | |
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
| Title: | Managing Member | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| TOPSPIN FUND, LP | ||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Title: | Partner | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
| INVESTORS: | ||
| VERSANT VENTURE CAPITAL III, L.P. | ||
| By: | Versant Ventures III, LLC | |
| Its: | General Partner | |
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Title: | Managing Director | |
| VERSANT SIDE FUND III, L.P. | ||
| By: | Versant Ventures III, LLC | |
| Its: | General Partner | |
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Title: | Managing Director | |
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
EXHIBIT A
SCHEDULE OF INVESTORS
| Alta Partners VIII, L.P. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
|
||
| Aventis Holdings Inc. ▇/▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ Facsimile: ▇▇▇ ▇ ▇▇ ▇▇ ▇▇ ▇▇ Attention: Vice President, Legal Operations |
With a copy (which will not constitute notice for purposes of Section 5.7 above) to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Facsimile: ▇▇▇▇.▇▇▇.▇▇▇▇ E-mail: ▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
| |
| The Column Group, L.P. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
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| Osage University Partners I, L.P. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇
|
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| ProQuest Investments IV, L.P. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
|
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| Topspin Fund, LP ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
|
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| Versant Venture Capital III, L.P. Versant Side Fund III, L.P. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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