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EXHIBIT 4.3
AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT
DECEMBER 27, 1996
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AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "AGREEMENT") is entered into as of
December 27, 1996 among (i) AURORA BIOSCIENCES CORPORATION, a Delaware
corporation (the "COMPANY"), with its principal office located at ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (ii) holders of the Company's Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (such
holders are listed on Exhibit A attached hereto and are referred to herein as
the "PREVIOUS INVESTORS"), and (iii) the purchasers listed on the Schedule of
Purchasers attached to that certain Series D Preferred Stock Purchase Agreement
of even date herewith (THE "PURCHASE AGREEMENT") and Exhibit B hereto (the
"PURCHASERS"). Each of the Previous Investors and the Purchasers are referred to
herein as a "STOCKHOLDER;" collectively they are referred to as the
"STOCKHOLDERS."
This Agreement supersedes, amends and restates in its entirety that
certain Investors Rights Agreement dated as of March 8, 1996, by and among the
Company and the Previous Investors, as amended by that certain Amendment
Agreement dated April 9, 1996 as further amended by that certain Second
Amendment Agreement dated April 29, 1996 (collectively, the "FORMER INVESTORS
RIGHTS AGREEMENT").
RECITALS
A. The Company proposes to issue and sell up to an aggregate of 572,536
shares of its Series D Preferred Stock pursuant to the Purchase Agreement (the
"FINANCING").
B. Each of the Previous Investors desire to waive his, her or its right to
receive notice of the Financing and to purchase a certain portion of the Series
D Preferred Stock to be sold by the Company in the Financing as set forth in
Section 3 of the Former Investors Rights Agreement.
C. As a condition of entering into the Purchase Agreement, the Purchasers
have requested that the Company extend to them registration rights, information
rights and other rights as set forth herein.
D. In order to induce the Purchasers to enter into the Purchase Agreement
and to induce the Purchasers to invest funds in the Company, the Company and the
Previous Investors have agreed to enter into this Agreement in order to amend
and restate the Former Investors Rights Agreement so that this Agreement is the
sole agreement with respect to the obligations and rights contained herein.
E. Section 4.7 of the Former Investors Rights Agreement provides that such
agreement may be amended with the written consent of the Company and the holders
of at least two-thirds (2/3) of the shares which are then Registrable Securities
(as defined in the Former
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Investors Rights Agreement) and that such amendment shall be binding upon the
Stockholders (as defined in the Former Investors Rights Agreement), each of
their transferees and the Company.
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the parties
hereby agree that the Former Investors Rights Agreement is amended and restated
in its entirety to read as set forth above and as follows (unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned
in the Purchase Agreement):
AGREEMENT
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1. RESTRICTIONS ON TRANSFERABILITY. Neither the shares of the Company's
Series A, Series B, Series C or Series D Preferred Stock issued to the
Stockholders pursuant to the Purchase Agreement or pursuant to that certain
Preferred Stock Purchase Agreement dated March 8, 1996, as amended by that
certain Amendment Agreement dated April 9, 1996, as further amended by that
certain Second Amendment Agreement dated April 29, 1996 (the "DESIGNATED
PREFERRED") nor the Registrable Securities (as defined below) shall be
transferable except upon compliance with (i) the Right of First Refusal set
forth in Section 45 of the Company's Bylaws, (ii) the conditions specified in
this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act (as defined below), and (iii) if such shares
are Restricted Securities (as defined below), upon such other terms as are in
the opinion of counsel to the Company necessary to comply with the provisions of
the Securities Act; provided, however that such restrictions shall not apply to
transfers under the circumstances described in Sections 1.5, 1.6 or 1.7 and that
the requirements of clause (iii) shall not apply to a transfer without
consideration to one or more partners or shareholders of a Stockholder (e.g., an
in-kind distribution pursuant to the terms of the Stockholder's governing
documents). Except for transfers made pursuant to Rule 144 of the Securities
Act, each Stockholder will cause any proposed transferee of Designated Preferred
or Registrable Securities held by such Stockholder to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement and it will be a condition precedent to the effectiveness of any
such transfer that such Stockholder shall have secured a written agreement of
such transferee in form and substance satisfactory to the Company to that
effect, if so requested by the Company; provided, however, that this sentence
shall not apply with respect to any proposed transferee in whose hands the
transferred shares will not be Restricted Securities.
1.2. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company, as constituted on the date of this Agreement.
"FORM S-3" shall mean Form S-3 under the Securities Act (as defined below)
as in effect on the date of this Agreement, or any substantially similar,
equivalent or successor form under the Securities Act.
"HOLDER" shall mean each holder of Registrable Securities.
"INITIAL PUBLIC OFFERING" shall mean the Company's initial firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "ACT"), covering the offer and
sale by the Company of Common Stock to the public at an aggregate offering price
of not less than $10,000,000 (prior to underwriters' discounts and expenses),
and at a public offering price not less than $6.00 per share, subject to
adjustment for stock splits, stock dividends, reorganizations and the like with
respect to such shares.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock (i)
issued or issuable upon conversion of Designated Preferred which have not been
sold to the public, and (ii) issued in respect of the shares of Common Stock
referred to under the foregoing clause (i) by reason of any stock split, stock
dividend, recapitalization or similar event which have not been sold to the
public.
The terms "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 the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling Expenses,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel, blue sky fees
and expenses (including counsel fees), 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).
"RESTRICTED SECURITIES" shall mean the securities of the Company required
to bear the legends set forth in Section 1.3 hereof or legends substantially
similar thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3. RESTRICTIVE LEGEND(S). Each certificate representing the shares of
Designated Preferred and Registrable Securities shall (unless otherwise
permitted by the provisions of Section 1.4 below) be stamped or otherwise
imprinted with legends in the following form (in addition to any other legend
required by the Bylaws of the Company, or under applicable California or other
state securities laws):
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(A) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(B) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION'S STOCKHOLDERS, AS
PROVIDED IN THE BYLAWS OF THE CORPORATION.
1.4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to comply,
in addition to the requirements of Section 45 of the Company's Bylaws, in all
respects with the provisions of this Section 1.4. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the holder thereof
shall give written notice to the Company of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall be accompanied (except in
transactions in compliance with Rule 144 and except for transfers without
consideration to one or more partners or shareholders of the holder (e.g., an
in-kind distribution pursuant to the terms of the holder's governing documents))
by either (i) a written opinion of legal counsel who shall be reasonably
satisfactory to the Company (it being agreed that ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ is
satisfactory) addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission, a copy of any
holder's request (together with all supplements or amendments thereto) for which
shall have been provided to the Company, at or prior to the time of first
delivery to the Commission's staff, to the effect that the transfer of such
securities without registration will not result in a recommendation by such
staff that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
provided for above shall bear the appropriate restrictive legends set forth in
Section 1.3 above, except that such certificate shall not bear the restrictive
legend set forth in Section 1.3(a) above if, in the opinion of counsel for the
Company or counsel for such holder, such legend is not required in order to
establish compliance with any provisions of the Securities Act and except that
such certificate shall not bear the restrictive legend set forth in Section
1.3(b) above if the right of first refusal set forth in the Company's Bylaws is
no longer applicable.
1.5. DEMAND REGISTRATION RIGHTS.
(A) Commencing on the earlier of (i) five (5) years after the date
hereof, or (ii) one (1) year after the Company's initial public offering of
securities pursuant to a registration statement
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under the Securities Act, if the Company shall receive a written request
(specifying that it is being made pursuant to this Section 1.5) from the Holders
of at least fifty percent (50%) of the Registrable Securities that the Company
file a registration statement or similar document under the Securities Act
covering the registration of the greater of (i) 20% of the shares which are then
Registrable Securities, or (ii) Registrable Securities the expected aggregate
offering price to the public of which is at least $5,000,000, then the Company
shall promptly notify all other Holders of such request and shall use its best
efforts to promptly and expeditiously cause all Registrable Securities that such
Holders have requested, within 15 days after receipt of such written notice, to
be registered in accordance with this Section 1.5 to be registered under the
Securities Act. The Holders making the written request pursuant to this Section
1.5 shall be referred to hereinafter as the "INITIATING HOLDERS".
Notwithstanding the foregoing: (i) the Company shall not be obligated to
effect a registration pursuant to this Section 1.5 during the period starting
with the date one hundred twenty (120) days prior to the Company's estimated
date of filing of, and ending on a date one hundred twenty (120) days following
the effective date of, a registration statement pertaining to an underwritten
public offering of the Company's securities, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; or (ii) if
the Company shall furnish to such Holders a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its stockholders for a
registration statement to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed six (6) months; provided, however, that the
Company shall not obtain such a deferral more than once in any 12-month period.
The Company shall not be obligated to effect more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders; provided, however that such obligation
shall be deemed satisfied only when a registration statement covering all
Registrable Securities requested by Holders to be registered pursuant to such
demand shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.
(B) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the
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Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be reduced and shall be allocated pro rata among such Holders
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration. If by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other securityholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited
and if such inclusion will not adversely affect the marketing of the Registrable
Securities.
Except for registration statements on Form ▇-▇, ▇-▇ or any successor
thereto, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a request for registration
from Initiating Holders pursuant to this Section 1.5 until the earlier of (a)
one hundred twenty (120) days from the receipt of the initial request pursuant
to Section 1.5(a) or (b) the completion of the period of distribution of the
registration contemplated thereby. Although the Company shall have no obligation
to register any Designated Preferred, in any underwritten public offering
contemplated by this Section 1.5 or Section 1.6 or 1.7, holders of Designated
Preferred shall be entitled to sell shares of Designated Preferred representing
Registrable Securities to be included in such underwriting to the underwriters
for conversion and sale of the Registrable Securities issued upon conversion
thereof.
1.6. COMPANY REGISTRATION.
(A) If, at any time or from time to time, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than a registration (A) relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, (B) a registration on Form S-4 or similar forms which may be promulgated
in the future relating solely to a Securities and Exchange Commission Rule 145
or similar transaction or (C) in connection with the Company's Initial Public
Offering, the Company will (i) promptly give to each Holder written notice
thereof and (ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance),
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and in any underwriting involved therein, all Registrable Securities of such
Holders as specified in a written request or requests made within 15 days after
receipt of such written notice from the Company.
(B) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
indicate in the notice given pursuant to Section 1.6(a). In such event the right
of any Holder to registration pursuant to this Section 1.6 shall be conditioned
upon such Holder's agreeing to participate in such underwriting and in 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 (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company or by other holders exercising any
demand registration rights to the extent such holders are not excluded from the
registration pursuant to the Underwriter Cutback described below.
Notwithstanding any other provision of this Section 1.6, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities or other securities from such registration and underwriting
(hereinafter an "UNDERWRITER CUTBACK"). In the event of an Underwriter Cutback,
the Company shall so advise all Holders and the other holders distributing their
securities through such underwriting, and the Underwriter Cutback shall be
implemented on the basis that the holders who are not Holders shall be cut back
before any cutback of Holders. If the limitation determined by the underwriter
requires an Underwriter Cutback with respect to the Registrable Securities to be
included, such Underwriter Cutback shall be in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
1.7. FORM S-3 REGISTRATION RIGHTS. After the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3, and
to that end the Company shall use its best efforts to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), within twelve (12) months following the effective date of the first
registration of any securities of the Company for an underwritten registered
public offering. After the Company has qualified for the use of Form S-3, and
subject to the provisions of Section 1.14, each Holder shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by each such Holder), subject only
to the following limitations:
(A) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred twenty (120) days following
the effective date of a Company initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145);
(B) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $1,000,000 (unless the value of all of the
Registrable
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Securities held by all Holders is less than $1,000,000, in which case the
Holders shall be entitled to a final demand registration pursuant to this
Section 1.7 for an amount equal to the value of the Registrable Securities held
by all Holders at the time of such demand; provided that for purposes of the
foregoing, "value" shall be determined based on the average of the last sale
prices of the Company's Common Stock on the principal exchange or market on
which such Common Stock is traded during the five (5) trading days immediately
preceding such demand);
(C) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its stockholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than one hundred twenty
(120) days within which to file such registration statement; provided however,
that the Company shall not use this right more than once in any twelve- month
period;
(D) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred twenty
(120) days from the effective date thereof; and
(E) The Company shall not be obligated to cause a registration on
Form S-3 if in the prior twelve-month period the Company has caused a
registration on Form S-3 to become effective as the result of a request pursuant
to this Section 1.7.
The Company shall give notice to all Holders of the receipt of a request
for registration pursuant to this Section 1.7 and shall use its best efforts to
cause all Registrable Securities that such Holders have requested, within 15
days after receipt of such written notice, be registered in accordance with this
Section 1.7 to be registered under the Securities Act. Subject to the foregoing,
the Company will use its best efforts to effect promptly any registration
pursuant to this Section 1.7. The provisions of Section 1.5(b) shall apply to
any registration effected pursuant to this Section 1.7
1.8. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement to
forfeit, the Holders of Registrable Securities to have been registered shall
bear all such expenses pro rata on the basis of the Registrable Securities to
have been registered. Notwithstanding the foregoing, however, if at the time of
the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses
and shall retain their rights pursuant to Section 1.5.
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1.9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(A) Keep such registration, qualification or compliance effective
for a period of one hundred twenty (120) days or until the Holder or Holders
have completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(B) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(C) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them;
(D) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders or
the underwriters, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;
(E) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with (and provide customary due diligence materials and information to)
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement;
(F) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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; and
(G) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
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1.10. INDEMNIFICATION.
(A) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will promptly reimburse each such Holder, each of its
officers and directors and partners, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred (as and when incurred) in
connection with investigating, preparing to defend or defending any such claim,
loss, damage, liability or action, provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder or underwriter and stated to be specifically for use therein.
(B) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, severally and not jointly indemnify the Company,
each of its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and partners and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification, or compliance,
and will promptly reimburse the Company, such Holders, such directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred (as and when incurred) in connection with
investigation, preparing to defend or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
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omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each such Holder hereunder shall be
limited to an amount equal to the proceeds to each such Holder of Registrable
Securities sold in such registration as contemplated herein.
(C) Each party entitled to indemnification under this Section 1.10
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense; provided, however, that, if the defendants in any such claim or
litigation include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 1 unless such failure resulted in actual
detriment to the Indemnifying Party. 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 a release from all liability in respect of
such claim or litigation.
(D) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission, provided, however, that in no case will any seller of
Registrable Securities be required to contribute any amount in excess of the
amount of proceeds to such seller of Registrable Securities sold pursuant to the
registration statement with respect to which the contribution obligation arose.
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(E) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and otherwise.
1.11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.12. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(A) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(B) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act at any time after it has become subject to such reporting
requirements;
(C) So long as a Stockholder owns any Restricted Securities, to
furnish to the Stockholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company as a Stockholder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Stockholder to sell any such
securities without registration.
1.13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder," and the transferred shares shall be considered
"Registrable Securities," for purposes of this Section 1, provided that (i) said
transferee acquires Registrable Securities (including shares of Designated
Preferred prior to conversion into Registrable Securities) in a private
transaction, and (ii) the Company is given written notice by such Holder at the
time of or within a reasonable time (but not more than 30 days) after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, subject to said transferee's agreement to be bound by and comply
with the provisions of this Section 1.
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1.14. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Section 1 shall terminate (i) upon the seventh anniversary of
the effective date of the Initial Public Offering or (ii) if earlier, as to any
individual Holder, at such time after the Company's Initial Public Offering as
all Registrable Securities held by such Holder can be sold within any
three-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 (including Rule 144(k)) promulgated
thereunder.
1.15. "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that it
shall not, to the extent requested by the Company and the underwriters managing
any underwritten offering of the Company's Common Stock (or other securities),
sell or otherwise transfer or dispose of (other than to those who agree to be
similarly bound) any Registrable Securities or any other securities of the
Company during the one hundred eighty (180) day period following the effective
date of a registration statement of the Company filed in connection with the
Company's Initial Public Offering. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Registrable Securities and other securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such one hundred eighty (180) day period.
1.16. OTHER REGISTRATION RIGHTS. The Company shall not grant to any third
party any registration rights more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.
1.17. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Designated Preferred by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Designated Preferred as so changed.
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS
2.1. FINANCIAL INFORMATION. Subject to Section 2.16, the Company will
furnish the following reports to the Stockholders for so long as the
Stockholders are Holders of Registrable Securities:
(A) As soon as practicable after the end of each fiscal year (other
than the fiscal year ended March 31, 1996), and in any event within 90 days
thereafter, audited consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income, stockholders' equity and cash flows of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of recognized national standing
selected by the Company; and
(B) As soon as practicable after the end of each fiscal quarter, and
in any event within 45 days thereafter, unaudited consolidated balance sheets of
the Company and its subsidiaries, if any, as of the end of such quarter, and
unaudited consolidated statements of income, stockholders'
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equity and cash flows of the Company and its subsidiaries, if any, for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, prepared in accordance with generally accepted accounting
principles (but subject to normal year-end audit adjustments) and certified by
the chief financial officer.
2.2. ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 2.1 and Section 2.3 may be assigned by the Stockholders (or
by any permitted transferee of any such rights) so long as (i) the Company is
given notice of any such assignment within a reasonable time after the date the
same is effected, (ii) the transferee shall have acquired Registrable Securities
(including shares of Designated Preferred prior to conversion into Registrable
Securities) in a private transaction, and (iii) the transferee is not engaged in
a business that is competitive with the Company.
2.3. INSPECTION AND VISITATION RIGHTS. Each Stockholder, so long as such
Stockholder holds Registrable Securities, shall have the right to visit and
inspect the Company's principal place of business, subject to such limitations
and restrictions as the President of the Company in good faith determines to be
necessary for the protection of the Company's Proprietary Information.
2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
for the purpose of effecting the conversion of the Designated Preferred and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Designated Preferred from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Designated Preferred or otherwise to comply with
the terms of this Agreement, the Company will forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
The Company will obtain any authorization, consent, approval or other action by
or make any filing with any court or administrative body that may be required
under applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Designated Preferred.
2.5. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain and cause
each of its subsidiaries to maintain as to their respective properties and
business, with financially sound and reputable insurers, insurance against such
casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient.
2.6. RESTRICTIVE AGREEMENTS PROHIBITED. Neither the Company nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
the Company's performance of this Agreement, the Management Rights Agreements,
the Voting Agreements or the Restated Certificate.
2.7. TRANSACTIONS WITH AFFILIATES. Except for transactions contemplated by
the Agreements or as otherwise approved by the Board of Directors, neither the
Company nor any of its subsidiaries shall enter into any material transaction
with any director, officer, employee or holder of more than 5% of the
outstanding capital stock of any class or series of capital stock of the Company
or any of its subsidiaries, or to the Company's knowledge any member of the
family
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of any such person, any corporation, partnership, trust or other entity in which
any such person, or member of the family of any such person, is a director,
officer, trustee, partner or holder of more than 5% of the outstanding capital
stock thereof, except for transactions on customary terms related to such
person's employment.
2.8. EXPENSES OF DIRECTORS. The Company shall promptly reimburse in full,
each director of the Company who is not an employee of the Company for all of
his reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any Committee thereof.
2.9. BYLAWS. The Company shall at all times cause its Bylaws to provide
that (a) any three directors shall have the right to call a meeting of the Board
of Directors and (b) the number of directors fixed in accordance therewith shall
in no event conflict with any of the terms or provisions of the Designated
Preferred as set forth in the Restated Certificate. The Company shall at all
times maintain provisions in its Bylaws and/or Certificate of Incorporation
indemnifying all directors against liability and absolving all directors from
liability to the Company and its stockholders to the maximum extent permitted
under the laws of the State of Delaware.
2.10. PERFORMANCE OF CONTRACTS. The Company shall not amend, modify,
terminate, waive or otherwise alter, in whole or in part, any of the Proprietary
Information Agreements or the provisions contained in the Employment Amendment
without the approval of the Company's Board of Directors.
2.11. PROPRIETARY INFORMATION AGREEMENTS. The Company shall use its best
efforts to obtain, and shall cause its subsidiaries to use their best efforts to
obtain, a Proprietary Information Agreement in substantially the form of Exhibit
E to the Purchase Agreement from all future officers, key employees and other
employees who will have access to confidential information of the Company or any
of its subsidiaries, upon their employment or engagement by the Company or any
of its subsidiaries. The Company shall use its reasonable best efforts to cause
any consultant with whom the Company contracts to agree to maintain the
confidentiality of the Company's confidential or Proprietary information, and to
assign to the Company any proprietary rights arising from work performed by the
consultant for the Company.
2.12. COMPLIANCE WITH LAWS. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise.
2.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall keep, and
cause each subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied, reflecting
financial transactions of the Company and each subsidiary in accordance with
GAAP.
2.14. U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall provide
prompt written notice to each Stockholder following any "determination date" (as
defined in Treasury Regulation Section 1.897-2(c)(i)) on which the Company
becomes a United States real property holding corporation. In addition, upon a
written request by any Stockholder, the Company shall provide such
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Stockholder with a written statement informing the Stockholder whether such
Stockholder's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Stockholder shall be delivered to such Stockholder within ten
(10) days of such Stockholder's written request therefor. In addition, upon
request by any foreign Stockholder but subject to the succeeding sentence, the
Company shall provide along with such statement either or both of the following
documents: (i) an affidavit in conformance with the requirements of Section
1445(b)(3) of the Code and the regulations thereunder or (ii) a notarized
statement, executed by an officer having actual knowledge of the facts, that the
shares of Company stock held by such Stockholder are of a class that is
regularly traded on an established securities market, within the meaning of
Section 1445(b)(6) of the Code and the regulations thereunder. If the Company is
unable to provide either of the documents described in (i) or (ii) above upon
request, it shall promptly, and in any event within such ten (10) day period,
notify such Stockholder in writing of the reason for such inability. Finally,
upon the request of a foreign Stockholder and without regard to whether either
document described in (i) or (ii) above has been requested, the Company shall
reasonably cooperate with the efforts of such foreign Stockholder to obtain a
"qualifying statement" within the meaning of Section 1445(b)(4) of the Code and
the regulations thereunder or such other documents as would excuse a transferee
of a foreign Stockholder's interest from withholding of income tax imposed
pursuant to Section 897(a) of the Code.
2.15. RULE 144A INFORMATION. The Company shall, at all times during which
it is not subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, provide in writing, upon the
written request of any Stockholder or a prospective buyer of Registrable
Securities (including Designated Preferred before conversion into Registrable
Securities) from any Stockholder, all information required by Rule 144A(d)(4)(i)
of the General Regulations promulgated by the Commission under the Securities
Act ("RULE 144A INFORMATION"). The Company's obligations under this Section 2.15
shall at all times be contingent upon the relevant Stockholder's obtaining from
the prospective buyer of such Registrable Securities a written agreement to take
all reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than a person who will assist such buyer in
evaluating the purchase of such Registrable Securities.
2.16. TERMINATION OF COVENANTS. The covenants set forth in Section 2.1,
Sections 2.3 through 2.13 and Section 2.15 shall terminate and be of no further
force or effect upon the earlier of (i) the closing of the Initial Public
Offering, or (ii) the date on which none of the Registrable Securities
(including shares of Designated Preferred prior to conversion into Common Stock)
is outstanding. The Covenants set forth in Section 2.14 shall terminate five (5)
years after the closing of the Initial Public Offering.
2.17. CONFIDENTIAL INFORMATION, ETC. Each Holder agrees that (i) all
information received by it pursuant to this Section 2 which the Company
designates as or promptly confirms in writing to be "Confidential" or the like,
and (ii) any other information relating to the Company's technology, processes
or formulas that is disclosed by the Company to any Holder in writing and is
marked "Confidential" or the like, shall be considered confidential information.
Each Holder further agrees that
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it shall hold all such confidential information in confidence and shall not,
without the Company's prior express written consent, disclose any such
confidential information to any third party other than its counsel, accountants,
employees and other professional advisors, representatives and agents, all of
whom shall have a need to know such information and shall be bound by the
provisions of this Section 2.17, nor shall such Holder, without the Company's
prior express written consent, use such confidential information for any purpose
other than evaluation of such Holder's investment in the Company; provided,
however, that the foregoing obligation to hold in confidence and not to disclose
confidential information shall not apply to any such information that (a) was
known to the public or the Holder or its representatives prior to disclosure by
the Company, (b) becomes known to the public through no fault of such Holder,
(c) is disclosed to such Holder on a non-confidential basis by a third party
having a legal right to make such disclosure, (d) is independently developed by
such Holder, or (e) is required to be disclosed as a matter of law or pursuant
to court order; and provided further that the foregoing obligation to hold in
confidence and not to disclose confidential information shall not prohibit such
Holder from disclosing to its partners or shareholders financial and other
information described in clause (i) of this Section 2.17 which is of a type
customarily provided by such Holder to such partners or shareholders in the
ordinary course or from disclosing to a bona-fide prospective transferee of its
securities of the Company such financial and other information described in such
clause (i) which is reasonably necessary to provide such transferee with
adequate disclosure of material information.
3. RIGHTS OF FIRST REFUSAL
3.1. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(A) The Company hereby grants to each Stockholder the right of first
refusal to purchase its Pro Rata Share (defined below) of all (or any part) of
New Securities (defined below) that the Company may from time to time propose to
sell and issue. Stockholder's "PRO RATA SHARE," for purposes of this Section 3,
is the ratio of the number of shares of Common Stock (assuming conversion of all
shares of Designated Preferred) then held by such Stockholder to the total
number of shares of Common Stock then outstanding (assuming conversion of all
shares of Designated Preferred). This right of first refusal shall be subject to
the following provisions:
(B) "NEW SECURITIES" shall mean any Common Stock or Preferred Stock
of the Company, whether now authorized or not, and rights, options, or warrants
to purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "NEW SECURITIES" does
not include (i) the Designated Preferred; (ii) securities issuable upon
conversion of or with respect to the Designated Preferred; (iii) shares of the
Company's Common Stock (or related options) issued to officers, directors,
employees of and/or consultants to the Company pursuant to plans or agreements
as approved by the Company's Board of Directors; (iv) shares of the Company's
Common Stock or Preferred Stock issued to holders of the Designated Preferred in
connection with any stock split, stock dividend, or recapitalization by the
Company; (v) securities issued in connection with any equipment leasing,
technology licensing, corporate partnering, strategic alliance, acquisition,
merger, purchase of assets or similar transaction as approved by the Company's
Board of Directors;
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(vi) shares of Common Stock issued to holders of Common Stock in connection with
a stock split or stock dividend with respect to the Common Stock; and (vii)
shares issued in the Initial Public Offering.
(C) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give the Stockholders written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. The Stockholders shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase for cash some or all of its Pro Rata Share of such New Securities for
the price and upon the general terms, including deferred payment, if any,
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(D) In the event that any Stockholder (a "NON-EXERCISING
STOCKHOLDER") fails to exercise in full the right of first refusal within said
twenty (20) day period, notice shall promptly be given by the Company to those
Stockholders who have exercised the right of first refusal in full. Such
Stockholders shall have the right for an additional ten (10) days to elect by
notice to the Company to purchase any or all of the New Securities which the
Non-exercising Stockholders were entitled to purchase but elected not to, with
such right of over-subscription to be allocated among such Stockholders in
accordance with their respective Pro Rata Shares or as they may otherwise agree.
After the aggregate thirty (30) day period during which Stockholders may
exercise their first refusal right, the Company shall have one hundred twenty
(120) days thereafter to sell (or enter into an agreement pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within one
hundred twenty (120) days from the date of said agreement) the New Securities
respecting which the Stockholder's rights were not exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Company's notice. In the event the Company has not sold the New Securities
within said one hundred twenty (120) day period (or sold and issued New
Securities in accordance with the foregoing agreement within one hundred twenty
(120) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities, without first offering such securities to the
Stockholders in the manner provided above.
(E) The right of first refusal granted under this Section 3.1 shall
not apply to and shall expire upon the closing of the Company's Initial Public
Offering.
(F) The rights granted pursuant to this Section 3.1 may be assigned
by the Stockholder (or by any permitted transferee of any such rights) so long
as (i) the Company is given notice of any such assignment within a reasonable
time after the date the same is effected and (ii) the transferee shall have
acquired Registrable Securities (including shares of Designated Preferred prior
to conversion into Registrable Securities) in a private transaction.
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4. MISCELLANEOUS
4.1. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
4.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to a Stockholder, to such Stockholder's address
set forth in the Purchase Agreement or to such other address as such Stockholder
shall have furnished to the Company in writing, (b) if to any other holder of
Registrable Securities, at such address as such holder shall have furnished the
Company in writing, or (c) if to the Company, to its address set forth above and
addressed to the attention of the President or at such other address as the
Company shall have furnished to the Stockholders. All notices and other
communications pursuant to the provisions of this Section 4.4 shall be deemed
delivered when mailed or sent by facsimile. Notwithstanding the foregoing, any
notice or communication to an address outside the United States shall be sent by
facsimile and confirmed in writing contemporaneously sent by two day guaranteed
international courier.
4.5. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.7. APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of (i) the Company and (ii) the holders
of at least two-thirds (2/3) of the shares which are then Registrable
Securities. Any amendment, termination or waiver effected in accordance with
this section shall be binding upon the Stockholders, each of their transferees
and the Company. The Stockholders acknowledge that by the operation of this
Section the holders of two-thirds (2/3) of the outstanding Registrable
Securities as aforesaid may have the right and power to diminish or eliminate
all rights of such Stockholder under this Agreement.
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The foregoing Amended and Restated Investors Rights Agreement is hereby
executed as of the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By: __________________________
Title: __________________________
THE PURCHASERS:
JAPAN ASSOCIATED FINANCE CO., LTD. JAFCO G-6(A) INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-2 INVESTMENT JAFCO G-6(B) INVESTMENT
ENTERPRISE PARTNERSHIP ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-3 INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ ________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: __________________________
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THE PREVIOUS INVESTORS:
AVALON MEDICAL PARTNERS, L.P.
By: __________________________
Title: __________________________
AVALON BIOVENTURES II, L.P.
By: __________________________
Title: __________________________
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇. ▇▇
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.
By: __________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
By: __________________________
Title: __________________________
21
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
23
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By: __________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By: __________________________
Title: Authorized Signatory
DP III ASSOCIATES, L.P.
By: One ▇▇▇▇▇▇ Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One ▇▇▇▇▇▇ Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: ___________________________
Attorney - in - Fact
22
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
24
PACKARD INSTRUMENT COMPANY, INC.
By: __________________________
Title: __________________________
SEQUANA THERAPEUTICS, INC.
By: __________________________
Title: __________________________
GC&H INVESTMENTS
By: __________________________
Title: __________________________
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. GLOBE
23
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
25
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ LUETOLF
FOR ▇▇▇▇▇▇ ▇.▇. LANGINGER
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
24
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
26
THE ▇▇▇▇▇▇ FAMILY TRUST
By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., TRUSTEE
By:______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEE
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ GROUP
By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:___________________________
25
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
27
EXHIBIT A
PREVIOUS INVESTORS
Avalon Medical Partners, L.P.
Avalon Bioventures II, ▇.▇.
▇▇▇▇▇▇▇▇▇ Capital Partners, ▇.▇. ▇▇
Abingworth Bioventures SICAV
New Enterprises Associates VI, Limited partnership
NEA Ventures 1996, L.P.
DP III Associates, L.P.
Domain Partners III, L.P.
Biotechnology Investments Limited
Packard Instrument Company, Inc.
Sequana Therapeutics, Inc.
GC&H Investments
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Globe
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Luetolf
for ▇▇▇▇▇▇ ▇.▇. Langinger
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇ Family Trust
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Group
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
28
EXHIBIT B
PURCHASERS
Japan Associated Finance Co., Ltd.
JAFCO R-2 Investment Enterprise Partnership
JAFCO R-3 Investment Enterprise Partnership
JAFCO G-6(A) Investment Enterprise Partnership
JAFCO G-6(B) Investment Enterprise Partnership
▇▇▇▇▇ ▇. ▇▇▇▇▇
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
29
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.............................1
1.1. Restrictions on Transferability...................................1
1.2. Certain Definitions...............................................1
1.3. Restrictive Legend(s).............................................2
1.4. Notice of Proposed Transfers......................................3
1.5. Demand Registration Rights........................................4
1.6. Company Registration..............................................6
1.7. Form S 3 Registration Rights......................................6
1.8. Expenses of Registration..........................................8
1.9. Registration Procedures...........................................8
1.10. Indemnification..................................................9
1.11. Information by Holder...........................................11
1.12. Rule 144 Reporting..............................................11
1.13. Transfer of Registration Rights.................................12
1.14. Termination of Registration Rights..............................12
1.15. "Market Stand Off" Agreement....................................12
1.16. Other Registration Rights.......................................12
1.17. Changes in Common Stock or Preferred Stock......................13
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS....................13
2.1. Financial Information............................................13
2.2. Assignment of Rights to Financial Information....................13
2.3. Inspection and Visitation Rights.................................13
2.4. Reserve for Conversion Shares....................................13
2.5. Properties, Business, Insurance..................................14
2.6. Restrictive Agreements Prohibited................................14
2.7. Transactions with Affiliates.....................................14
2.8. Expenses of Directors............................................14
2.9. Bylaws...........................................................14
2.10. Performance of Contracts........................................15
2.11. Proprietary Information Agreements..............................15
2.12. Compliance with Laws............................................15
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30
2.13. Keeping of Records and Books of Account.........................15
2.14. U.S. Real Property Interest Statement...........................15
2.15. Rule 144A Information...........................................16
2.16. Termination of Covenants........................................16
2.17. Confidential Information, etc...................................16
3. RIGHTS OF FIRST REFUSAL..................................................17
3.1. Right of First Refusal on Company Issuances......................17
4. MISCELLANEOUS............................................................18
4.1. Governing Law....................................................18
4.2. Successors and Assigns...........................................18
4.3. Entire Agreement.................................................18
4.4. Notices, etc.....................................................18
4.5. Counterparts.....................................................19
4.6. Severability.....................................................19
4.7. Approval of Amendments and Waivers...............................19
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