1
Exhibit 10.17
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
the 30th day of October, 1991 by and between BIOSITE DIAGNOSTICS INCORPORATED,
a Delaware corporation (the "Company"), and the investors listed on Schedule A
hereto, each of which is herein referred to as an "Investor."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Series D Preferred Stock.
(a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the first Closing (as defined
below) the Restated Certificate of Incorporation in the form attached hereto as
Exhibit A (the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement,
each Investor agrees, severally, to purchase at the Closing and the Company
agrees to sell and issue to each Investor at the Closing that number of shares
of the Company's Series D Preferred Stock set forth opposite such Investor's
name on Schedule A hereto for the purchase price of $3.00 per share.
(c) The Company may sell authorized but unissued shares
of Series D Preferred Stock not sold at the Closing referred to in Section 1.2
below at one or more additional closings to any purchaser who makes the
representations set forth in Section 3.8 hereof at a price of $3.00 per share,
provided that the agreements with respect to such sales are executed not later
than December 29, 1991 and provided further that the terms and conditions in
such agreement are no more favorable to such purchaser than those contained in
this Agreement. Any such purchaser shall be deemed to be an Investor for
purposes of this Agreement, and the shares so sold shall be deemed to have been
acquired hereunder.
1.2 Closing. A purchase and sale of the Series D Preferred
Stock shall take place at the offices of Pillsbury Madison & Sutro, 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, at 10:00 A.M., on October 30,
1991 or at such other time and place as the Company and Investors acquiring in
the aggregate more than half the shares of Series D Preferred Stock sold at
such time and place pursuant hereto mutually agree upon (verbally or in
writing) (which time and place are designated as the "Closing"). At the
Closing the Company shall deliver to each Investor a certificate representing
the Series D Preferred Stock which such Investor is purchasing against delivery
to the
-1-
2
Company by such Investor of a bank check or bank wire in the amount of the
purchase price therefor payable to the Company's order or by delivery of
evidences of indebtedness of the Company for cancellation by the Company.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to each Investor that, except as set
forth on the Schedule of Exceptions furnished to each Investor and specifically
identifying the relevant subparagraph hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on its business or properties.
2.2 Capitalization. The authorized capital of the Company
consists, or will consist prior to the Closing, of:
(i) Preferred Stock. 6,970,503 shares of preferred stock
(the "Preferred Stock"), 610,000 shares of which have been designated
Series A Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"), 2,156,336 shares of which have been designated
Series B Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock"), 2,204,167 shares of which have been designated
Series C Preferred Stock, par value $.01 per share (the "Series C
Preferred Stock") and 2,000,000 shares of which have been designated
Series D Preferred Stock, par value $.01 per share (the "Series D
Preferred Stock"). There are 610,000 shares of Series A Preferred
Stock, 2,156,336 shares of Series B Preferred Stock and 2,204,167
shares of Series C Preferred Stock issued and outstanding and, based
upon the Company's records, such outstanding shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
are owned by the persons and in the numbers specified in the
stockholder list provided supplementally to special counsel to the
Investors. The rights, preferences and privileges of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock are or as of the Closing will be as
stated in the Company's Restated Certificate.
(ii) Common Stock. 12,000,000 shares of common stock (the
"Common Stock"), of which 1,134,397 shares
-2-
3
are issued and outstanding and, based upon the Company's records, are
owned by the persons, and in the numbers specified in the stockholder
list provided supplementally to special counsel to the Investors.
(iii) Agreements for Purchase of Shares. Except for (a) the
conversion privileges of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock, (b) the right of first offer of the Investors
provided in Section 8.4 hereof, (c) the right of first offer provided
for in Section 8.4 of the Series A Preferred Stock Purchase Agreement
dated as of May 5, 1988 between the Company and the investors listed
therein (the "Series A Agreement"), (d) the right of first offer
provided for in Section 8.4 of the Series B Preferred Stock Purchase
Agreement dated as of July 24, 1989 between the Company and the
investors listed therein (the "Series B Agreement"), (e) the right of
first offer provided for in Section 8.4 of the Series C Preferred
Stock Purchase Agreement dated as of June 7, 1990 between the Company
and the investors listed therein (the "Series C Agreement") and (f)
Options to Purchase an aggregate of 151,150 shares of Common Stock
granted pursuant to the Amended and Restated 1989 Stock Plan of the
Company (the "Plan"), there are no outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its
capital stock.
2.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, partnership or other business entity.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Series D Preferred Stock being
sold hereunder and the Common Stock issuable upon conversion of the Series D
Preferred Stock, to the extent that the foregoing requires performance on or
prior to the Closing, has been taken or will be taken on or prior to the
Closing, and this Agreement constitutes a valid and legally binding obligation
of the Company enforceable in accordance with its terms.
2.5 Valid Issuance of Preferred and Common Stock.
(a) The Series D Preferred Stock which is being purchased by
the Investors hereunder, when issued, delivered and paid for in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly authorized and
-3-
4
issued, fully paid and nonassessable and, based in part upon the
representations of the Investors in this Agreement, will be issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the Series D Preferred Stock purchased under
this Agreement has been or will be on or prior to the Closing, duly and validly
reserved for issuance and, upon issuance, will be duly and validly issued,
fully paid and nonassessable.
(b) The outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock are duly
and validly authorized and issued, fully paid and nonassessable, and were
issued in compliance with federal and state securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for the filing pursuant to
section 25102(f) of the California Corporate Securities Law of 1968, as
amended, and the rules thereunder, and any other post-sale filings pursuant to
applicable state securities laws, which filings will be effected prior to any
applicable deadlines.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
2.8 Invention and Secrecy and Common Stock Purchase
Agreements. Each key employee of the Company has executed an Employee's
Invention and Proprietary Information Agreement in substantially the form
provided to special counsel to the Investors. The Company, after reasonable
investigation, is not aware
-4-
5
that any of its key employees are in violation thereof, and the Company will
use its best efforts to prevent any such violation. Each holder of Common
Stock of the Company has entered into a Common Stock Purchase Agreement in
substantially the form made available to special counsel to the Investors.
2.9 Patents and Trademarks. The Company has sufficient title
and ownership of all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted
without any conflict with or infringement of the rights of others. There are
no outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's
knowledge, after due inquiry, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated,
which conflict, breach or default would be materially adverse to the Company.
It is not and it will not be necessary for the Company to utilize any
inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by the Company.
2.10 Compliance with Other Instruments. The Company is not
in violation or default of any provisions of its Certificate of Incorporation
or Bylaws, as amended, or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, to its knowledge,
of any provision of federal or state statute, rule or regulation applicable to
the Company, which violation or default would be materially adverse to the
Company. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under
-5-
6
any such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company, which violation, default, conflict or event would be
materially adverse to the Company.
2.11 Agreements; Action.
(a) Except for the agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates or any affiliate
thereof.
(b) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound which involve (i) obligations of, or payments to the Company in
excess of, $50,000, other than liabilities or obligations of the Company for
compensation under employment agreements, (ii) the license of any patent,
copyright, trade secret or other proprietary right of the Company or (iii)
joint venture, partnership or other contract or arrangement involving the
sharing of profits or proprietary information or know how (other than
nondisclosure agreements), (iv) any contract or agreement limiting the
Company's right to engage in any business activity or compete with any person
or entity, or (v) any other material agreement.
(c) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred any indebtedness for money borrowed
or incurred any other liabilities individually in excess of $50,000 or in
excess of $100,000 in the aggregate, other than liabilities or obligations of
the Company for compensation under employment agreements, (iii) made any loans
or advances to any person, other than ordinary advances for travel expenses or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the sale of its inventory in the ordinary course of business.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate of Incorporation or Bylaws, which adversely affects in any
material respect its business as now conducted or as proposed to be conducted,
its properties or its financial condition.
(e) The Company has not engaged in the past three months in
any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of
-6-
7
the assets of the Company or a transaction or series of related transactions in
which more than 50 percent of the voting power of the Company is disposed of,
or (iii) regarding any other form of liquidation, dissolution or winding up of
the Company.
2.12 Disclosure. The Company believes it has fully provided
each Investor with all the information which such Investor has requested for
deciding whether to purchase the Series D Preferred Stock and all information
reasonably necessary to enable such Investor to make such decision. Neither
this Agreement nor any other statement or certificate made or delivered in
connection herewith contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading.
2.13 Registration Rights. Except as provided in Section 7 of
this Agreement, Section 7 of the Series A Agreement, Section 7 of the Series B
Agreement and Section 7 of the Series C Agreement, the Company has not granted
or agreed to grant any registration rights, including piggy-back rights, to any
person or entity.
2.14 Corporate Documents. The Restated Certificate of
Incorporation and Bylaws of the Company are in the form previously provided
special counsel to the Investors.
2.15 Title to Property and Assets. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to the best of its
knowledge, holds a valid leasehold interest free of any material liens, claims
or encumbrances. All the Company's personal properties, whether owned or
leased, are in good operating condition, normal wear and tear excepted, and are
adequate and suitable for the purposes for which they are currently being used.
2.16 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as described in section 3(2)(A) or section 3(2)(B) of the
Employee Retirement Income Security Act of 1974.
2.17 Tax Returns and Payments. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due prior to the time penalties would accrue thereon. The
provision for taxes of the Company is adequate for taxes due or accrued as of
the date thereof.
-7-
8
2.18 Insurance. The Company has in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed.
2.19 Minute Books. The minute books of the Company made
available to special counsel to the Investors contain a complete summary of all
meetings of directors and stockholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.20 Labor Agreements and Actions. The Company is not bound
by or subject to (and none of its assets or properties is bound by or subject
to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, nor is the Company aware of any labor organization activity
involving its employees. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing.
2.21 Real Property Holding Company. The Company is not a
"United States real property holding corporation" (as that term is defined in
Treasury Regulation section 1.897-2(b)). If at any time in the future the
Company shall become a "United States real property holding corporation," the
Company shall, as promptly as practicable, notify each foreign investor.
Within 30 days after receipt of a request from a foreign investor, the Company
shall prepare and deliver to such foreign investor the statement required under
Treasury Regulation section 1.897-2(h)(1)(i) and either or both of the
following documents: (i) an affidavit in conformance with the requirements of
Internal Revenue Code of 1986, as amended ("IRC") section 1445(b)(3) or (ii) a
notarized statement, executed by an officer having actual knowledge of the
facts, that the shares of Company stock held by such foreign investor are of a
class that is regularly traded on an established securities market, within the
meaning of IRC section 1445(b)(6). If the Company is unable to provide either
document described in (i) or (ii) above, if requested, it shall promptly notify
such foreign investor in writing of the reasons for such inability. Finally,
upon the request of a foreign investor and without regard to whether either
document described in (i) or (ii) above has been requested, the Company shall
cooperate fully with the efforts of such foreign investor to obtain a
"qualifying statement," within the meaning of IRC section 1445(b)(4), or such
other documents as would excuse a transferee of a foreign investor's interest
-8-
9
from withholding of income tax imposed pursuant to IRC section 897(a).
2.22 Financial Statements. The Company has delivered to each
Investor its audited financial statements (balance sheet and profit and loss
statement) at and for the period from inception through December 31, 1990, and
its unaudited interim financial statements at and for the period from January
1, 1991 through August 31, 1991 (the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the period indicated and are consistent with each
other. The Financial Statements accurately set out and describe the financial
condition and operating results of the Company as of the date, and for the
period, indicated therein. Except as set forth in the Financial Statements,
the Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to August
31, 1991, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements, which,
individually or in the aggregate, are not material to the financial condition
or operating results of the Company. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.23 Voting Arrangements. Except as may be provided in
Section 5.6 hereof, to the Company's knowledge there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the voting of
their respective shares.
3. Representations, Warranties, Covenants and Agreements of
Each Investor. Each Investor hereby represents, warrants, covenants and agrees
that:
3.1 Authorization. This Agreement constitutes its valid and
legally binding obligation.
3.2 Purchase Entirely for Own Account. This Agreement is
made with each Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Series D Preferred Stock to be received by such
Investor and the Common Stock issuable upon conversion thereof (collectively,
the "Securities") will be acquired for investment for such Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, each Investor further represents that
such Investor does not have any contract, undertaking, agreement
-9-
10
or arrangement with any person to sell, transfer or grant participations to
such person or to any third person, with respect to any of the Securities.
Each Investor represents that it has full power and authority to enter into
this Agreement.
3.3 Disclosure of Information. Each Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series D Preferred Stock. Each Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series D Preferred Stock. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement.
3.4 Investment Experience. Each Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series D
Preferred Stock. If other than an individual, Investor also represents it has
not been organized solely for the purpose of acquiring the Series D Preferred
Stock.
3.5 Restricted Securities. Each Investor understands that
the shares of Series D Preferred Stock it is purchasing are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities
may be resold only in certain limited circumstances without registration under
the Securities Act of 1933, as amended (the "Securities Act"). In this
connection each Investor represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
3.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, each Investor further agrees not
to make any disposition of all or any portion of the Series D Preferred Stock
(or the Common Stock issuable upon the conversion thereof) unless and until:
(a) 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
(b) (i) Such 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 (ii)
if reasonably requested by the Company, such Investor shall have furnished the
Company with an
-10-
11
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, as currently in existence, except in
unusual circumstances.
(c) Notwithstanding the provisions of subsections (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Investor which is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his spouse or lineal
descendants or ancestors, if the transferee agrees in writing to be subject to
the terms of this Agreement to the same extent as if he were an original
Investor hereunder; provided, however, that the provisions of Section 3.6(b)
above shall apply if the Company or its counsel are unable to determine if such
transfer may be made in compliance with federal and applicable state securities
laws.
3.7 Legends. It is understood that the certificates
evidencing the Series D Preferred Stock (and the Common Stock issuable upon
conversion thereof) may bear one or all of the following legends:
(a) "The shares represented hereby have not been registered
under the United States Securities Act of 1933, and may not be sold,
transferred, assigned, pledged or hypothecated absent an effective registration
thereof under such act or compliance with Rule 144 promulgated under such act,
or unless the Company has received an opinion of counsel, satisfactory to the
Company and its counsel, that such registration is not required."
(b) Any legend required by the laws of the State of
California or other jurisdiction, including any legend required by the
California Department of Corporations.
(c) "The Provisions of Article IV, Section (B)4(d) of the
Company's Restated Certificate of Incorporation may result in more than one
Conversion Price for shares of Series D Preferred Stock. The Company shall
maintain a ledger of such conversion prices for each holder of Series D
Preferred Stock, which information shall be available upon request to the
Secretary of the Company by any Person."
(d) "The Company and the original purchaser of the shares
of Series D Preferred Stock represented by this certificate have entered into
an agreement which waives the adjustment of the Conversion Price of such shares
in certain circumstances. A copy of the agreement is available from the
Secretary of the Company upon request."
-11-
12
3.8 Accredited or Foreign Investor. Except as disclosed to
the Company in writing, each Investor either (i) is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, of the SEC under the
Securities Act, or (ii) is neither (x) a national or resident of the United
States, its territories, possessions or any area subject to its jurisdiction,
nor (y) a corporation, partnership, trust or other entity created or organized
in the United States, its territories, possessions or any area subject to its
jurisdiction, nor (z) a corporation, partnership, trust or other entity, any of
the equity owners of which is described in clause (x) or (y) above and agrees
not to sell, hypothecate, pledge or otherwise dispose of any interest in the
Securities in the United States, its territories, possessions or any area
subject to its jurisdiction, or to any person who is a national thereof or
resident therein (including any estate of such person), or any corporation,
partnership or other entity created or organized therein, unless such
securities have been either registered under the Securities Act, or are exempt
from the registration requirements of the Securities Act, in the opinion of the
Company's counsel, and the Investor has complied with any restrictions on
transfer contained in this Agreement.
3.9 Confidentiality. Each Investor hereby represents,
warrants and covenants that it shall maintain in confidence, and shall not use
(except to evaluate its investment in the Company) or disclose without the
prior written consent of the Company, any confidential information that is
furnished to it by the Company in connection with this Agreement, including
(without limitation) all financial statements, budgets and other information
delivered or provided to Investors pursuant to Section 8 hereof. This
obligation of confidentiality shall not apply, however, to any information (a)
in the public domain through no unauthorized act or failure to act by any
Investor, (b) lawfully disclosed to such Investor by a third party who
possessed such information without any obligation of confidentiality or (c)
lawfully developed by such Investor independent of any disclosure by the
Company. Each Investor further covenants that it shall return to the Company
all tangible materials containing such information upon reasonable request by
the Company if such Investor is no longer a holder of shares of capital stock
of the Company.
3.10 Removal of Legends; Further Covenants.
(a) Any legend endorsed on a certificate pursuant to Section
3.7(a) hereof shall be removed (i) if the shares of the Series D Preferred
Stock or Common Stock issued upon conversion thereof represented by such
certificate shall have been effectively registered under the Securities Act or
otherwise lawfully sold in a public transaction or in accordance with Rule 144,
(ii) if such shares may be transferred in compliance with Rule 144(k)
promulgated under the Securities Act, or (iii) if the holder of such shares
shall have provided the Company with
-12-
13
an opinion of counsel, in form and substance acceptable to the Company and its
counsel and from attorneys reasonably acceptable to the Company and its
counsel, stating that a public sale, transfer or assignment of such shares may
be made without registration.
(b) Any legend endorsed on a certificate pursuant to Section
3.7(b) hereof shall be removed if the Company receives an order of the
appropriate state authority authorizing such removal or if the holder of the
Series D Preferred Stock or Common Stock issued upon conversion thereof
provides the Company with an opinion of counsel, in form and substance
acceptable to the Company and its counsel and from attorneys reasonably
acceptable to the Company and its counsel, stating that such state legend may
be removed.
(c) Each Investor further covenants that such Investor will
not transfer the Series D Preferred Stock or any securities received in
exchange therefor or on conversion thereof, in violation of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the
rules of the Commission promulgated thereunder, including rule 144 under the
Securities Act. Further, each Investor agrees that, prior to the closing of
the corporation's initial public offering, such Investor will not transfer any
of such securities in a public offering without the Company's prior consent,
even if he is otherwise permitted to transfer them pursuant to Rule 144(k);
provided that the foregoing shall not affect Investor's rights under Section 7.
3.11 Waiver of Antidilution Adjustment.
(a) Each Investor purchasing shares of Series D Preferred
Stock hereunder hereby agrees that in the event that:
(i) the Company shall give a holder of Series D Preferred
Stock twenty calendar days notice of the Company's intent to offer a
Dilutive Issuance (as defined below) together with the terms and
conditions of such Dilutive Issuance, and
(ii) the Company shall offer such holder of Series D
Preferred Stock that portion (a "Pro-Rata Portion") of such Dilutive
Issuance which equals the proportion that the number of shares of
Common Stock issuable upon conversion of the Series D Preferred Stock
then held by such holder bears to the total number of shares of Common
Stock issuable upon conversion of the Preferred Stock then outstanding
(excluding the Series A Preferred Stock), or such lesser portion as
the Company may specify in writing, and
-13-
14
(iii) such holder fails to tender to the Company, other than
at the written request of the Company, the purchase price of such
holder's Pro-Rata Portion (or such lesser portion as the Company may
specify in writing) of such Dilutive Issuance on the scheduled closing
of such Dilutive Issuance (which shall not be less than 20 days after
the written notice provided in (i) above),
then no adjustment of the Conversion Price shall be made (other than
adjustments made prior to the time of such Dilutive Issuance), and any future
adjustment shall be deemed waived, with respect to the shares of Series D
Preferred Stock held by such holder. Notwithstanding the foregoing: (a) if no
holder of Series D Preferred Stock purchases any part of such Dilutive
Issuance, the provisions of this Section 3.11(a) shall not apply to such
Dilutive Issuance; (b) in the event any Dilutive Issuance is in excess of
$8,000,000, the provisions of this Section 3.11(a) shall not apply to any
holder who purchases less than such holder's Pro-Rata Portion of such Dilutive
Issuance if the purchase price of such lesser portion is an amount equal to or
greater than such holder's Pro-Rata Portion of $8,000,000; (c) it is understood
and agreed that if the Company only offers an Investor an opportunity to
purchase less than an Investor's Pro Rata Portion, that no waiver shall result
from Investor purchasing such lesser portion (including, without limitation,
the portion of such Dilutive Issuance Investor may purchase under Section 8.4);
and (d) the provisions of this Section 3.11(a) shall apply to the closing of
only one Dilutive Issuance in any 12-month period.
(b) A "Dilutive Issuance" shall mean an issuance and sale of
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be Issued pursuant to Article IV, Section (B)4(d)(ii) of the Restated
Certificate) with respect to the Series D Preferred Stock in excess of
$250,000. Defined terms in this Section 3.11 not otherwise defined in this
Agreement shall have the meanings given such terms in the Restated Certificate.
(c) Any offer of a Dilutive Issuance pursuant to this Section
3.11 shall be subject to the rights of first offer described in Section
2.2(iii) hereof.
(d) In the event the provisions of this Section 3.11 result
in more than one Conversion Price for the Series D Preferred Stock, the
Secretary of the Company shall keep a written ledger identifying the Conversion
Price in effect for each share of Series D Preferred Stock outstanding, which
information shall be made available to any person upon request.
(e) The waiver of adjustment of Conversion Price provided for
in this Section 3.11 shall bind any transferee of shares of Series D Preferred
Stock. Each Investor agrees that,
-14-
15
prior to transferring any shares of Series D Preferred Stock to any person or
entity, such Investor will ensure that such transferee shall have delivered to
the Company a written agreement to be bound by the provisions of this Section
3.11.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTIONS 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE
IS SO EXEMPT.
5. Conditions of Investors' Obligations at Closing and
Subsequent Closings. The obligations of each Investor under subsections 1.1(b)
of this Agreement are subject to the fulfillment on or before Closing of each
of the following conditions, the waiver of which shall not be effective against
any Investor who does not consent in writing thereto:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
5.2 Performance. The Company shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing; provided that the obligations of the Investors shall not be
conditional upon the issuance by the Company of the Series D Preferred Stock to
the persons or entities listed on Schedule A who have not performed or tendered
the performance of their obligations under this Agreement required to be
performed on or prior to the Closing except as provided in Section 5.7 hereof.
5.3 Compliance Certificate. The President of the Company
shall deliver to each Investor at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there has been no material adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Company since the
date of the Agreement.
5.4 Qualifications. The Commissioner of Corporations of the
State of California shall have issued a permit qualifying the offer and sale of
the Series D Preferred Stock and the underlying Common Stock to the Investors
pursuant to this
-15-
16
Agreement, or such offer and sale shall be exempt from such qualification under
the California Corporate Securities Law of 1968, as amended.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to special counsel to the Investors and to each Investor, and they
shall have received all such counterpart original and certified or other copies
of such documents as they may reasonably request.
5.6 Board of Directors. The Board of Directors at the
Closing shall consist of eight duly elected members: Xxxxxx X. Xxxxx, Xxx X.
Xxxxxxxxxxxx, Xxxxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxx
X. Xxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxx.
5.7 Minimum Investment. The Investors shall have purchased
at the Closing specified in Section 1.2, an aggregate of at least 1,000,000
shares of Series D Preferred Stock.
5.8 Opinion of Company Counsel. Each Investor shall have
received from Pillsbury Madison & Sutro, counsel for the Company, an opinion,
dated as of the Closing, in form and substance satisfactory to the Investors,
to the effect that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and the
Company has the requisite corporate power and authority to own its properties
and to conduct its business.
(b) The Company is qualified to do business as a foreign
corporation in the State of California.
(c) The Company has the requisite corporate power and
authority to execute, deliver and perform the Agreement. The Agreement has
been duly and validly authorized by the Company, duly executed and delivered by
an authorized officer of the Company and constitutes a legal, valid and binding
obligation of the Company.
(d) The capitalization of the Company is as follows:
(i) Preferred Stock. 6,970,503 shares of Preferred Stock,
$.01 par value per share, 610,000 shares of which have been designated
Series A Preferred Stock, 2,156,336 shares of which have been
designated Series B Preferred Stock, 2,204,167 shares of which have
been designated Series C Preferred Stock and 2,000,000 shares of which
have been designated Series D Preferred Stock. 610,000 shares of
Series A Preferred Stock, 2,156,336 shares of Series B
-16-
17
Preferred Stock and 2,204,167 shares of Series C Preferred Stock have
been duly authorized, issued and delivered, are validly outstanding,
fully paid and nonassessable, and have been approved by all requisite
corporate action and, based in part on the representations and
warranties of the investors in such securities, were issued in
compliance with all applicable federal and California securities laws.
The shares of Series D Preferred Stock being issued under this
Agreement, when issued, delivered and paid for, will be duly
authorized, issued and delivered and will be validly outstanding,
fully paid and nonassessable, and have been approved by all requisite
corporate action and, to the best of counsel's knowledge, are free of
any liens and encumbrances. The rights, privileges and preferences of
the Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock and the Series D Preferred Stock are as stated in
the Company's Restated Certificate. The shares of Common Stock
issuable upon the conversion of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the Series
D Preferred Stock have been duly and validly reserved for issuance
and, when issued in accordance with the Company's Restated
Certificate, will be validly issued, fully paid and nonassessable.
(ii) Common Stock. 12,000,000 shares of Common Stock, of
which 1,134,397 shares have been duly authorized, issued and delivered
and are validly outstanding, fully paid and nonassessable.
(iii) Except for (A) the conversion privileges of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock, (B) the right of first offer of the
Investors provided for in Section 8.4 of this Agreement, (C) the right
of first offer provided for in Section 8.4 of the Series A Agreement,
(D) the right of first offer provided in Section 8.4 of the Series B
Agreement, (E) the right of first offer provided for in Section 8.4 of
the Series C Agreement and (F) options to purchase Common Stock of the
Company issued under the 1989 Stock Plan of the Company, there are no
preemptive rights or, to the best of counsel's knowledge, options,
warrants, conversion privileges or other rights (or agreements for any
such rights) outstanding to purchase from or otherwise obtain from the
Company any shares of its capital stock.
(e) The certificates representing shares of the Series D
Preferred Stock are in due and proper form and have been duly and validly
executed by the officers of the Company named thereon.
-17-
18
(f) The execution, delivery, performance and compliance with
the terms of this Agreement do not violate any provision of any applicable
federal, state law, rule or regulation or any provision of the Company's
Restated Certificate or Bylaws and, to the best of such counsel's knowledge, do
not conflict with or constitute a default under the provision of any material
judgment, writ, decree, order or agreement to which the Company is a party or
by which it is bound, which violation, conflict or default would be materially
adverse to the Company.
(g) All consents, approvals, orders or authorizations of, and
all qualifications, registrations, designations, declarations or filings with,
any federal or state governmental authority on the part of the Company (other
than by federal or state securities laws which are covered in paragraph (h)
below) required to be made prior to the Closing in connection with the
consummation of the transactions contemplated by this Agreement have been
obtained, and are effective, as of the Closing and such counsel is not aware of
any proceedings, or threat thereof, which question the validity thereof.
(h) Based in part upon the representations of the Investors,
the offer and sale of the Series D Preferred Stock pursuant to the terms of
this Agreement are exempt from the registration requirements of section 5 of
the Securities Act of 1933, as amended, by virtue of section 4(2) thereof and
from the qualification requirements of the California Corporate Securities Law
of 1968, as amended, by virtue of section 25102(f) thereof. No opinion need be
expressed as to compliance with applicable antifraud statutes, rules and
regulations of any applicable law governing the issuance of securities.
(i) Such counsel is not aware, after making inquiry of the
Company's chief executive officer (but without any other investigation), that
there is any action, proceeding or investigation pending against the Company or
any of its officers, directors or employees, or that any of the foregoing has
received any threat thereof, which questions the validity of the Agreement, or
which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company.
The opinion of counsel for the Company under this Section 5.8
shall be subject to such matters as are set forth in the Schedule of Exceptions
to this Agreement.
5.9 Restated Certificate. The Restated Certificate in
substantially the same form attached hereto as Exhibit A shall have been filed
with the Delaware Secretary of State.
5.10 Lawful Issuance. At the Closing, the purchase of the
Series D Preferred Stock by the Investors shall be
-18-
19
legally permitted by all laws and regulations to which the Investors and the
Company are subject.
5.11 Amended Co-Sale Agreement. The Company shall have
entered into an amended and restated Co-Sale Agreement in substantially the
form of Exhibit B hereto together with the Principal Stockholders (as defined
therein).
6. Conditions of the Company's Obligations at the Closing.
The obligations of the Company to each Investor under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by such Investor:
6.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 hereof shall be true on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
6.2 Payment of Purchase Price. Each Investor shall have
delivered the purchase price specified in Section 1.2 and Investors shall
collectively have acquired and paid for at the Closing specified in Section
1.2, an aggregate of at least 1,000,000 shares of Series D Preferred Stock.
6.3 California Qualification. The Commissioner of
Corporations of the State of California shall have issued a permit qualifying
the offer and sale to the Investors of the Series D Preferred Stock and Common
Stock issuable upon the conversion thereof or such offer and sale shall be
exempt from such qualification under the California Corporate Securities Law of
1968, as amended.
7. Registration Rights. The Company covenants and agrees as
follows:
7.1 Definitions. For purposes of this Section 7:
(a) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and any other series of Preferred Stock of the Company with respect to
which, and in accordance with this Agreement, registration rights substantially
similar to the registration rights provided in this Section 7 may be granted,
and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as)
-19-
20
a dividend or other distribution with respect to, or in exchange for or in
replacement of, such Preferred Stock or Common Stock, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
such person's registration rights are not assigned;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are exercisable or
convertible into, Registrable Securities;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 7.13 hereof; and
(e) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange Commission
("SEC") in lieu of Form S-3 which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
7.2 Request for Registration.
(a) If the Company shall receive at any time after the
earlier of January 15, 1994 or six months after the effective date of the
Company's first registered public offering of stock a written request from the
Holders of at least 30% of the Registrable Securities then outstanding that the
Company file a registration statement under the Securities Act covering the
registration of at least 30% of the Registrable Securities and with an offering
price, net of underwriting discounts and commissions, of more than $7,500,000
then the Company shall, within ten days of the receipt thereof, give written
notice of such request to all Holders and shall, subject to the limitations of
subsection 7.2(b), file as soon as practicable, and in any event within 60 days
of the receipt of such request, a registration statement under the Securities
Act covering all Registrable Securities which the Holders request to be
registered within 20 days of the mailing of such notice by the Company in
accordance with Section 9.6.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 7.2
and the Company shall include such information in the written notice referred
to in subsection 7.2(a). In such event, the right of any Holder to include
such Holder's Registrable Securities in such registration shall be conditioned
upon such Holder's participation in
-20-
21
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. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company as provided in subsection 7.4(e)) enter into
an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders. Notwithstanding any other provision of this Section 7.2,
if the underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Initiating Holders shall so advise all Holders of Registrable Securities
which would otherwise be underwritten pursuant hereto, and the number of shares
of Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the number of shares of Registrable
Securities of the Company owned by each Holder.
(c) The Company is obligated to effect only two such
registrations pursuant to this Section 7.2; provided, however, that the Company
shall not be obligated to effect any such registration if the Company has,
within twelve months preceding the date of receipt of the request for such
registration, already effected one such demand registration pursuant to this
Section 7.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
7.2, 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 and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 60 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any 12-month period.
7.3 Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock or other securities under the Securities Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of
-21-
22
such registration. Upon the written request of each Holder given within 20
days after mailing of such notice by the Company in accordance with Section
9.6, the Company shall, subject to the provisions of Section 7.8, cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered.
7.4 Obligations of the Company. Whenever required under this
Section 7 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the 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 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.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each 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
-22-
23
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 7, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 7, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
7.5 Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 7
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 the Registrable Securities.
7.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions and fees and expenses of counsel for the
selling Holders, incurred in connection with registrations, filings or
qualifications pursuant to Section 7.2, including (without limitation) all
registration, filing and qualification fees, printer's and accounting fees,
fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 7.2 if
the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all participating Holders shall bear such expenses), unless the Holders of
a majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 7.2; provided further, however, that if
at the time of such 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, then the Holders shall not be
required to pay any of such expenses and shall retain their rights pursuant to
Section 7.2.
-23-
24
7.7 Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7.3 for each Holder (which right may be assigned as
provided in Section 7.13), including (without limitation) all registration,
filing and qualification fees, printer's and accounting fees relating or
apportionable thereto, but excluding underwriting discounts and commissions
relating to Registrable Securities and the fees and disbursements of counsel
for the selling Holders.
7.8 Underwriting Requirements. In connection with any
offering involving an underwriting of shares being issued by the Company, the
Company shall not be required under Section 7.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders)
but: (i) in no event shall the amount of securities of the selling Holders
included in the offering be reduced below 30% of the total amount of securities
included in such offering, unless such offering is the initial public offering
of the Company's securities in which case the selling stockholders may be
excluded if the underwriters make the determination described above and no
other stockholder's securities are included; and (ii) in no event shall any
shares being sold by a stockholder exercising a demand registration right
similar to that granted in Section 7.2 be excluded from such offering.
7.9 Delay of Registration. 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 7.
7.10 Indemnification. In the event any Registrable
Securities are included in a registration statement under this Section 7:
-24-
25
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (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"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will reimburse
each such Holder, officer or director, underwriter or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
7.10(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, officer, director, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities in such registration statement or any
of its directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or controlling
person 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
-25-
26
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or controlling person, other
Holder, officer, director, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
7.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this subsection 7.10(b) exceed the
gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 7.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7.10,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
7.10.
(d) The obligations of the Company and Holders under this
Section 7.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 7, and otherwise.
7.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may
at any time permit a Holder to
-26-
27
sell securities of the Company to the public without registration or pursuant
to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after 90 days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company), the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
7.12 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 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'
-27-
28
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 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 7.12: (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 (net of any
underwriters' discounts or commissions) of less than $1,000,000; (iii) if the
Company shall furnish to the 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 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 60 days after receipt
of the request of the Holder or Holders under this Section 7.12; provided,
however, that the Company shall not utilize this right more than once in any 12
month period; (iv) if the Company has, within the 12 month period preceding the
date of such request, already effected one registration on Form S-3 for the
Holders pursuant to this Section 7.12; (v) if the Company has, within the
preceding 180 days, effected any other registration of its securities; 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
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses other than underwriting
discounts and commissions incurred in connection with a registration requested
pursuant to Section 7.12, including (without limitation) all registration,
filing, qualification, printer's and accounting fees and the reasonable fees
and disbursements of counsel for the selling Holder or Holders and counsel for
the Company, shall be borne by the Company. Registrations effected pursuant to
this Section 7.12 shall not be counted as demands for registration effected
pursuant to Section 7.2.
7.13 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 7 may
be assigned by a purchaser of Registrable Securities under this Agreement to a
transferee or assignee of an amount of such securities representing at least
50% of the aggregate number of shares of Registrable Securities of such
-28-
29
purchaser or to a partner or retired partner of such purchaser; provided, that
such transferee or assignee is approved by the Board of Directors of the
Company, which approval shall not be unreasonably withheld, and that the
Company is, within a reasonable time after such approved transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; and provided, further, that such assignment shall be effective only
if immediately following such transfer the further disposition of such
securities by the approved transferee or assignee is restricted under the
Securities Act.
7.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
7.2 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subsection 7.2(a) or within 120 days of the effective date of any registration
effected pursuant to Section 7.2.
7.15 "Market Stand-Off" Agreement. Each Investor hereby
agrees that it shall not, to the extent requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, sell or
otherwise transfer or dispose (other than to donees who agree to be similarly
bound) of any Registrable Securities during the 120-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers shares (or securities) to be
sold on its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such 120-day period.
-29-
30
7.16 Amendment of Registration Rights. Any provision of this
Section 7 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities; provided that (i) consent of a Major
Investor (as defined in the Stock Purchase Agreement under which such
Registrable Securities were purchased) shall be required for any amendment
which materially increases the obligations of such Major Investor, and (ii)
consent of a majority of the inequitably affected Registrable Securities shall
be required for any waiver of a material right of a Major Investor (as defined
in the Stock Purchase Agreement under which such Registrable Securities were
purchased) which does not apply equally to all Major Investors (as defined in
the Stock Purchase Agreements under which Registrable Securities were
purchased) who hold Registrable Securities. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
7.17 Termination of Registration Rights. The Company's
obligations pursuant to this Section 7 shall terminate seven years from the
date of consummation of the Company's sale of its common stock in a bona fide,
firm commitment underwriting pursuant to a registration statement on Form S-1
under the Securities Act which results in gross offering proceeds to the
Company of more than $7,500,000, the public offering price of which was not
less than $9.00 per share (adjusted to reflect stock dividends, stock splits or
recapitalizations).
8. Covenants.
8.1 Delivery of Financial Statements. The Company shall
deliver to (i) each Investor who holds 100,000 shares of Series D Preferred
Stock (or the securities into which they are convertible) ("Major Investor")
and (ii) each assignee of any Major Investor who acquires 50% of such Major
Investor's Series D Preferred Stock purchased hereunder:
(a) as soon as practicable, but in any event within 90 days
after the end of each fiscal year of the Company, an income statement for such
fiscal year, a balance sheet of the Company as of the end of such year, and a
statement of cash flows for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles ("GAAP"), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company (the
Company will include, upon request, the Company's management letter for such
audited reports); and
-30-
31
(b) (i) within 30 days of the end of each month, an
unaudited statement of operations, statement of cash flows and balance sheet
for and as of the end of such month, in reasonable detail; such monthly
statements shall also contain the foregoing information on a year-to-date basis
and shall also compare actual performance to budget;
(ii) At least annually, a comprehensive operating budget for
the next fiscal year forecasting the Company's revenues, expenses and cash
position, prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company; and
(iii) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any such assignee of the Investor may from time to time request,
provided, however, that the Company shall not be obligated to provide
information which it deems in good faith to be proprietary; and
(c) with respect to the financial statements called for in
subsection (b)(i) of this Section 8.1, an instrument executed by the Treasurer
or the President of the Company and certifying that such financials were
prepared in accordance with internally consistent accounting methods
consistently applied with prior practice for earlier periods and fairly present
the financial condition of the Company and its results of operation for the
period specified, subject to year-end audit adjustment. For purposes of this
Section 8, a Major Investor includes affiliated investing entities of that
Investor.
8.2 Inspection. The Company shall permit each Investor, at
such Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 8.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential or
proprietary information.
8.3 Termination of Covenants. The covenants set forth in
Sections 8.1, 8.2 and 8.5 shall terminate and be of no further force or effect
when the sale of securities pursuant to a registration statement filed by the
Company under the Securities Act in connection with the firm commitment
underwritten offering of its securities to the general public is consummated or
when the Company first becomes subject to the periodic reporting requirements
of Section 13(a) or 15(d) of the Exchange Act, whichever event shall first
occur; provided that the Company shall furnish to each Major Investor (as
defined in Section 8.4) copies of its reports on Forms 10-K and 10-Q within 10
days after filing with the SEC.
-31-
32
8.4 Right of First Offer. Subject to the terms and
conditions specified in this Section 8.4, the Company hereby grants to each
Major Investor a right of first offer with respect to future sales by the
Company of its Shares (as hereinafter defined). For purposes of this Section
8.4, a "Major Investor" includes any partners or affiliates of that Investor.
A Major Investor shall be entitled to apportion the right of first offer hereby
granted it among itself and its partners and affiliates in such proportions as
it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for, any class of its capital stock
("Shares"), the Company shall first make an offering of such Shares to each
Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Major Investors stating (i) its bona fide intention to offer
or issue such Shares, (ii) the number of such Shares to be offered, and (iii)
the price, if any, for which it proposes to offer such Shares.
(b) Within 20 calendar days after receipt of the Notice, the
Major Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Shares which equals the
proportion that the number of shares of Common Stock issuable (or issued and
held) upon conversion of the Series D Preferred Stock then held, by such Major
Investor bears to the total number of shares of outstanding Common Stock and
Common Stock issuable upon conversion of the Preferred Stock then outstanding.
The Company shall promptly, in writing, inform each Major Investor which
purchases all the shares available to it ("Fully Exercising Investor") of any
other Major Investor's failure to do likewise. During the 10-day period
commencing after receipt of such information, each Fully Exercising Investor
shall be entitled to obtain that portion of the shares subject to such right of
first refusal and not subscribed for by the Major Investors which is equal to
the proportion that the number of shares of Common Stock issuable (or issued
and held) upon conversion of the Series D Preferred Stock then held by such
Fully Exercising Investor bears to the total number of shares of Common Stock
issuable (or issued and held) upon conversion of the Series D Preferred Stock
then held by all Fully Exercising Investors who wish to purchase some of the
unsubscribed shares.
(c) If all such Shares referred to in the Notice are not
elected to be obtained as provided in subsection 8.4(b) hereof, the Company
may, during the 60 day period following the expiration of the period provided
in subsection 8.4(b) hereof, offer the remaining unsubscribed Shares to any
person or persons at a price not less than that, and upon terms no more
favorable to the offeree than those, specified in the Notice. If the
-32-
33
Company does not enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within 60 days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Major Investors in
accordance herewith.
(d) The right of first offer granted in this Section 8.4
shall not be applicable (i) to the issuance or sale of shares of Common Stock
(or options therefor), to employees, directors, consultants or advisors of the
Company, provided each such person executes an agreement, in substantially the
form as approved by the Company's Board of Directors, (ii) shares offered in
the acquisition of another company, to strategic partners of the Company or to
companies with business relationships with the Company or in connection with
research and development partnerships sponsored by the Company, or (iii) to or
after consummation of a bona fide, firmly underwritten public offering of
shares of the Company's Common Stock registered under the Securities Act
pursuant to a registration statement on Form S-1, which results in gross
proceeds to the Company of more than $7,500,000 at a price per share of at
least $9.00 (adjusted for any stock splits, stock dividends or other
recapitalizations).
8.5 Issuance of Debt. The Company shall not borrow in excess
of $250,000 annually without the approval of the Company's Board of Directors,
including the approval of a majority of Directors who represent the Investors
hereunder.
9. Miscellaneous.
9.1 Survival of Warranties. The warranties, representations
and covenants of the Company contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investors.
9.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California except as it
regards choice of law.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
-33-
34
original, but all of which together shall constitute one and the same
instrument.
9.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.6 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by 10 days' advance written notice to the other
parties.
9.7 Finder's Fee. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction. Each Investor agrees to indemnify and hold harmless the
Company from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its officers, partners,
employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each
Investor from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Company or any of its officers, employees
or representatives is responsible.
9.8 Expenses. Irrespective of whether the Closing is
effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If the Closing is effected, the Company shall reimburse the
Investors no more than $10,000 for the reasonable fees and expenses of the law
firm of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel to the Investors. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Restated Certificate, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
9.9 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
D Preferred Stock purchased by the Investors pursuant to
-34-
35
this Agreement, except: (i) as specified in Section 7.16, and (ii) no amendment
shall increase the price of the Series D Preferred Stock without the consent of
all Investors, and any material amendment or waiver which does not apply
equally to all Major Investors shall not be effective unless it has been
consented to or approved in writing by a majority of the inequitably affected
Major Investors. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company; provided, however, that no condition set forth in Section 5 hereof may
be waived with respect to any Investor who does not consent thereto.
9.10 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
9.11 Aggregation of Stock. All shares of Series D Preferred
Stock held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
9.12 Amendment to Series A, Series B and Series C
Registration Rights. Pursuant to Section 7.16 of the Series A Agreement,
Section 7.16 of the Series B Agreement and Section 7.16 of the Series C
Agreement, the Company and the holders of Series A Preferred Stock purchased
under the Series A Agreement, the holders of Series B Preferred Stock purchased
under the Series B Agreement and the holders of the Series C Preferred Stock
purchased under the Series C Agreement hereby consent to the deletion of
Section 7 of the Series A Agreement in its entirety, the deletion of Section 7
of the Series B Agreement in its entirety and the deletion of Section 7 of the
Series C Agreement in its entirety effective upon the Closing and thereafter
the registration rights applicable to the Common Stock issuable or issued upon
conversion of the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock, and any Common Stock of the Company issued (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, in exchange for,
or in replacement of, such Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock (excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under Section
7 are not assigned), shall be determined solely under Section 7 hereof.
9.13 Waiver of Right of First Offer. Pursuant to Section 9.9 of the
-35-
36
Series A Agreement, Section 9.9 of the Series B Agreement and Section 9.9 of
the Series C Agreement, the holders of Series A Preferred Stock purchased under
the Series A Agreement, the holders of Series B Preferred Stock purchased under
the Series B Agreement and the holders of the Series C Preferred Stock
purchased under the Series C Agreement hereby waive the rights of first offer
of the Series A Holders, the Series B Holders and the Series C Holders,
respectively, under the Series A Agreement, the Series B Agreement and the
Series C Agreement to the purchase and sale of Series D Preferred Stock and the
issuance of Common Stock thereof, except to the extent of such holders'
purchase of shares hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
BIOSITE DIAGNOSTICS INCORPORATED
By /s/ Xxx X. Xxxxxxxxxxxx
______________________________
Address: 00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
INVESTORS:
CHC Venture Co.
By /s/ Xxxxxxx X. Xxxxxxxxx
_____________________________
Title President
__________________________
Address: c/x Xxxxxx Corporation
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
SENTRON MEDICAL, INC.
By /s/ Xxxxxxx X. Xxxxxxx
______________________________
Xxxxxxx X. Xxxxxxx
Vice President
Address: c/o Senmed Medical Ventures
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
-36-
37
MEDICUS VENTURE PARTNERS 1991 A
CALIFORNIA LIMITED PARTNERSHIP
By MEDICUS MANAGEMENT PARTNERS,
General Partner
By /s/ Xxxxxxxxx X. Xxxxxxx
___________________________
Xxxxxxxxx X. Xxxxxxx
General Partner
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
XXXXXXX XXXXXXX XXXXXXXX &
XXXXX V, A CALIFORNIA LIMITED
PARTNERSHIP
By KPCB V ASSOCIATES, A CALIFORNIA
LIMITED PARTNERSHIP, its
General Partner
By /s/ Xxxxx X. Xxxxx
______________________________
Xxxxx X. Xxxxx
Address: Xxxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
EUCLID PARTNERS III, L.P., A
DELAWARE LIMITED PARTNERSHIP
By EUCLID ASSOCIATES III, L.P.
A DELAWARE LIMITED PARTNERSHIP,
General Partner
By /s/ Xxxxxxx X. Xxxxx
______________________________
Xxxxxxx X. Xxxxx
General Partner
Address: Euclid Partners Corporation
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
DOMAIN PARTNERS, L.P.
By One Xxxxxx Square Associates,
L.P.
-37-
38
Biosite Diagnostics Incorporated
Series D Preferred Stock
Counterpart Signature Page
By /s/ Xxxxx Xxxx
______________________________
Xxxxx Xxxx
General Partner
Address: Domain Associates
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
BIOTECHNOLOGY INVESTMENTS LIMITED
By N. M. ROTHSCHILD AND SONS
(C.I.) LIMITED
By /s/ Xxxxx Xxxx
_______________________________
Xxxxx Xxxx
Attorney in Fact
Address: P. O. Box 58
St. Julian's Court
St. Xxxxx Port
Guernsey
Channel Islands
/s/ Xxxxx Xxxxxx
_______________________________
Xxxxx Xxxxxx
Address: The Xxxxxx Foundation
000 Xxxxx Xxxxx Xx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
-38-
39
Biosite Diagnostics Incorporated
Series D Preferred Stock
Counterpart Signature Page
/s/ Xxxxxx Xxxxxx
__________________________________
Xxxxxx Xxxxxx
Address: 0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
STANFORD UNIVERSITY
By /s/ Xxxxx Xxxxxx
_______________________________
Title Assistant Secretary,
Board of Trustees
___________________________
Address: c/o Stanford Management Company
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xx 00000
Attn: Xx. Xxxxx Xxxxxx
/s/ D. Xxx Xxxxxxx
__________________________________
D. Xxx Xxxxxxx
Address: c/x Xxxxxx Corporation
0000 Xxxxx Xxxxxxxxx #00
Xxxxx Xxxxx, XX 00000
/s/ Xxxxx Xxxxxxx
__________________________________
Xxxxx Xxxxxxx
Address: c/x Xxxxxx Corporation
0000 Xxxxx Xxxxxxxxx #00
Xxxxx Xxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxxxxx
__________________________________
Xxxxxxx X. Xxxxxxxxx
Address: c/x Xxxxxx Corporation
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
-39-
40
Biosite Diagnostics Incorporated
Series D Preferred Stock
Counterpart Signature Page
/s/ Xxxxxx X. Xxxxxxxxx
__________________________________
Xxxxxx X. Xxxxxxxxx
Address: 000 Xxxxxxxxx
Xx. Xxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
__________________________________
Xxxxxx X. Xxxxxxx
Address: c/o Pen Station
00000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
/s/ Xxxxx X. Xxxxxxx
__________________________________
Xxxxx X. Xxxxxxx
Address: c/o Pen Station
00000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
/s/ X. Xxxxxx Xxxxxxxxx
__________________________________
X. Xxxxxx Xxxxxxxxx
Address: 000 Xxxx Xxxxxx
Xxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
__________________________________
Xxxxxx X. Xxxxxxx
Address: 0000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
/s/ Xxx X. Xxxxxxxxxxxx
__________________________________
Xxx X. Xxxxxxxxxxxx
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
-40-
41
Biosite Diagnostics Incorporated
Series D Preferred Stock
Counterpart Signature Page
THE VALKIRS FAMILY TRUST
By /s/ Xxxxxx X. Xxxxxxx
_____________________________
Xxxxxx X. Xxxxxxx, Trustee
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
/s/ Xxxxxxx Xxxxxxx
_________________________________
Xxxxxxx Xxxxxxx
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
/s/ Xxxxxxx Xxxxxxxx
_________________________________
Xxxxxxx Xxxxxxxx
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
/s/ Xxxxxxx Xxxxxxxx
_________________________________
Xxxxxxx Xxxxxxxx
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
/s/ S. Xxxxxxxx Xxxxx
_________________________________
S. Xxxxxxxx Xxxxx
Address: c/o Biosite Diagnostics Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
-41-
42
Biosite Diagnostics Incorporated
Series D Preferred Stock
Counterpart Signature Page
The undersigned hereby agree to the terms and provisions of Sections 9.12 and
9.13 hereof.
BIOVEST PARTNERS
By Biovest Associates,
A California Limited
Partnership
By /s/ Xxxxxxx X. Xxxxxxxxx
___________________________
Xxxxxxx X. Xxxxxxxxx
General Partner
Address: c/o Xxxxxxx X. Xxxxxxxxx
Xxxxxx Corporation
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
MEDICUS VENTURE PARTNERS 1989
A CALIFORNIA LIMITED PARTNERSHIP
By MEDICUS MANAGEMENT PARTNERS,
General Partner
By /s/ Xxxxxxxxx X. Xxxxxxx
___________________________
Xxxxxxxxx X. Xxxxxxx
General Partner
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
MEDICUS VENTURE PARTNERS 1990
A CALIFORNIA LIMITED PARTNERSHIP
By MEDICUS MANAGEMENT PARTNERS,
General Partner
By /s/ Xxxxxxxxx X. Xxxxxxx
___________________________
Xxxxxxxxx X. Xxxxxxx
General Partner
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
-42-
43
44
SCHEDULE A
BIOSITE DIAGNOSTICS INCORPORATED
SERIES D PREFERRED STOCK
Investors Shares Amount
--------- ------ ------
CHC Venture Co. 500,000 $1,500,000
Sentron Medical Inc. 333,334 1,000,002
Medicus Venture Partners 1991 333,334 1,000,002
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx V 333,334 1,000,002
Euclid Partners III, L.P. 166,667 500,001
Domain Partners, L.P. 16,667 50,001
Biotechnology Investments Ltd. 116,667 350,001
Xxxxx Xxxxxx 33,334 100,002
Xxxxxx Xxxxxx 8,334 25,002
Stanford Management Company 3,334 10,002
D. Xxx & Xxxxx Xxxxxxx 6,667 20,001
Xxxxxxx X. Xxxxxxxxx 1,667 5,001
Xxxxxx X. Xxxxxxxxx 1,667 5,001
Xxxxxx & Xxxxx X. Xxxxxxx 1,667 5,001
Xxxxxx X. Xxxxxxx 1,667 5,001
Xxx X. Xxxxxxxxxxxx 6,667 20,001
Valkirs Family Trust 13,334 40,002
Xxxxxxx Xxxxxxx 3,334 10,002
Xxxxxxx Xxxxxxxx 3,334 10,002
Xxxxxxx Xxxxxxxx 8,334 25,002
S. Xxxxxxxx Xxxxx 5,000 15,000
----- ------
1,898,343 $5,695,029
========= ==========
