EXHIBIT 10.4
INFORMAX, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "AGREEMENT")
is entered into as of the 16th day of August, 2000, by and among INFORMAX, INC.,
a Delaware corporation (the "COMPANY"), FBR Technology Venture Partners II, LP,
a Delaware limited partnership ("FBR") and Amersham Pharmacia Biotech Inc., a
Delaware corporation ("APB" and together with FBR, the "INVESTORS" and each
individually an "INVESTOR").
RECITALS
WHEREAS, the Company and FBR entered into that certain Investor Rights
Agreement dated as of June 22, 1999 (the "ORIGINAL INVESTOR RIGHTS AGREEMENT")
in connection with FBR's purchase (the "SERIES A FINANCING") of shares of the
Company's Series A Preferred Stock, $0.01 par value per share (the "SERIES A
STOCK"), pursuant to that certain Series A Preferred Stock Purchase Agreement
dated as of June 22, 1999 (the "SERIES A PURCHASE AGREEMENT");
WHEREAS, the Company and the APB are parties to a certain Series B
Preferred Stock Purchase Agreement (the "SERIES B PURCHASE AGREEMENT") of even
date herewith, pursuant to which the Company proposes to sell and issue to APB
(the "SERIES B FINANCING") up to Nine Hundred Fifty Thousand Seven Hundred Forty
Seven (950,747) shares of the Company's Series B Preferred Stock, $0.01 par
value per share (the "SERIES B STOCK");
WHEREAS, in connection with the consummation of the Series B Financing,
the Company and the Investors have agreed to amend and restate the Original
Investor Rights Agreement to provide for certain registration rights,
information rights and other rights as set forth in this Agreement; and
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall be given the meanings ascribed to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"COMMON STOCK" means the authorized Voting Common Stock and
Nonvoting Common Stock of the Company.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
"FAMILY MEMBER" means a person who is a spouse, child, parent
or sibling of the Holder or one or more trusts established for the exclusive
benefit of such Holder and/or one or more of such persons.
"FORM S-3" means such form under the Securities Act as in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
"HOLDER" means any person owning of record Registrable
Securities that have not been sold to the public or pursuant to Rule 144 and any
assignee of record of such Registrable Securities to whom rights under Section 2
have been duly assigned in accordance with Section 2.11 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company
issued or issuable upon conversion of the shares of Series A Stock; (b) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such above-described securities; (c) except for purposes of Section 2.2 hereof,
Common Stock of the Company issued or issuable upon conversion of shares of
Series B Stock; and (d) except for purposes of Section 2.2 hereof, any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
securities described in clause (c) above. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold by a person to the
public or sold pursuant to Rule 144 or sold in a transaction in which the
transferor's rights under Section 2 of this Agreement are not assigned in
accordance with this Agreement.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number
of shares determined by calculating the total number of shares of the Common
Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
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"REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, reasonable fees and disbursements
of a single special counsel for the Holders, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"RULE 144" means Rule 144 under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
"SHARES" shall mean the Series A Stock issued pursuant to the
Series A Purchase Agreement and held by FBR and its permitted assigns and the
Series B Stock issued pursuant to the Series B Stock Purchase Agreement and held
by APB and its permitted assigns.
SECTION 2. RESTRICTIONS ON TRANSFER; REGISTRATION
2.1 RESTRICTIONS ON TRANSFER.
(A) Each Holder agrees not to make any disposition of all
or any portion of the Shares or Registrable Securities:
(I) unless and until 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;
(II) in the event that any underwriting
arrangements described herein require the Holders to refrain from making any
such disposition;
(III) unless and until (A) the transferee of such
Shares or Registrable Securities has agreed with the Company in writing to be
bound by and comply with the terms of this Agreement, (B) such Holder shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (C) if reasonably requested by the Company, such Holder shall
have furnished the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of such
shares under the Securities Act; or
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(IV) to any Competitor of the Company in a
private sale. For the purposes of this Agreement, the term "COMPETITOR" means
any person, partnership, limited liability company, corporation or other entity
(other than the Company) which is engaged as its principal line of business, in
the "Company's Business." For the purposes of this Agreement, the term
"COMPANY'S BUSINESS" means the business of the development and licensing of
pharma-informactic software tools of the type developed by the Company as of the
date hereof.
(V) Notwithstanding the provisions of paragraphs
(i) through (iv) above, no such registration statement under the Securities Act
or opinion of counsel shall be necessary for a transfer by a Holder which is (A)
a partnership to its partners or former partners in accordance with partnership
interests, (B) a limited liability company to its members or former members in
accordance with their interest in the limited liability company, or (C) to the
Holder's Family Member or trust for the benefit of an individual Holder;
provided that in each case the transferee will be subject to the terms of this
Agreement to the same extent as if he were an original Holder hereunder.
(B) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the Agreement)
be stamped or otherwise imprinted with legends substantially similar to the
following (in addition to any legend required under applicable state securities
laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SHARES SHALL NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE TRANSFER OF SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS SET FORTH
IN AN INVESTOR RIGHTS AGREEMENT WHICH CONTAINS
RESTRICTIONS ON TRANSFER OTHER THOSE IMPOSED BY
SECURITIES LAWS. COPIES OF THE INVESTOR RIGHTS
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS.
(C) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of
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counsel (which counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.
(D) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(A) Subject to the conditions of this Section 2.2, if the
Company shall receive a written request from the Holders of not less than thirty
percent (30%) of the Registrable Securities then outstanding (the "INITIATING
HOLDERS") that the Company file a registration statement under the Securities
Act covering the registration of Registrable Securities then outstanding, and
such offering provides for an anticipated aggregate offering price, net of
underwriting discounts and commissions, of not less than Twenty Million Dollars
($20,000,000) (a "QUALIFIED PUBLIC OFFERING"), then the Company shall, within
thirty (30) days of the receipt thereof, give written notice of such request to
all Holders and, subject to the limitations of this Section 2.2 and the
registration procedures set forth in Section 2.7 hereof, use its best efforts to
effect, as soon as practicable, to register under the Securities Act all
Registrable Securities that the Holders request to be registered.
(B) If the 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 2.2 or any request pursuant to Section 2.4 and the Company shall
include such information in the written notice referred to in Section 2.2(a) or
Section 2.4(a), as applicable. In such event, the right of any Holder to include
its Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2 or Section 2.4, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities) then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders); provided, however, that the number of shares
of Registrable Securities to be included in such underwriting and registration
shall not be reduced unless all other securities of the Company are first
entirely excluded from the underwriting and registration. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
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(C) Notwithstanding the foregoing, the Company shall not
be required to effect a registration pursuant to Section 2.2(a):
(I) prior to the earlier of (A) the third
anniversary of the date of this Agreement or (B) one hundred eighty (180) days
following the effective date of the registration statement pertaining to the
Initial Offering;
(II) after the Company has effected two (2)
registrations pursuant to Section 2.2(a), and such registrations have been
declared or ordered effective;
(III) during the period starting with the date of
filing of, and ending on the date one hundred eighty (180) days following the
effective date of the registration statement pertaining to the Initial Offering;
provided that the Company makes reasonable good faith efforts to cause such
registration statement to become effective;
(IV) if within thirty (30) days of receipt of a
written request from Initiating Holders pursuant to Section 2.2(a), the Company
gives notice to the Holders of the Company's intention to file its Initial
Offering within ninety (90) days of such Company notice to the Holders;
(V) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board 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 shareholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Initiating Holders; provided that such right to delay a request shall be
exercised by the Company not more than once in any twelve (12) month period; or
(VI) if the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 2.4 below.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders
of Registrable Securities in writing at least fifteen (15) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to
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have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the Company
with respect to offerings of its securities, all upon the terms and conditions
set forth herein.
(A) UNDERWRITING. If the registration statement under
which the Company gives notice under this Section 2.3 is for an underwritten
offering, the Company shall so advise the Holders of Registrable Securities. In
such event, the right of any such Holder to be included in a registration
pursuant to this Section 2.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of the Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting pursuant to this Section 2.3 shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities held by the Holders; and third, to any
shareholder of the Company (other than a Holder) on a pro rata basis. No such
reduction shall reduce the amount of securities of the selling Holders included
in the registration below twenty-five percent (25%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
shareholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling shareholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities proposed to be sold
in the offering. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
Family Members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing person shall be deemed to be a single "HOLDER",
and any pro rata reduction with respect to such "HOLDER" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "HOLDER," as defined in this sentence.
(B) RIGHT TO TERMINATE REGISTRATION. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 2.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 2.5 hereof.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders of Registrable Securities a written request or requests
that the Company effect a registration on Form S-3 (or any successor to Form
S-3) or any similar short-form registration
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statement and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
will:
(A) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and
(B) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(I) if Form S-3 (or any successor to Form S-3)
is not available for such offering by the Holders;
(II) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than Five Hundred Thousand dollars
($500,000);
(III) if within thirty (30) days of receipt of a
written request to effect such Form S-3 registration, the Company gives notice
to the Holders of the Company's intention to make a public offering within
ninety (90) days of the Company's notice to the Holders;
(IV) if the Company shall furnish to the Holders
a certificate signed by the Chairman of the Board of Directors 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 shareholders
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 ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period;
(V) if the Company has, within the twelve (12)
month period preceding the date of such request, already effected one (1)
registration on Form S-3 for the Holders pursuant to this Section 2.4; or
(VI) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(C) Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as
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soon as practicable after receipt of the request or requests of the Holders.
Registrations effected pursuant to this Section 2.4 shall not be counted as
demands for registration or registrations effected pursuant to Sections 2.2 or
2.3, respectively.
(D) Notwithstanding the foregoing, the Company shall not
be required to effect a registration pursuant to this Section 2.4 after the
Company has effected three (3) registrations on Form S-3 pursuant to this
Section 2.4 (or four (4) registrations on Form S-3 if the Holders have not
demanded a registration pursuant to Section 2.2), and such registrations have
been declared or ordered effective; provided, that, such limitations shall not
apply to any registrations pursuant to this Section 2.4 requested by APB or any
of its permitted assigns.
2.5 NO REGISTRATION OF SERIES A STOCK AND SERIES B STOCK. The
registration rights of the Holders set forth in this Agreement apply only to the
Common Stock of the Company and nothing in this Agreement shall obligate the
Company to register any of the Series A Stock or Series B Stock.
2.6 EXPENSES OF REGISTRATION. Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder, shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered. The Company shall not, however, be required to
pay for the expenses of any registration proceeding begun pursuant to Sections
2.2 or 2.4, the request of which has been subsequently withdrawn by the
Initiating Holders, unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request; or (b) the Holders of a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 2.2 or Section 2.4, as applicable (in which
event such right shall be forfeited by all Holders). If the Holders are required
to pay the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If the
Company is required to pay the Registration Expenses of a withdrawn offering
pursuant to clause (a) above, then the Holders shall not forfeit their rights
pursuant to Section 2.2 or Section 2.4 to a demand registration.
2.7 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(A) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to thirty (30)
days or, if earlier, until the Holder or Holders have completed the distribution
related thereto. The Company shall not be required to file, cause to become
effective or maintain the effectiveness of any registration statement that
contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act.
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(B) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
Section 2.7(a) above.
(C) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(D) Use its reasonable best efforts to register and
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(E) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(F) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(G) Use its best efforts to furnish, on the date that
such Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.8 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under Section 2.2 shall terminate and be of no further force and effect
five (5) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (a) such Holder (together with its
affiliates, partners and former partners) holds less than one percent (1%) of
the Registrable Securities, or (b) all Registrable Securities held by and
issuable to such Holder (and its affiliates, partners, former partners, members
and former members) may be sold under Rule 144 during any ninety (90) day
period; provided, that, the limitation in clause (a) shall not apply to any
registration rights of APB or its permitted assigns.
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2.9 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(A) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(B) It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
(C) The Company shall have no obligation with respect to
any registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of Section 2.2(b), the number of shares or the anticipated aggregate
offering price of the Registrable Securities to be included in the registration
does not equal or exceed the anticipated aggregate offering price required to
trigger the Company's obligation to initiate such registration as specified in
Section 2.2 or Section 2.4, as applicable.
2.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(A) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, 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 Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will pay as incurred to each such Holder, partner, officer, 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 Section 2.10(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
11.
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expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.
(B) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any 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 under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company (including, without
limitation, any expenses payable by the Company pursuant to Section 2.6 hereof)
or any such director, officer, controlling person, underwriter or other Holder,
or partner, officer, director or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 2.10(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 further, that in no event shall any indemnity under this Section 2.10
exceed the net proceeds from the offering received by such Holder.
(C) Promptly after receipt by an indemnified party under
this Section 2.10 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 2.10, 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 materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.10, 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
2.10.
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(D) If the indemnification provided for in this Section
2.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, that in no event shall any contribution by
a Holder hereunder exceed the net proceeds from the offering received by such
Holder.
(E) The obligations of the Company and Holders under this
Section 2.10 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(F) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "FINAL PROSPECTUS"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
2.11 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities which
(a) is a subsidiary, parent, general partner, limited partner, retired partner,
member or retired member of a Holder, (b) is a Holder's Family Member or trust
for the benefit of an individual Holder, or (c) acquires at least twenty percent
(20%) of the shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (i) the transferor shall, within ten (10) days
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
in writing with the Company to be subject to all restrictions set forth in this
Agreement. Notwithstanding the foregoing, the rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may not be assigned
by a Holder to a transferee or assignee who is a Competitor of the Company.
Notwithstanding anything to the contrary, no transfer of shares will
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require the Company to effect a registration of shares in excess of the
limitations set forth in Sections 2.2, 2.3 and 2.4 of this Agreement.
2.12 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Section 2 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
at least sixty six and two-thirds percent (66 2/3%) of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 2.12 shall be binding upon each Holder and the Company. By
acceptance of any benefits under this Section 2, Holders of Registrable
Securities hereby agree to be bound by the provisions hereunder.
2.13 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date
of this Agreement, the Company shall not, without the prior written consent of
the Holders of sixty six and two-thirds percent (66 2/3%) of the Registrable
Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder
registration rights pari passu or senior to those granted to the Holders
hereunder.
2.14 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH
INFORMATION. Each Holder hereby agrees that such Holder shall not sell, pledge,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company held by such Holder (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the
Company not to exceed one hundred eighty (180) days following the effective date
of a registration statement of the Company filed under the Securities Act;
provided that (i) such agreement shall apply only to the Company's Initial
Offering; and (ii) the Company shall have used its reasonable best efforts to
cause all Holders of the Company's voting securities to enter into similar
agreements; and (iii) all officers and directors of the Company and holders of
at least one percent (1%) of the Company's voting securities enter into similar
agreements.
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall provide,
within ten (10) days of such request, such information as may be required by the
Company or such representative in connection with the completion of any public
offering of the Company's securities pursuant to a registration statement filed
under the Securities Act. The obligations described in this Section 2.14 shall
not apply to a registration relating solely to employee benefit plans on Form
S-1 or Form S-8 or similar forms that may be promulgated in the future, or a
registration relating solely to a Commission Rule 145 transaction on Form S-4 or
similar forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said
one-hundred eighty (180) day period.
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2.15 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(A) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the effective date
of the first registration filed by the Company for an offering of its securities
to the general public;
(B) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the Exchange Act; and
(C) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
SECTION 3. COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(A) The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
(B) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days thereafter, the
Company will furnish each Investor a balance sheet of the Company, as at the end
of such fiscal year, and a statement of income and a statement of cash flows of
the Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion
thereon by independent public accountants of national standing selected by the
Company's Board of Directors.
(C) The Company will furnish each Investor, as soon as
practicable after the end of each month, and in any event within twenty (20)
days thereafter, a balance sheet of the Company as of the end of each such
monthly period, and a statement of income and a statement of cash flows of the
Company for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and year-end audit adjustments
may not have been made.
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(D) So long as an Investor (with its affiliates) shall
own not less than one hundred thousand (100,000) shares of Registrable
Securities (as adjusted for stock splits and combinations) (a "MAJOR INVESTOR"),
the Company will furnish each such Major Investor at least sixty (60) days prior
to the beginning of each fiscal year an annual operating plan and budget,
prepared on a monthly basis for the ensuing fiscal year, and on a basis
consistent with prior periods (including, among other items, appropriate
reserves, accruals and provisions for income taxes) and representing the best
estimate of the Company based upon available information. The Company shall also
furnish to such Major Investor, within a reasonable time of its preparation,
amendments to the annual budget, if any. Such budget shall include underlying
assumptions and a brief qualitative description of the Company's plan by the
Chief Executive Officer in support of that budget.
(E) The Company will notify each Investor, as soon as
practicable, and in any event within ten (10) days of discovery, of (i) any
event (including pending or threatened litigation) which could have a material
adverse effect upon the financial condition or results of operations of the
Company considered in the aggregate; (ii) any change in any material fact or
circumstance represented or warranted in this Agreement, (iii) a default or any
event or occurrence which with the lapse of time or notice or both could become
a default under the Purchase Agreement and (iv) a material default or any event
or occurrence which with the lapse of time or notice or both could become a
default under any of the Company's material agreements. Such notice shall
contain a reasonably detailed statement outlining such default or event, and the
Company's proposed response.
(F) In the event the Company fails to provide the reports
or financial statements required by this Section 3.1, the Major Investors may
give the Company notice requesting immediate delivery of such reports. If the
Company fails to deliver such reports upon receipt of such notice, then any of
the Major Investors shall have the right and authority, at the Company's sole
expense, to request an audit by a single accounting firm of its or their choice,
such that the reports or financial statements are produced to its or their sole
satisfaction.
3.2 INSPECTION RIGHTS. Each Major Investor shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Company
or any of its subsidiaries with its officers, and to review such information as
is reasonably requested all at such reasonable times and as often as may be
reasonably requested; provided, however, that the Company shall not be obligated
under this Section 3.2 with respect to a competitor of the Company or with
respect to information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and
to use its best efforts to insure that its authorized representatives use, the
same degree of care as such Investor uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Investor may disclose
such proprietary or confidential information to any partner, subsidiary or
parent of such Investor for the purpose of
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evaluating its investment in the Company as long as such partner, subsidiary or
parent is advised of, and agrees to comply with, the confidentiality provisions
of this Section 3.3.
3.4 RESERVATION OF SHARES. The Company will at all times reserve
and keep available, solely for issuance and delivery upon conversion of the
Preferred Stock, shares of Common Stock sufficient to effectuate the conversion
of all such shares of the Preferred Stock at the then applicable conversion
rate.
3.5 STOCK VESTING. Unless otherwise approved by the Board of
Directors (including the approval of the director designated by holders of a
majority of shares of the Series A Stock (the "Series A Board Designee"), all
stock options and other stock equivalents issued pursuant to agreements executed
by the Company, except for agreements executed prior to, or agreements executed
based on offers made prior to, the date of this Agreement to employees,
directors, consultants, and other service providers shall be subject to vesting
as follows: (a) twenty-five percent (25%) of such stock shall vest at the end of
the first year following the earlier of the date of issuance or such person's
services commencement date with the company, and (b) seventy-five percent (75%)
of such stock shall vest over the remaining three (3) year period subsequent to
the end of the one (1) year period described in subsection (a) above. With
respect to any shares of stock purchased by any such person, the Company's
repurchase option shall provide that upon such person's termination of
employment or service with the Company, with or without cause, the Company or
its assignee (to the extent permissible under applicable securities laws and
other laws) shall have the option to purchase at cost any unvested shares of
stock held by such person.
3.6 OPTION POOL. Unless otherwise approved by the Board of
Directors (including the approval of the Series A Board Designee), the Company
will not increase the number of shares reserved under the Company's equity
incentive plan.
3.7 KEY MAN INSURANCE. Subject to the approval of the Board of
Directors, the Company will use its best efforts to obtain and maintain in full
force and effect term life insurance in the amount of Two Million Dollars
($2,000,000) on the lives of each of Alex Titomirov and Vadim Babenko; naming
the Company as beneficiary.
3.8 OBSERVATION RIGHTS. In the event FBR (i) does not have a
designee elected to the Company's Board of Directors and (ii) is a Major
Investor, the Company shall allow one representative designated by FBR to attend
all meetings of the Company's Board of Directors in a nonvoting capacity, and in
connection therewith, the Company shall give such representative copies of all
notices, minutes, consents and other materials, financial or otherwise, which
the Company provides to its Board of Directors; provided, however, that the
Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if the company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the attorney
client privilege, to protect highly confidential proprietary information or for
other similar reasons.
3.9 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company
will use commercially reasonable efforts to cause all employees and consultants
to execute and deliver a
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Proprietary Information and Inventions Agreement in substantially the form
attached to the Series A Purchase Agreement.
3.10 ASSIGNMENT OF RIGHT OF FIRST REFUSAL. In the event the Company
elects not to exercise any right of first refusal or right of first offer the
Company may have on a proposed transfer of any of the Company's outstanding
capital stock pursuant to the Company's charter documents, by contract or
otherwise, the Company shall assign such right of first refusal or right of
first offer to the Major Investors. In the event of such assignment, each Major
Investor shall have a right to purchase its pro rata portion (as defined in
Section 4.1) of the capital stock proposed to be transferred.
3.11 AFFILIATED TRANSACTIONS. The Company shall not without the
approval of a majority of the Board of Directors, with only non-interested
Directors voting, authorize or enter into any transactions, with any director or
management employee, or such director's or employee's immediate family,
provided, however, that with respect to any transaction with a Director who is a
member of the Company's management (other than transactions related to
compensation including salary, stock options, and bonuses), the Company shall
not without the approval of a majority of the outside directors of the Company,
authorize or enter into such transaction.
3.12 DIRECTORS' EXPENSES. Except for the agreement with Lawrence
Levy, the Company shall not pay any compensation to any member of the Company's
Board of Directors in connection with the performance of their duties as a
Director; provided, however, the Company will reimburse reasonable expenses of
Board members incurred in attending Board meetings or any other activities
(e.g., meetings, trade shows) which are required and/or requested by the Company
and that involve expenses.
3.13 DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's
Certificate of Incorporation and Bylaws shall provide (a) for elimination of the
liability of director to the maximum extent permitted by law and (b) for
indemnification of directors for acts on behalf of the Company to the maximum
extent permitted by law.
3.14 ISSUANCE OF CAPITAL STOCK. The Company shall not, without the
prior approval of a majority of the Board of Directors, issue any capital stock
or securities convertible into capital stock.
3.15 CAPITAL EXPENDITURES. The Company shall not, without the prior
approval of a majority of the Board of Directors (including the Series A Board
Designee), make capital expenditures (including expenditures under capitalized
leases) in excess of $250,000 in the aggregate in any fiscal year or any single
capital expenditure exceeding $100,000.
3.16 INDEBTEDNESS. The Company shall not, without the prior
approval of a majority of the Board of Directors (including the Series A Board
Designee), directly or indirectly create, incur, assume, suffer to exist, or be
or remain liable with respect to, any indebtedness or obligation other than the
following:
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(A) Current accounts payable and similar current
liabilities, incurred in the ordinary course of business of the Company;
(B) Indebtedness incurred upon the purchase of equipment
(which indebtedness may be secured by a security interest or any other lien or
title retention agreement relating to such equipment), and equipment lease
obligations of any character;
(C) Obligations under present or future leases of real
estate used in the ordinary course of business; or
(D) Any other indebtedness which would not increase the
Company's total indebtedness by more than Two Million Dollars ($2,000,000) in
any fiscal year.
Notwithstanding the foregoing, the Company shall not, without
the prior approval of the Holders of at least sixty-six and two-thirds percent
(66 2/3%) of the Registrable Securities, incur any indebtedness or provide any
guaranties in excess of Two Million Dollars ($2,000,000) in any fiscal year.
3.17 BOARD MEETINGS. Until such time as the Board of Directors
shall elect to meet less often, the Company shall cause the Board of Directors
to meet at least once every two months.
3.18 SUBSIDIARIES OR JOINT VENTURES. The Company shall not, without
the prior approval of a majority of the Board of Directors (including the Series
A Board Designee), establish or invest in any subsidiary or joint venture.
3.19 USE OF PROCEEDS. The Company shall use the proceeds of the
sale of shares of the Series B Stock for working capital purposes.
3.20 TERMINATION OF COVENANTS. All covenants of the Company
contained in this Section 3, other than Sections 3.12 and 3.13, of the Agreement
shall expire and terminate as to each Investor upon the earlier to occur of (i)
the effective date of the registration statement pertaining to the Initial
Offering, which results in the Series A Stock and the Series B Stock being
converted into Common Stock; (ii) upon (a) the sale, lease or other disposition
of all or substantially all of the assets of the Company or (b) an acquisition
of the Company by another corporation or entity by consolidation, merger or
other reorganization in which the holders of the Company's outstanding voting
stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the voting
power of the corporation or other entity surviving such transaction, provided
that this Section 3.20 shall not apply to a merger effected exclusively for the
purpose of changing the domicile of the Company (a "CHANGE IN CONTROL"); or
(iii) the termination of this Agreement.
SECTION 4. RIGHTS OF FIRST REFUSAL
4.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of
first refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the
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Equity Securities excluded by Section 4.6 hereof. The Investor's pro rata share
is equal to the ratio of (a) the number of shares of the Company's Common Stock
(including all shares of Common Stock issued or issuable upon conversion of the
Shares) which the Investor is deemed to be a holder immediately prior to the
issuance of such Equity Securities to (b) the total number of shares of the
Company's outstanding Common Stock (including all shares of Common Stock issued
or issuable upon conversion of the Shares or upon the exercise of any
outstanding warrants or options) immediately prior to the issuance of the Equity
Securities. For the purposes of this Agreement, the term "EQUITY SECURITIES"
shall mean (i) any Common Stock, Series A Stock, Series B Stock or other
security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Series A Stock, Series B Stock or other
security (including any option to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Series A Stock, Series B Stock or other security or (iv) any such
warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any
Equity Securities, it shall give the Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. The Investor shall have thirty
(30) days from the giving of such notice to agree to purchase its pro rata share
of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities to the Investor if it would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the
Investors fail to exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which the Investor's rights were not exercised, at a price and upon general
terms and conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Investors pursuant to Section 4.2
hereof. If the Company has not sold such Equity Securities within ninety (90)
days of the notice provided pursuant to Section 4.2, the Company shall not
thereafter issue or sell any Equity Securities, without first offering such
securities to the Investors in the manner provided above.
4.4 TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights
of first refusal established by this Section 4 shall not apply to, and shall
terminate upon the earlier of (i) effective date of the registration statement
pertaining to the Company's Initial Offering or (ii) a Change in Control. The
rights of first refusal established by this Section 4 may be amended, or any
provision waived with the written consent of the Investor or as permitted by
Section 5.6.
4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal of the Investor under this Section 4 may be transferred to the same
parties, subject to the same restrictions as any transfer of registration rights
pursuant to Section 2.11.
4.6 EXCLUDED SECURITIES. The rights of first refusal established
by this Section 4 shall have no application to any of the following Equity
Securities:
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(A) up to an aggregate amount of Five Hundred Thousand
(500,000) shares of Common Stock (and/or options, warrants or other Common Stock
purchase rights issued pursuant to such options, warrants or other rights) as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like issued or to be issued after the Original Issue Date (as defined in the
Company's Certificate of Designation) to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors (or the Equity Incentive Compensation Plan Committee
thereof);
(B) stock issued pursuant to any rights or agreements
outstanding as of the date of this Agreement, options and warrants outstanding
as of the date of this Agreement; and stock issued pursuant to any such rights
or agreements granted after the date of this Agreement; provided that the rights
of first refusal established by this Section 4 applied with respect to the
initial sale or grant by the Company of such rights or agreements;
(C) any Equity Securities issued for consideration other
than cash pursuant to a merger, consolidation, acquisition or similar business
combination approved by the Board of Directors including the representative
designated by the holder of the Shares;
(D) shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
(E) shares of Common Stock issued upon conversion of the
Shares;
(F) up to 250,000 of shares of any Equity Securities
issued pursuant to any equipment leasing or loan arrangement, or debt financing
from a bank or similar financial or lending institution approved by the Board of
Directors, including the Series A Board Designee;
(G) any Equity Securities that are issued by the Company
pursuant to a registration statement filed under the Securities Act; and
(H) up to 250,000 shares of the Company's Common Stock,
Series A Stock or Series B issued in connection with strategic transactions
involving the Company and other entities, including (i) joint ventures,
manufacturing, marketing or distribution arrangements or (ii) technology
transfer or development arrangements; provided that such strategic transactions
and the issuance of shares therein, has been approved by the Company's Board of
Directors, including the Series A Board Designee.
SECTION 5. MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware
(without regard to the conflicts of laws principles thereof).
21.
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5.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee of such Registrable Securities, the Company may
deem and treat the person listed as the holder of such shares in its records as
the absolute owner and holder of such shares for all purposes, including the
payment of dividends or any redemption price.
5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Purchase Agreement and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
5.5 SEVERABILITY. In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
5.6 AMENDMENT AND WAIVER.
(A) Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written consent of the
Company and the holders of at least sixty-six and two-thirds percent (66 2/3%)
of the Registrable Securities.
(B) Except as otherwise expressly provided, the
obligations of the Company and the rights of the Holders under this Agreement
may be waived only with the written consent of the holders of at least sixty-six
and two-thirds percent (66 2/3%) of the Registrable Securities.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's
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part of any provisions or conditions of this Agreement must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, by law, or otherwise afforded to
Holders, shall be cumulative and not alternative.
5.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
Exhibit A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.
5.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: INVESTORS:
INFORMAX, INC. FBR TECHNOLOGY VENTURE
PARTNERS II, LP
BY: FBR VENTURE CAPITAL MANAGERS, L.P.,
its General Partner
By: /s/ Alexander Titomirov By: /s/ Hooks K. Johnston
--------------------------------- ----------------------------------
Alexander Titomirov, President Name: Hooks K. Johnston
--------------------------------
Title: Managing Director
-------------------------------
AMERSHAM PHARMACIA BIOTECH INC.
By: /s/ Peter B. Coggins
---------------------------------
Name: Peter B. Coggins
--------------------------------
Title: V.P. Drug Discovery
-------------------------------
