Exhibit 10.3
CARDICA, INC.
AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT
August 19, 2003
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SECTION 1.
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GENERAL.
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1
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1.1
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Definitions.
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1
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SECTION 2.
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REGISTRATION; RESTRICTIONS ON TRANSFER.
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3
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2.1
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Restrictions on Transfer.
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3
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2.2
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Demand Registration.
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4
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2.3
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Piggyback Registrations.
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5
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2.4
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Form S-3 Registration.
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7
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2.5
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Expenses of Registration.
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8
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2.6
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Obligations of the Company.
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8
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2.7
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Termination of Registration Rights.
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9
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2.8
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Delay of Registration; Furnishing
Information.
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9
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2.9
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Indemnification.
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10
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2.10
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Assignment of Registration Rights.
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12
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2.11
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Amendment of Registration Rights.
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12
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2.12
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Limitation on Subsequent Registration
Rights.
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12
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2.13
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“Market Stand-Off” Agreement; Agreement
to Furnish Information.
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12
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2.14
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Rule 144 Reporting.
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13
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SECTION 3.
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COVENANTS OF THE COMPANY.
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14
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3.1
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Basic Financial Information and
Reporting.
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14
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3.2
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Inspection Rights.
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14
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3.3
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Confidentiality of Records.
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14
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3.4
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Reservation of Common Stock.
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15
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3.5
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Proprietary Information and Inventions
Agreement.
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15
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3.6
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Approval.
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15
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3.7
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Notification and Negotiation of Material
Transaction.
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15
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3.8
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Termination of Covenants.
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16
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3.9
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Visitation Rights.
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16
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SECTION 4.
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RIGHTS OF FIRST REFUSAL.
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17
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4.1
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Subsequent Offerings.
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17
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4.2
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Exercise of Rights.
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17
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i.
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TABLE OF CONTENTS
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(CONTINUED)
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PAGE
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4.3
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Issuance of Equity Securities to Other
Persons.
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17
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4.4
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Termination and Waiver of Rights of First
Refusal.
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18
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4.5
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Transfer of Rights of First Refusal.
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18
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4.6
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Excluded Securities.
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18
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SECTION 5.
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MISCELLANEOUS.
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19
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5.1
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Governing Law.
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19
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5.2
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Survival.
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19
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5.3
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Successors and Assigns.
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19
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5.4
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Entire Agreement.
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19
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5.5
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Severability.
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19
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5.6
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Amendment and Waiver.
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19
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5.7
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Delays or Omissions.
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20
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5.8
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Notices.
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20
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5.9
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Attorneys’ Fees.
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20
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5.10
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Titles and Subtitles.
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20
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5.11
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Additional Investors.
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20
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5.12
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Counterparts.
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21
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5.13
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Amendment of Prior Agreement.
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21
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ii.
CARDICA, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND
RESTATED INVESTOR
RIGHTS AGREEMENT (the “ Agreement ”) is entered
into as of the 19 th day of August, 2003, by and
among CARDICA, INC
. , a Delaware corporation
(the “ Company
”) and the investors listed on
EXHIBIT
A hereto, referred to
hereinafter as the “ Investors ” and each
individually as an “ Investor .”
RECITALS
WHEREAS, Guidant Investment
Corporation is purchasing shares of the Company’s
Series E Preferred Stock (the “ Series
E Stock ”), pursuant to that certain Series E Preferred
Stock Purchase Agreement (the “ Purchase Agreement ”) of
even date herewith (the “ Financing ”);
WHEREAS, the obligations in
the Purchase Agreement are conditioned upon the execution and
delivery of this Agreement;
WHEREAS, certain of the
Investors (the “ Prior
Investors ”) are holders of the
Company’s Series A Preferred Stock (the “
Series A Stock ”), Series B Preferred Stock (the “
Series B Stock ”), Series C Preferred Stock (the “
Series C Stock ”) and Series D Preferred Stock (the “
Series D Stock ,”
and collectively with the Series A Stock, Series B Stock, Series C
Stock, and the Series E Stock the “ Preferred Stock ”);
WHEREAS, the Company and the
Prior Investors are parties to a Restated Investor Rights Agreement
dated June 13, 2002, as amended on June 17, 2003 (the
“Prior Agreement”
);
WHEREAS, the parties to the
Prior Agreement desire to amend and restate the Prior Agreement in
its entirety and to accept the rights and covenants hereof in lieu
of their rights and covenants under the Prior Agreement;
and
WHEREAS, in connection with
the consummation of the Financing, the Company and the Investors
have agreed to the registration rights, information rights, and
other rights as set forth below.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warrants, 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:
“ Exchange
Act ” means the Securities
Exchange Act of 1934, as amended.
“ Form
S-3 ” means such form under the Securities Act as in effect on the
date hereof or any successor or similar registration form under the
Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC.
“ Holder ” means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.10
hereof.
“ Initial
Offering ” means the Company’s first firm commitment underwritten
public offering of its Common Stock registered under the Securities
Act.
“ Note ” shall mean that
certain subordinated convertible promissory note dated June 17,
2003, issued by the Company in favor of Century Medical, Inc., a
Japan corporation, pursuant to that certain Subordinated
Convertible Note Agreement dated June 17, 2003, which is
convertible in certain circumstances into shares of the
Company’s Common Stock.
“ 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; and (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. Notwithstanding
the foregoing, Registrable Securities shall not include any
securities (i) sold by a person to the public either pursuant to a
registration statement, (ii) sold in a private transaction in which
the transferor’s rights under Section 2 of this
Agreement are not assigned or (iii) held by a Holder (together with
its affiliates) if, as reflected on the Company’s list of
stockholders, such Holder (together with its affiliates) holds less
than 1% of the Company’s outstanding Common Stock (treating
all shares of Preferred Stock on an as converted basis), the
Company has completed its Initial Offering and all shares of Common
Stock of the Company issuable or issued upon conversion of the
Shares held by and issuable to such Holder (and its affiliates) may
be sold pursuant to Rule 144 during any ninety (90) day period. For
the purposes of this Agreement, the term “affiliate”
shall include, in the case of Guidant Investment Corporation
(“ Guidant
”), The Guidant Foundation (“
Foundation ”) so long as Foundation is an “accredited
investor” within the meaning such term is given in the
Securities Act, as hereinafter defined.
“ Registrable
Securities then outstanding ” shall be the number of shares
determined by calculating the total number of shares of the
Company’s 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.
“ 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 not to exceed ten
thousand dollars ($10,000) of a single
special counsel for the Holders, blue sky fees and expenses and the
expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the
Company).
“ SEC ”
or “ Commission
” means the Securities
and Exchange Commission.
“ 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.
“ Shares ” shall mean (a) shares of the Company’s Preferred Stock
held by the Investors and their permitted assigns, and (b) shares
of the Company’s Common Stock issued or issuable upon
conversion of the Note.
“ Special
Registration Statement ” shall
mean a registration statement relating to any employee benefit plan
under Form S-8 or similar form or with respect to any corporate
reorganization or other transaction under Rule 145 of the
Securities Act.
SECTION 2. REGISTRATION; RESTRICTIONS ON
TRANSFER.
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2.1
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Restrictions on Transfer.
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(a)
Each Holder agrees not to make any disposition of
all or any portion of the Shares or Registrable Securities unless
and until:
(i)
There is then in effect a registration statement
under the Securities Act covering such proposed disposition and
such disposition is made in accordance with such registration
statement; or
(ii)
(A) The transferee has agreed in writing to be
bound by the terms of this Agreement, (B) such Holder 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. It is agreed
that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii)
Notwithstanding the provisions of
paragraphs (i) and (ii) above, no such registration statement
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 corporation to
its shareholders in accordance with their interest in the
corporation, (C) a limited liability company to its members or
former members in accordance with their interest in the limited
liability company, (D) to the Holder’s family member or
trust for the benefit of an individual Holder, or (E) any entity to
any of its affiliates; 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 a legend
substantially similar to the following (in addition to any legend
required under applicable state securities laws):
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“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ ACT ”) AND MAY 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.”
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(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 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.
(a)
Subject to the conditions of this Section 2.2,
if the Company shall receive a written request from the Holders of
a majority of the Registrable Securities (the “
Initiating Holders ”) that the Company file a registration statement under
the Securities Act covering the registration of at least a majority
of the Registrable Securities then outstanding (or a lesser percent
if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $5,000,000 (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, effect, as expeditiously as
reasonably possible, the registration under the Securities Act of
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). Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn
from the registration.
(c)
The Company shall not be required to effect a
registration pursuant to this Section 2.2:
(i)
prior to the earlier of (A) July 15, 2006 or (B) six
(6) months following the effective date of the registration
statement pertaining to the Initial Offering;
(ii)
after the Company has effected three (3)
registrations pursuant to this Section 2.2, 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 make its Initial Offering within ninety (90)
days;
(v)
if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a
certificate signed by the Chairman of the Board 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 twice 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 twenty (20) days prior to the filing of any
registration statement
under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited
to, registration statements relating to secondary offerings of
securities of the Company, but excluding Special Registration
Statements) and will afford each such Holder an opportunity to
include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the
Registrable Securities held by it shall, within 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 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 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 (i) reduce the securities being offered by the
Company for its own account to be included in the registration and
underwriting, or (ii) reduce the amount of securities of the
selling Holders included in the registration below twenty percent
(20%) of the total amount of securities included in such
registration, unless such offering is the Initial Offering, 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 a majority 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 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:
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(i)
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if Form S-3 is not available for such offering
by the Holders, or
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(ii)
if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less
than one million dollars ($1,000,000), or
(iii)
if within thirty (30) days of receipt of a written
request from any Holder or Holders pursuant to this
Section 2.4, the Company gives notice to such Holder or
Holders of the Company’s intention to make a public offering
within ninety (90) days, other than pursuant to a Special
Registration Statement;
(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, or
(v)
if the Company has already received three demand
registrations on Form S-3, or
(vi)
in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
(c)
Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable
Securities and other securities so requested to be registered as
soon as practicable after receipt of the 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.
2.5
Expenses of Registration. Except as specifically provided herein, all Registration
Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 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 expenses of any registration proceeding begun
pursuant to Section 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.
2.6
Obligations of the Company.
Whenever required to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as
reasonably possible:
(a)
Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all
reasonable efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for up to 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.
(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 paragraph (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 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. The Company will use reasonable
efforts to amend or supplement such prospectus in order to cause
such prospectus not to include any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(g)
Use its reasonable efforts to furnish, on the date
that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters,
(i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, if
any, and (ii) a letter dated as of such date, from the
independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering addressed to the underwriters.
2.7
Termination of Registration Rights.
All registration rights granted under this Section 2
shall terminate and be of no further force and effect three
(3) years after the date of the
Company’s Initial Offering.
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2.8
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Delay of Registration; Furnishing
Information.
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(a)
No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration
as the result of any controversy that might arise with respect to
the interpretation or implementation of this
Section 2.
(b)
It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 2.2, 2.3
or 2.4 that the selling Holders shall furnish to the
Company such information regarding themselves, the
Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
(c)
The Company shall have no obligation with respect to
any registration requested pursuant to Section 2.2 or
Section 2.4 if, due to the operation of
subsection 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 number of
shares or the anticipated aggregate offering price required to
originally trigger the Company’s obligation to initiate such
registration as specified in Section 2.2 or Section 2.4,
whichever is applicable.
2.9
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 2.9(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 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 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 2.9(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 2.9 exceed
the net proceeds from the offering received
by such Holder.
(c)
Promptly after receipt by an indemnified party under
this Section 2.9 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 2.9, 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 2.9, 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 2.9.
(d)
If the indemnification provided for in this
Section 2.9 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
