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
