|
Exhibit
10.3
IMPERIUM RENEWABLES,
INC.
SECOND AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
This Second Amended and
Restated Investor Rights Agreement (this “
Agreement ”), made as of February 7, 2007,
amends and supersedes in its entirety that certain Amended and
Restated Investor Rights Agreement (the “ Existing
Agreement ”) dated October 30, 2006, by and
among Imperium Renewables, Inc. (formerly Seattle Biofuels, Inc.),
a Washington corporation (the “ Company
”), the investors listed on Exhibit A and certain
Investors listed on Exhibit A-1 , thereto and hereto (each,
an “ Investor ” and, collectively, with
their permitted transferees, the “ Investors
”), and the holders of Common Stock (the “ Common
Stock” ) listed on Exhibit B thereto and
hereto (each, a “ Common Holder ” and,
collectively, with their permitted transferees, the “
Common Holders ”). Each Additional Investor, as
defined below, who executes a counterpart of this Agreement, shall
be and become an additional “Investor” pursuant to this
Agreement.
RECITAL
The Company and certain
Investors listed on Exhibit A-1 hereof (as supplemented from
time-to-time, the “ Additional Investors
”) are entering into, contemporaneously herewith, a Stock
Purchase Agreement (as amended from time to time, the “
Purchase Agreement ”) dated October 30,
2006 pursuant to which the Company desires to sell to the
Additional Investors and the Additional Investors desire to
purchase from the Company shares of the Company’s Series B
Preferred Stock (“ Series B Preferred ”).
The Company desires to induce the Additional Investors to purchase
shares of Series B Preferred pursuant to the Purchase Agreement by
agreeing to the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as
follows:
1. Registration
Rights . The Company and the Investors covenant and agree
as follows:
1.1 Definitions
. For purposes of this Section 1:
(a) The term “
Affiliated Fund ” means, with respect to a
Common Holder or a Holder (as defined below) that is a limited
liability company or a limited liability partnership, a fund or
entity managed by the same manager or managing member or general
partner or management company or by an entity controlling,
controlled by, or under common control with such manager or
managing member or general partner or management
company;
(b) The term “
Change of Control ” shall mean a sale, lease,
conveyance or disposition of all or substantially all of the
Company’s property or business, or a merger, consolidation,
share exchange or reorganization of the Company with or into
another corporation, limited liability company or other entity
other than (i) a merger effected exclusively
for the purpose of changing the domicile
of the Company; (ii) a merger or consolidation with a wholly
owned subsidiary of the Company; (iii) an equity financing
approved by the Board of Directors of the Company in which the
Company is the surviving corporation; or (iv) a transaction in
which the shareholders of the Company immediately prior to the
transaction own 50% or more of the voting power of the acquiring or
surviving corporation following the transaction;
(c) The term “Common
Stock” means shares of the Company’s common
stock;
(d) The term “
Exchange Act ” means the Securities Exchange
Act of 1934, as amended (and any successor thereto), and the rules
and regulations promulgated thereunder;
(e) The term “
Form S-3 ” means such form under the
Securities Act (as defined below) as in effect on the date hereof
or any successor form under the Securities Act that permits
significant incorporation by reference of the Company’s
subsequent public filings under the Exchange Act;
(f) The term “
Holder ” means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.12 of this Agreement;
(g) The term “
Major Investor ” shall mean any person who
holds at least 500,000 shares of the Series A Preferred, the Series
B Preferred and/or the Common Stock issued upon conversion thereof
(subject to adjustment for stock splits, stock dividends,
reclassifications or the like). A Major Investor includes any
general partners, shareholders, managing members and affiliates of
a Major Investor, including Affiliated Funds;
(h) The term “
Qualified IPO ” means a firm commitment
underwritten public offering by the Company of shares of its Common
Stock with aggregate proceeds to the Company of not less than
$30,000,000 (after deducting any commissions or other expenses
allowed, paid or incurred by the corporation for any underwriting),
in connection with which all the outstanding shares of preferred
stock of the Company are converted to Common Stock pursuant the
Company’s Amended and Restated Articles of
Incorporation;
(i) The terms “
register ,” “ registered
,” and “ registration ” refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such
registration statement or document;
(j) The term “
Registrable Securities ” means (i) the
shares of Common Stock issuable or issued upon conversion of the
Series A Preferred or Series B Preferred or upon exercise of the
Common Stock Warrants issued to certain Holders pursuant to
Affirmation Of Investment, Consent, Agreement And Waiver as of the
date of this Agreement or the Common Stock Warrants issued to
Subsequent Purchasers (as defined in the Purchase Agreement)
simultaneously
2
with a Subsequent Closing (as defined in
the Purchase Agreement, and (ii) any other shares of Common
Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares listed in clause (i);
provided , however , that the foregoing definition
shall exclude in all cases such shares for which registration
rights have terminated pursuant to Section 1.15 hereof, and
any Registrable Securities sold by a person in a transaction in
which his or her rights under this Agreement are not assigned.
Notwithstanding the foregoing, Common Stock or other securities
shall only be treated as Registrable Securities if and so long as
(A) they have not been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities
transaction or (B) they have not been sold in a transaction
exempt from the registration and prospectus delivery requirements
of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such
sale;
(k) The number of shares of
“ Registrable Securities then outstanding
” means the number of shares of Common Stock that are
Registrable Securities and (i) are then issued and outstanding
or (ii) are then issuable pursuant to the exercise or
conversion of then outstanding and then exercisable options,
warrants or convertible securities;
(l) The term “
SEC ” means the Securities and Exchange
Commission;
(m) The term “
Series A Preferred ” refers to shares of Series
A Preferred Stock of the Company originally issued by the Company
pursuant to that certain Stock Purchase Agreement dated as of
December 22, 2005 (the “ Series A Purchase
Agreement ”); and
(n) The term “
Securities Act ” means the Securities Act of
1933, as amended (and any successor thereto), and the rules and
regulations promulgated thereunder.
1.2 Request for
Registration .
(a) If the Company shall
receive at any time after the earlier of (i) December 22,
2008, or (ii) six months after the effective date of the first
registration statement for a public offering of securities of the
Company (other than a registration statement relating either to the
sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145
transaction), a written request from one or more Holders
representing at least fifty percent (50%) of the Registrable
Securities then outstanding (the “ Initiating
Holders ”) that the Company file a registration
statement under the Securities Act covering the registration of
Registrable Securities with an aggregate offering price to the
public of at least $5,000,000, then the Company shall, within ten
(10) days of the receipt thereof, give written notice of such
request to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best efforts to file a registration
statement under the Securities Act as soon as practicable, and in
any event within sixty (60) days of the receipt of such
request, of all Registrable Securities which the Holders request to
be registered within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 3.5 and use
its commercially reasonable efforts to cause such registration
statement to become effective within one hundred twenty
(120) days after such request.
3
(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 1.2 and the Company shall include such information in
the written notice referred to in subsection 1.2(a). The
underwriter will be selected by the holders of a majority of the
Registrable Securities held by the Initiating Holders and shall be
reasonably acceptable to the Company. In such event, the right of
any Holder to include his 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 (unless
otherwise mutually agreed by the holders of a majority of the
Registrable Securities held by the Initiating Holders and such
Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.5(e))
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to
be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting
shall be allocated among all participating Holders thereof,
including the Initiating Holders, in proportion (as nearly as
practicable) to the amount of Registrable Securities of the Company
owned by each participating Holder; provided ,
however , that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the
underwriting.
(c) Notwithstanding the
foregoing, if the Company shall furnish to the Holders requesting a
registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company, within thirty
(30) days of the Company’s receipt of the registration
request, stating that in the good faith judgment of the Board of
Directors of the Company (the “ Board ”),
it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after providing
notice to the Initiating Holders; provided , however
, that the Company may not utilize this right more than once in any
twelve-month period.
(d) In addition, the Company
shall not be obligated to effect, or to take any action to effect,
any registration pursuant to this Section 1.2:
(i) After the Company has
effected two (2) registrations pursuant to this
Section 1.2 and such registrations have been declared or
ordered effective however a registration shall not count as one of
the two (2) registrations under this Section 1.2 unless
the Initiating Holders have been allowed to include at least 80% of
the Registrable Securities requested to be included in the
registration;
(ii) During the period
starting with the date ninety (90) days prior to the
Company’s good faith estimate of the date of filing of, and
ending on a date ninety (90) days after the effective date of,
a registration subject to Section 1.3 hereof unless
such
4
offering is the initial public offering
of the Company’s securities, in which case, ending on a date
one hundred eighty (180) days after the effective date of such
registration subject to Section 1.3 hereof; provided
that the Company is actively employing in good faith all
commercially reasonable efforts to cause such registration
statement to become effective;
(iii) 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 1.4 below; or
(iv) 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.
1.3 Company
Registration . If (but without any obligation to do so) the
Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than
the Holders) any of its stock under the Securities Act in
connection with the public offering of such securities solely for
cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration
in which the only stock being registered is Common Stock issuable
upon conversion of debt securities which are also being registered,
or any registration on any form which does not include
substantially the same information as would be required to be
included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days
after mailing of such notice by the Company in accordance with
Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Securities Act
all of the Registrable Securities that each such Holder has
requested to be registered. The Company shall have the right to
terminate or withdraw any registration initiated by it under this
Section 1.3 prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration. The expenses of such registration shall be borne by
the Company, in accordance with Section 1.7.
1.4 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
and any related qualification or compliance with respect to all or
a part of the Registrable Securities owned by such Holder or
Holders (an “ S-3 Request ”), the Company
will:
(a) promptly give written
notice of the proposed registration, and any related qualification
or compliance, to all other Holders; and
(b) within thirty
(30) days of receipt of the S-3 Request, file a registration
statement and use its commercially reasonable efforts to cause such
registration statement to become effective within forty-five
(45) days after filing and effect 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
5
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 1.4: (i) if Form S-3 is not available
for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $500,000; (iii) if
the Company shall furnish to the Holders a certificate signed by
the President of the Company stating that in the good faith
judgment of the Board, 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 1.4; provided , however , that the
Company shall not utilize this right more than once in any 12-month
period; (iv) if the Company has, within the 12-month period
preceding the date of such request, already effected two
(2) registrations on Form S-3 for the Holders pursuant to
this Section 1.4; (v) 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; or (vi) during the
period ending one hundred eighty (180) days after the
effective date of a registration statement in the case of the
Company’s initial public offering or ninety (90) days
after the effective date of a registration in connection with any
subsequent public offering (excluding registrations in connection
with employee benefit plans or Rule 145 transactions), subject to
Section 1.3.
(c) Registrations effected
pursuant to this Section 1.4 shall not be counted as demands
for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.5 Obligations of the
Company . Whenever required under this Section 1 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 commercially 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 one hundred eighty (180) days, or until the
distribution described in such registration statement is completed,
if earlier.
(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 up to one hundred eighty
(180) days, or until the distribution described in such
registration statement is completed, if earlier.
6
(c) Furnish to the Holders
such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned
by them.
(d) Use commercially
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 of such offering. Each Holder
participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(f) Notify each Holder of
Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as
a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then
existing.
(g) Cause all such
Registrable Securities registered pursuant to this Section 1
to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent
and registrar for all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable Securities,
in each case not later than the effective date of such
registration.
(i) Otherwise use its
commercially reasonable efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective
date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act.
(j) Use all commercially
reasonable efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a
registration pursuant to this Section 1, if such securities
are being sold through underwriters, or if such securities are not
being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective,
(i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an
underwritten public offering, addressed to the
7
underwriters and to the Holders
requesting registration of Registrable Securities and (ii) a
“comfort” letter dated such date, from the independent
certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering and reasonably
satisfactory to the Holders of a majority of the Registrable
Securities being registered, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable
Securities.
1.6 Furnish
Information . In connection with the obligations of the
Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder, such
Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended
method of disposition of such securities as shall be required to
effect the registration of such Holder’s Registrable
Securities. The Company shall have no obligation with respect to
any registration requested pursuant to Section 1.2 or
Section 1.4 of this Agreement if, as a result of the
application of the preceding sentence, 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 subsection 1.2(a) or
subsection 1.4(b)(ii), whichever is applicable.
1.7 Expenses of
Registration .
(a) Demand
Registration . All expenses other than underwriting
discounts and commissions, stock transfer taxes and fees of counsel
to the selling Holders other than the Special Counsel (as defined
below) incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without
limitation) all registration, filing, qualification fees,
printers’ and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements
of one counsel (such fees and disbursements not to exceed $35,000)
for the selling Holders selected by them (the “ Special
Counsel ”), shall be borne by the Company;
provided , however , that the Company shall not be
required to pay for any expenses of any registration proceeding
begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses on a pro rata
basis), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration
pursuant to Section 1.2; provided , however ,
that if at the time of such withdrawal, the Holders have learned of
a material adverse change in the condition, business or prospects
of the Company that was unknown to the Holders at the time of their
request and have withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse
change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to
Section 1.2.
(b) Company
Registration . All expenses other than underwriting
discounts and commissions, stock transfer taxes and fees of counsel
to the selling Holders other than the Special Counsel incurred in
connection with registrations, filings or qualifications of
Registrable Securities pursuant to Section 1.3 for each Holder
(which right may be assigned as provided in Section 1.12),
including (without limitation) all registration, filing,
qualification fees, printers’ and accounting fees, fees and
disbursements of counsel for the Company, and the
8
reasonable fees and disbursements of the
Special Counsel (such fees and disbursements not to exceed $20,000)
shall be borne by the Company.
(c) Registration on
Form S-3 . All expenses other than underwriting discounts
and commissions, stock transfer taxes and fees of counsel to the
selling Holders other than the Special Counsel incurred in
connection with registrations, filings or qualifications of
Registrable Securities pursuant to Section 1.4 for each Holder
(which right may be assigned as provided in Section 1.12),
including (without limitation) all registration, filing,
qualification fees, printers’ and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees
and disbursements of the Special Counsel (such fees and
disbursements not to exceed $20,000) and shall be borne by the
Company.
1.8 Underwriting
Requirements . In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the
Company shall not be required under Section 1.3 to include any
of the Holders’ securities in such underwriting unless they
accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities,
requested by shareholders to be included in such offering exceeds
the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with
the success of the offering, then the Company shall be required to
include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the
offering.
Notwithstanding any other
provision of this Section 1.8, if the underwriters advise the
Holders in writing that marketing factors require a limitation on
the number of shares to be underwritten, the number of Registrable
Securities that may be so included shall be allocated as follows:
(a) first, the Company, for its own account, unless it is a
registration initiated pursuant to Section 1.2 or
Section 1.4, (b) second, among all Holders requesting to
include Registrable Securities in such registration statement based
on the pro rata percentage of Registrable Securities held by such
Holders, assuming conversion; and (c) third, to the Company,
which the Company may allocate, at its discretion, for its own
account in connection with a registration initiated pursuant to
Section 1.2 or Section 1.4, or for the account of other
holders or employees of the Company; provided ,
however , in no event shall the amount of securities of the
selling Holders included in the offering be reduced below
twenty-five (25%) of the total amount of securities included
in such offering, unless such offering is the initial public
offering of the Company’s secur
| 
