LUNA INNOVATIONS INCORPORATED AMENDED & RESTATED INVESTOR RIGHTS AGREEMENT

Exhibit 10.8

 

EXECUTION COPY

 

LUNA INNOVATIONS INCORPORATED

 

AMENDED & RESTATED INVESTOR RIGHTS AGREEMENT

 

December 30, 2005

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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LUNA INNOVATIONS INCORPORATED

 

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

 

This Amended and Restated Investor Rights Agreement (this “Agreement”) is made as of December 30, 2005, by and among Luna Innovations Incorporated, a Delaware corporation (the “Company”), the entity (the “Investor”) listed on Exhibit A hereto, and the existing stockholders of the Company listed on Exhibit B hereto (the “Stockholders”). Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings ascribed to them in Section 1.

 

RECITALS

 

WHEREAS: The Investor is a party to the Class C Common Stock and Note Purchase Agreement of even date herewith, by and between the Company and the Investor (the “Purchase Agreement”), pursuant to which, among other things, Investor is purchasing shares of Class C Common Stock and senior convertible promissory notes (the “Notes”).

 

WHEREAS: The Investor, the Company and certain of the Stockholders are parties to that certain Investor Rights Agreement made and entered into as of August 2, 2005 (the “Prior Agreement”) entered into in connection with a prior Class C Common Stock financing of the Company (the “Prior Financing”);

 

WHEREAS: The Company, the holders of a majority of the Class A Common Stock issued and outstanding as of the date hereof, and the holders of a majority of the Class C Common Stock issued pursuant to the Prior Agreement (the “Requisite Stockholders”) desire to amend and restate the Prior Agreement as provided herein;

 

WHEREAS, the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement by the Company and the Requisite Stockholders; and

 

WHEREAS, in consideration of the Company’s sale and the investor’s purchase of the Notes and the Class C Common Stock under the Purchase Agreement and in the Prior Financing, the Company, the Investor and the Stockholders have agreed to the provisions set forth below.

 

NOW, THEREFORE: In consideration of the mutual promises and covenants set forth herein, and other consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1

Definitions

 

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

 

(a) “CHS” shall mean Carilion Health System or its assigns.

 

(b) “Class A Common Stock” shall mean shares of the Company’s Class A Common Stock, par value $0.001 per share.

(c) “Class B Common Stock” shall mean shares of the Company’s Class B Common Stock, par value $0.001 per share.

 

(d) “Class C Common Stock” shall mean shares of the Company’s Class C Common Stock, par value $0.001 per share.

 

(e) “Class Common Stock” shall mean the Class A Common Stock, Class B Common Stock and Class C Common Stock of the Company.

 

(f) “Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

(g) “Common Stock” shall mean shares of the Company’s Common Stock, par value $0.001 per share.

 

(h) “Conversion Stock” shall mean shares of Common Stock issued or issuable, directly or indirectly, upon conversion of the Class Common Stock held by the Holders.

 

(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

(j) “Holder” shall mean any Investor or Major Stockholder who holds Registrable Securities and any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been duly and validly transferred in accordance with Section 2.12 of this Agreement.

 

(k) “Indemnified Party” shall have the meaning set forth in Section 2.6(c) hereto.

 

(l) “Indemnifying Party” shall have the meaning set forth in Section 2.6(c) hereto.

 

(m) “Initial Public Offering” shall mean the closing of the Company’s first firm commitment underwritten public offering of the Company’s Common Stock registered under the Securities Act.

 

(n) “Initiating Holders” shall mean any Holder or Holders who in the aggregate hold not less than a majority of (i) the outstanding Registrable Securities or (ii) the outstanding Registrable Securities issued or issuable, directly or indirectly, pursuant to the conversion of Class C Common Stock.

 

(o) “Major Stockholder” shall mean Kent A. Murphy, Ph.D. or any permitted transferee.

 

(p) “New Securities” shall have the meaning set forth in Section 4.1(a) hereto.

 

(q) “Other Selling Stockholders” shall mean persons other than Holders who, by virtue of agreements with the Company, are entitled to include their Other Shares in certain registrations hereunder.

 

(r) “Other Shares” shall mean shares of Common Stock, other than Registrable Securities (as defined below), with respect to which registration rights have been granted.

 

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(s) “Purchase Agreement” shall have the meaning set forth in the Recitals hereto.

 

(t) “Registrable Securities” shall mean (i) shares of Common Stock issued or issuable, directly or indirectly, pursuant to the conversion of the Shares or the Notes and (ii) any Class C Common Stock issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; provided, however, that Registrable Securities shall not include any shares of Common Stock described in clause (i) or (ii) above which have previously been registered or which have been sold to the public either pursuant to a registration statement or Rule 144, or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not validly assigned in accordance with this Agreement.

 

(u) The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

 

(v) “Registration Expenses” shall mean all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification, and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and expenses of any regular or special audits incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of counsel for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

 

(w) “Restricted Securities” shall mean any Registrable Securities required to bear the first legend set forth in Section 2.8(c) hereof.

 

(x) “Rule 144” shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

 

(y) “Rule 145” shall mean Rule 145 as promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission

 

(z) “Rule 415” shall mean Rule 415 as promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

 

(aa) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

(bb) “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder.

 

(cc) “Shares” shall mean the Company’s Class Common Stock held by any Holder, whether initially issued pursuant to the Purchase Agreement or pursuant to the Prior Agreement.

 

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(dd) “Withdrawn Registration” shall mean a forfeited demand registration under Section 2.1 in accordance with the terms and conditions of Section 2.4.

 

Section 2

Registration Rights

 

2.1 Requested Registration.

 

(a) Request for Registration. Subject to the conditions set forth in this Section 2.1, if the Company shall receive from Initiating Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to Registrable Securities held by such Initiating Holders, provided such request states the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Initiating Holders, the Company will:

 

(i) promptly give written notice of the proposed registration to all other Holders; and

 

(ii) file and use its best efforts to effect such registration within ninety (90) days of such written request from the Initiating Holders (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after such written notice from the Company is mailed or delivered.

 

(b) Limitations on Requested Registration. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 2.1:

 

(i) Prior to the earlier of (x) the Company’s Initial Public Offering or (y) August 2, 2011;

 

(ii) During the one hundred eighty (180) days following the effective date of the first registration statement filed by the Company covering an underwritten offering of any of its securities to the general public, except upon receipt of the written consent of the applicable underwriter(s);

 

(iii) If the Initiating Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration statement, propose to sell Registrable Securities and such other securities (if any) the aggregate proceeds of which (after deduction for underwriter’s discounts and expenses related to the issuance) are less than $500,000.

 

(iv) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(v) After the Company has initiated two (2) such registrations pursuant to this Section 2.1;

 

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(vi) If the Initiating Holders propose to dispose of shares of Registrable Securities which may be immediately registered on Form S-3 pursuant to a request made under Section 2.3 hereof; or

 

(vii) If the Company, within thirty (30) days of its receipt of the request from the Initiating Holders, provides written notice to all Initiating Holders of its intent to file a registration statement for its Initial Public Offering within ninety (90) days.