Exhibit 10.10
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Second Amended and Restated
Investor Rights Agreement is made as of November 17, 2005 by
and among Achillion Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), the holders of shares of the
Company’s Series A Convertible Preferred Stock, $.01 par
value per share (the “Series A Preferred”),
Series B Convertible Preferred Stock, $.01 par value per share
(the “Series B Preferred”), Series C Convertible
Preferred Stock, $.01 par value per share (the “Series C
Preferred”), Series C-1 Convertible Preferred Stock, $.01 par
value per share (the “Series C-1 Preferred”), and
Series C-2 Convertible Preferred Stock, $.01 par value per share
(the “Series C-2 Preferred”) (collectively, the
“Holders”).
RECITALS
A. The Company and certain of the
Holders are parties to that certain Amended and Restated Investor
Rights Agreement dated as of November 24, 2004 (the
“Prior Investor Rights Agreement”).
B. On November 7, 2000 and
March 30, 2001, the Company issued warrants to Connecticut
Innovations, Inc. (“CII”) to purchase an aggregate of
341,667 shares of Common Stock (as defined below) (the “CII
Warrants”).
C. On July 12, 2004 and
October 28, 2004, the Company issued warrants to certain of
the Holders to purchase shares of Common Stock (the “Lender
Warrants”).
D. The Company and certain of the
Holders desire to terminate and supersede the Prior Investor Rights
Agreement and, together with the other Holders, to provide for
certain arrangements with respect to (i) the registration of
shares of capital stock of the Company under the Securities Act (as
defined below), (ii) the right of first refusal of certain
Holders with respect to certain issuances of securities of the
Company, and (iii) certain covenants of the
Company.
In consideration of the mutual
covenants set forth herein, the parties agree as
follows:
1. Certain Definitions . As
used in this Agreement, the following terms shall have the
following respective meanings:
“ CII Shares ”
shall mean the shares of Common Stock issued or issuable upon
exercise of the CII Warrants.
“ Commission ”
shall mean the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities
Act.
“ Common Stock ”
shall mean the Common Stock, $.001 par value, of the Company, as
constituted as of the date of this Agreement.
“ Conversion Shares
” shall mean shares of Common Stock issued upon conversion of
the Preferred Shares.
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
“ IPO ” shall
mean the initial public offering of shares of Common Stock pursuant
to an effective registration statement filed by the Company with
the Commission for a public offering and sale of securities of the
Company.
“ Lender Shares ”
shall mean the shares of Common Stock issued or issuable upon
exercise of the Lender Warrants.
“ Preferred Shares
” shall mean any shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series C-1 Preferred
and Series C-2 Preferred held by the parties hereto and any shares
of Series B-[x] Convertible Preferred Stock, $.01 par value per
share (the “Series B-[x] Preferred”), into which shares
of Series B Preferred may convert from time to time.
“ Purchase Agreement
” shall mean the Series C-2 Convertible Preferred Stock
Purchase Agreement, dated as of the date hereof, by and among the
Company and the parties named therein, as such agreement may be
amended from time to time.
“ Registration Expenses
” shall mean the expenses so described in
Section 8.
“ Restricted Stock
” shall mean (i) the Conversion Shares, (ii) the
CII Shares and (iii) the Lender Shares; provided, however,
that shares of Common Stock which are Restricted Stock shall cease
to be Restricted Stock when such shares have been
(a) registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them or
(b) publicly sold pursuant to Rule 144 under the Securities
Act.
“ Securities Act
” shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
“ Selling Expenses
” shall mean the expenses so described in
Section 8.
“ Stockholders’
Agreement ” shall mean the Third Amended and Restated
Stockholders’ Agreement by and among the Company and certain
Holders.
“ Transaction Documents
” shall mean this Agreement, the Purchase Agreement and the
Stockholders’ Agreement.
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2. Restrictive Legend . Each
certificate representing Preferred Shares or Conversion Shares
shall, except as otherwise provided in this Section 2 or in
Section 3, be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SALE AND ISSUANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR UNDER THE SECURITIES LAW OF ANY STATE OR
OTHER JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER,
SALE, PLEDGE, OR TRANSFER IN COMPLIANCE WITH APPLICABLE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS AN OPINION
OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY, THAT AN
EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH OFFER, SALE, PLEDGE,
OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY
STATE OR OTHER JURISDICTION.
FURTHERMORE, THE SALE, PLEDGE,
ASSIGNMENT, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF THESE
SECURITIES ARE RESTRICTED PURSUANT TO THE TERMS OF AN INVESTOR
RIGHTS AGREEMENT, AS AMENDED AND/OR RESTATED FROM TIME TO TIME,
AMONG THE COMPANY, THE HOLDER OF THIS CERTIFICATE AND OTHER HOLDERS
OF THE COMPANY’S SECURITIES (THE “RIGHTS
AGREEMENT”). COPIES OF THE RIGHTS AGREEMENT MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
A certificate shall not bear such legend if in
the opinion of counsel satisfactory to the Company the securities
represented thereby may be publicly sold without registration under
the Securities Act and any applicable state securities
laws.
3. Notice of Proposed
Transfer . Prior to any proposed transfer of any Preferred
Shares or Conversion Shares (other than under the circumstances
described in Sections 4, 5 or 6), the holder thereof shall give
written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Company, shall be
accompanied by an opinion of counsel satisfactory to the Company to
the effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state
securities laws, whereupon the holder of such stock shall be
entitled to transfer such stock in accordance with the terms of its
notice; provided , however , that no such opinion of
counsel shall be required for a transfer by a Holder to any
affiliate of such Holder or by a Holder that is a partnership to a
partner of such partnership or a retired partner of such
partnership who retires after the date hereof or a limited
liability company to a member of such limited liability company or
a retired member of such limited liability company who retires
after the date hereof, or to the estate of any such partner or
retired partner and member or retired member or the transfer by
gift, will or intestate succession of any partner or member to his
or her spouse or to the siblings, lineal descendants or ancestors
of such partner or his or her spouse, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if
he or she were an original Holder hereunder. Each certificate for
Preferred Shares or Conversion Shares transferred as above provided
shall bear the legend set forth in Section 2, except that
such
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certificate shall not bear such legend if
(i) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that the transferee and
any subsequent transferee (other than an affiliate of the Company)
would be entitled to transfer such securities in a public sale
without registration under the Securities Act. The restrictions
provided for in this Section 3 shall not apply to securities
which are not required to bear the legend prescribed by
Section 2 in accordance with the provisions of that
Section.
4. Required Registration
.
(a) At any time after the earliest
of (i) six months after any registration statement covering a
public offering of securities of the Company under the Securities
Act shall have become effective, (ii) six months after the
Company shall have become a reporting company under Section 12
of the Exchange Act, and (iii) the third anniversary of the
date of this Agreement, the holders of Restricted Stock
constituting at least 20% of the total shares of Restricted Stock
then outstanding may request the Company to register under the
Securities Act all or any portion of the shares of Restricted Stock
held by such requesting holder or holders for sale in the manner
specified in such notice if either (A) the reasonably
anticipated aggregate price to the public of such public offering
would exceed $5,000,000, or (B) the shares of Restricted Stock
for which registration has been requested shall constitute at least
30% of the total shares of Restricted Stock then outstanding. For
purposes of this Section 4 and Sections 5, 6, 13(a) and 13(d),
the term “Restricted Stock” shall be deemed to include
the number of shares of Restricted Stock which would be issuable to
a holder of Preferred Shares upon conversion of all Preferred
Shares held by such holder at such time, provided ,
however , that the only securities which the Company shall
be required to register pursuant hereto shall be shares of Common
Stock, and provided , further , however , that
in any underwritten public offering contemplated by this
Section 4 or Sections 5 and 6, the holders of Preferred Shares
shall be entitled to sell such Preferred Shares to the underwriters
for conversion and sale of the shares of Common Stock issued upon
conversion thereof. Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 4
within 120 days after the effective date of a registration
statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Restricted
Stock shall have been entitled to join pursuant to Sections 5 or 6
and in which there shall have been effectively registered all
shares of Restricted Stock as to which registration shall have been
requested.
(b) Following receipt of any notice
under Section 4, the Company shall immediately notify all
holders of Restricted Stock from whom notice has not been received
and shall use its reasonable best efforts to register under the
Securities Act, for public sale in accordance with the method of
disposition specified in such notice from requesting holders, the
number of shares of Restricted Stock specified in such notice (and
in all notices received by the Company from other holders within 30
days after the giving of such notice by the Company). If such
method of disposition shall be an underwritten public offering, the
holders of a majority of the shares of Restricted Stock to be sold
in such offering may designate the managing underwriter of such
offering, subject to the approval of the Company, which approval
shall not be unreasonably withheld or delayed. The Company shall be
obligated to register Restricted Stock pursuant to this
Section 4 on three occasions only, provided ,
however , that such obligation shall be deemed satisfied
only when all shares of Restricted Stock specified in notices
received
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as aforesaid, for sale in accordance
with the method of disposition specified in notices received as
aforesaid (including a firm commitment underwritten public
offering), shall have been sold pursuant to a registration
statement covering such shares.
(c) The Company shall be entitled to
include in any registration statement referred to in this
Section 4, for sale in accordance with the method of
disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account, except as and
to the extent that, in the opinion of the managing underwriter (if
such method of marketing of disposition shall be an underwritten
public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold. Except for
registration statements on Form S-4, S-8 or any successor thereto,
the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether
for its own account or that of other stockholders, from the date of
receipt of a notice from requesting holders pursuant to this
Section 4 until the completion of the period of distribution
of the registration contemplated thereby.
5. Incidental Registration .
If the Company at any time proposes to register any of its
securities under the Securities Act for sale to the public, whether
for its own account or for the account of other security holders or
both (except with respect to registration statements on Forms S-4,
S-8 or another form not available for registering the Restricted
Stock for sale to the public), each such time it will give written
notice to all holders of outstanding Restricted Stock of its
intention to do so. Upon the written request of any such holder,
received by the Company within 20 days after the giving of any such
notice by the Company, to register any of its Restricted Stock, the
Company will use its reasonable best efforts to cause the
Restricted Stock as to which registration shall have been so
requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to
the extent required to permit the sale or other disposition by the
holder of such Restricted Stock so registered. In the event that
any registration pursuant to this Section 5 shall be, in whole
or in part, an underwritten public offering of Common Stock, the
number of shares of Restricted Stock to be included in such an
underwriting may be reduced (pro rata among the requesting holders
based upon the number of shares of Restricted Stock owned by such
holders) if and to the extent that the managing underwriter shall
be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold by the Company therein,
provided , however , that (i) such number of
shares of Restricted Stock shall not be reduced if any shares are
to be included in such underwriting for the account of any person
other than the Company or requesting holders of Restricted Stock,
and (ii) except in the case of a registration relating to the
IPO, in no event may less than one-third of the total number of
shares of Common Stock to be included in such underwriting be made
available for shares of Restricted Stock. Notwithstanding the
foregoing provisions, the Company may withdraw any registration
statement referred to in this Section 5 without thereby
incurring any liability to the holders of Restricted
Stock.
6. Registration on Form S-3 .
If at any time (i) a holder or holders of Preferred Shares or
Restricted Stock request that the Company file a registration
statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the shares of Restricted Stock
held by such requesting holder or holders, the reasonably
anticipated aggregate price to the public of which would exceed
$1,000,000, and (ii) the Company is a registrant entitled to
use Form S-3 or any successor thereto to register such shares, then
the Company shall use its best
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efforts to register under the Securities Act on
Form S-3 or any successor thereto, for public sale in accordance
with the method of disposition specified in such notice, the number
of shares of Restricted Stock specified in such notice. Whenever
the Company is required by this Section 6 to use its best
efforts to effect the registration of Restricted Stock, each of the
procedures and requirements of Section 4 (including but not
limited to the requirement that the Company notify all holders of
Restricted Stock from whom notice has not been received and provide
them with the opportunity to participate in the offering) shall
apply to such registration, provided , however , that
there shall be no limitation on the number of registrations on Form
S-3 which may be requested and obtained under this Section 6,
and provided , further , however , that the
requirements contained in the first sentence of Section 4(a)
shall not apply to any registration on Form S-3 which may be
requested and obtained under this Section 6.
7. Registration Procedures .
If and whenever the Company is required by the provisions of
Sections 4, 5 or 6 to use its reasonable best efforts to effect the
registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the
Commission a registration statement (which, in the case of an
underwritten public offering pursuant to Section 4, shall be
on Form S-1 or other form of general applicability satisfactory to
the managing underwriter selected as therein provided) with respect
to such securities and use its best efforts to cause such
registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as
hereinafter provided);
(b) prepare and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the
period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of
all Restricted Stock covered by such registration statement in
accordance with the sellers’ intended method of disposition
set forth in such registration statement for such
period.
(c) furnish to each seller of
Restricted Stock and to each underwriter such number of copies of
the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably
may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration
statement;
(d) use its best efforts to register
or qualify the Restricted Stock covered by such registration
statement under the securities or “blue sky” laws of
such jurisdictions as the sellers of Restricted Stock or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request, provided , however , that
the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;
(e) use its best efforts to list the
Restricted Stock covered by such registration statement with any
securities exchange on which the Common Stock of the Company is
then listed;
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(f) immediately notify each seller
of Restricted Stock and each underwriter under 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 of which the Company has knowledge as a result of
which the prospectus contained 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 light of
the circumstances then existing;
(g) if the offering is underwritten
and at the request of any seller of Restricted Stock, use its best
efforts to furnish on the date that Restricted Stock is delivered
to the underwriters for sale pursuant to such registration;
(i) an opinion dated such date of 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 and reasonably satisfactory to a
majority in interest of the sellers of Restricted Stock requesting
registration, addressed to the underwriters, if any, and to the
sellers of Restricted Stock requesting registration, and
(ii) a “comfort” 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 and reasonably satisfactory to a majority in
interest of the sellers of Restricted Stock requesting
registration, addressed to the underwriters, if any, and to the
sellers of Restricted Stock requesting registration; and
(h) make available for inspection by
each seller of Restricted Stock, any underwriter participating in
any distribution pursuant to such registration statement, and any
attorney, accountant or other agent retained by such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the
Company’s officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 7(a)
and 7(b) and of Section 4(c), the period of distribution of
Restricted Stock in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be
deemed to extend until the earlier of the sale of all Restricted
Stock covered thereby and 120 days after the effective date
thereof.
In connection with each registration
hereunder, the sellers of Restricted Stock will furnish to the
Company in writing such information with respect to themselves, the
Restricted Stock held by them and the proposed method of
disposition of such securities as reasonably shall be necessary in
order to assure compliance with federal and applicable state
securities laws.
In connection with each registration
pursuant to Sections 4, 5 or 6 covering an underwritten public
offering, the Company and each seller agree to enter into, and
perform its obligations under, a written agreement with the
managing underwriter selected in the manner herein provided in such
form and containing such provisions as are customary in the
securities business for such an arrangement between such
underwriter and companies of the Company’s size and
investment stature.
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8. Expenses . All expenses
incurred by the Company in complying with Sections 4, 5 and 6,
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with
state securities or “blue sky” laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and fees
and disbursements of one counsel for the sellers of Restricted
Stock, but excluding any Selling Expenses, are called
“Registration Expenses”. All underwriting discounts and
selling commissions applicable to the sale of Restricted Stock are
called “Selling Expenses”.
The Company will pay all
Registration Expenses in connection with each registration
statement under Sections 4, 5 or 6. All Selling Expenses in
connection with each registration statement under Sections 4, 5 or
6 shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such participating sellers
other than the Company (except to the extent the Company shall be a
seller) as they may agree.
9. Indemnification and
Contribution .
(a) In the event of a registration
of any of the Restricted Stock under the Securities Act pursuant to
Sections 4, 5 or 6, the Company will indemnify and hold harmless
each seller of such Restricted Stock thereunder, each underwriter
of such Restricted Stock thereunder and each other person, if any,
who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted
Stock was registered under the Securities Act pursuant to Sections
4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or
are based upon 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, and will reimburse as
incurred each such seller, each such underwriter and each such
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 Company will not be liable in any such
case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such seller, any such
underwriter or any such controlling person in writing specifically
for use in such registration statement or prospectus.
(b) In the event of a registration
of any of the Restricted Stock under the Securities Act pursuant to
Sections 4, 5 or 6, each seller of such Restricted Stock
thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which
the Company or such officer,
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director, underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement under which such Restricted
Stock was registered under the Securities Act pursuant to Sections
4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or
are based upon 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, and will reimburse the
Company and each such officer, director, underwriter and
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 such seller will be liable hereunder in any
such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the
Company by such seller specifically for use in such registration
statement or prospectus, and provided , further ,
however , that the liability of each seller hereunder shall
be limited to the net proceeds received by such seller from the
sale of Restricted Stock covered by such registration
statement.
(c) Promptly after receipt by an
indemnified party hereunder of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than
under this Section 9 and shall only relieve it from any
liability which it may have to such indemnified party under this
Section 9 if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with
counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under this Section 9 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison
with counsel so selected, provided , however , that,
if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses
available to it which are different from or additional to those
available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall
have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by
the indemnifying party as incurred.
(d) In order to provide for just and
equitable contribution to joint liability under the Securities Act
in any case in which either (i) any holder of Restricted Stock
exercising rights under this Agreement, or any controlling person
of any such holder, makes a claim for indemnification pursuant to
this Section 9 but it is judicially determined (by the entry
of a final
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judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this
Section 9 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on
the part of any such selling holder or any such controlling person
in circumstances for which indemnification is provided under this
Section 9, then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in such proportion so that such holder is responsible for
the portion represented by the percentage that the public offering
price of its Restricted Stock offered by the registration statement
bears to the public offering price of all securities offered by
such registration statement, and the Company is responsible for the
remaining portion; provided , however , that, in any
such case, (A) no such holder will be required to contribute
any amount in excess of the public offering price of all such
Restricted Stock offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding the foregoing,
to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into
in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting
agreement shall control.
10. Right of First Offer .
The Company shall, prior to any issuance by the Company of any of
its securities (other than debt securities with no equity feature),
offer to each holder of Series B Preferred, Series C Preferred,
Series C-1 Preferred, Series C-2 Preferred and Series B-[x]
Preferred (individually, a “Series Preferred Holder”
and, collectively, the “Series Preferred Holders”) by
written notice the right, for a period of twenty (20) days, to
purchase all of such securities for cash at an amount equal to the
price or other consideration for which such securities are to be
issued; provided, however, that the first offer rights of the
Series Preferred Holders pursuant to this Section 10 shall not
apply to securities issued (A) upon conversion of any of the
Preferred Shares, (B) as a stock dividend or upon any
subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited
to additional shares of Common Stock, (C) pursuant to
subscriptions, warrants, options, convertible securities, or other
rights which are listed in Schedule II to the Purchase
Agreement as being outstanding on the date of this Agreement,
(D) solely in consideration for the acquisition (whether by
merger or otherwise) by the Company or any of its subsidiaries of
all or substantially all of the stock or assets of any other
entity, (E) pursuant to a firm commitment underwritten public
offering, (F) pursuant to (i) the issuance of Common
Stock to directors, officers, employees or consultants of the
Company or (ii) the exercise of options to purchase Common
Stock granted to directors, officers, employees or consultants of
the Company, in each case, in connection with their service to the
Company, not to exceed in the aggregate 8,000,000 shares
(appropriately adjusted to reflect stock splits, stock dividends,
combinations of shares and the like with respect to the Common
Stock) less the number of shares (as so adjusted) issued pursuant
to subscriptions, warrants, options, convertible securities, or
other rights outstanding on the date of this Agreement and listed
in Schedule II to the Purchase Agreement pursuant to clause
(C) above (the shares exempted by this clause (F) being
hereinafter referred to as the “Reserved Employee
Shares”), (G) in connection with Board of
- 10 -
Director-approved bank loans or equipment
financings and (H) pursuant to the Purchase Agreement. The
Company’s written notice to the Series Preferred Holders
shall describe the securities proposed to be issued by the Company
and specify the number, price and payment terms. Each Series
Preferred Holder may accept the Company’s offer as to the
full number of securities offered to it or any lesser number, by
written notice thereof given it to the Company prior to the
expiration of the aforesaid twenty (20) day period, in which
event the Company shall promptly sell and such Series Preferred
Holder shall buy, upon the terms specified, the number of
securities agreed to be purchased by such Series Preferred Holder.
Notwithstanding the foregoing, if the Series Preferred Holders
agree, in the aggregate, to purchase more than the full number of
securities offered by the Company, then each Series Preferred
Holder accepting the Company’s offer shall first be allocated
the lesser of (i) the number of securities which such Series
Preferred Holder agreed to purchase and (ii) the number of
securities as is equal to the full number of securities offered by
the Company multiplied b
