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<PAGE>
Exhibit 4.2
VALERA PHARMACEUTICALS, INC.
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
AUGUST 16, 2004
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TABLE OF CONTENTS
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PAGE
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SECTION 1
GENERAL...................................................... 1
1.1
Definitions.................................................. 1
SECTION 2 RESTRICTIONS ON TRANSFER;
REGISTRATION....................... 4
2.1 Restrictions on
Transfer..................................... 4
2.2 Demand
Registration.......................................... 5
2.3 Piggyback
Registrations...................................... 6
2.4 Form S-2 and S-3
Registration................................ 7
2.5 Expenses of
Registration..................................... 9
2.6 Obligations of the
Company................................... 9
2.7 Termination of Registration
Rights........................... 11
2.8 Delay of Registration; Furnishing
Information................ 11
2.9
Indemnification..............................................
11
2.10 Assignment of Registration
Rights............................ 13
2.11 Amendment of Registration
Rights............................. 14
2.12 Limitation on Subsequent Registration
Rights................. 14
2.13 "Market Stand-Off"
Agreement................................. 14
2.14 Agreement to Furnish
Information............................. 14
2.15 Rule 144
Reporting........................................... 15
SECTION 3
COVENANTS....................................................
15
3.1 Basic Financial Information and
Reporting.................... 15
3.2 Inspection
Rights............................................ 16
3.3 Confidentiality of
Records................................... 16
3.4 Reservation of Common
Stock.................................. 16
3.5 Stock
Vesting................................................ 17
3.6 Special Relationships of Prospective
Employees............... 17
3.7 Directors' Liability and
Indemnification..................... 17
3.8 Reimbursement of
Expenses.................................... 17
3.9 Qualified Small
Business..................................... 17
3.10 Election of
Directors........................................ 17
3.12 Observer
Rights.............................................. 18
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3.13 Termination of
Covenants..................................... 18
SECTION 4 PREEMPTIVE
RIGHTS............................................ 19
4.1 Subsequent
Offerings......................................... 19
4.2 Exercise of Preemptive
Rights................................ 19
4.3 Termination and Waiver of Preemptive
Right................... 19
4.4 Transfer of Preemptive
Rights................................ 19
4.5 Excluded
Securities.......................................... 20
SECTION 5
MISCELLANEOUS................................................
20
5.1 Governing
Law................................................ 20
5.2
Survival.....................................................
20
5.3 Successors and
Assigns....................................... 21
5.4 Entire
Agreement............................................. 21
5.5
Severability.................................................
21
5.6 Amendment and
Waiver......................................... 21
5.7 Delays or
Omissions.......................................... 22
5.8
Notices......................................................
22
5.9 Attorneys'
Fees.............................................. 22
5.10 Titles and
Subtitles......................................... 22
5.11 Additional
Investors......................................... 22
5.12
Counterparts.................................................
23
5.13 Joinder of
Spouses........................................... 23
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VALERA PHARMACEUTICALS, INC.
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
(this
"Agreement") is entered into as of August 16, 2004, by and among
VALERA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
the stockholders
of the Company listed as "Common Stock Investors" on EXHIBIT A
hereto
(collectively, the "Common Stock Investors", and each
individually, a "Common
Stock Investor"), the investors listed as the "Series C
Investors" on EXHIBIT A
hereto (the "Series C Investors"), the stockholders of the
Company listed as
"Series A Investors" on EXHIBIT A hereto (the "Series A
Investors"), and the
stockholders of the Company listed as "Series B Investors" on
EXHIBIT A hereto
(the "Series B Investors" and, together with the Common Stock
Investors, the
Series C Investors and the Series A Investors, the
"Investors").
RECITALS
The Series C Investors are purchasing shares of the Company's
Series C
Convertible Preferred Stock pursuant to that certain Stock
Purchase Agreement
(the "Purchase Agreement") of even date herewith (the
"Financing").
The obligations in the Purchase Agreement are conditioned upon
the
execution and delivery of this Agreement.
In connection with the consummation of the Financing, the
parties desire to
enter into this Agreement in order to grant registration,
information rights and
other rights to the Investors as set forth below.
AGREEMENT
In consideration of the premises and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged,
intending to be legally bound hereby, the parties agree as
follows:
1. GENERAL.
1.1. DEFINITIONS. As used in this Agreement the following terms
shall
have the following respective meanings:
"Board of Directors" means the Company's Board of Directors.
"Certificate" means the Company's Restated Certificate of
Incorporation, as filed with the Delaware Secretary of State on
August 16, 2004.
"Common Stock" means the Company's common stock, par value $.001
per
share.
"Equity Securities" means (i) any Common Stock, Preferred Stock,
or
other security of the Company, (ii) any security convertible,
with or without
consideration, into any
<PAGE>
Common Stock, Preferred Stock, or other security of the Company
(including any
option to purchase such a convertible security), (iii) any
security carrying any
warrant or right to subscribe to or purchase any Common Stock,
Preferred Stock,
or other security of the Company, or (iv) any such warrant or
right.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form S-2" 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 that permits
inclusion or
incorporation of certain information by reference to other
documents filed by
the Company with the SEC.
"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.
"GP Strategies" means GP Strategies Corporation, a Delaware
corporation.
"Holder" means any person owning of record Registrable
Securities, or
securities convertible into Registrable Securities that have not
been sold to
the public or any assignee of record of such Registrable
Securities or
securities in accordance with Section 2.10 hereof.
"Preferred Stock" means the Company's preferred stock, par value
$.001
per share.
"Qualified Offering" means a firm commitment underwritten
public
offering of the Company's Common Stock, pursuant to an effective
registration
statement under the Securities Act (i) at a public offering
price per share,
before deductions for underwriter discounts and commissions, of
at least three
(3) times the highest of the original purchase prices of the
Series C
Convertible Preferred Stock, Series B Convertible Preferred
Stock or Series A
Convertible Preferred Stock (subject to adjustment for any stock
splits,
dividends, combinations, recapitalizations and the like), and
(ii) with
aggregate proceeds to the Company of at least $25,000,000 before
deductions for
underwriter discounts and commissions and any and all expenses
of such
underwritten offering incurred by the Company.
"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, (b) for purposes of
Section 2.3 and
2.4 only (and to the extent such provisions relate to Section
2.3 or 2.4,
Sections 2.1, 2.5, 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12, 2.13,
2.14, 2.15 or
Section 5), Common Stock owned by GP Strategies, and (c) 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 sold by a person to the public
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either pursuant to a registration statement or Rule 144 or sold
in a private
transaction in which the transferor's rights under Section 2 of
this Agreement
are not assigned.
"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, excluding any Registrable Securities as to which the
rights under
Section 2 have terminated pursuant to Section 2.7.
"Registration Expenses" 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 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" means the Securities Act of 1933, as
amended.
"Selling Expenses" mean all underwriting discounts and
selling
commissions applicable to the sale.
"Series A Convertible Preferred Stock" means shares of the
Company's
Preferred Stock designated as Series A Convertible Preferred
Stock, par value
$.001 per share.
"Series B Convertible Preferred Stock" means shares of the
Company's
Preferred Stock designated as Series B 10% Convertible Preferred
Stock, par
value $.001 per share.
"Series C Convertible Preferred Stock" means shares of the
Company's
Preferred Stock designated as Series C Convertible Preferred
Stock, par value
$.001 per share.
"Shares" mean (i) Series C Convertible Preferred Stock issued
pursuant
to the Purchase Agreement held by the Series C Investors hereto
and their
permitted assigns, (ii) Series B Convertible Preferred Stock
held by the Series
B Investors and their permitted assigns, (iii) Series A
Convertible Preferred
Stock held by the Series A Investors and their permitted
assigns, and (iv) for
purposes of Section 2.3 and 2.4 only (and to the extent such
provisions relate
to Section 2.3 or 2.4, Sections 2.1, 2.5, 2.6, 2.7, 2.8, 2.9,
2.10, 2.11, 2.12,
2.13 and 2.14 or Section 5), shares of Common Stock held by GP
Strategies and
its permitted assigns.
"Special Registration Statement" means a registration
statement
relating to any employee benefit plan or with respect to any
corporate
reorganization or other transaction under Rule 145 of the
Securities Act.
<PAGE>
2. RESTRICTIONS ON TRANSFER; REGISTRATION.
2.1. RESTRICTIONS ON TRANSFER.
(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.
Notwithstanding the provisions of paragraphs (i) and (ii)
above,
no such registration statement, detailed statement or opinion of
counsel shall
be necessary for a transfer by a party hereto 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
party's family member or trust for the benefit of an individual
party, (E) an
entity which is controlled by, controls or is under common
control with the
transferor (an "Affiliate"), or (F) a Common Stock Investor to
another Common
Stock Investor or then current employees of the Company;
provided that in each
case the transferee will be subject to the terms of this
Agreement to the same
extent as if he, she or it were an original party 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 or under any other agreement):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE STATE SECURITIES
OR BLUE SKY
LAWS OF ANY JURISDICTION. SUCH SHARES MAY NOT BE SOLD, OFFERED
FOR SALE,
PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND SECURITIES
LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION
IS NOT REQUIRED. COPIES OF THE AGREEMENTS COVERING THE PURCHASE
OF THESE
SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD
<PAGE>
OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
(C) If such Shares or Registrable Securities are proposed to
be
disposed of, the Company shall be obligated to reissue promptly
certificates
without the foregoing legend 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
may lawfully be so disposed of thereafter without registration,
qualification,
or legend.
2.2. DEMAND REGISTRATION.
(A) Subject to the conditions of this Section 2.2, if the
Company
shall receive a written request from a Holder or Holders of at
least 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 a majority of the Registrable Securities owned
by such
Initiating Holders, then the Company shall, within 30 days of
receipt thereof,
give written notice of such request to all Holders and, subject
to the
limitations of this Section 2.2, use its commercially reasonable
efforts to file
a registration statement under the Securities Act with the
Commission covering
all Registrable Securities that the Initiating 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 and the Company shall include such information
in the written
notice referred to in Section 2.2(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 the Company (which underwriter or underwriters
shall be
reasonably acceptable to a majority in interest of the
Initiating Holders).
Notwithstanding any other provision of this Section 2.2, 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
that would
otherwise be underwritten pursuant hereto, and the number of
shares that may be
included in the underwriting shall be allocated first to the
Holders who are
holders of Series C Convertible Preferred Stock (or shares of
Common Stock
issued upon conversion thereof), Series B Convertible Preferred
Stock (or shares
of Common Stock issued upon conversion thereof) and Series A
Convertible
Preferred Stock (or shares of Common Stock issued upon
conversion thereof) on a
pro rata basis based on the total number of Registrable
Securities held by such
Holders of Series C Convertible Preferred Stock, Series B
Convertible Preferred
Stock and Series A Convertible Preferred Stock; provided,
however, that the
number of shares of Registrable Securities to be included in
such underwriting
and registration shall not be reduced unless all other
securities of the Company
are first entirely excluded from the underwriting and
registration, and in any
event, by not more than fifty-percent (50%) of the number of
shares of
Registrable Securities requested to be so included. Any
<PAGE>
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:
(1) prior to the earlier of (A) six months following a
Qualified Offering, and (B) December 31, 2005;
(2) after the Company has effected two (2) registrations
pursuant to Section 2.2(a), and such registrations have been
declared or ordered
effective;
(3) during the period starting with the date of filing of,
and ending on the date 90 days following the effective date of,
any registration
statement (other than a Special Registration Statement) of the
Company;
(4) if within 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 a Qualified Offering
within 90 days;
(5) if the Company shall furnish to the Initiating Holders,
a certificate signed by the Chairman of the Board of Directors
stating that in
the good faith judgment of the Board of Directors, it would be
seriously
detrimental to the Company and its stockholders 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 120 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 once in any
twelve-month period;
or
(6) 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 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 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.
<PAGE>
(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 who are
holders of Series C Convertible Preferred Stock (or shares of
Common Stock
issued upon conversion thereof), Series B Convertible Preferred
Stock (or shares
of Common Stock issued upon conversion thereof) and Series A
Convertible
Preferred Stock (or shares of Common Stock issued upon
conversion thereof) on a
pro rata basis based on the total number of Registrable
Securities held by such
Holders of Series C Convertible Preferred Stock, Series B
Convertible Preferred
Stock and Series A Convertible Preferred Stock; and third, to
the Holders who
are holders of Common Stock (issued otherwise than upon
conversion of Series C
Convertible Preferred Stock, Series B Convertible Preferred
Stock or Series A
Convertible Preferred Stock) on a pro rata basis based on the
total number of
Registrable Securities held by such Holders; provided, however,
that the number
of shares of Registrable Securities to be included in such
underwriting and
registration shall not be reduced unless all other securities of
the Company
(other than securities being offered by the Company and
Registrable Securities
being offered by the Holders) are first entirely excluded from
the underwriting
and registration. 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 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 that is a partnership or
corporation, the
partners, retired partners, stockholders and Affiliates 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 of Registrable
Securities 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-2 AND S-3 REGISTRATION. In case the Company shall
receive
from a Holder or Holders of at least 50% of the Registrable
Securities then
outstanding a written request or requests that the Company
effect a registration
on Form S-2 or 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:
<PAGE>
(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, use its best efforts to file
such
registration statement as may be so requested and as would
permit or facilitate
the sale and distribution of all or such portion of such
Holder's 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 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:
(I) if Form S-2 or Form S-3, as the case may be, is not
available for such offering by the Holders, or
(II) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors
stating that in the
good faith judgment of the Board of Directors, it would be
seriously detrimental
to the Company and its stockholders for such Form S-2 or 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 registration statement for a period of
not more than 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-month period, or
(III) 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
(IV) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such Form S-2
or Form S-3
registration statement, propose to sell Registrable Securities
and such other
securities (if any) at an aggregate price to the public of less
than $3,000,000;
or
(V) if the Company has filed a registration statement at the
request of Holders under this Section 2.4 within the preceding
six months.
(C) Subject to the foregoing, the Company shall file a Form
S-2
or Form S-3 registration statement, as the case may be, 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.
(D) If the registration statement under which the Company
gives
notice under this Section 2.4 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 2.4 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
<PAGE>
underwriter or underwriters selected for such underwriting by
the Company.
Notwithstanding any other provision of this 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 Holders
who are holders of
Series C Convertible Preferred Stock (or shares of Common Stock
issued upon
conversion thereof), Series B Convertible Preferred Stock (or
shares of Common
Stock issued upon conversion thereof) and Series A Convertible
Preferred Stock
(or shares of Common Stock issued upon conversion thereof) on a
pro rata basis
based on the total number of Registrable Securities held by such
Holders of
Series C Convertible Preferred Stock, Series B Convertible
Preferred Stock and
Series A Convertible Preferred Stock; and second, to the Holders
who are holders
of Common Stock (issued other than upon conversion of the Series
C Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series
A Convertible
Preferred Stock) on a pro rata basis based on the total number
of Registrable
Securities held by such Holders; provided, however, that the
number of shares of
Registrable Securities to be included in such underwriting and
registration
shall not be reduced unless all other securities of the Company
(other than
securities being offered by the Company and Registrable
Securities being offered
by the Holders) are first entirely excluded from the
underwriting and
registration. 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, stockholders and Affiliates 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 of Registrable
Securities owned by
all entities and individuals included in such "Holder," as
defined in this
sentence.
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;
provided,
however, that the Company shall not be required to pay any
Registration Expenses
incurred in connection with any registration, qualification or
compliance
proceedings begun pursuant to a request under Section 2.2 if
such request is
subsequently withdrawn by the Holders of a majority of the
Registrable
Securities to be included in such registration, qualification or
compliance (in
which case all participating Holders shall bear all such
Registration Expenses).
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 and sold.
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
<PAGE>
registered thereunder, keep such registration statement
effective (i) in the
case of any registration under Section 2.2, for up to 180 days
or, if earlier,
until the Holder or Holders have completed the distribution
related thereto and
(ii) in the case of any registration under Section 2.4,
indefinitely or, if
earlier, until the Holder or Holders have completed the
distribution related
thereto.
(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
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