EXHIBIT 4.2
SECURITYHOLDERS AGREEMENT
DATED AS OF
JULY 31, 2000
AMONG
ACCENT SEMICONDUCTOR TECHNOLOGIES, INC.
JFI II, L.P.,
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, TRUSTEE,
THE RHINE 2000 CHILDREN'S TRUST
DATED JUNE 12, 2000
BIO-RAD LABORATORIES, INC.
CONTENTS
ARTICLE I DEFINITIONS................................................................ 2
Section 1.1 Definitions.......................................................... 2
ARTICLE II RESTRICTIONS ON TRANSFERS.................................................. 10
Section 2.1 In General........................................................... 10
Section 2.2 Additional Restrictions.............................................. 12
ARTICLE III ADDITIONAL RIGHTS AND OBLIGATIONS OF SECURITYHOLDERS AND THE COMPANY....... 12
Section 3.1 Obligation to Sell Securities; Rights of Inclusion................... 12
Section 3.2 Right of First Offer................................................. 17
Section 3.3 Founders' Purchase Option............................................ 18
Section 3.4 Registration Rights.................................................. 19
Section 3.5 Action by Founders................................................... 19
Section 3.6 Financial and Other Information...................................... 20
ARTICLE IV ISSUANCE OF ADDITIONAL SECURITIES.......................................... 21
Section 4.1 Rights Upon Issuance of Additional Securities........................ 21
Section 4.2 Issuance Notice...................................................... 22
Section 4.3 Response Notice...................................................... 22
Section 4.4 Revised Issuance Notice.............................................. 22
Section 4.5 Pro Rata Share....................................................... 22
Section 4.6 Approval by Bio-Rad.................................................. 23
Section 4.7 Bio-Rad Dilution..................................................... 23
ARTICLE V TERMINATION................................................................ 24
Section 5.1 Termination.......................................................... 24
ARTICLE VI OTHER MATTERS.............................................................. 24
Section 6.1 Board Composition.................................................... 24
Section 6.2 Remedies............................................................. 27
Section 6.3 Rights and Obligations of Transferees; New Issuances................. 27
Section 6.4 Spousal Consent...................................................... 29
Section 6.5 Successors and Assigns............................................... 29
Section 6.6 No Waivers; Amendments............................................... 29
Section 6.7 Notices.............................................................. 30
Section 6.8 Inspection........................................................... 31
Section 5.9 Governing Law........................................................ 31
Section 6.10 Captions............................................................. 32
PAGE i
Section 6.11 Entire Agreement..................................................... 32
Section 6.12 Severability......................................................... 33
Section 6.13 Counterparts......................................................... 33
Section 6.14 Waiver Of Jury Trial................................................. 33
Section 6.15 Further Assurances................................................... 33
Schedule I Initial Additional Securityholders
Schedule II Initial Management Securityholders
Schedule III Registration Rights
PAGE ii
SECURITYHOLDERS AGREEMENT
This SECURITYHOLDERS AGREEMENT is dated as of July 31, 2000, and
entered into by and among ACCENT SEMICONDUCTOR TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), JFI II, L.P., a Texas limited partnership ("JFI
II"), ▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual ("Joost"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, AS JOINT TENANTS WITH A RIGHT OF SURVIVORSHIP ("Rhine"), ▇▇▇▇▇ ▇▇▇▇▇▇▇,
TRUSTEE, THE RHINE 2000 CHILDREN'S TRUST DATED JUNE 12, 2000 ("Rhine Trust" and,
together with JFI II, Joost and Rhine, the "Founders"), BIO-RAD LABORATORIES,
INC. ("Bio-Rad"), the entities listed on Schedule I annexed hereto (together
with Bio-Rad, the "Initial Additional Securityholders" arid, together with the
Subsequent Additional Securityholders (as hereinafter defined), the "Additional
Securityholders"), and the individuals listed on Schedule II annexed hereto (the
"Initial Management Securityholders" and, together with the Additional
Management Securityholders (as hereinafter defined), the "Management
Securityholders"). Each of the Company, the Founders, the Initial Additional
Securityholders, the Initial Management Securityholders and any other Person who
shall become a party to or agree to be bound by (or otherwise become bound by)
the terms of this Agreement after the date hereof is sometimes hereinafter
referred to as a "Securityholder."
WITNESSETH:
WHEREAS, the authorized capitalization of the Company is (x) 400,000
shares of Common Stock, par value $0.01 per share (the "Common Stock") and (y)
9,550 shares of Series A Preferred Stock, par value $0.01 per share (the
"Preferred Stock"; the Preferred Stock and Common Stock are collectively
referred therein as the "Stock"; provided that, reasonably promptly after the
date hereof, the Company shall amend its Articles of Incorporation to increase
the authorized capitalization of the Company to be (x) 1,400,000 shares of
Common Stock and (y) 9,550 shares of Preferred Stock;
WHEREAS, the Company has entered into a Transaction Agreement dated as
of June 29, 2000 (the "Transaction Agreement"), pursuant to which the Company
has purchased (itself and/or through one or more of its wholly owned
subsidiaries) certain assets and assumed certain liabilities of Bio-Rad, Sandia
Systems, Inc., Bio-Rad Micromeasurements Limited and Bio-Rad Microscience
Limited, as provided therein (the "Transaction");
WHEREAS, (x) in connection with the Transaction, shares of Common Stock
were issued by the Company to Bio-Rad and (y) on the date hereof Bio-Rad owns
PAGE 1
21,951 shares of Common Stock (of which 3,659 shares of Common Stock constitute
the Optioned Securities (as hereinafter defined));
WHEREAS, on the date hereof (w) JFI II owns 37,630 shares of Common
Stock, Joost owns 5,024 shares of Common Stock, (x) Rhine owns 29,479 shares of
Common Stock and (y) Rhine Trust owns 13,175 shares of Common Stock;
WHEREAS, on the date hereof (w) JFI II owns 3,593.70 shares of
Preferred Stock, (x) Joost owns 479.76 shares of Preferred Stock, (y) Rhine owns
2,815.21 shares of Preferred Stock and (z) Rhine Trust owns 1,258.25 shares of
Preferred Stock;
WHEREAS, each of the Initial Additional Securityholders owns the shares
of Common Stock and the shares of Preferred Stock set forth next to such Initial
Additional Securityholder's name on Schedule I annexed hereto; and
WHEREAS, the parties hereto desire to set forth certain rights and
obligations relating to their ownership of Securities.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I DEFINITIONS
SECTION 1.1 DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
"Additional Management Securityholders" means any member of management
of the Company or any of its subsidiaries to whom Securities are issued after
the date hereof who shall become a party to or agree to be bound by (or
otherwise become bound by) the terms of this Agreement after the date hereof.
"Additional Securities" means all Securities which are issued by the
Company at any time, other than (i) the Securities issued and outstanding on the
date hereof, (ii) any Securities issued to all of the holders of Securities then
outstanding on a proportionate basis, (iii) any Securities issued to one or more
employees of the Company pursuant to and in accordance with any employee benefit
plan, agreement or arrangement that has been approved by the Board, (iv) any
Securities that are issued in connection with the acquisition by the Company or
a subsidiary of the Company of any business (whether by acquisition of stock or
assets) or any assets, (v) any Securities issued to any lender or other Person
providing debt financing to the Company in a bona fide financing transaction
approved by the Board, (vi) any Securities issued upon exercise, conversion or
exchange of any other Securities, (vii) any Securities issued to a Person whose
participation in the Company the Board
PAGE 2
determines in good faith, based on factors particular to the identity, nature or
domicile of such person, would be an asset or benefit to the Company and (viii)
any Securities issued in amounts less than $500,000 in any single transaction or
related series of transactions; provided that the aggregate amount of all
transactions under this clause (viii) shall not exceed $2,000,000.
"Additional Securityholders" shall have the meaning set forth in the
preamble.
"Affiliate" means with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" means this Securityholders Agreement, as amended from time
to time.
"Applicable Drag Percentage" shall have the meaning set forth in
subsection 3.1(a)(i).
"Applicable Tag Percentage" shall have the meaning set forth in
subsection 3.1(b)(i).
"Bio-Rad" shall have the meaning set forth in the preamble.
"Board" means the board of directors of the Company.
"Business Day" means each day other than Saturdays, Sundays and days
when commercial banks are authorized to be closed for business in San Francisco,
California.
"Buyer's Notice" shall have the meaning set forth in subsection 3.2(c).
"Change of Control" shall mean:
(a) the consummation of a plan of reorganization, merger
or consolidation involving Company or any Qualified Subsidiary or Affiliate (for
purposes of this definition, the "Reorganizing Corporation"), except for a
reorganization, merger or consolidation where (x) the ultimate shareholders of
the Reorganizing Corporation immediately prior to such reorganization, merger or
consolidation (determined after giving pro forma effect to any transaction
relating to Timbre Technologies, Inc., whether structured as a reorganization,
merger, consolidation, acquisition or other transaction) own directly or
indirectly at least 50%
PAGE 3
of the combined voting power of the outstanding voting securities of the
corporation resulting from such reorganization, merger or consolidation (for
purposes of this definition, the "Surviving Corporation") and the individuals
who were members of the incumbent Board of Directors immediately prior to the
execution of the agreement providing for such reorganization, merger or
consolidation constitute at least 50% of the members of the board of directors
of the Surviving Corporation, or (y) the Reorganizing Corporation is
reorganized, merged or consolidated with a corporation in which any shareholder
owning directly or indirectly at least 50% of the combined voting power of the
outstanding voting securities of the Reorganizing Corporation immediately prior
to such reorganization, merger or consolidation (determined after giving pro
forma effect to any transaction relating to Timbre Technologies, Inc., whether
structured as a reorganization, merger, consolidation, acquisition or other
transaction), owns directly or indirectly at least 50% of the combined voting
power of the outstanding voting securities of the corporation resulting from
such reorganization, merger or consolidation;
(b) the sale of fifty percent (50%) of more of the assets
of the Division Businesses by Company or any Qualified Subsidiary or Affiliate,
in a single transaction or in a series of related transactions, to any Person
other than Company or a wholly-owned Subsidiary of Company or of such Qualified
Subsidiary or Affiliate; or
(c) the acquisition of beneficial ownership of stock
representing more than fifty percent (50%) of the voting power of Company or any
Qualified Subsidiary or Affiliate then outstanding by any Person other than the
shareholders of Company existing on the date hereof and such shareholders'
Subsidiaries and Affiliates (determined after giving pro forma effect to any
transaction relating to Timbre Technologies, Inc., whether structured as a
reorganization, merger, consolidation, acquisition or other transaction).
"Commission" means the U.S. Securities and Exchange Commission.
"Common Securities" means Securities other than Preferred Stock.
"Common Stock" shall have the meaning set forth in the recitals.
"Company" shall have the meaning set forth in the preamble.
"Competitor" means any Person with an interest, whether as an owner,
principal, director, independent contractor or employee, in any business, entity
or venture that competes directly with any of the businesses conducted by the
Company and its subsidiaries. An interest solely in publicly traded securities
constituting less than 5% of the issuer shall not, alone, cause a Person to be a
Competitor.
PAGE 4
"Critical Dimension Metrology Business" means the Critical Dimension
Metrology Equipment research, development, manufacturing, marketing and
distribution business carried on by Bio-Rad, its Subsidiaries and its Affiliates
(including the other Seller Parties) and includes the ownership, development and
exploitation of Intangible Property; the research and development of Critical
Dimension Metrology Equipment and components and products with respect thereto;
the manufacturing, warehousing and distribution of Critical Dimension Metrology
Equipment and components and products with respect thereto and the marketing,
sales and service of Critical Dimension Metrology Equipment and components and
products with respect thereto. Any general reference to the Critical Dimension
Metrology Business shall be deemed to include the following incidents of such
business: revenue, income, cash flow, employees, operations, condition
(financial or other), assets and properties and liabilities.
"Critical Dimension Metrology Equipment" means hardware and software
that utilize scatterometric techniques for the measurement of various dimensions
of the patterns etched into semiconductor wafers.
"Division Businesses" means the Critical Dimension Metrology Business,
the Overlay Metrology Business, the Semiconductor Materials Characterization
Business, and the Substrate Metrology Business, collectively.
"Drag-Along Sale" shall have the meaning set forth in subsection
3.1(a)(i).
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Founders" shall have the meaning set forth in the preamble.
"Initial Additional Securityholders" shall have the meaning set forth
in the preamble.
"Initial Management Securityholders" shall have the meaning set forth
in the preamble.
"Initial Public Offering" shall mean a primary public offering (whether
or not underwritten, but excluding any offering pursuant to Form S-8 under the
Securities Act or any other publicly registered offering pursuant to the
Securities Act solely pertaining to an issuance of shares of Common Stock of
Company or common stock of any Qualified Subsidiary or Affiliate or securities
exercisable therefor under any benefit plan, employee compensation plan, or
employee or director stock purchase plan) of the Common Stock of Company or
common stock of any Qualified Subsidiary or Affiliate, as the case may be,
pursuant to an effective registration statement under the Securities Act in
which Company or any Qualified Subsidiary or
PAGE 5
Affiliate, as the case may be, receives aggregate gross proceeds of at least
$35,000,000.
"Issuance Notice" shall have the meaning set forth in Section 4.2.
"JFI II" shall have the meaning set forth in the preamble.
"Joost" shall have the meaning set forth in the Preamble.
"Management Options" means options to purchase Common Stock issued to
the Management Securityholders.
"Management Securityholders" shall have the meaning set forth in the
preamble.
"Offer Price" shall have the meaning set forth in subsection 3.2(b).
"Offeror" shall have the meaning set forth in subsection 3.2(a).
"Offering Notice" shall have the meaning set forth in subsection
3.2(b).
"Offered Securities" shall have the meaning set forth in subsection
3.2(a).
"Optioned Securities" means the 3,659 shares of Common Stock of the
Company owned by Bio-Rad on the Closing Date, as such shares may be adjusted for
any stock splits, stock dividends, combinations, recapitalizations, or similar
events, but specifically excluding Securities issued with respect to Bio-Rad's
exercise of any pre-emptive rights pursuant to Section 4.1 of this Agreement.
"Overlay Metrology Business" means the Overlay Metrology Equipment
research, development, manufacturing, marketing and distribution business
carried on by Bio-Rad, its Subsidiaries and its Affiliates (including the other
Seller Parties) and includes the ownership, development and exploitation of
Intangible Property; the research and development of Overlay Metrology Equipment
and components and products with respect thereto; the manufacturing, warehousing
and distribution of Overlay Metrology Equipment and components and products with
respect thereto and the marketing, sales and service of Overlay Metrology
Equipment and components and products with respect thereto. Any general
reference to the Overlay Metrology Business shall be deemed to include the
following incidents of such business: revenue, income, cash flow, employees,
operations, condition (financial or other), assets and properties and
liabilities.
PAGE 6
"Overlay Metrology Equipment" means hardware and software utilized for
the non-destructive measurement of the accuracy of registration of critical
pattern layers in the semiconductor photolithography process.
"Permitted Transferee" means, (i) with respect to any Securityholder
that is an individual (an "Individual Securityholder"), such Individual
Securityholder's spouse, children, parents or grandchildren or any trust or
partnership established solely for the benefit of the foregoing relatives of
such Individual Securityholder, and (ii) in the case of a Securityholder that is
a corporation, partnership or other entity, any Affiliate of such
Securityholder.
"Person" means any individual, general partnership, limited
partnership, corporation, limited liability company, joint venture, trust,
business trust, cooperative or association.
"Preferred Applicable Tag Percentage" shall have the meaning set forth
in subsection 3.1(b)(ii).
"Preferred Drag-Along Sale" shall have the meaning set forth in
subsection 3.1(a)(ii).
"Preferred Stock" shall have the meaning set forth in the recitals.
"Preferred Tag-Along Sale" shall have the meaning set forth in
subsection 3.1(b)(ii).
"Preferred Tag-Along Right" shall have the meaning set forth in
subsection 3.1(b)(ii).
"Preferred Transfer Notice" shall have the meaning set forth in
subsection 3.1(b)(ii).
"Pro Rata Share" shall have the meaning set forth in Section 4.5.
"Public Transfer" means a Transfer in a public offering pursuant to an
effective registration statement under the Securities Act or a Transfer in a
bona fide market transaction effected on a public securities exchange, NASDAQ or
a comparable market system.
"Purchase Option" shall have the meaning set forth in subsection
3.3(a).
"Purchase Option Notice" shall have the meaning set forth in subsection
3.3(b).
"Qualified Public Offering" means a public offering (whether or not
underwritten, but excluding any offering pursuant to Form S-8 under the
Securities
PAGE 7
Act or any other publicly registered offering pursuant to the Securities Act
solely pertaining to an issuance of shares of Common Stock or securities
exercisable therefor under any benefit plan, employee compensation plan, or
employee or director stock purchase plan) of the Common Stock pursuant to an
effective registration statement under the Securities Act in which Company
receives aggregate gross proceeds of at least $35,000,000.
"Qualified Subsidiary or Affiliate" means any Subsidiary or Affiliate
of Company that conducts all or substantially all of the Division Businesses as
conducted on the date hereof.
"Response Notice" shall have the meaning set forth in Section 4.3.
"Rhine" shall have the meaning set forth in the preamble.
"Rhine Trust" shall have the meaning set forth in the preamble.
"Right of First Offer" shall have the meaning set forth in subsection
3.2(c).
"Securities" means the Preferred Stock, the Common Stock, the
Management Options and any warrants, options or other rights that may be issued
by the Company to purchase Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" shall have the meaning set forth in the preamble.
"Seller Parties" means Bio-Rad, Sandia Systems, Inc., Bio-Rad
Micromeasurements Limited and Bio-Rad Microscience Limited.
"Semiconductor Materials Characterization Business" means the
Semiconductor Materials Characterization Equipment research, development,
manufacturing, marketing and distribution business carried on by Bio-Rad, its
Subsidiaries and its Affiliates (including the other Seller Parties) and
includes the ownership, development and exploitation of Intangible Property; the
research and development of Semiconductor Materials Characterization Equipment
and components and products with respect thereto; the manufacturing, warehousing
and distribution of Semiconductor Materials Characterization Equipment and
components and products with respect thereto and the marketing, sales and
service of Semiconductor Materials Characterization Equipment and components and
products with respect thereto. Any general reference to the Semiconductor
Materials Characterization Business shall be deemed to include the following
incidents of such business: revenue, income, cash flow, employees, operations,
condition (financial or other), assets and properties and liabilities.
PAGE 8
"Semiconductor Materials Characterization Equipment" means hardware and
software utilized for the characterization of the electrical, optical and
materials properties of silicon and compound semiconductor materials (including,
without limitation, doping profiles, Hall mobility, resistivity,
photoluminescence and impurity detection).
"Spousal Consent" shall have the meaning set forth in Section 6.4.
"Stock" shall have the meaning set forth in the recitals.
"Subsequent Additional Securityholder" means any Person to whom
Securities are issued after the date hereof who shall become a party to or agree
to be bound by (or otherwise become bound by) the terms of this Agreement after
the date hereof.
"Subsidiary" means, with respect to any Person, any other Person in
which such Person has a direct or indirect equity or ownership interest in
excess of 50%.
"Substrate Metrology Business" means the Substrate Metrology Equipment
research, development, manufacturing, marketing and distribution business
carried on by Bio-Rad, its Subsidiaries and its Affiliates (including the other
Seller Parties) and includes the ownership, development and exploitation of
Intangible Property; the research and development of Substrate Metrology
Equipment and components and products with respect thereto; the manufacturing,
warehousing and distribution of Substrate Metrology Equipment and components and
products with respect thereto and the marketing, sales and service of Substrate
Metrology Equipment and components and products with respect thereto. Any
general reference to the Substrate Metrology Business shall be deemed to include
the following incidents of such business: revenue, income, cash flow, employees,
operations, condition (financial or other), assets and properties and
liabilities.
"Substrate Metrology Equipment" means hardware and software utilized
for the measurement, in silicon and silicon-containing semiconductor materials,
of film thickness, carbon, oxygen, boron and phosphorus concentrations, deep
trench depth and similar measurements.
"Swap Transaction" means, with respect to any Securities, any swap,
participation or other arrangement that transfers to another Person, in whole or
in part, any significant economic consequences of ownership thereof.
"Tag-Along Right" shall have the meaning set forth in subsection
3.1(b)(i).
"Tag-Along Sale" shall have the meaning set forth in subsection
3.1(b)(i).
"Transaction" shall have the meaning set forth in the recitals.
PAGE 9
"Transaction Agreement" shall have the meaning set forth in the
recitals.
"Transfer" means, with respect to any Securities, any direct or
indirect transfer, sale, assignment or other disposition of ownership thereof
(other than the conversion of Preferred Stock into Common Stock in accordance
with the terms of the Preferred Stock).
"Transferee" means any transferee of Securities or any interest
therein.
"Transfer Notice" shall have the meaning set forth in subsection
3.1(b)(i).
"Vested Options" shall have the meaning set forth in subsection
3.1(a)(i).
ARTICLE II RESTRICTIONS ON TRANSFERS
SECTION 2.1 IN GENERAL
(a) No Securityholder shall pledge, hypothecate or
otherwise encumber or Transfer any Securities, or enter into any Swap
Transaction with respect to any Securities, except in compliance with the
Securities Act, applicable state securities laws and all applicable provisions
of this Agreement. Any attempt to pledge, hypothecate or otherwise encumber or
Transfer any Securities or enter into any Swap Transaction with respect to any
Securities not in compliance with all applicable provisions of this Agreement
shall be null and void and the Company shall not register upon its books any
such attempted pledge, hypothecation or other encumbrance or Transfer of
Securities.
(b) Each Securityholder agrees that it will not pledge,
hypothecate or otherwise encumber or Transfer any Securities or enter into any
Swap Transaction with respect to any Securities prior to delivery to the Company
of evidence in form and substance reasonably satisfactory to the Company to the
effect that such pledge, hypothecation, encumbrance, Transfer, or Swap
Transaction will be in compliance with the Securities Act and applicable state
securities laws.
(c) A copy of this Agreement shall be filed with the
Company and kept with the records of the Company. Each of the Securityholders
hereby agrees that each outstanding certificate representing any Securities
issued to any Securityholder and any certificate for any Securities issued in
exchange for any similarly legended certificate shall bear a legend reading
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A MANNER
PAGE 10
EXEMPT FROM REGISTRATION UNDER SUCH ACT. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SECURITYHOLDERS
AGREEMENT OF ACCENT SEMICONDUCTOR TECHNOLOGIES, INC. (THE
"COMPANY"), DATED AS OF JULY 31, 2000, COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY. NO TRANSFER OF THESE SECURITIES
WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY
EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.
The foregoing legend shall be in addition to any other legend required to be
placed on any certificates for any Securities under applicable law. Subject to
subsection 2.1(g), no Transfer of any Securities shall be effective unless the
certificates representing the Securities issued to the Transferee bear the
legend set forth in this Section.
(d) The Securityholder making a pledge, hypothecation,
encumbrance or Transfer or entering into a Swap Transaction permitted hereunder
shall be required to pay any and all filing and recording fees, fees of counsel
and accountants and other costs and expenses reasonably incurred by the Company
as a result of such pledge, hypothecation, encumbrance or Transfer or such Swap
Transaction.
(e) No pledge, hypothecation, encumbrance, Transfer or
Swap Transaction by a Securityholder permitted hereunder shall relieve the
transferor Securityholder of any of its obligations or liabilities under this
Agreement arising prior to or in connection with consummation of such pledge,
hypothecation, encumbrance or Transfer or Swap Transaction.
(f) In connection with each pledge, hypothecation,
encumbrance, Transfer or Swap Transaction permitted hereunder, the
Securityholder making the pledge, hypothecation, encumbrance or Transfer or
entering into a Swap Transaction and the Transferee shall deliver to the Company
such other documents and instruments as the Company reasonably may request to
confirm that such pledge, hypothecation, encumbrance, Transfer or Swap
Transaction is in compliance with the terms and conditions of this Agreement.
(g) If Transfers of any Securities may be made to the
public without registration under the Securities Act, the Company shall, upon
the written request of a Securityholder, issue to such Securityholder a new
certificate evidencing such Securities which certificate shall bear a legend
that does not contain the first sentence
PAGE 11
of the legend set forth in subsection 2.1(c); provided that such holder shall
furnish the Company or its transfer agent such certificates, legal opinions or
other information as the Company or its transfer agent may reasonably require to
confirm that such sentence is not required on such certificate. If any
Securities shall cease to be entitled to any rights and subject to any
obligations set forth in this Agreement, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such Securities without the second and third sentence of the foregoing legend.
SECTION 2.2 ADDITIONAL RESTRICTIONS
(a) No Additional Securityholder or Management
Securityholder may pledge, hypothecate, encumber, Transfer or enter into a Swap
Transaction with respect to any interest in Securities without the prior written
approval of the Company other than (i) a Transfer to a Permitted Transferee,
(ii) a pledge or Transfer to the Company, (iii) a Transfer pursuant to and in
conformity with Section 3.1, 3.2 or 3.3, and (iv) a pledge or Transfer by
Bio-Rad of Securities other than the Optioned Securities to any of its lenders
as collateral for any secured financing extended by any such lender to Bio-Rad
or any of its Affiliates; provided that such lender agrees in writing to be
bound by the terms of this Agreement.
(b) The Management Securityholders shall not pledge,
hypothecate, encumber, Transfer, or enter into a Swap Transaction with respect
to any Management Options that are not Vested Options.
ARTICLE III ADDITIONAL RIGHTS AND OBLIGATIONS OF SECURITYHOLDERS AND THE COMPANY
SECTION 3.1 OBLIGATION TO SELL SECURITIES; RIGHTS OF INCLUSION
(a) (i) If the Founders propose to Transfer, directly or indirectly, to
any Person (other than to a Permitted Transferee or in a Public
Transfer) Common Securities representing at least such number of Common
Securities that, together with the Common Securities that the Founders
are entitled to drag-along pursuant to this subsection 3.1(a)(i), would
constitute at least 25% of the aggregate number of Common Securities
then outstanding (whether such Transfer is by way of purchase,
exchange, merger or other form of transaction, a "Drag-Along Sale"),
then, upon the request of the Founders, each of the Additional
Securityholders and Management Securityholders shall (i) sell the
Applicable Drag Percentage (as defined below) of its Common Securities
(including all vested Management Options or Management Options that
will become vested upon the consummation of the proposed Transfer
("Vested Options") on the same terms and conditions as apply to the
Founders' Transfer,
PAGE 12
(ii) vote their Securities in favor of any such merger or other form of
transaction and (iii) execute and deliver all documents and instruments
which are necessary or desirable to effectuate such sale or merger;
provided that the Vested Options shall be Transferred on the same terms
that the Common Securities are to be Transferred, subject to a
deduction of the exercise price with respect to the number of Common
Securities for which each such instrument is exercisable (it being
understood that if the exercise price is greater than the sale price
then such Vested Options may not be Transferred unless necessary to
meet a Securityholder's Applicable Drag Percentage and, in such case,
shall be credited towards the Applicable Drag Percentage but shall be
deemed cancelled and no consideration shall be received therefor). The
Founders shall provide written notice of such Drag-Along Sale to each
Securityholder not later than ten (10) Business Days prior to the
proposed Drag-Along Sale. Such notice shall identify the proposed
purchaser, the number and type of Common Securities proposed to be
sold, the consideration offered and any other material terms and
conditions of the Drag-Along Sale. The Founders shall have 180 days
from the expiration of such ten (10) Business Day period to consummate
the proposed Drag-Along-Sale; provided that the Founders shall in any
event endeavor to consummate the proposed Drag-Along Sale as
expeditiously as practicable. "Applicable Drag Percentage" means, in
connection with any Transfer by the Founders, the percentage of the
total number of Common Securities then held by the Founders to be sold
pursuant to such Transfer. For purposes of calculating the number of
Vested Options required to be sold under this subsection 3.1(a)(i), any
Vested Options shall be deemed exercised and treated as the number of
Securities into which they are then exercisable.
(ii) If the Founders propose to Transfer, directly or
indirectly, to any Person (other than to a Permitted Transferee or in a
Public Transfer) all of the Founders' Preferred Stock (whether such
Transfer is by way of purchase, exchange, merger or other form of
transaction, a "Preferred Drag-Along Sale", then, upon the request of
the Founders, each of the Additional Securityholders and Management
Securityholders shall (i) sell all of its Preferred Stock on the same
terms and conditions as apply to the Founders' Transfer, (ii) vote
their Securities in favor of any such merger or other form of
transaction and (iii) execute and deliver all documents and instruments
which are necessary or desirable to effectuate such sale or merger.
The Founders shall provide written notice of such Preferred Drag-Along
Sale to each Securityholder not later than ten (10) Business Days prior to the
proposed Preferred Drag-Along Sale. Such notice shall identify the, proposed
purchaser, the number of Preferred Stock proposed to be sold, the consideration
offered and any
PAGE 13
other material terms and conditions of the Preferred Drag-Along Sale. The
Founders shall have 180 days from the expiration of such ten (10) Business Day
period to consummate the proposed Preferred Drag-Along-Sale; provided that the
Founders shall in any event endeavor to consummate the proposed Preferred
Drag-Along Sale as expeditiously as practicable.
(b)(i) If the Founders propose to Transfer, directly or indirectly,
in any one transaction or series of related transactions, to any Person
or Persons (other than (i) to a Permitted Transferee, (ii) in a
Drag-Along Sale with respect to which the Founders exercise their
Drag-Along Rights under subsection 3.1(a)(i) or (iii) in a Public
Transfer) Common Securities representing at least 25% of the aggregate
number of Common Securities then outstanding (a "Tag-Along Sale"), the
Founders shall provide written notice of such proposed Transfer to each
of the Securityholders (the "Transfer Notice") (it being understood
that any Transfers by the Founders that occur within 90 days of one
another shall be deemed to be related for these purposes (other than
any Transfer within the first 60 days after the date hereof)). Such
notice shall identify the purchaser, the number of Common Securities
proposed to be sold, the consideration offered and any other material
terms and conditions of the proposed Transfer. If the offer price
consists in part or in whole of consideration other than cash, the
Founders will provide such information, to the extent reasonably
available to the Founders, relating to such consideration as each of
the Securityholders may reasonably request in order to evaluate such
non-cash consideration. Each of the Additional Securityholders and
Management Securityholders shall have the right (the "Tag-Along
Right"), exercisable as set forth below, to sell, pursuant to the
proposed Transfer, the Applicable Tag Percentage (as defined below) of
its Common Securities (provided that no Management Options other than
Vested Options may be so sold) on the same terms and conditions as
apply to the Founders' Transfer and shall execute and deliver all
documents and instruments which are necessary or desirable to
effectuate such sale; provided that the Vested Options shall be
Transferred on the same terms as the Common Securities are to be
Transferred, subject to a deduction of the exercise price with respect
to the number of Common Securities into which each such instrument is
exercisable (it being understood that if the exercise price is greater
than the sale price, then such Vested Options may not be Transferred).
"Applicable Tag Percentage" means, in connection with any Transfer by
the Founders, the percentage of the total number of Common Securities
then held by the Founders to be sold pursuant to such Transfer after
giving effect to the exercise of the Tag-Along Right by each of the
Additional Securityholders and Management Securityholders exercising
such right. For purposes of calculating the number of Common Securities
that any Management Securityholder is entitled to sell under this
PAGE 14
subsection 3.1(b)(i), any Vested Options held by a Management
Securityholder shall be deemed exercised and treated as the number of
Common Securities into which they are then exercisable. Each such
Tag-Along Right shall be exercisable by delivering written notice to
the Founders within 20 days after receipt of the Transfer Notice.
Promptly upon the expiration of such 20-day period, the Founders shall
notify each of the Additional Securityholders and Management
Securityholders exercising a Tag-Along Right of its Applicable Tag
Percentage. The Founders shall have 180 days from the expiration of
such 20-day period to consummate the proposed Transfer at a price no
greater than the price set forth in the Transfer Notice (provided that
each of the Additional Securityholders and Management Securityholders
who exercised a Tag Along Right in accordance with this subsection
3.1(b)(i) shall have the right to sell at the price set forth in the
Transfer Notice unless otherwise agreed by such Person) and on terms
and conditions no more favorable to the Founders than those stated in
the Transfer Notice. Any Common Securities that continue to be held by
the Founders after such Transfer shall continue be subject to the
provisions of this subsection 3.1(b)(i).
(ii) If the Founders propose to Transfer, directly or
indirectly, in any one transaction or series of related transactions,
to any Person or Persons (other than (i) to a Permitted Transferee,
(ii) in a Preferred Drag-Along Sale with respect to which the Founders
exercise their Preferred Drag-Along Rights under subsection 3.1(a)(ii)
or (iii) in a Public Transfer) Preferred Stock representing at least
25% of the aggregate number of Preferred Stock then outstanding (a
"Preferred Tag-Along Sale"), the Founders shall provide written notice
of such proposed Transfer to each of the Securityholders (the
"Preferred Transfer Notice") (it being understood that any Transfers by
the Founders that occur within 90 days of one another shall be deemed
to be related for these purposes (other than any Transfers within the
first 60 days hereof). Such notice shall identify the purchaser, the
number of Preferred Stock proposed to be sold, the consideration
offered and any other material terms and conditions of the proposed
Transfer. If the offer price consists in part or in whole of
consideration other than cash, the Founders will provide such
information, to the extent reasonably available to the Founders,
relating to such consideration as each of the Securityholders may
reasonably request in order to evaluate such non-cash consideration.
Each of the Additional Securityholders and Management Securityholders
shall have the right (the "Preferred Tag-Along Right"), exercisable as
set forth below, to sell, pursuant to the proposed Transfer, the
Preferred Applicable Tag Percentage (as defined below) of its
Preferred Stock on the same terms and conditions as apply to the
Founders' Transfer and shall execute and deliver all documents and
instruments which are necessary or desirable to effectuate such sale.
"Preferred Applicable Tag
PAGE 15
Percentage" means, in connection with any Transfer by the Founders, the
percentage of the total number of Preferred Stock then held by the
Founders to be sold pursuant to such Transfer after giving effect to
the exercise of the Preferred Tag-Along Right by each of the Additional
Securityholders and Management Securityholders exercising such right.
Each such Preferred Tag-Along Right shall be exercisable by delivering
written notice to the Founders within 20 days after receipt of the
Preferred Transfer Notice. Promptly upon the expiration of such 20-day
period, the Founders shall notify each of the Additional
Securityholders and Management Securityholders exercising a Preferred
Tag-Along Right of its Preferred Applicable Tag Percentage. The
Founders shall have 180 days from the expiration of such 20-day period
to consummate the proposed Transfer at a price no greater than the
price set forth in the Transfer Notice (provided that each of the
Additional Securityholders and Management Securityholders who exercised
a Preferred Tag Along Right in accordance with this subsection
3.1(b)(ii) shall have the right to sell at the price set forth in the
Preferred Transfer Notice unless otherwise agreed by such Person) and
on terms and conditions no more favorable to the Founders than those
stated in the Preferred Transfer Notice. Any Preferred Stock that
continues to be held by the Founders after such Transfer shall continue
to be subject to the provisions of this subsection 3.1(b)(ii).
(c) The rights and obligations of the Securityholders in
connection with a Tag-Along Sale, Preferred Tag-Along Sale, Drag-Along Sale or
Preferred Drag-Along Sale are subject to the following additional conditions:
(i) Concurrently with the consummation of the Drag-Along
Sale or Preferred Drag-Along Sale, as the case may be, the Founders
shall give notice thereof to the other Securityholders and the
purchaser shall remit the applicable consideration directly to each
Securityholder and furnish such other evidence of the completion and
time of completion of such Transfer and the terms thereof as may be
reasonably requested by such Securityholders.
(ii) Upon the consummation of any Tag-Along Sale,
Preferred Tag-Along Sale, Drag-Along Sale or Preferred Drag-Along Sale,
as the case may be, all of the Securityholders participating therein
shall receive the same form and amount of consideration per share of
Common Stock or Preferred Stock, as the case may be, (or, if the Common
Securities are not shares of Common Stock, the implied consideration
per share of Common Stock, determined as of such time based on the
price paid and the terms and conditions of such Common Securities), or
if Securityholders are given an option as to the form and amount of
consideration to be received, all Securityholders participating therein
must be given the same option; provided that the Founders may, if they
so choose, receive less favorable terms.
PAGE 16
(iii) All reasonable expenses incurred by the selling
Securityholders in connection with any Tag-Along Sale, Preferred
Tag-Along Sale, Drag-Along Sale or Preferred Drag-Along Sale, as the
case may be, shall be borne ratably by such Securityholders.
(iv) Each Securityholder participating in a Tag-Along
Sale, Preferred Tag-Along Sale, Drag-Along Sale or Preferred Drag-Along
Sale, as the case may be, shall make representations and warranties as
to its title to the Securities being sold and its power, authority, and
right to enter into the pertinent transaction without contravention of
law or contract. In addition, such Securityholders shall join with the
Founders in making such representations and warranties concerning the
Company and its subsidiaries and the business of the Company and its
subsidiaries as the Founders shall deem necessary or appropriate;
provided, however, that any liability for any breach thereof shall be
borne by each Securityholder on a pro rata basis based upon the amount
of Common Securities or Preferred Stock, as the case may be, owned by
such Securityholder and included in such Tag-Along Sale, Preferred
Tag-Along Sale, Drag-Along Sale or Preferred Drag-Along Sale.
SECTION 3.2 RIGHT OF FIRST OFFER
(a) If any of the Additional Securityholders and
Management Securityholders proposes to Transfer, directly or indirectly, all or
any portion of its Securities, other than to a Permitted Transferee (any such
Additional Securityholder or Management Securityholder desiring to make any such
Transfer is referred to herein as an "Offeror," and the Securities which the
Offeror seeks to Transfer is referred to herein as the "Offered Securities")
then, in each case, the Offeror shall comply with paragraphs (b) through (e)
below. Such transfer shall also be subject to the provisions of Sections 2.1 and
2.2 and nothing set forth herein is intended to modify the restrictions set
forth therein.
(b) The Offeror shall give written notice (the "Offering
Notice") to the Company and the Founders which Offering Notice shall (i) state
that the Offeror desires to Transfer such Offered Securities and (ii) the
minimum sale price (the "Offer Price") for such Securities and the other
material terms and conditions of such proposed Transfer. Each Offering Notice
shall constitute an irrevocable offer by the Offeror to the Company and the
Founders to Transfer the Offered Securities at the Offer Price in cash, subject
to the provisions of this Section 3.2.
(c) The Company and the Founders shall have the right
(the "Right of First Offer") collectively to purchase all, but not less than
all, of the Offered Securities at the Offer Price in cash exercisable by
delivery, within 30 days of receipt of an Offering Notice, to the Offeror of a
notice (a "Buyer's Notice") stating that the
PAGE 17
Company or the Founders, as the case may be, elects to purchase all the Offered
Securities. Delivery of a Buyers Notice shall constitute a contract between the
Offeror and the Company or the Founders, as the case may be, for the sale and
purchase of the Offered Securities at the Offer Price in cash and upon the other
applicable terms and conditions set forth in the Offer Notice. Failure of the
Company or the Founders to exercise such right within such 30-day period shall
be regarded as a waiver of such rights.
(d) If the Company and the Founders do not elect to
purchase all of the Offered Securities within such 30-day period, the Offeror
may, within 90 days of the expiration of such 30-day period, Transfer (or enter
into an agreement to Transfer and thereafter Transfer) all, but not less than
all, of the Offered Securities, to one or more Persons at a price no lower than
the Offer Price and on terms in all material respects no more favorable to the
purchaser than those contained in the Offering Notice.
(e) The closing of any purchase of the Offered Securities
by the Company and/or the Founders, as the case may be, shall be held at the
principal office of the Company at 11:00 A.M. local time on a Business Day
chosen by it (upon at least five days notice to the other parties to the
transaction), which date shall be no later than the scheduled closing date
provided for in the Offering Notice; provided that such closing may be held at
such other time and place as the parties to the transaction may agree. At such
closing the Offeror shall deliver, such instruments, executed by it and in form
and substance reasonably satisfactory to the Company or the Founders, as the
case may be, as shall be necessary to transfer, assign and convey the Offered
Securities to the Company or the Founders, as the case may be, which shall be
transferred free and clear of all liens or other encumbrances, against payment
of the purchase price therefor.
(f) The Founders shall have the first right to exercise
the Right of First Offer granted to the Company and the Founders hereunder. In
the event that the Founders choose not to exercise the Right of First Offer, the
Company may exercise the Right of First Offer. In the event that the Founders
exercise such right, the Founders may designate any of their respective
Affiliates or Permitted Transferees as the purchaser of all or part of the
Offered Securities in any transaction hereunder.
SECTION 3.3 FOUNDERS' PURCHASE OPTION
(a) Notwithstanding anything to the contrary contained
herein and subject to Article II hereof, the Founders shall have the irrevocable
option, exercisable at any time prior to July 31, 2005, to purchase from Bio-Rad
the Optioned Securities for $5,000,000 in cash (the "Purchase Option"). Upon the
exercise of the Purchase Option, each Founder shall have the right to purchase
its pro rata share of the
PAGE 18
Optioned Securities. For purposes of this subsection 3.3(a), each Founder's "pro
rata share" shall equal a fraction, the numerator of which is the number of
shares of Common Stock owned by such Founder and the denominator of which is the
total number of shares of Common Stock owned by all of the Founders.
(b) The Founders shall provide written notice (the
"Purchase Option Notice") of the proposed exercise of the Purchase Option to
Bio-Rad not later than five (S) Business Days prior to the proposed exercise of
the Purchase Option, which shall state (i) that the Founders desire to exercise
the Purchase Option and (ii) the proposed closing date for the purchase of the
Optioned Securities.
(c) The closing of the purchase of Optioned Securities
pursuant to the exercise of the Purchase Option shall be held at the principal
office of the Company at 1 I:00 a.m. local time on a Business Day chosen by the
Founders (upon at least S days notice to Bio-Rad), which date shall be no later
than the scheduled closing date specified in the Purchase Option Notice;
provided that such closing may be held at such other time and place as the
parties to the transaction may agree. At such closing, Bio-Rad shall deliver
such instruments, executed by it and in form and substance reasonably
satisfactory to the Founders as shall be necessary to transfer, assign and
convey the Optioned Securities to the Founders, which shall be transferred free
and clean of all liens or other encumbrances, against payment of $5,000,000 in
cash therefor.
(d) Notwithstanding anything to the contrary contained
herein (including Section 2.2(a), Bio-Rad shall not pledge, hypothecate or
otherwise encumber or Transfer the Optioned Securities, or enter into any Swap
Transaction with respect to the Optioned Securities, except for a Transfer to
the Founders pursuant to an exercise of the Purchase Option pursuant to this
Section 3.3. The Company shall hold the Optioned Securities from and after the
date hereof until the earlier of July 31, 2005 or the exercise of the Purchase
Option.
SECTION 3.4 REGISTRATION RIGHTS
Each of the Securityholders shall have the registration rights set
forth in Schedule III annexed hereto. Each of the Securityholders agrees to be
bound by the provisions of Schedule III annexed hereto as though such terms were
set forth in full herein.
SECTION 3.5 ACTION BY FOUNDERS
Each reference to "Founders" contained in Sections 3.1, 3.2 and 3.3 of
this Agreement shall be a reference to all of the Founders. Any action to be
taken by all
PAGE 19
of the Founders pursuant to Sections 3.1, 3.2 and 3.3 shall only be taken with
the consent of each of the Founders.
SECTION 3.6 FINANCIAL AND OTHER INFORMATION
(a) Until the later to occur of (i) the date on which the
Company is required to file a report with the Commission pursuant to Section
13(a) of the Exchange Act, by reason of the Company having registered any of its
securities pursuant to Section 12(g) of the Exchange Act, or (ii) the date on
which either of the following events first occurs: (y) quotations for the Common
Stock are reported by the automated quotations system operated by the National
Association of Securities Dealers, Inc., or by an equivalent quotation system,
or (z) shares of the Common Stock are listed on a national securities exchange
registered under Section 6 of the Exchange Act, the Company shall:
(1) so long as any Securityholder owns any of the
Securities, furnish to such Securityholder as soon as practicable after
the end of each fiscal year of the Company, and in any event within 90
days thereafter, consolidated balance sheets of the Company and its
subsidiaries, if any, as at the end of such fiscal year, and
consolidated statements of income, cash flows and changes in
stockholders' equity of the Company and its subsidiaries, if any, for
such year, prepared in accordance with GAAP and setting forth in each
case in comparative form the figures for the previous fiscal year, all
in reasonable detail, and certified by independent public accountants
of recognized national standing selected by the Company;
(2) so long as Bio-Rad owns 5% of the outstanding Common
Stock, deliver to Bio-Rad as soon as practicable after the end of each
fiscal quarter, and in any event within 45 days thereafter, unaudited
consolidated balance sheets of the Company and its subsidiaries, if
any, as at the end of such quarter, and unaudited consolidated
statements of income and consolidated statements of cash flows of the
Company and its subsidiaries, if any, for such quarter and for the
current fiscal year to date, prepared in accordance with GAAP compared
to projected financial information for the relevant fiscal period, all
in reasonable detail and signed, subject to changes resulting from
year-end audit adjustments, by the principal financial officer of the
Company; and
(3) from and after the time that Bio-Rad is no longer
entitled to designate a member of the Board of Directors pursuant to
Section 6.1, but only so long as Bio-Rad owns 5% of the issued and
outstanding shares of Common Stock, deliver to Bio-Rad, upon Bio-Rad's
written request, unaudited consolidated balance sheets of the Company
and its subsidiaries, if any, as at the end of any month, and unaudited
consolidated statements of income and
PAGE 20
consolidated statements of cash flows of the Company and its
subsidiaries, if any, for such month and for the current fiscal year to
date, prepared in accordance with GAAP compared to projected financial
information for the relevant fiscal period, all in reasonable detail
and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial officer of the Company.
(4) so long as Bio-Rad owns 10% or more of the
outstanding Common Stock, upon Bio-Rad's reasonable request (such
request to be made no more than once in each fiscal quarter), the
Company shall cause the Chief Executive Officer of the Company to
personally attend a regularly scheduled meeting of the Board of
Directors of Bio-Rad to brief the Board of Directors of Bio-Rad on the
Company's affairs; rote that Bio-Rad shall cause, and the Board of
Directors of Bio-Rad shall agree in writing, to keep any and all
confidential information conveyed during such briefing, written or
oral; confidential.
(b) Any Securityholder may from time to time request the
right to visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss it and their affairs, finances and accounts with
its and their officers, all at such reasonable times and as often as may be
reasonably requested.
ARTICLE IV ISSUANCE OF ADDITIONAL SECURITIES
SECTION 4.1 RIGHTS UPON ISSUANCE OF ADDITIONAL SECURITIES
The Company hereby grants to each of the Founders, the Additional
Securityholders and the Management Securityholders (collectively, the
"Pre-emptive Rights Parties' the rights set forth in this Article IV with
respect to any and all proposed issuances or sales of Additional Securities by
the Company. Notwithstanding anything to the contrary contained herein, each of
the Pre-emptive Rights Parties hereby acknowledges and agrees that this Article
IV shall not apply to the issuance of up (i) to 11,848 shares of Common Stock
for a purchase price of at least $10.00 per share and (ii) 1131.52 shares of
Preferred Stock for a purchase price of at least $1,000.00 per share, in each
case to directors, management and other Persons (including, without limitation,
any such shares issued by the Company in connection with the conversion of (x)
that certain Promissory Note issued by Company to JFI II on the date hereof, (y)
that certain Promissory Note issued by Company to Joost on the date hereof or
(z) that certain Promissory Note issued by Company to Rhine on the date hereof,
in each case in accordance with the terms thereof); provided that such
issuances, if any, shall be consummated within 60 days of the date hereof.
PAGE 21
SECTION 4.2 ISSUANCE NOTICE
The Company shall give the Pre-emptive Rights Parties written notice of
the Company's intention to issue Additional Securities (the "Issuance Notice"),
describing the material terms of such Additional Securities, the price at which
such Additional Securities will be issued or sold and the material terms upon
which the Company proposes to issue or sell such Additional Securities,
including the anticipated date of such issuance or sale.
SECTION 4.3 RESPONSE NOTICE
Each Pre-emptive Rights Party shall have 20 days from the date the
Issuance Notice is received to agree to purchase all or any portion of its Pro
Rata Share (as defined below in Section 4.5) of such Additional Securities by
giving written notice to the Company of its desire to purchase Additional
Securities (the "Response Notice") and stating therein the quantity of
Additional Securities to be purchased. Such Response Notice shall constitute the
irrevocable agreement of such Pre-emptive Rights Party to purchase the quantity
of Additional Securities indicated in the Response Notice at the price and upon
the terms stated in the Issuance Notice. Any purchase of Additional Securities
by any Pre-emptive Rights Party shall be consummated on the closing date
specified in the Issuance Notice (or, if other Persons are also purchasing such
Additional Securities, the date on which such Additional Securities described in
the applicable Issuance Notice are first issued and sold to such other Persons).
In the event that Additional Securities are being issued or will be issuable as
part of an investment unit with other securities of the Company, the right of
Pre-emptive Rights Party to purchase such Additional Securities shall be a right
to purchase the entire investment unit and not a right to purchase Additional
Securities alone.
SECTION 4.4 REVISED ISSUANCE NOTICE
The Company shall have 90 days from the date of the Issuance Notice to
consummate the proposed issuance and sale of the Additional Securities that are
not being purchased by the Pre-emptive Rights Parties at a price and upon terms
that are not materially less favorable to the Company than those specified in
the Issuance Notice. If the Company proposes to issue Additional Securities
after such 90-day period or at a price or upon terms that are materially less
favorable to the Company than those specified in the Issuance Notice, it must
again comply with this Article IV.
SECTION 4.5 PRO RATA SHARE
For purposes of this Article IV, the "Pro Rata Share" of a Pre-emptive
Rights Party shall be a fraction, (i) the numerator of which shall be the total
number of shares
PAGE 22
of Common Stock, Vested Options or other Securities (but not unvested Management
Options), as the case may be, then held by the Pre-emptive Rights Party and (ii)
the denominator of which shall be the total number of shares of Common Stock,
Vested Options or other Securities (but not unvested Management Options) then
issued and outstanding.
SECTION 4.6 APPROVAL BY BIO-RAD
Notwithstanding anything to the contrary herein or in the Transaction
Agreement, for so long as Bio-Rad owns 10% or more of the outstanding Common
Stock, the Company shall not (i) issue any shares of Preferred Stock (other than
shares of Preferred Stock issued on the Closing Date or shares of Preferred
Stock issued as described in the last sentence of Section 4.1) or (ii) amend its
Certificate of Incorporation in a way that changes the authorized capitalization
of the Company as set forth hereinabove, in each case, without the prior written
consent of Bio-Rad; provided, however, that in no event shall such prior written
consent be required with respect to any such amendment that (x) increases the
number of shares of Common Stock that the Company is authorized to issue or
increases the number of shares of Common Stock that the Company has reserved for
issuance upon the conversion of the Preferred Stock in accordance with its terms
or (y) is not materially adverse to Bio-Rad.
SECTION 4.7 BIO-RAD DILUTION
Notwithstanding anything to the contrary contained herein; until the
earlier of (i) an Initial Public Offering, (ii) a Change of Control, (iii) the
date on which Bio-Rad has Transferred in the aggregate 25% of the shares of
Common Stock issued to Bio-Rad on the Closing Date (calculated without giving
effect to any Transfer of the Optioned Securities to the Founders upon the
exercise of the Purchase Option pursuant to Section 3.3) or (iv) July 31, 2005,
the Company shall take such steps as may be necessary, including, without
limitation, the issuance for its par value of additional shares of Common Stock
to Bio-Rad, to ensure that the Common Stock issued to Bio-Rad on the Closing
Date and under this Article 4 constitutes 15% of the issued and outstanding
Common Stock of the Company (it being understood and agreed that Management
Options shall not be deemed to be issued and outstanding Common Stock unless and
until such Management Options have vested in accordance with their respective
terms); provided that (x) the dilution protection provided by this Section 4.7
shall only apply to the Common Stock issued to Bio-Rad on the Closing Date and
to Common Stock issued pursuant to this Article 4 and shall not apply to (i) any
other Common Stock or other capital stock of the Company acquired by or
otherwise held by Bio-Rad or (ii) any of the Common Stock of the Company issued
to Bio-Rad on the Closing Date or pursuant to this Article 4 that Bio-Rad
Transfers to any other Person, (y) as of any date of determination, the
percentage represented by
PAGE 23
the Common Stock issued to Bio-Rad at the Closing and under this Article 4 shall
be determined (i) as if Bio-Rad had not Transferred any shares of Common Stock
(including, without limitation, any Transfer by Bio-Rad pursuant to the exercise
of the Purchase Option pursuant to Section 3.3) to any other Person and (ii) as
if Bio-Rad had fully exercised its preemption rights pursuant to Article 4 each
time Bio-Rad had the right to exercise such rights, regardless of whether or not
Bio-Rad actually exercises such rights, and as if all shares of Common Stock
acquired by Bio-Rad on any such exercise or deemed exercise had been acquired
under Article 4. Company hereby represents and warrants to Bio-Rad that upon the
issuance of the Common Stock described in the last sentence of Section 4.1 (and
assuming no other Common Stock is issued by Company between the date hereof and
the date of the issuance of the Common Stock described in the last sentence of
Section 4.1), on the date of the issuance of the Common Stock described in the
last sentence of Section 4.1 the Common Stock issued to Bio-Rad on the date
hereof will constitute at least 17.999% of the issued and outstanding Common
Stock of Company.
ARTICLE V TERMINATION
SECTION 5.1 TERMINATION
(a) This Agreement shall terminate and, except as
otherwise expressly provided herein, shall be of no further force and effect and
shall not be binding upon any party hereto upon the occurrence of a Qualified
Public Offering. This Agreement shall terminate in full (A) upon the
dissolution, liquidation or winding up of the Company, or (B) upon the approval
of such termination by each Securityholder. In any event, all provisions of this
Agreement shall terminate on December 31, 2025.
(b) As to any particular Securityholder, this Agreement
shall no longer be binding or of further force or effect as to such
Securityholder, except as noted below or otherwise expressly provided herein, as
of the date such Securityholder has Transferred all of such Securityholder's
Securities and the transferees) of such Securities, if required by this
Agreement, shall have become a party hereto; provided however, that no such
termination shall be effective if such Securityholder is in breach of this
Agreement.
ARTICLE VI OTHER MATTERS
SECTION 6.1 BOARD COMPOSITION
(a) For so long as Bio-Rad (together with its Permitted
Transferees) holds as of any date of determination an aggregate number of shares
of Common Stock equal to at least 10% of the aggregate number of issued and
outstanding shares
PAGE 24
of Common Stock as of such date of determination, each Securityholder agrees
that it will vote all Securities owned by it so as to elect to the Board one
member designated by Bio-Rad. If any such designee shall resign or otherwise
fail, decline or cease to serve, Bio-Rad may designate a replacement. The
initial designee under this subsection shall be ▇▇▇▇ ▇▇▇▇▇▇▇▇. No person
designated hereunder may be a Competitor. The right to designate a member of the
Board set forth in this subsection 6.1(a) shall not be transferable; provided
that, in the event that Bio-Rad Transfers in accordance with the terms of this
Agreement at least 10% of the aggregate issued and outstanding shares of Common
Stock of the Company to a Person in a single transaction, Bio-Rad may, with the
consent of the Company (such consent not to be unreasonably withheld) transfer
its right to designate a member of the Board set forth in this subsection 6.1(a)
to such Person (to be held by such Person as long as such Person continues to
hold at least 10% of the aggregate number of issued and outstanding shares of
Common Stock).
(b) Each Securityholder agrees that it will vote all
Securities owned by it so as to elect to the Board three members designated by
JFI II (the "JFI II Designees"); provided that if any Substitute Designator
becomes entitled to designate a member of the Board pursuant to subsection
6.1(d) below, JFI II shall only be entitled to designate two members of the
Board; and provided further that if such Substitute Designator ceases to be
entitled to designate a member of the Board pursuant to subsection 6.1(d) below,
JFI II shall again be entitled to designate three members of the Board. If any
of the JFI II Designees shall resign or otherwise fail, decline or cease to
serve, then JFI II may designate a replacement. The right to designate one or
more members of the Board set forth in this subsection 6.1(b) may be
transferred, in whole or in part, to a Transferee of Securities.
(c) Each Securityholder agrees that it will vote all
Securities owned by it so as to elect to the Board three members designated by
Rhine (the "Rhine Designees"); provided that if any Additional Substitute
Designator becomes entitled to designate a member of the Board pursuant to
subsection 6.1(e) below, Rhine shall only be entitled to designate two members
of the Board; and provided further that if such Additional Substitute Designator
ceases to be entitled to designate a member of the Board pursuant to subsection
6.1(e) below, Rhine shall again be entitled to designate three members of the
Board. If any of the Rhine Designees shall resign or otherwise fail, decline or
cease to serve, then Rhine may designate a replacement. The right to designate
one or more members of the Board set forth in this subsection 6.1(c) may be
transferred, in whole or in part, to a Transferee of Securities.
(d) For so long as any Person who is not a Securityholder
on the date hereof who becomes a Securityholder pursuant to a merger, stock
purchase or other form of transaction and as a result of such transaction such
Person holds as of any date of determination an aggregate number of shares of
Common Stock equal to at
PAGE 25
least 10% of the aggregate number of issued and outstanding shares of Common
Stock as of such date of determination (a "Substitute Designator"), each
Securityholder agrees that it will vote all Securities owned by it so as to
elect to the Board one member designated by the Substitute Designator. If any
such designee shall resign or otherwise fail, decline or cease to serve, the
Substitute Designator may designate a replacement. No person designated
hereunder may be a Competitor. The right to designate a member of the Board set
forth in this subsection 6.1(d) shall not be transferable. Notwithstanding
anything to the contrary contained herein, a Person can only become a Substitute
Designator in connection with the first material merger, stock purchase or other
form of transaction consummated by the Company after the date hereof.
(e) For so long as any Person that is neither a
Securityholder as of the date hereof nor the Substitute Designee who becomes a
Securityholder pursuant to a merger, stock purchase or other form of transaction
and as a result of such transaction such Person holds as of any date of
determination an aggregate number of shares of Common Stock equal to at least
10% of the aggregate number of issued and outstanding shares of Common Stock as
of such date of determination (the "Additional Substitute Designator"), each
Securityholder agrees that it will vote all Securities owned by it so as to
elect to the Board one member designated by the Additional Substitute
Designator. If any such designee shall resign or otherwise fail, decline or
cease to serve, the Additional Substitute Designator may designate a
replacement. No person designated hereunder may be a Competitor. The right to
designate a member of the Board set forth in this subsection 6:I(e) shall not be
transferable. Notwithstanding anything to the contrary contained herein, a
Person can only become an Additional Substitute Designator in connection with
the second material merger, stock purchase or other form of transaction
consummated by the Company after the date hereof.
(f) Each Securityholder agrees that it will vote all
Securities owned by it so as to elect any member of management entitled pursuant
to his or her management agreement to a seat on the Board.
(g) Whenever a Securityholder is entitled to designate a
member of the Board, (x) such Securityholder may instead designate an observer
to attend meetings of the Board and (y) such Securityholder's designee shall
also sit on (I) any executive or similar committee of the Board to which is
delegated a substantial portion of the Board's responsibilities and (II) any
board or committee of the board of any Subsidiary which exercises comparable
responsibilities.
(h) Reasonably promptly after the date hereof, the Board
shall have 7 members, unless increased by the Board. Except as otherwise
provided in subsections 6.1(b) and 6.1(c), if any Securityholder or group of
Securityholders entitled to
PAGE 26
designate one or more members of the Board hereunder ceases to qualify so to
designate one or more of such members, then, unless the right to designate such
member or members has been transferred in accordance herewith, the
Securityholders, voting as a class in proportion to the Common Securities they
hold, shall be entitled to designate one or more directors to fill the Board
seat or seats formerly filled by such designees of such Securityholder.
(i) The Board shall take appropriate steps to ensure that
any confidential information in the possession of the Company or the Board shall
be used only for Company purposes and not for any other purpose. Such steps may
include without limitation the establishment of Board procedures designed to
prevent access by any Competitor or its representatives to any such confidential
information.
(j) Each Securityholder grants to the Company an
irrevocable proxy to vote such Securityholder's Securities in accordance with
the terms of this Section 6.1.
SECTION 6.2 REMEDIES
The Company and the Securityholders acknowledge and agree that in the
event of any breach of this Agreement by any one of them, the Company or the
relevant Securityholder or Securityholders, as the case may be, would be
irreparably harmed and could not be made whole by monetary damages. The Company
and the Securityholders accordingly agree (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate and (ii) that
the Company and the Securityholders, in addition to any other remedy to which
they may be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement.
SECTION 6.3 RIGHTS AND OBLIGATIONS OF TRANSFEREES; NEW ISSUANCES
Notwithstanding anything to the contrary contained herein, and without
limiting the provisions of Article II, any Transfer of Securities in which the
Transferee fails to comply with this Section 6.3 shall be null and void.
(a) Upon Transfer of any Securities by any Additional
Securityholder or Management Securityholder to a Permitted Transferee, such
Permitted Transferee shall (i) execute and deliver to the Company an agreement
to be bound by this Agreement reasonably satisfactory in form and substance to
the Company and (ii) have all of the rights and be bound by all of the
obligations hereunder of an Additional Securityholder or Management
Securityholder, as the case may be.
(b) Upon Transfer of any Securities by any Founder to a
Permitted Transferee, such Permitted Transferee shall (i) execute and deliver to
the Company an
PAGE 27
agreement to be bound by this Agreement reasonably satisfactory in form and
substance to the Company and (ii) have all of the rights and be bound by all of
the obligations hereunder of such Founder.
(c) Any Transferee (other than a Permitted Transferee) of
an Additional Securityholder or Management Securityholder, as the case may be,
shall (i) execute and deliver to the Company an agreement to be bound by this
Agreement reasonably satisfactory in form and substance to the Company and (ii)
have all of the rights and be bound by all of the obligations hereunder of an
Additional Securityholder or Management Securityholder, as the case may be,
except that (i) no such transferee shall have any right to designate members of
the Board pursuant to Section 6.1 and (ii) no such transferee of Securities
pursuant to a Transfer under subsection 3.1(a) or 3.1(b) shall have any rights
under subsection 3.1(b).
(d) Any Transferee (other than a Permitted Transferee) of
any Founder shall (i) execute and deliver to the Company an agreement to be
bound by this Agreement reasonably satisfactory to the Company and (ii) be bound
by all of the obligations of such Founder hereunder and have only those rights
of such Founder hereunder as such Founder shall determine in its sole
discretion, except that (A) no such Transferee shall have any obligation under
subsection 3.1(b), (B) any such Transferee will be subject to the obligations of
an Additional Securityholder under subsection 3.I(a) and (C) such Transferee
shall have no rights to compel a sale under subsection 3.1(a).
(e) Notwithstanding anything to the contrary contained
herein, a Transferee in a Public Transfer shall not have any rights or
obligations under this Agreement with respect to the Securities Transferred.
(f) In the event Securities are issued by the Company to
a Securityholder at any time during the term of this Agreement, such Securities
shall, as a condition to such issuance, become subject to the terms and
provisions of this Agreement as Securities hereunder. In the event Securities
are issued by the Company to Subsequent Additional Securityholders, such
Subsequent Additional Securityholders shall be required to execute an agreement
to be bound by this Agreement as Additional Securityholders. In the event
Securities are issued by the Company to Additional Management Securityholders,
such Additional Management Securityholders shall be required to execute an
agreement to be bound by this Agreement as a Management Securityholder. In the
event Securities are issued by the Company to other parties, such parties shall
be required to execute an agreement to be bound by this Agreement and shall
receive the rights hereunder deemed appropriate by the Company.
PAGE 28
SECTION 6.4 SPOUSAL CONSENT
Each Securityholder who is married as of the date hereof represents and
warrants that he or she shall deliver to the Company reasonably promptly after
the date hereof a separate consent and agreement executed by his or her spouse
in a form reasonably acceptable to the Company (a "Spousal Consent").
Additionally, to the extent not previously delivered and if requested by the
Company, each Securityholder who is an individual shall cause his or her spouse,
as applicable, to execute and deliver a Spousal Consent. The signature of a
spouse on a Spousal Consent shall not be construed as making such spouse a
securityholder of the Company or a party to this Agreement except as may
otherwise be set forth in such consent. Each Securityholder who is an individual
will certify his or her marital status to the Company at the Company's request.
SECTION 6.5 SUCCESSORS AND ASSIGNS
Subject to Section 6.3, this Agreement, and alt obligations and rights
hereunder, shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
SECTION 6.6 NO WAIVERS; AMENDMENTS
(a) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(b) This Agreement may be amended or modified only by a
writing signed by each of (i) the Company, (ii) each of the Founders, (iii)
Additional Securityholders holding at least 35% of the aggregate number of
Securities held by all Additional Securityholders, and (iv) Management
Securityholders holding at least 25% of the Securities then held by all
Management Securityholders on a fully diluted basis; provided that no amendment
that materially and adversely affects a particular Securityholder without
similarly affecting similarly situated Securityholders may be made without the
consent of such Securityholder.
(c) Any provision of this Agreement may be waived if, but
only if, such waiver is in writing and is signed by the party against whom the
enforcement of such waiver is sought.
PAGE 29
SECTION 6.7 NOTICES
All notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given,
(1) if to the Company:
Accent Semiconductor Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
(2) if to Additional Securityholders:
The addresses set forth on Schedule I.
(3) if to any Management Securityholder:
The addresses set forth on Schedule II.
(4) if to JFI II:
JFI II, L.P.
c/o Joost Enterprises Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(5) if to Joost:
▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Joost Enterprises Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
PAGE 30
(6) if to Rhine:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(7) if to Rhine Trust:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
The Rhine Childrens' Family Trust
c/o Rutgers Organics Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(8) if to Bio-Rad:
Bio-Rad Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and evidence of receipt is received or (ii) if given by any other
means, upon delivery or refusal of delivery at the address specified in this
Section 6.7.
SECTION 6.8 INSPECTION
So long as this Agreement shall be in effect, this Agreement and any
amendments hereto shall be made available for inspection by any Securityholder
at the principal offices of the Company.
SECTION 5.9 GOVERNING LAW
This Agreement, the legal relations between the parties and any action,
whether contractual or non-contractual, instituted by any party with respect to
matters
PAGE 31
arising under or in connection with or in respect of this Agreement,
including but not limited to the negotiation, execution, interpretation,
coverage, scope, performance, breach, termination, validity, or enforceability
of this Agreement, shall be governed by and construed in accordance with the
laws of the State of California applicable to contracts made and performed in
such State and without regard to conflicts of law doctrines, except to the
extent that certain matters are preempted by federal law or are governed as a
matter of controlling law by the law of the jurisdiction of organization of the
respective parties. Each party hereby irrevocably submits to and accepts for
itself and its properties, generally and unconditionally, the non-exclusive
jurisdiction of the United States District Court for the Northern District of
California or any state court sitting in the City of San Francisco (and of the
appropriate appellate courts) with respect to any action seeking to enforce any
provision of, or based on any matter arising out of or in connection with this
Agreement or any of the transactions contemplated hereby, and each of the
parties hereby waives any defense of forum non conveniens and any objection to
venue laid therein and agrees to be bound by any judgment rendered thereby
arising under, out of, in respect of or in connection with this Agreement. Each
party further irrevocably accepts for itself and its properties, generally and
unconditionally, service of process pursuant to the laws of the State of
California and the rules of its courts, and designates and appoints the
individuals identified in or pursuant to Section 6.7 hereof to receive notices
on its behalf, such service being hereby acknowledged to be effective and
binding service in every respect. A copy of any such process so served shall be
mailed by registered mail to the designated agent of each party at its address
provided in Section 6.7; provided that, unless otherwise provided by applicable
law, any failure to mail such copy shall not affect the validity of the service
of such process. If any agent so appointed refuses to accept service, the
designating party hereby agrees that service of process sufficient for personal
jurisdiction in any action against it in the applicable jurisdiction may be made
by registered or certified mail, return receipt requested, to its address
provided in Section 6.7. Each party hereby acknowledges that such service shall
be effective and binding in every respect. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any party to bring any action or proceeding against the other party in any
other jurisdiction, except to the extent expressly otherwise provided in this
Section.
SECTION 6.10 CAPTIONS
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
SECTION 6.11 ENTIRE AGREEMENT
This Agreement and the other agreements relating to the Transaction
constitute the entire agreement among the parties with respect to the subject
matter hereof and
PAGE 32
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any Person other
than the parties any rights or remedies hereunder.
SECTION 6.12 SEVERABILITY
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdictions; it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
SECTION 6.13 COUNTERPARTS
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signature thereto and
hereto were upon the same instrument. This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
parties hereto.
SECTION 6.14 WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 6.15 FURTHER ASSURANCES
After the date hereof, each party hereto shall take such other actions
as the other parties may reasonably request to consummate or implement the
transactions contemplated hereby or to evidence such events or matters.
[Remainder of page intentionally left blank]
PAGE 33
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
ACCENT SEMICONDUCTOR TECHNOLOGIES, INC.
By: /s/
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & CEO
JFI II, L.P.
By: Joost Enterprises Corporation, its General
Partner
By: /s/
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
/s/
-----------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/
-----------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/
-----------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, AS TRUSTEE OF THE RHINE 2000
CHILDREN'S TRUST DATED JUNE 12, 2000
/s/
-----------------------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇,
as Trustee and not individually
PAGE 34
BIO-RAD LABORATORIES, INC.
By: /s/
-------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and General Counsel
FSC CORP.
By: /s/
-------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
PAGE 35
SCHEDULE I
INITIAL ADDITIONAL SECURITYHOLDERS
Common Stock: Preferred Stock
FSC Corp. 2,844 shares 271.56 shares
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ____________________
Telecopier: ___________________
SCHEDULE I PAGE 1
SCHEDULE II
INITIAL MANAGEMENT SECURITY HOLDERS
None.
SCHEDULE II PAGE 1
SCHEDULE III
REGISTRATION RIGHTS
The following registration rights provisions shall be applicable in any
of the circumstances in which they are referenced in Article III of the
Securityholders Agreement.
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition have the meanings
assigned to such terms in the Securityholders Agreement dated as of July 28,
2000 (the "Securityholders Agreement") among Accent Semiconductor Technologies,
Inc., a Delaware corporation, JFI II, L.P. ("JFI II"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Joost"),
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants with a right of
survivorship (collectively, "Rhine"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee, The Rhine
Childrens' Family Trust dated June 12, 2000 ("Rhine Trust"), Bio-Rad
Laboratories Inc. ("Bio-Rad") and the entities and individuals listed on
Schedules I and II annexed thereto, of which this Schedule III is a part. As
used in this Schedule III, the following terms shall have the following
meanings:
"Demand Registration" has the meaning set forth in Section 2A(i).
"Demand Request" has the meaning set forth in Section 2A(i).
"Excess Amount" means the portion of the Registrable Securities
requested by all holders to be sold pursuant to Section 2A or Section 2B which
the managing Underwriter or Underwriters determines exceeds the largest number
of Registrable Securities which can successfully be sold in an orderly manner in
such offering within a price range reasonably acceptable to the Initiating
Holder requesting such registration in the case of a Demand Registration or by
the Company or the Initiating Holder commencing such registration in the case of
a Piggyback Registration.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Initial Public Offering" has the meaning set forth in Section 2A(i).
"Initiating Holder" means (i) JFI until such time as it shall have
requested and there shall have been prosecuted to effectiveness at its request
three (3) Demand Registrations, (ii) Joost until such time as it shall have
requested and there shall have been prosecuted to effectiveness at its request
one (1) Demand Registration, (iii) Rhine until such time as it shall have
requested and there shall have been prosecuted to effectiveness at its request
three (3) Demand Registrations, (iv) Rhine Trust until
SCHEDULE III PAGE 1
such time as it shall have requested and there shall have been prosecuted to
effectiveness at its request one (1) Demand Registration, or (v) Bio-Rad until
such time as it shall have requested and there shall have been prosecuted to
effectiveness at its request two (2) Demand Registrations.
"Piggy-Back Registration" has the meaning set forth in Section 2B.
"Prospectus" means any Prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by any
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Registrable Securities" means any shares of Common Stock of the
Company (i) held by Securityholders and (ii) which Securityholders have a
current right to receive; provided, however, that shares of Common Stock of the
Company shall cease to be Registrable Securities upon any sale thereof pursuant
to an effective Registration Statement or under Rule 144, and provided, further,
that shares of Common Stock of the Company described in clauses (i) or (ii)
above shall cease to be Registrable Securities at such time as those shares
become eligible for sale under Rule 144(k) or for so long as such shares may be
offered or sold pursuant to Rule 144 in any 90-day period.
"Registration Statement" means any Registration Statement and any
additional Registration Statement, including (in each case) the Prospectus,
amendments and supplements to such Registration Statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference in such Registration Statement to be filed
pursuant to the terms of this Schedule III.
"Rule 144" means Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"Rule 158" means Rule 158 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"Rule 415" means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
SCHEDULE III PAGE 2
"SEC" means the Securities and Exchange Commission or its successors.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor federal statute, and the rules and regulations thereunder, all as the
same shall be in effect from time to time.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
"Underwritten Offering" means a registration in connection with which
securities of the Company are sold to an underwriter for reoffering to the
public pursuant to an effective Registration Statement.
SECTION 2. DEMAND AND PIGGY-BACK REGISTRATIONS
A. DEMAND REGISTRATIONS
(i) At any time and from time to time on or after the
earlier of (i) the date which is six months following the closing of the first
registered public offering of the Company resulting in gross proceeds of at
least $35,000,000 to the Company (the "Initial Public Offering") and (ii) July
28, 2005, an Initiating Holder may make a written request to the Company (a
"Demand Request") for registration under the Securities Act of all or part of
the Registrable Securities held by such Initiating Holder and its Affiliates and
Permitted Transferees (a "Demand Registration"); provided that the Registrable
Securities requested to be registered shall, on the date such request is
delivered, have an aggregate market value of $10,000,000 (before calculation of
underwriting discounts and commissions; provided that, in the event the Company
has not consummated an Initial Public Offering, the market value of Registrable
Securities requested to be registered shall be determined by an investment
banker with a national reputation reasonably acceptable to Company and the
applicable Initiating Holder). Such request will specify the number of shares of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof.
(ii) The Company shall give written notice of such Demand
Request to all Securityholders in accordance with Section 2B and the Company
shall use its reasonable best efforts to cause a Registration Statement on Form
S-3 under the Securities Act (or any comparable or successor form permitting
resale of securities on a continuous or delayed basis pursuant to Rule 415), or,
if the Company is ineligible to use Form S-3, on another appropriate form, for
the resale of such Registrable Securities as may be requested to be included
therein by the Initiating Holder and its Affiliates and any Persons exercising
piggy-back rights under Section 2B, to be filed
SCHEDULE III PAGE 3
with the SEC not later than 60 days (or 120 days, in the case of a Demand
Request with respect to the first registered public offering of the Company)
after receipt of a Demand Request. The Company shall use its reasonable best
efforts to cause any such Registration Statement to be declared effective by the
SEC as promptly as practicable after such filing.
(iii) If the Initiating Holder so elects, the offering of
such Registrable Securities pursuant to such Demand Registration shall be in the
form of an Underwritten Offering. The Company shall select one or more
nationally recognized firms of investment bankers, reasonably acceptable to the
Initiating Holder, to act as the managing Underwriter or Underwriters in
connection with such Underwritten Offering.
B. PIGGY-BACK REGISTRATIONS
If at any time the Company shall determine to register for its own
account or the account of others under the Securities Act (other than in
connection with the Initial Public Offering but including a Demand Registration)
any Registrable Securities (other than a registration statement on Form S-4 or
S-8 (or any substitute form that may be adopted by the SEC)), then the Company
shall (a) promptly give written notice of such proposed filing to the
Securityholders (but in no event less than 30 days before the anticipated filing
date), and (b) such notice shall offer such Securityholders the opportunity to
register such number of shares of Registrable Securities as each such
Securityholder may request in writing within 15 days of receipt of such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such Securityholder and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use reasonable best efforts to
cause the managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration on the same terms and conditions as any similar
securities of the Company or the Initiating Holder included therein to permit
the sale or other disposition of such Registrable Securities in accordance with
the intended method of distribution thereof. Subject to Section 2C(ii), any
Securityholder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Piggy-Back Registration by giving written notice
to the Company of its request to withdraw within 10 days of its request for
inclusion. To the extent the related registration statement was filed by the
Company for its own account, the Company may withdraw such registration at any
time prior to the time it becomes effective.
C. REDUCTION IN OFFERING
(i) Notwithstanding anything contained herein, if the
managing Underwriter or Underwriters of an offering described in Section 2A or
2B determine
SCHEDULE III PAGE 4
that the size of the offering that the Company, Securityholders and/or other
Persons intend to make is such that the success of the offering would be
materially adversely affected by inclusion of the Registrable Securities
requested to be included, then (i) with respect to a Demand Registration, the
Company shall not include in such registration an amount of Registrable
Securities requested to be included in such offering by all holders (other than
the Initiating Holder and its Affiliates and Permitted Transferees) equal to the
Excess Amount (such reduction to be allocated first pro rata among holders other
than Securityholders, if any, and next pro rata among Securityholders seeking to
exercise their piggy-back rights, in each case according to the number of
Registrable Securities requested for inclusion) and (ii) with respect to a
Piggy-Back Registration (that does not also constitute a Demand Registration),
the Company shall not include in such registration an amount of Registrable
Securities requested to be included in such offering by all holders equal to the
Excess Amount (such reduction to be allocated pro rata among all holders seeking
to exercise their piggy-back rights according to the number of Registrable
Securities requested for inclusion).
(ii) If, as a result of the proration provisions of
Section 2C(i), any Securityholder shall not be entitled to include all
Registrable Securities in a Piggy-Back Registration that such Securityholder has
requested to be included, such Securityholder may elect to withdraw his request
to include Registrable Securities in such registration; provided however, that
such election shall be irrevocable and, after making such election, a
Securityholder shall no longer have any right to include Registrable Securities
in the registration as to which such election to withdraw was made.
SECTION 3. SUSPENSION OF OBLIGATIONS UNDER CERTAIN CIRCUMSTANCES
Notwithstanding anything to the contrary contained herein, the Company
may, by written notice to each Securityholder, suspend for up to 180 consecutive
days (the period of any such suspension, the "Suspension Period") the filing of
a Registration Statement or the right of all Securityholders to sell Registrable
Securities pursuant to an effective Registration Statement if the board of
directors of the Company determines in good faith that such suspension is in the
best interests of the Company; provided that the number of days in all such
periods of suspension pursuant to this Section 3 in any consecutive twelve
months shall not exceed 180 days in the aggregate.
SECTION 4. REGISTRATION PROCEDURES
Whenever any holder has requested that any Registrable Securities be
registered pursuant to this Schedule III, the Company shall use its reasonable
best
SCHEDULE III PAGE 5
efforts to effect the registration of such Registrable Securities and in
furtherance thereof the Company shall:
A. (i) prepare and file with the SEC such amendments, including
post-effective amendments and supplements to the Registration Statement as may
be necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities until the holder or holders have completed the
distribution described in such Registration Statement; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(including, among other things, as a result of any change or changes after the
effective date of the Registration Statement in the plan of distribution
contemplated by the holders), and as so supplemented or amended to be filed
pursuant to Rule 424 promulgated under the Securities Act (or any similar
provisions then in force); (iii) respond as promptly as possible to any comments
received from the SEC with respect to each Registration Statement or any
amendment thereto and as promptly as possible provide the holders true and
complete copies of all correspondence from and to the SEC relating to the
Registration Statement; provided, however, that any information for which the
Company requests confidential treatment from the SEC shall be kept confidential
by the holders, unless (A) disclosure of such information is required by court
or administrative order or is necessary to respond to inquiries of regulatory
authorities; (B) disclosure of such information, in the opinion of counsel to
such holders, is required by law; (C) such information becomes generally
available to the public other than as a result of a disclosure or negligent
failure to safeguard by such holders; or (D) such information becomes available
to such holders from a source other than the Company and such source is not
known by such holders to be bound by a confidentiality agreement with the
Company; and (iv) comply in all material respects with the provisions of the
Exchange Act with respect to the disposition of all Registrable Securities
covered by each Registration Statement in accordance with the intended methods
of disposition by the holders as set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented;
B. furnish to the holders of Registrable Securities to be sold,
their counsel and any managing underwriters, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such holders, their counsel and such
managing underwriters, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to such holders
and such underwriters, to conduct a reasonable due diligence investigation
within the meaning of the Securities Act;
C. notify the holders of Registrable Securities to be sold, and
any managing underwriters as promptly as possible (and in the case of (i),
below, not less
SCHEDULE III PAGE 6
than five (5) Business Days prior to such filing) and confirm such notice in
writing no later than one (1) Business Day following the day:
(i) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be
filed;
(ii) when the SEC notifies the Company whether there will
be a "review" of a Registration Statement and whenever the SEC comments
in writing on such Registration Statement;
(iii) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective;
(iv) of any request by the SEC or any other Federal or
state governmental authority for amendments or supplements to each
Registration Statement or Prospectus or for additional information;
(v) of the issuance by the SEC of any stop order
suspending the effectiveness of each Registration Statement covering
any or all of the Registrable Securities or the initiation of any
proceedings for that purpose;
(vi) if at any time any of the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby in connection with the
registration of Registrable Securities ceases to be true and correct in
all material respects;
(vii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose; and
(viii) of the occurrence of any event that makes any
statement made in any Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the
case of the Registration Statement or the Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading;
D. use its reasonable best efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of (i) any order suspending the effectiveness
of the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification)
SCHEDULE III PAGE 7
of any of the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment;
E. if requested by any managing underwriter of Registrable
Securities to be sold in connection with an Underwritten Offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 4E
that would (x) in the opinion of counsel for the Company, violate applicable law
or not be required to be taken by applicable securities laws or (y) be
detrimental to the business prospects of the Company;
F. furnish to each holder of Registrable Securities to be sold,
and any managing underwriters, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the SEC;
G. promptly deliver to each holder of Registrable Securities to
be sold, and any underwriters, without charge, as many copies of the Prospectus
or Prospectuses (including each form of Prospectus) and each amendment or
supplement thereto as such Persons may reasonably request;
H. use its reasonable best efforts to register or qualify or
cooperate with the selling holders, any underwriters and their counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling holder or underwriter requests in writing, to keep each
such registration or qualification (or exemption therefrom) effective until the
holder or holders have completed the distribution of such Registrable Securities
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject;
SCHEDULE III PAGE 8
I. cooperate with the selling holders and any managing
underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
applicable law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
managing underwriters or selling holders may request at least two Business Days
prior to any sale of Registrable Securities pursuant to such Registration
Statement;
J. upon the occurrence of any event contemplated by Section
4C(viii) of this Schedule III, as promptly as reasonably practicable, prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other document required to be filed in connection therewith so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
K. use its reasonable best efforts to cause all Registrable
Securities relating to each Registration Statement to be listed on the
securities exchange, quotation market or over-the-counter bulletin board (i) in
the case of the Initial Public Offering, recommended by the managing
Underwriters as that which is reasonable under the circumstances in order to
optimize the liquidity and value of the Common Stock of the Company or (ii)
following the Initial Public Offering, on which Common Stock of the Company is
then listed;
L. enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith (including
those reasonably requested by any managing underwriters in order to expedite or
facilitate the disposition of such Registrable Securities, and whether or not an
underwriting agreement is entered into) to:
(i) make such representations and warranties to such
selling holders and such underwriters as are customarily made by
issuers to underwriters in underwritten public offerings, and confirm
the same if and when requested;
(ii) in the case of an Underwritten Offering, obtain and
deliver copies thereof to the managing underwriters, if any, of
opinions of counsel to the Company and updates thereof addressed to
each such underwriter, in form, scope and substance reasonably
satisfactory to any such managing
SCHEDULE III PAGE 9
underwriters and counsel to the selling holders covering the matters
customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by such counsel and
underwriters;
(iii) immediately prior to the effectiveness of each
Registration Statement, and, in the case of an Underwritten Offering,
at the time of delivery of any Registrable Securities sold pursuant
thereto, obtain and deliver copies to the selling holders and the
managing underwriters, if any, of "cold comfort" letters and updates
thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any Affiliate of the Company or of any business acquired
by the Company for which financial statements and financial data is, or
is required to be, included in any such Registration Statement),
addressed to each selling holder and each of the underwriters, if any,
in form and substance as are customary in connection with Underwritten
Offerings;
(iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less
favorable to the selling holders and the underwriters, if any, than
those set forth in Section 7A of this Schedule III (or such other
provisions and procedures acceptable to the managing underwriters, if
any); and
(v) deliver such documents and certificates as may be
reasonably requested by the selling holders, their counsel and any
managing underwriters to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company;
M. comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders an
earnings statement covering a period of twelve months beginning within three
months after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
N. make available executive officers of the Company for
participation in a reasonable number of "road show" and other investor
presentations requested by the holders selling Registrable Securities in an
Underwritten Offering; and
O. make available for inspection by the Initiating Holder, any
representative of such Initiating Holder, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant retained
by such
SCHEDULE III PAGE 10
Initiating Holder or underwriters, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information in each case reasonably requested by any such Initiating
Holder, representative, underwriter, attorney or accountant in connection with
each Registration Statement; provided, however, that any information that is
determined in good faith by the Company in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities; (ii) disclosure of such information, in the opinion of counsel to
such Person, is required by law; (iii) such information becomes generally
available to the public other than as a result of a disclosure or negligent
failure to safeguard by such Person; or (iv) such information becomes available
to such Person from a source other than the Company and such source is not known
by such Person to be bound by a confidentiality agreement with the Company.
SECTION 5. SECURITYHOLDER COVENANTS
Each Securityholder hereby covenants and agrees that:
A. it will not sell any Registrable Securities under any
Registration Statement until it has received notice from the Company that such
Registration Statement and any post-effective amendments thereto have become
effective;
B. it and its officers, directors and Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to a Registration Statement;
C. by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 4C(iv), (v), (vi), (vii) and (viii) of this Schedule III or
the initiation of a Suspension Period, such holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until the holder is advised in writing by the
Company that the use of the applicable Prospectus may be resumed or that the
Suspension Period has terminated, as applicable;
D. if an underwriting agreement is entered into, the same shall
contain indemnification provisions no less favorable to the Company and the
underwriters, if any, than those set forth in Section 7.B;
SCHEDULE III PAGE 11
E. The Company may require each selling holder to furnish to the
Company information regarding such holder and the distribution of such
Registrable Securities as is required by law to be disclosed in each
Registration Statement, and the Company may exclude from such registration the
Registrable Securities of any such holder who unreasonably fails to furnish such
information within a reasonable time after receiving such request. If the
Registration Statement refers to any holder by name or otherwise as the holder
of any securities of the Company, then such holder shall have the right to
require (if such reference to such holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such holder in any amendment or supplement to each
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required; and
F. it will not effect any sale or distribution of Registrable
Securities, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act, during the 14 days prior to, and during the 180-day period
beginning on, the effective date of the registration statement filed by the
Company (except as part of such registration) if, and to the extent, requested
by the managing Underwriter or Underwriters in the case of an underwritten
public offering.
SECTION 6. REGISTRATION EXPENSES
All fees and expenses of the Company and any holder incident to the
performance of or compliance with this Schedule III shall be borne by the
Company whether or not pursuant to an Underwritten Offering and whether or not
any Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
securities exchange or market on which Registrable Securities are required
hereunder to be listed and (B) in compliance with state securities or Blue Sky
laws, including, without limitation, fees and disbursements of counsel engaged
by Company in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the managing underwriters
shall request, if any); (ii) printing expenses, including, without limitation,
expenses of printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any; (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company; (v) Securities Act liability
insurance, if the Company so desires such insurance; (vi) fees and expenses of
all other Persons retained by the Company in connection with the consummation of
the transactions contemplated by this Schedule III; and (vii) all internal
expenses of the Company
SCHEDULE III PAGE 12
incurred in connection with the consummation of the transactions contemplated by
this Schedule III, including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties, the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder (all such expenses being referred to herein as "Registration
Expenses"); provided, however, in no event shall Registration Expenses include
any underwriting discounts, commissions, or fees attributable to the sale of the
Registrable Securities or any counsel, accountants or other persons retained by
the holders in connection with the consummation of the transactions contemplated
by this Schedule III.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION
A. INDEMNIFICATION BY THE COMPANY
The Company will indemnify to the fullest extent permitted by law, each
holder of Registrable Securities, each person who controls any such holder,
(within the meaning of either the Securities Act or the Exchange Act), and their
respective directors, officers, employees and agents against any and all losses,
claims, damages, liabilities (or actions or proceedings in respect thereof) and
expenses (including reasonable attorneys' fees) arising out of or based on any
untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus (each as amended
and/or supplemented, if the Company shall have furnished any amendments or
supplements thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, in the light of the circumstances under
which they were made) not misleading; provided that the Company shall not be
required to indemnify such holder, such controlling persons or their respective
officers or directors for any losses, claims, damages, liabilities (or actions
or proceedings in respect thereof) or expenses resulting from any such untrue or
alleged untrue statement or omission or alleged omission if such untrue or
alleged untrue statement or omission or alleged omission is made in reliance on
and conformity with any information with respect to such holder or the
underwriters furnished in writing to the Company by such holder expressly for
use therein; provided, further, that the Company shall not be required to
indemnify any holder to the extent that any such loss, claim, damage, liability
(or actions or proceedings in respect thereof) or expense arises out of or is
based upon an untrue or alleged untrue statement or omission or alleged omission
made in any preliminary Prospectus if in the case of any offering other than an
Underwritten Offering, (i) having previously been furnished by or on behalf of
the Company with copies of the final Prospectus, such holder failed to send or
deliver a copy of the final Prospectus with or prior to the delivery of written
confirmation of the sale of the Registrable Securities by the holder to the
person asserting the claim from which such loss, claim, damage, liability (or
SCHEDULE III PAGE 13
actions or proceedings in respect thereof) or expense arises and (ii) the final
Prospectus would have corrected in all material respects such untrue statement
or alleged untrue statement or omission or alleged omission; and provided,
further, that the Company shall not be required to indemnify any holder to the
extent that any such loss, claim, damage, liability (or actions or proceedings
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement, omission or alleged omission in the
Prospectus if (x) such untrue statement or alleged untrue statement, omission or
alleged omission is corrected in all material respects in an amendment or
supplement to the Prospectus and (y) in the case of any offering other than an
Underwritten Offering, having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such holder
thereafter fails to deliver such Prospectus as so amended or supplemented, prior
to or concurrently with the sale of Registrable Securities. In connection with
an Underwritten Offering, the Company agrees to indemnify, each underwriter
thereof, the officers and directors of such underwriter, and each person who
controls such underwriter (within the meaning of either the Securities Act or
Exchange Act) to the same extent as provided above with respect to the
indemnification of holders; provided that such underwriter agrees to indemnify
the Company to the same extent as provided below with respect to the
indemnification of the Company by such holders.
B. INDEMNIFICATION BY HOLDERS
Each holder will, if Registrable Securities held by or issuable to such
holder are included in the securities as to which registration is being
effected, indemnify to the fullest extent permitted by law the Company, each
Person who controls the Company within the meaning of the Securities Act, each
of its directors, officers, employees and agents who sign the Registration
Statement relating to such registration, each other such holder, each of such
other holder's respective directors, officers, employees, agents and controlling
persons, and any prospective underwriters against any and all losses, claims,
damages, liabilities (or actions or proceedings in respect thereof) and expenses
(including reasonable attorneys' fees) arising out of or based on any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, Prospectus or preliminary Prospectus (each as amended and/or
supplemented, if the Company shall have furnished any amendments or supplements
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a Prospectus, in the light of the circumstances under which they
were made) not misleading, in each case to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission is
made in reliance upon and in conformity with information relating to such holder
furnished to the Company in
SCHEDULE III PAGE 14
writing by such holder expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary Prospectus.
C. CONDUCT OF INDEMNIFICATION PROCEEDINGS
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 7A or Section 7B of this Schedule III, such person
(hereinafter called the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (hereinafter called the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have been advised by counsel
that representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
indemnified parties, such firm shall be designated in writing by all of the
indemnified parties. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (which consent
will not be unreasonably withheld), but if settled with such consent or if there
be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the third sentence of this Section 7C, the indemnifying party agrees that the
indemnifying party shall be liable for any settlement of any proceeding effected
without the indemnifying party's written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not either have
reimbursed the indemnified party in accordance with such request or reasonably
objected in writing, on the basis of the standards set forth herein, to the
propriety of such reimbursement prior to the date of such settlement.
SCHEDULE III PAGE 15
No indemnifying party shall, without the prior written consent of the
indemnified party (which will not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes as
an unconditional term thereof a release of such indemnified party, from all
liability on claims that are the subject matter of such proceeding.
D. CONTRIBUTION
If the indemnification provided for in this Section 7 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 7, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 7C, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7D were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7D, no holder shall be required
to contribute any amount in excess of the amount of the total net proceeds
received by such holder from sales of the Registrable Securities sold by such
holder pursuant to the offering that gave rise to such losses, claims, damages,
liabilities or expenses. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
SCHEDULE III PAGE 16
If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 7A and 7B without regard to the relative fault of said indemnifying
party, or indemnified party or any other equitable consideration provided for in
this Section 7D.
SCHEDULE III PAGE 17