EXHIBIT 10.5
INVESTORS RIGHTS AGREEMENT
This Agreement is made as of April 12, 1996 by and among Focal, Inc., a
Delaware corporation (the "Company"), the holders of the Company's Series A,
Series B, Series C, Series D and Series E Preferred Stock, the holders of
certain warrants to purchase Preferred Stock of the Company and certain
holders of Common Stock of the Company.
RECITALS
A. Simultaneously herewith, the Company is entering into a Series E
Preferred Stock Purchase Agreement (the "1996 Series E Agreement") and
issuing shares of Series E Preferred Stock to the Purchasers named in the
Schedule of Investors to the 1996 Series E Agreement.
B. In connection with this transaction, the Company wishes to
consolidate the registration rights and rights of first refusal held by the
holders of its Preferred Stock and warrants to acquire Preferred Stock into a
single agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Stock" shall mean the shares of Common Stock issued or
issuable upon conversion of the Shares.
"Holder" shall mean the holders of Registrable Securities,
securities convertible into Registrable Securities or warrants to acquire
Registrable Securities or securities convertible into Registrable Securities
and any person holding such securities to whom the rights under this
Agreement have been transferred in accordance with Section 2.13 hereof.
"Initiating Holders" shall mean any Holder or Holders who in the
aggregate hold or have the power to acquire (through conversion or exercise
of other securities) at least 40% of the Registrable Securities.
"Purchasers" shall mean the purchasers of Series A and B Preferred
Stock pursuant to the Preferred Stock Purchase Agreement dated May 31, 1992
(the "Series A and B Agreement"), the Purchasers of Series C Preferred Stock
pursuant to the Series C Preferred Stock Purchase Agreement dated December
22, 1992 (the "Series C Agreement"), the Purchasers of Series D Preferred
Stock pursuant to the Series D Agreement dated August 11, 1993 (the "1993
Series D Agreement") the
Purchasers of Series D Preferred Stock pursuant to the Series D Agreement
dated August 5, 1994 (the "1994 Series D Agreement"), the Purchasers of
Series E Preferred Stock pursuant to the 1996 Series E Agreement.
"Registrable Securities" means (i) the Conversion Stock, and (ii)
any Common Stock of the Company issued or issuable with respect to, or in
exchange for or in replacement of the Conversion Stock or other securities
convertible into or exercisable for Conversion Stock upon any stock split,
stock dividend, recapitalization, or similar event, provided, however, that
shares of Common Stock or other securities shall only be treated as
Registrable Securities for the purposes of Section 2.6 hereof if and so long
as they have not been sold to or through a broker or dealer or underwriter in
a public distribution or a public securities transaction.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 2.5, 2.6 and
2.7 hereof, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company and special counsel to the selling Holders, blue sky
fees and expenses, the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 2.2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Holders.
"Shares" shall mean the shares of the Company's (i) Series A
Preferred Stock and Series B Preferred Stock issued pursuant to the Series A
and B Agreement, (ii) Series C Preferred Stock issued pursuant to the Series
C Agreement, (iii) Series C Preferred Stock issued pursuant to a warrant held
by Comdisco, Inc., (iv) Series D Preferred Stock issued or issuable pursuant
to warrants held by Comdisco, Inc., MMC/GATX Partnership No. I, ▇▇▇▇▇▇▇
Investment Securities and Invemed Associates, (v) Series D Preferred Stock
issued pursuant to the 1993 Series D Agreement and the 1994 Series D
Agreement, and (v) Series E Preferred Stock issued pursuant to the 1996
Series E Agreement.
2. Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
a. Restrictions on Transferability. The Shares and the
Conversion Stock shall not be sold, assigned, transferred or
pledged except upon the conditions specified in this Section 2,
which conditions are intended to ensure compliance with the
provisions of the Securities Act. The Purchasers will cause
any proposed purchaser, assignee, transferee, or pledgee of the
Shares or the Conversion Stock held by the Purchasers to agree
to take and hold such securities subject to the provisions and
upon the conditions specified in this Section 2.
b. Restrictive Legend. Each certificate representing (i) the
Shares, (ii) the Conversion Stock and (iii) any other
securities issued in respect of the Shares or the Conversion
Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise
permitted by the provisions of Section 2.3 below) be stamped or
otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR
SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
The Purchasers and Holders consent to the Company making a notation on
its records and giving instructions to any transfer agent of the Shares or
the Conversion Stock in order to implement the restrictions on transfer
established in this Section 2.
c. Notice of Proposed Transfers. The holder of each
certificate representing Restricted Securities by acceptance
thereof agrees to comply in all respects with the provisions
of this Section 2.3. Prior to any proposed sale, assignment,
transfer or pledge of any Restricted Securities (other than (i)
a transfer not involving a change in beneficial ownership or
(ii) in transactions involving the distribution without
consideration of Restricted Securities by any Holder to any of
its partners, or retired partners, or to the estate of any of
its partners or
retired partners, (iii) a transfer to an affiliated fund,
partnership or company, which is not a competitor of the
Company, subject to compliance with applicable securities laws,
or (iv) transfers in compliance with Rule 144, so long as the
Company is furnished with satisfactory evidence of compliance
with such Rule), unless there is in effect a registration
statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer,
sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense, by either (i) a written
opinion of legal counsel who shall, and whose legal opinion
shall be, reasonably satisfactory to the Company addressed to
the Company, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration
under the Securities Act; or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the
staff of the Commission that action be taken with respect
thereto, whereupon the holder of such Restricted Securities
shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder
to the Company. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if
such transfer is made pursuant to Rule 144, the appropriate
restrictive legend set forth in Section 2.2 above, except that
such certificate shall not bear such restrictive legend if in
the opinion of counsel for such holder and in the reasonable
opinion of the Company such legend is not required in order to
establish compliance with any provision of the Securities Act.
d. Removal of Restrictions on Transfer of Securities. Any
legend referred to in Section 2.2 hereof stamped on a
certificate evidencing (i) the Shares, (ii) the Conversion
Stock or (iii) any other securities issued in respect of the
Shares or the Conversion Stock upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar
event and the stock transfer instructions and record notations
with respect to such security shall be removed and the Company
shall issue a certificate without such legend to the holder of
such security if such security is registered under the
Securities Act, or if such holder provides the Company with an
opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company to the effect that a
public sale or transfer of such security may be made without
registration under the Securities Act or such holder provides
the Company with reasonable assurances,which may, at the option
of the Company, include an opinion of counsel satisfactory to
the Company, that such security can be sold pursuant to Section
(k) of
Rule 144 under the Securities Act. The Company will cause
legend removal to be authorized or provide a written response
as to why legends may not be removed within 10 days of receipt
of any such request.
e. Requested Registration.
i. Request for Registration. In case the Company shall receive
from Initiating Holders a written request that the Company effect
any registration, qualification or compliance with respect to
shares of Registrable Securities with an expected aggregate
offering price to the public of at least $5,000,000, the Company
will:
(1) within ten days of the receipt by the Company of such
notice, give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(2) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including,
without limitation, appropriate qualification under applicable
blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities
of any Holder or Holders joining in such request as are
specified in a written request received by the Company within
20 days after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant
to this Section 2.5:
(a) In any particular jurisdiction in which the Company
would be required to execute a general consent to service
of process in effecting such registration, qualification
or compliance unless the Company is already subject to
service in such jurisdiction and except as may be required
by the Securities Act;
(b) Prior to the earlier of (i) December 31, 1997 or (ii)
the expiration of six months following completion of the
Company's first registered public offering of its stock;
(c) During the period starting with the date sixty (60)
days prior to the Company's estimated date of filing of,
and ending on the date three (3) months immediately
following the effective date of, any registration
statement pertaining to securities of the Company (other
than a registration of securities in a Rule 145
transaction, with respect to an employee benefit plan or
with respect to the Company's first registered public
offering of its stock), provided that the Company is
actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(d) After the Company has effected two such registrations
pursuant to this Section 2.5(a) covering all shares
requested to be registered by the Holders initiating or
joining such request, and such registrations have been
declared or ordered effective, and, if the method of
disposition specified by such initiating or requesting
Holders shall have been a firm commitment underwritten
public offering, all such shares shall have been sold
pursuant thereto;
(e) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its
stockholders for a registration statement to be filed in
the near future, then the Company's obligation to use its
best efforts to register, qualify or comply under this
Section 2.5 shall be deferred for a period not to exceed
90 days from the date of receipt of written request from
the Initiating Holders; provided, however, that the
Company shall not exercise such right more than once in
any twelve-month period.
Subject to the foregoing clauses (A) through (E), the Company shall file
a registration statement covering the Registrable Securities so requested to
be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders.
ii. Underwriting. In the event that a registration pursuant
to Section 2.5 is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as part
of the notice given pursuant to Section 2.5(a)(i). In such
event, the right of any Holder to registration pursuant to
Section 2.5 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by
this Section 2.5, and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent
requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting
agreement in customary form with the managing underwriter of recognized
national standing selected for such underwriting by the Company and
reasonably acceptable to a majority of the Holders proposing to distribute
their securities through such underwriting; provided, however, that if
General Electric Pension Trust ("GEPT") is participating in such underwriting
and the General Electric Company is directly or indirectly the beneficial
owner of five percent (5%) or more of the outstanding equity interests of any
underwriter or underwriters, GEPT shall have the absolute right to disapprove
such underwriter or underwriters. Notwithstanding any other provision of this
Section 2.5, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Company shall so advise all holders of
Registrable Securities and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities requested by such Holders to be
included in such registration statement or in such other manner as shall be
agreed to by the Company and Holders of a majority of the Registrable
Securities proposed to be included in such registration. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate
the allocation of shares in accordance with the above provisions, the Company
or the underwriters may round the number of shares allocated to any Holder to
the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 90 days after the effective
date of such registration, or such other shorter period of time as the
underwriters may require.
f. Company Registration.
i. Notice of Registration. If at any time or from time to time
the Company shall determine to register any of its securities,
either for its own account or the account of a security holder or
holders, other than (i) a registration relating solely to employee
benefit plans or (ii) a registration relating solely to a Commission
Rule 145 transaction, the Company will:
(1) promptly give to each Holder written notice thereof; and
(2) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made
within 20 days after receipt of such written notice from the
Company, by any Holder.
ii. Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to Section 2.6(a)(i); provided,
however, that if GEPT is participating in such underwriting and the
General Electric Company is directly or indirectly the beneficial
owner of five percent (5%) or more of the outstanding equity
interests of any underwriter or underwriters, GEPT shall have the
absolute right to disapprove such underwriter or underwriters. In
such event the right of any Holder to registration pursuant to
Section 2.6 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter selected for such
underwriting by the Company. Notwithstanding any other provision of
this Section 2.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable
Securities and other securities to be distributed through such
underwriting; provided, however, that except in connection with the
Company's initial underwritten public offering of Common Stock the
number of Registrable Securities shall not be limited to less than
20% of the aggregate number of shares proposed to be included in
such underwriting. The Company shall so advise all Holders
distributing their securities through such underwriting of such
limitation and the number of shares of Registrable Securities that
may be included in the registration (and underwriting if any) shall
be allocated among all Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities
requested by such Holders to be included in such Registration
Statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of
shares allocated to any Holder or holder to the nearest 100 shares.
If any Holder or holder disapproves of the terms of any such
underwriting, such Holder or holder may elect to withdraw therefrom
by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration, and shall not be transferred in a
public distribution prior to 90 days after the effective date of the
registration statement relating thereto, or such other shorter
period of time as the underwriters may require.
iii. Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it
under this Section 2.6 prior to the effectiveness of such
registration whether or not any Holder has elected to include
securities in such registration. The Registration Expenses of such
withdrawn registration shall be borne by the Company in accordance
with Section 2.8 hereof.
g. Registration on Form S-3.
i. If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form
S-3), or any similar short-term registration statement, for a public
offering of Registrable Securities, the reasonably anticipated
aggregate price to the public of which, net of underwriting
discounts and commissions (if any), would exceed $1,000,000 and the
Company is a registrant entitled to use Form S-3 to register the
Registrable Securities for such an offering, the Company shall use
its best efforts to cause such Registrable Securities to be
registered on such form for the offering and to cause such
Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that
the Company shall not be required to effect more than four
registrations pursuant to this Section 2.7 or more than one such
registration in any twelve (12) month period. After the Company's
first public offering of its securities, the Company will use its
best efforts to qualify for Form S-3 registration or a similar
short-form registration. The provisions of Section 1.6(b) shall be
applicable to each registration initiated under this Section 2.7.
ii. Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 2.7: (i) in
any particular jurisdiction in which the Company would be required
to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act; (ii) if the Company, within ten (10)
days of the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days
of receipt of such request (other than with respect to a
registration statement relating to a Rule 145 transaction, or an
offering solely to employees); (iii) during the period starting with
the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date three (3) months immediately
following, the effective date of any registration statement
pertaining to securities of the Company (other than a registration
of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company
shall furnish to such Holder a certificate signed by the President
of the Company stating that in the good faith judgment of the Board
of Directors it would be seriously detrimental to the Company or its
stockholders for registration statements to be filed in the near
future, then the Company's obligation to use its best efforts to
file a registration statement shall be deferred for a period not to
exceed 90 days from the receipt of the request to file such
registration by such Holder;
provided, however, that the Company shall not exercise such right
more than once in any twelve-month period.
h. Expenses of Registration. All Registration Expenses
incurred in connection with registrations pursuant to Sections
2.5, 2.6 and 2.7 shall be borne by the Company. All Selling
Expenses relating to securities registered on behalf of the
Holders shall be borne by the holders of securities included in
such registration pro rata with the Company and among each
other on the basis of the number of shares so registered.
i. Registration Procedures. In the case of each
registration, qualification or compliance effected by the
Company pursuant to this Section 2, the Company will keep each
Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
i. Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at
least one hundred eighty (180) days or until the distribution
described in the Registration Statement has been completed;
ii. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection with such registration statement as may be necessary
to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration
statement.
iii. Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such
reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as
such underwriters may reasonably request in order to facilitate the
public offering of such securities.
iv. Furnish, at the request of any Holder requesting registration
of Registrable Securities at the time such securities are delivered
to the underwriters (if any) for sale in connection with a
registration pursuant to this Section 2.9, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated the date of
commencement of the offering and a "bring-down" letter dated as of
the
closing date of such offering, from the independent accountants of
the Company, in form and substance as is customarily given by
independent accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
j. Indemnification.
i. The Company will indemnify each Holder, each of its officers,
directors, partners and legal counsel, and each person controlling
(or deemed to be controlling) such Holder within the meaning of
Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant
to this Section 2, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of the Securities Act or
any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each
such Holder, each of its officers, directors, partners and legal
counsel and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection
with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be
specifically for use therein.
ii. Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the
Company, each of its directors, officers and legal counsel, each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act,
and each other Holder, each of its officers, directors, partners
and legal counsel and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the
foregoing, the liability of each Holder under this subsection (b)
shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the
public offering price of the shares sold by such Holder under such
registration statement bears to the total public offering price of
all securities sold thereunder, but not to exceed the proceeds
received by such Holder from the sale of Registrable Securities
covered by such registration statement. A Holder will not be
required to enter into any agreement or undertaking in connection
with any registration under this Section 2 providing for any
indemnification or contribution on the part of such Holder greater
than the Holder's obligations under this Section 2.10(b).
iii. Each party entitled to indemnification under this Section 2.10
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations
under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend
such action and provided further, that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict
of interest or separate and different defenses but shall bear the
expense of such defense nevertheless. No Indemnifying Party, in the
defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
iv. If the indemnification provided for paragraphs (a) through (c)
of this Section 2.10 is unavailable or insufficient to hold harmless
an indemnified party under such paragraphs in respect of any losses,
claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of
indemnifying such indemnified party contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one
hand, and the underwriters and the Holder of such Registrable
Securities, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any notice under
paragraph (c). The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the
Company, on the one hand, or the underwriters or the Holders of such
Registrable Securities, on the other, and to the parties' relative
intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and each of the
Holders agrees that it would not be just and equitable if
contributions pursuant to this paragraph were determined by pro rata
allocation (even if all of the Holders of such Registrable
Securities were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the
equitable considerations referred to above in this paragraph. The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, no
Holder shall be required to contribute any amount in excess of the
lesser of (i) the proportion that the public offering price of
shares sold by such Holder under such registration statement bears
to the total public offering price of all securities sold
thereunder, but not to exceed the proceeds received by such Holder
for the sale of Registrable Securities covered by such registration
statement and (ii) the amount of any damages which they would have
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
k. Information by Holder. The Holder or Holders of
Registrable Securities included in any registration shall
furnish to the Company such information regarding such
Holder or Holders, the Registrable Securities held by them
and the distribution proposed by such Holder or Holders as
the Company may reasonably request in writing and as shall
be required in connection with any registration,
qualification or compliance referred to in this Section 2.
l. Rule 144 Reporting. With a view to making available
the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the
Restricted Securities to the public without registration,
after such time as a public market exists for the Common
Stock of the Company, the Company agrees to use its best
efforts to:
i. Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to
the reporting requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended.
ii. Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Securities Exchange Act of 1934, as
amended (at any time after it has become subject to such reporting
requirements);
iii. So long as a Purchaser owns any Restricted Securities to
furnish to the Purchaser forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements
of said Rule 144 (at any time after 90 days after the effective date
of the first registration statement filed by the Company for an
offering of its securities to the general
public), and of the Securities Act and the Securities Exchange
Act of 1934 (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession
of or reasonably obtainable by the Company as a Purchaser may
reasonably request in availing itself of any rule or regulation
of the Commission allowing a Purchaser to sell any such
securities without registration.
m. Transfer of Registration Rights. The rights to cause
the Company to register securities granted Holders under
Sections 2.5, 2.6 and 2.7 may be assigned to a transferee or
assignee in connection with any transfer or assignment of
Registrable Securities by a Holder of not less than 100,000
shares of Registrable Securities, or to any transferee
or assignee who is a constituent partner of a Holder or the
estate of such constituent partner, provided that such
transfer may otherwise be effected in accordance with
applicable securities laws.
n. Standoff Agreement. Each Holder agrees in connection
with the Company's initial public offering of the Company's
securities, upon request of the Company or the underwriters
managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the
registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such
period of time (not to exceed one hundred eighty (180) days)
from the effective date of such registration as may be
requested by the underwriters; provided, that the officers
and directors of the Company who own stock of the Company
and all other holders of 5% or more of the Company's
outstanding Common Stock equivalents also agree to such
restrictions.
o. Rule 144A Information. Whenever the Company receives a
request for the following information from Initiating
Holders on or after December 31, 1997, then the Company
shall within 60 days after the date of such request provide
the information required in Rule 144A(d)(4) to such
Initiating Holders and any person or persons designated by
the Initiating Holders as a prospective buyer in a
transaction pursuant to Rule 144A. The Company's
obligations pursuant to this Section 2.15 shall extend to
any person who acquires shares of the Company's Preferred
Stock and/or Conversion Stock as a result of a transaction
pursuant to Rule 144A.
p. Termination of Registration Rights. The rights granted
under this Section 2 shall terminate on the fifth
anniversary of the consummation of the initial underwritten
public offering of the Company's securities pursuant to a
registration statement filed under the Securities Act.
3. Purchasers' Right of First Refusal.
a. Right of First Refusal Upon Issuances of Securities by
the Company.
i. The Company hereby grants, on the terms set forth in
this Section 3.1, to each Purchaser the right of first
refusal to purchase all or any part of such Purchaser's pro
rata share of the New Securities (as defined in Section
3.1(b)) which the Company may, from time to time, propose to
sell and issue. The
Purchasers may purchase said New
Securities on the same terms and at the same price at which
the Company proposes to sell the New Securities. The pro
rata share of each Purchaser, for purposes of this right of
first refusal, is the ratio of the total number of shares of
Common Stock held by such Purchaser, including any shares of
Common Stock into which shares of Preferred Stock held by
such Purchaser are convertible, to the total number of
shares of Common Stock outstanding immediately prior to the
issuance of the New Securities (including any shares of
Common Stock into which outstanding shares of Preferred
Stock are convertible).
ii. "New Securities" shall mean any capital stock of the
Company, whether now authorized or not, and any rights,
options or warrants to purchase said capital stock, and
securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided that "New
Securities" does not include the following issuances (as
long as they are approved by the Company's board of
directors): (i) the Shares purchased under this Agreement or
the Conversion Stock, (ii) securities offered pursuant to a
registration statement filed under the Securities Act, as
hereinafter defined, (iii) securities issued pursuant to the
acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other
reorganization, (iv) up to 4,250,000 shares of Common Stock
or other securities hereafter issued or issuable to
officers, directors, employees, scientific advisors or
consultants of the Company pursuant to any employee or
consultant stock offering, plan or arrangement approved by
the Board of Directors of the Company, (v) all shares of
Common Stock or other securities hereafter issued in
connection with or as consideration for acquisition or
licensing of technology, (vi) all shares of Common Stock or
other securities hereafter issued pursuant to warrants,
rights or options, provided that the rights of first refusal
established hereby applied to the initial sale or grant by
the Company of such warrants, rights or options, and
(vii) all shares of Common Stock or other securities issued
in connection with equipment leasing or equipment financing
arrangements.
iii. In the event the Company proposes to undertake an
issuance of New Securities, it shall give to the Purchasers
written notice (the "Notice") of its intention, describing
the type of New Securities, the price, the terms upon which
the Company proposes to issue the same, and a statement as
to the number of days from receipt of such Notice within
which the Purchasers must respond to such Notice. The
Purchasers shall have thirty (30) days from the date of
receipt of the Notice to purchase any or all of the New
Securities for the price and upon the terms specified in the
Notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased and
forwarding payment for such New Securities to the Company if
immediate payment is required by such terms, or in any event
no later than thirty (30) days after the date of receipt of
the Notice.
iv. In the event the Purchasers fail to exercise in full
the right of first refusal within said thirty (30) day
period, the Company shall have ninety (90) days thereafter
to sell or enter into an agreement (pursuant to which the
sale of New Securities covered thereby shall be closed, if
at all, within thirty (30) days from date of said agreement)
to sell the New Securities respecting which the Purchasers'
rights were not exercised, at a price and upon general terms
no more favorable to the Purchasers thereof than specified
in the Notice. In the event the Company has not sold the
New Securities within said ninety (90) day period (or sold
and issued New Securities in accordance with the foregoing
within thirty (30) days from the date of said agreement),
the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the
Purchasers in the manner provided above.
v. The right of first refusal granted under this
Section 3.1 shall expire upon:
(1) The date upon which a registration statement filed
by the Company under the Securities Act (other than a
registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan) in connection
with an underwritten public offering of its securities
first becomes effective and the securities registered
thereunder are sold.
(2) For each Purchaser, the date on which such
Purchaser no longer holds a minimum of 75,000 Shares or
Conversion Stock or the number of Shares or Conversion
Shares originally purchased, whichever is less.
b. Right of First Refusal Upon Issuances of
Securities by the Company. The right of first refusal
granted under this Section is assignable by any
Purchaser to any transferee of a minimum of 75,000
Shares or Conversion Stock or to any transferee who is
a constituent partner or affiliate of the transferor.
4. Right of Co-Sale.
▇. ▇▇▇▇▇ of Co-Sale Rights.
(a) If a Stockholder or a Purchaser proposes to sell or transfer
any shares of Common Stock now owned by the selling Stockholder or Purchaser
(the shares subject to such offer to be hereafter called the "Stock" and the
selling Stockholder or Purchaser to be called the "Selling Party") in one or
more related transactions, then, such Party shall promptly deliver written
notice (the "Co-Sale Notice") to each of the Purchasers (if such Selling Party
is a Stockholder) or to each of the other Purchasers (if such Selling Party is
an Purchaser) at least twenty (20) days prior to
the closing of such sale or transfer. For purposes of this Section 4,
"Common Stock" shall mean (i) the Company's Common Stock (including
Conversion Shares), (ii) shares of Common Stock issuable upon exercise of
outstanding options and (iii) shares of Common Stock issuable upon conversion
of the Shares or any other outstanding convertible securities. The Co-Sale
Notice shall describe in reasonable detail the proposed sale or transfer
including, without limitation, the number of shares of Stock to be sold or
transferred, the nature of such sale or transfer, the consideration to be
paid and the name and address of each prospective purchaser or transferee.
(b) Each Purchaser shall have the right, exercisable upon
written notice to such Selling Party within thirty (30) days after receipt of
the Notice, to participate in such sale of Stock on the same terms and
conditions provided that no Purchaser shall be required to make any
representation or warranties or perform any undertakings other than with respect
to its title and authority. To the extent one or more of the Purchasers
exercise such right of participation in accordance with the terms and conditions
set forth below, the number of shares of Stock that the Selling Party may sell
in the transaction shall be correspondingly reduced.
(c) Each Purchaser who elects to participate in a sale of Stock
under this Section 4 (a "Participant") may sell all or any part of that number
of shares of Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Stock covered by the Co-Sale Notice by (ii) a
fraction the numerator of which is the number of shares of Common Stock (on a
fully-diluted, as converted basis) owned by the Purchaser at the time of the
sale or transfer and the denominator of which is the total number of shares of
Common Stock owned by the Stockholders and Purchasers (including the Selling
Party) at the time of the sale or transfer.
(d) If any Purchaser fails to elect to fully participate in the
Selling Party's sale pursuant to this Section 4.1, the Selling Party shall
promptly give notice of such failure and the aggregate number of shares that the
non-participating Purchasers did not elect to sell (the "Unsold Portion") to
each of the Participants. Such notice may be made by telephone if confirmed in
writing within fifteen (15) days. The Participants shall have two (2) days from
the date such notice was given to agree to sell their pro rata share of the
Unsold Portion. After the expiration of the fifteen (15) day period following
the provision of notice to the Participants and without being subject to the
provisions of this paragraph 4.1(d), the Selling Party shall have the right to
sell or transfer the number of shares of Stock that is equivalent to the balance
of the Unsold Portion that is not elected to be sold by the Participants. For
purposes of this paragraph, a Participant's pro rata share shall be the ratio of
(x) the number of shares of Common Stock held by such Participant to (y) the
total number of shares of Common Stock held by all the Participants and the
Selling Party.
(e) Each Participant shall effect its participation in the sale
by promptly delivering to the Selling Party for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent:
(i) the type and number of shares of Common Stock
which such Participant elects to sell; or
(ii) that number of Shares or other shares of Preferred
Stock which is at such time convertible into the number of shares of Common
Stock which such Participant elects to sell; provided, however, that if the
prospective purchaser objects to the delivery of such Shares or other Preferred
Stock in lieu of Common Stock, such Participant shall convert such Shares or
Preferred Stock into Common Stock upon the closing of the sale contemplated
hereby and deliver Common Stock as provided in subparagraph 4.1(e)(i) above.
The Company agrees to make any such conversion concurrent with the actual
transfer of such shares to the purchaser.
(f) The stock certificate or certificates that the Participant
delivers to the Selling Party pursuant to paragraph 4.1(e) shall be transferred
to the prospective purchaser in consummation of the sale of the Stock pursuant
to the terms and conditions specified in the Co-Sale Notice, and the Selling
Party shall concurrently therewith remit to such Participant that portion of the
sale proceeds to which such Participant is entitled by reason of its
participation in such sale. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase shares or
other securities from a Participant exercising its rights of co-sale hereunder,
the Selling Party shall not sell to such prospective purchaser or purchasers any
Stock unless and until, simultaneously with such sale, the Selling Party shall
purchase such shares or other securities from such Participant.
(g) The exercise or non-exercise of the rights of the
Participants hereunder to participate in one or more sales of Stock made by a
Selling Party shall not adversely affect their rights to participate in
subsequent sales of Stock subject to paragraph 4.1(a).
(h) Subject to the rights of the Purchasers who have elected to
participate in the sale of the Stock subject to the Co-Sale Notice, the Selling
Party may, not later than sixty (60) days following delivery to the Company and
each of the Purchasers of the Notice, conclude a transfer of any or all of the
Stock covered by the Notice on terms and conditions not materially more
favorable to the transferor than those described in the Notice. Any proposed
transfer on terms and conditions materially more favorable than those described
in the Co-Sale Notice, as well as any subsequent proposed transfer of any of the
Stock by the Selling Party, shall again be subject to the co-sale rights of the
Purchasers and shall require compliance by the Selling Party with the procedures
described in this Section 4.
b. Termination of Right of Co-Sale. Notwithstanding anything in
this Section 4 to the contrary, the right of co-sale shall terminate
upon (and shall not be applicable with respect to) the earlier of (i)
the closing of the Company's initial firm commitment underwritten
public offering pursuant to an effective registration statement under
the Securities Act, (ii) the closing of the Company's sale of all or
substantially all of its assets or the acquisition of the Company by
another entity by means of merger or consolidation resulting in the
exchange of the outstanding shares of the Company's capital stock for
securities or consideration issued, or caused to be issued, by the
acquiring entity or its subsidiary, or (iii) such time as the
Purchasers hold an aggregate of less than 1,000,000 (appropriately
adjusted for stock splits, dividends, recapitalizations and similar
events) Shares and Conversion Shares.
c. Exempt Transfers.
(a) Notwithstanding the foregoing, the co-sale rights of the
Purchasers shall not apply to any transfer to the ancestors, descendants or
spouse or to trusts for the benefit of such persons or the transferring
Stockholder or Purchaser or to any transfer by an Purchaser to a partner or
affiliate of such Purchaser, or a retired partner of such Purchaser who retires
after the date hereof; or to the estate of any such partner or retired partner
or the transfer by gift, will or intestate succession of any partner to such
partner's spouse or to the siblings, lineal descendants or ancestors of such
partner or such partner's spouse; provided that (A) the transferring Stockholder
or Purchaser shall inform the Purchasers or the Company (which shall then inform
the Purchasers) of such pledge, transfer or gift prior to effecting it and (B)
the pledgee, transferee or donee shall furnish the Purchasers with a written
agreement to be bound by and comply with all provisions of Section 4 of this
Agreement. Such transferred Stock shall remain "Stock" hereunder, and such
pledgee, transferee shall be treated as a "Stockholder" or "Purchaser," as
applicable, for purposes of this Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 4
shall not apply to the sale of any Stock (i) to the public pursuant to a
registration statement filed with, and declared effective by, the Commission
under the Securities Act or (ii) to the Company pursuant to the terms of the
Company's repurchase rights set forth in restricted stock purchase agreements
with the Stockholders or in connection with the termination of a Stockholder's
employment with the Company or (iii) if prior to such sale, the Stockholder held
less than one percent (1%) of the Company's outstanding shares.
(c) This Section 4 shall in no manner limit the right of the
Company to repurchase securities from Stockholders, consultants, employees or
directors pursuant to its repurchase rights and first refusal rights set forth
in applicable stock purchase agreements.
4.4 Prohibited Transfers. Notwithstanding the foregoing, any
attempt by a Stockholder or Purchaser to transfer Stock in violation of Section
4 hereof shall be void and the Company agrees it will not effect such a transfer
nor will it treat any alleged transferee as the holder of such shares without
the written consent of sixty percent (60%) of the outstanding shares of the
Company's Preferred Stock.
4.5 Legend.
(a) Each certificate representing shares of Stock now or
hereafter owned by the Stockholders or Purchasers or issued to any person in
connection with a transfer pursuant to paragraph 4.3(a) hereof shall be endorsed
with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
TERMS AND CONDITIONS OF AN INVESTORS RIGHTS AGREEMENT, BY
AND BETWEEN THE STOCKHOLDER, THE COMPANY AND CERTAIN HOLDERS
OF STOCK OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
(b) Each Stockholder and Purchaser agrees that the Company may
instruct its transfer agent to impose transfer restrictions on the shares
represented by certificates bearing the legend referred to in paragraph 4.5(a)
above to enforce the provisions of this Section 4 and the Company agrees to
promptly do so. The legend shall be removed upon termination of the provisions
of Section 4 of this Agreement.
4.6 Assignability of Rights. The co-sale rights granted to the
Purchasers hereunder shall be assignable only to an assignee or transferee who
acquires at least 75,000 shares of Preferred Stock or Common Stock issued upon
conversion thereof.
4.7 Stock Split. All references to numbers of shares in this
Section 4 shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
5. Amendments to Prior Agreements; Waivers.
a. Prior Investors Rights Agreement. The Investors Rights Agreement
dated March 18, 1996 (the "Prior Rights Agreement") is hereby
terminated and superseded in its entirety by this Agreement. Holders
of outstanding Series A, Series B, Series C, Series D and Series E-1
Preferred Stock hereby consent to the foregoing as parties to the
Prior Rights Agreement.
b. Waivers. The holders of the Series A, Series B, Series C, Series
D and Series E-1 Preferred Stock hereby waive any rights they may
have pursuant to the Prior Rights Agreement to receive notice of the
issuance of or to purchase or otherwise acquire the Series E Preferred
Stock being issued pursuant to the 1996 Series E Agreement (and the
Common Stock issuable upon conversion of such Series E Preferred
Stock).
6. Miscellaneous.
a. Waivers and Amendments. With the written consent of the Company
and the record holders of more than sixty percent (60%) of the Shares
and/or the Conversion Stock and, to the extent Stockholders are
specifically affected by a waiver, amendment or modification of
Section 4 hereof, by each such Stockholder, the obligations of the
Company and the rights of the holders of the Shares and the Conversion
Stock under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either
for a specified period of time or indefinitely), and with the same
consent the Company, when authorized by resolution of its Board of
Directors, may enter into a supplementary agreement for the purpose of
adding any provisions to or changing in any manner or eliminating any
of the provisions of this
Agreement; provided, however, that no such
waiver or supplemental agreement shall reduce the aforesaid percentage
of the Shares and/or the Conversion Stock, the holders of which are
required to consent to any waiver or supplemental agreement without
the consent of the record holders of all of the Shares and/or the
Conversion Stock and any such waiver or supplementary agreement that
amends the proviso to the first sentence of the second paragraph of
Section 2.5(b) hereof , the proviso to the first sentence of Section
2.6(b) hereof or the proviso to Section 2.14 hereof or that otherwise
adversely affects any individual Holder only shall require the consent
of such Holder. Upon the effectuation of each such waiver, consent,
agreement, amendment or modification the Company shall promptly given
written notice thereof to the record holders of the Shares and/or the
Conversion Stock who have not previously consented thereto in writing.
Neither this Agreement nor any provisions hereof may be changed,
waived, discharged or terminated orally, but only by a signed
statement in writing.
b. Governing Law. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be
performed entirely within California.
c. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
d. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof.
e. Notices. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, electronic mail,
overnight delivery service or U.S. mail, in which event it may be
mailed by first-class, certified or registered, postage prepaid,
addressed (a) if to a Purchaser or Holder, at such address as such
Purchaser or Holder shall have furnished the Company in writing, or,
until any such holder so furnishes an address to the Company, then to
and at the address of the last holder of such securities who has so
furnished an address to the Company, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other
address as the Company shall have furnished to the Purchasers, Holders
and each such other holder in writing. Notwithstanding the foregoing,
all notices and communications to addresses outside the United States
shall be given by telecopier and confirmed in writing sent by
overnight or two-day courier service.
f. Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only
and are not to be considered in construing this Agreement.
g. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
h. Nominees. Securities registered in the name of a nominee for a
Purchaser or a Holder shall, for purposes of this Agreement, be
treated as being owned by such Purchaser or Holder.
The foregoing Investors Rights Agreement is hereby executed as of the date
first above written.
FOCAL, INC.
By:
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
STOCKHOLDERS:
------------------------------ ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------ ---------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
HOLDERS:
Name of Holder
-------------------------------------
APA EXCELSIOR FUND IV, L.P.
By APA Excelsior IV Partners, L.P.,
its General Partner
By:
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
APA EXCELSIOR IV/OFFSHORE, L.P.
By Patricof & Co. Ventures, Inc.,
its Investment Adviser
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
THE P/A FUND
By APA Pennsylvania Partners II, L.P.,
its General Partner
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
WARBURG PINCUS EMERGING GROWTH FUND
By:
---------------------------------
Title:
--------------------------------
PACIFIC HORIZON VENTURES
By:
---------------------------------
Title:
--------------------------------
GMGF, L.P.
By:
---------------------------------
Title:
--------------------------------
SENTRON MEDICAL, INC.
By:
---------------------------------
Title:
--------------------------------
--------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
THE CIT GROUP/EQUITY INVESTMENTS, INC.
By:
---------------------------------
Title:
--------------------------------
DELPHI INVESTMENTS II, L.P.
By:
---------------------------------
Title:
--------------------------------
DELPHI VENTURES II, L.P.
By:
---------------------------------
Title:
--------------------------------
DOMAIN PARTNERS II, L.P.
By:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Signature
▇▇▇▇▇▇▇ MANAGEMENT, L.L.C.
By:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇ & CO., L.P.
By:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇ HEALTHCARE INVESTMENTS, L.P.
By:
------------------------------------
Title:
---------------------------------
GENERAL ELECTRIC PENSION TRUST
By:
---------------------------------
Title:
--------------------------------
GLENBROOK PARTNERS
By:
---------------------------------
Title:
--------------------------------
H & Q HEALTHCARE INVESTORS
By:
---------------------------------
Title:
--------------------------------
H & Q FOCAL INVESTORS, L.P.
By:
---------------------------------
Title:
--------------------------------
H & Q LIFE SCIENCES INVESTORS
By:
---------------------------------
Title:
--------------------------------
HELIOS PARTNERS, L.P.
By:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Signature
INVEMED ASSOCIATES, INC.
By:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Signature
KLEINER, PERKINS, CAULFIELD & ▇▇▇▇▇ VI
By:
---------------------------------
Title:
--------------------------------
KPCB FOUNDERS' FUND
By:
---------------------------------
Title:
--------------------------------
KPCB VI FOUNDERS' FUND
By:
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Title:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Signature
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Signature
▇▇▇▇▇▇▇▇ VI
By:
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Title:
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▇▇▇▇▇▇▇▇ VII
By:
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Title:
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▇▇▇▇▇▇▇▇ ASSOCIATES
By:
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Title:
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▇▇▇▇▇▇▇▇ ASSOCIATES FUND II
By:
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Title:
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▇▇▇▇▇▇▇▇ MEDICAL PARTNERS
By:
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Title:
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▇▇▇▇▇▇▇▇ MEDICAL PARTNERS 1992
By:
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Title:
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OLD COURT LIMITED
By:
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Title:
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PARVEST U.S. PARTNERS II, C.V.
By:
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Title:
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ROUSSO FAMILY TRUST
By:
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Title:
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SINGAPORE BIO-INNOVATIONS PTE LTD
By:
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Title:
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▇▇▇▇▇▇ ▇. Step
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Signature
VULCAN VENTURES, INC.
By:
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Title:
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▇▇▇▇▇▇ ▇. Widensohler
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Signature
WARRANT HOLDERS:
COMDISCO, INC.
By:
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Title:
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BANK OF BOSTON
By:
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Title:
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▇▇▇▇▇▇▇ INVESTMENT SECURITIES, L.P.
By:
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Title:
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MMC/GATX PARTNERSHIP NO.1
GATX CAPITAL CORPORATION
By:
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Title:
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