EXHIBIT 10.38
FORM OF
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
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This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made this
_____th day of May, 1999 (the "Effective Date") between Careside, Inc., a
Delaware corporation (the "Company") and S.R. One, Limited, a Pennsylvania
Business Trust ("S.R. One").
W I T N E S S E T H:
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WHEREAS, the Company and S.R. One entered into a Securities Purchase
Agreement (the "Securities Purchase Agreement") dated December 17, 1998,
pursuant to which the Company agreed that it would borrow from S.R. One, and
S.R. One agreed to lend to the Company, the aggregate principal amount of
$3,000,000 (the "Existing Notes"); and, in connection thereof, the Company
issued to S.R. One Warrant Certificate SR-1 to acquire shares of Common Stock of
the Company, $.01 par value per share ("Common Stock") and granted to S.R. One
certain registration rights pursuant to a Registration Rights Agreement, dated
December 17, 1998 between the Company and S.R. One (the "Registration Rights
Agreement");
WHEREAS, pursuant to a Securities Conversion Agreement dated as of the
Effective Date, between the Company and S.R. One (the "Securities Conversion
Agreement"), one-third of the Existing Notes will be exchanged for shares of
Series A Convertible Preferred Stock and Warrant Certificate SR-1 will be
exchanged for Warrant Certificate SR-2; and
WHEREAS, in connection with the conversion, the Company and S.R. One
desire to amend and restate the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, and other good valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
agree that the Registration Rights Agreement is hereby amended and restated to
be as follows:
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1. Definitions. As used herein, unless the context otherwise requires,
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the following terms have the following respective meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange
Act.
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Common Stock" has the meaning set forth in the first WHEREAS clause
of the Recitals.
"Conversion Shares" means the shares of Common Stock usable upon
conversion of shares of Series A Convertible Preferred Stock and upon exercise
of warrants received upon conversion of shares of Series A Convertible Preferred
Stock.
"Demand" has the meaning set forth in Section 2.1.1.
"Demand Registration Period" means the period (i) commencing on the
earlier of one six (6) months after the effective date of the initial Public
Offering of the Units of the Company and the fifth (5th) anniversary of the
Effective Date, and (ii) ending on the date which is the earlier of three (3)
years after the effective date of the initial Public Offering or the seventh
(7th) anniversary of the Effective Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
promulgated thereunder, as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Investors" means the purchasers of Common Stock in the private
placements of Common Stock undertaken by the Company in 1997 and 1998.
"Participating Holder" has the meaning set forth in Section 2.1.4.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.
"Public Offering" has the meaning set forth in Section 2.1.7.
"Registrable Securities" means collectively the Conversion Shares and
Warrant Shares and any other securities issuable in connection therewith or in
replacement thereof by way of a dividend, distribution, recapitalization,
exchange, merger, consolidation
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or other reorganization. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been sold as permitted by, and in compliance with, Rule 144 (or any successor
provision) promulgated under the Securities Act or (c) they shall have ceased to
be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration, filing and National Association of Securities Dealers, Inc. fees,
all listing fees, all fees and expenses of complying with securities or blue sky
laws (including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities), all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel for the
Company and counsel for S.R. One (comprised of not more than one outside law
firm) and of the Company's independent public accountants, including the
expenses of "comfort" letters required by or incident to such performance and
compliance, and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
subsequent similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933, as amended,
shall include a reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Series A Convertible Preferred Stock" means a series of preferred
stock of the Company, the terms and conditions of which are set forth in the
Securities Conversion Agreement.
"Units" means a unit comprised of one share of Common Stock and a
warrant to purchase one share of Common Stock.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of Warrant Certificate SR-2.
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2. Registration Rights.
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2.1 Registration on Demand.
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2.1.1 Demand. At any time during the Demand Registration Period,
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subject to Section 2.1.7, upon the written request (the "Demand") of S.R. One
that the Company effect the registration under the Securities Act of all or part
of the Registrable Securities, the Company shall cause to be filed, and shall
take all commercially reasonable actions to effect, as soon as practicable and
in any event, subject to the reasonable cooperation of S.R. One within 120 days
after the Demand is received from S.R. One, the registration under the
Securities Act, of the Registrable Securities which the Company has been so
requested to register by S.R. One.
2.1.2 Registration of Other Securities. Whenever the Company
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shall effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering by S.R. One of Registrable Securities, holders of
securities of the Company who have "piggyback" registration rights may include
all or a portion of such securities in such registration, offering or sale. If
the managing underwriter of any such offering shall inform the Company by letter
of its belief that the number or type of securities of the Company requested by
holders of the securities of the Company other than S.R. One to be included in
such registration would materially and adversely affect the underwritten
offering, then the Company shall include in such registration, to the extent of
the number and type of securities which the Company is so advised can be sold in
(or during the time of) such offering, first, all of the Registrable Securities
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specified by S.R. One in the Demand and second, for each holder of the Company's
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securities other than S.R. One, the fraction of such holder's securities
proposed to be registered which is obtained by dividing (i) the number of the
securities of the Company that such holder proposes to include in such
registration by (ii) the total number of securities proposed to be included in
such registration by all holders other than S.R. One.
2.1.3 Registration Statement Form. Registrations under this
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Section 2.1 shall be on such appropriate registration form of the Commission as
shall be selected by the Company. The Company shall include in any such
registration statement all information which, in the opinion of counsel to the
Company, is required to be included.
2.1.4 Expenses. The Company shall pay the Registration Expenses
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in connection with the Demand registration effected pursuant to this Section
2.1, other than underwriting discounts and selling commissions relating to the
sale or disposition of Registrable Securities. If a registration requested
pursuant to this Section 2.1 is withdrawn or otherwise not effected, other than
at the request of S.R. One (whether such request is for pricing or other
reasons), the Company shall pay the Registration Expenses in connection
therewith. If the registration pursuant to a Demand is withdrawn at the request
of S.R. One
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and if S.R. One elects not to have such registration count as its Demand
registration under this Section 2.1, S.R. One shall pay all the Registration
Expenses of such registration, other than the fees and expenses of counsel to
Company or of any other holder of Common Stock participating in the registration
(a "Participating Holder"). At no time shall S.R. One be required to pay the
underwriting discounts or selling commissions relating to the sale or
disposition of shares of Common Stock by other Persons, or the fees and expenses
of any Participating Holder's or the Company's counsel, except as required by
Section 2.6.2 below.
2.1.5 Effective Registration Statement. A registration requested
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pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and has not thereafter become
effective, or (iii) in the case of an underwritten offering, if the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived.
2.1.6 Selection of Underwriters. In connection with each
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underwritten offering, (a) the Company shall promptly select the managing
underwriter subject to the approval of S.R. One (which approval shall not be
unreasonably withheld, delayed or conditioned by S.R. One) and (b) S.R. One
shall promptly select the co-managing underwriter subject to the approval of the
Company (which approval shall not be unreasonably withheld, delayed or
conditioned by the Company).
2.1.7 Limitations on Registration on Demand.
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(i) The Company shall not be required to file a registration statement
pursuant to this Section 2.1 which would become effective within (a) 180 days,
or such shorter period as agreed to by the managing underwriter for the
Company's initial Public Offering, following the effective date (the "IPO
Effective Date") of a registration statement filed by the Company with the
Commission pertaining to an initial underwritten public offering of convertible
debt securities or equity securities for cash (a "Public Offering") for the
account of the Company, provided that no other holder of the Company's
securities shall have been permitted to participate in such initial Public
Offering, or (b) 120 days following the effective date of a registration
statement (other than a registration statement filed on Form S-8) filed by the
Company with the Commission pertaining to any subsequent Public Offering for the
account of the Company or another holder of securities of the Company if S.R.
One was afforded the opportunity to include all of its Registrable Securities in
such subsequent registration pursuant to Section 2.2.
(ii) In no event shall the Company be required to effect more
than one registration pursuant to this Section 2.1.
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(iii) Notwithstanding the foregoing, if, in the good faith
determination of the Company's Board of Directors, a registration would
adversely affect certain activities of the Company to the material detriment of
the Company, then the Company may at its option direct that the effective date
of such registration be delayed for a period not in excess of 90 days in the
aggregate from the date of the Company's receipt of the Demand (the "Delay
Period"); provided, however, any action by a Person under a registration or
other agreement with the Company in connection with or triggered by a
registration under this Agreement shall not be considered an adverse effect for
purposes of this sentence; and provided further that if there shall occur any
such delay in a registration hereunder, then S.R. One shall be entitled to (a)
effect such registration no later than any other holder of registration rights,
or (b), if the Company shall effect a Public Offering during any such Delay
Period, sell, together with the Investors, all of their respective Registrable
Securities in connection with such Public Offering, whichever occurs first;
provided, however, that if the managing underwriter of such Public Offering does
not agree to include all (or such lesser amount as S.R. One shall, in its sole
discretion, agree to) of the number of S.R. One's Registrable Securities in such
registration, then the Company shall include in such registration, to the extent
of the number and type which the Company is so advised can be sold in (or during
the time of) such Public Offering first, all securities proposed by the Company
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to be sold for its own account, and second, for each of S.R. One and the
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Investors, the fraction of such holder's securities proposed to be registered
which is obtained by dividing (i) the number of the securities of the Company
that such holder proposes to include in such registration by (ii) the total
number of securities proposed to be sold in such offering by such holders.
2.2 Piggyback Registration.
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2.2.1 Right to Include Registrable Securities. If the Company at
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any time proposes to register any of its securities under the Securities Act by
registration on Forms ▇-▇, ▇-▇, ▇-▇ or any successor or similar form(s) (except
registrations on such Forms or similar forms solely for registration of
securities in connection with (i) an employee benefit plan or dividend
reinvestment plan or a merger or consolidation or (ii) debt securities which are
not convertible into Common Stock), whether or not for sale for its own account,
it shall each such time give written notice to S.R. One of its intention to do
so at least 30 days prior to the anticipated filing date of a registration
statement with respect to such registration with the Commission; provided
however, that no such notice shall be required if the managing underwriters for
such registration shall have, in a writing delivered to the Company, provided
that no Common Stock held by the Company's stockholders may be sold pursuant to
the registration. Upon the written request of S.R. One made as promptly as
practicable and in any event within 10 business days after the receipt of any
such notice, which request shall specify the Registrable Securities intended to
be disposed of by S.R. One, the Company shall use commercially reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by S.R.
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One; provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to S.R. One and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, (provided, however, that S.R. One may request that such registration
be effected as a registration under Section 2.1 hereof) and (ii) in the case of
a determination to delay registering, shall be permitted to delay registering
any Registrable Securities for the same period as the delay in registering such
other securities; and provided further that S.R. One shall have the right to
have its Registrable Securities included in any Public Offering after the
Company's initial Public Offering (in accordance with Section 2.2.2) if, and
only if, any other holder of the Company's convertible debt securities or equity
securities shall have the right to have its securities included in such Public
Offering. No registration effected under this Section 2.2 shall relieve the
Company of its obligation to effect any registration upon demand under Section
2.1. The Company shall pay all Registration Expenses in connection with
registration of Registrable Securities requested pursuant to Section 2.2, other
than underwriting discounts and selling commissions relating to the sale or
disposition of Registrable Securities.
2.2.2 Priority in Piggyback Registrations. Notwithstanding
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anything in Section 2.2.1 above to the contrary and except as provided in
Section 2.1.7, if the managing underwriter of any underwritten offering shall
inform the Company by letter of its belief that the number or type of
Registrable Securities requested to be included in such registration would
materially and adversely affect such offering, then the Company shall promptly
notify S.R. One of such fact. If the managing underwriter does not agree to
include all (or such lesser amount as S.R. One shall, in its sole discretion,
agree to) of the number of the Registrable Securities initially requested by
S.R. One to be included in such registration, then the Company shall include in
such registration, to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering first, all
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securities proposed by the Company to be sold for its own account, if the
Company initiated such registration, or by the holder of securities who
initiated such demand registration, if any, second, for each of S.R. One,
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▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Incorporated and the Investors, other than the
holder(s) of the securities who initiated such demand registration, if any, the
fraction of such holder's securities proposed to be registered which is obtained
by dividing (i) the number of the securities of the Company that such holder
proposes to include in such registration by (ii) the total number of securities
proposed to be sold in such offering by such holders, and third, for each
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remaining holder of the Company's securities, other than the holder of the
securities who initiated such demand registration and the holders listed above,
if any, the fraction of such holder's securities proposed to be registered which
is obtained by dividing (i) the number of the securities of the Company that
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such holder proposes to include in such registration by (ii) the total number of
securities proposed to be sold in such offering by such holders.
2.3 Registration Procedures.
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2.3.1 In connection with the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company shall as promptly as practicable:
(i) prepare and file with the Commission the requisite registration
statement to effect such registration and thereafter use commercially reasonable
efforts to cause such registration statement to become and remain effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration statement for 180
days or such shorter period as may be required for the disposition of all of
such Registrable Securities by the underwriters;
(iii) furnish to S.R. One such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such number of copies of such other documents as S.R. One may reasonably
request;
(iv) use commercially reasonable efforts (x) to register or qualify
all Registrable Securities and other securities covered by such registration
statement under such other securities or Blue Sky laws of such States of the
United States of America where an exemption is not available and as S.R. One
shall reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and (z) to
take any other action which may reasonably be necessary or advisable to enable
S.R. One to consummate the disposition in such jurisdictions of the Registrable
Securities to be sold by S.R. One, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not, but for the requirements
of this paragraph (iv), be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such
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other federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to S.R. One to consummate
the disposition of such Registrable Securities in accordance with their intended
method of disposition;
(vi) furnish to S.R. One, (x) an opinion of outside counsel for the
Company, and (y) a copy of a "comfort" letter addressed to the Company and/or
any managing underwriter signed by the certified independent public accountants
who have certified the Company's financial statements included or incorporated
by reference in such registration statement, each covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountant's comfort letter, with
respect to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountant's comfort
letters delivered to the underwriters in underwritten public offerings of
securities (and dated the dates such opinions and comfort letters are
customarily dated);
(vii) notify S.R. One when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of S.R. One to use
its best efforts to promptly prepare and furnish to S.R. One such number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include 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 not misleading in the light of the circumstances under which
they were made;
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security-
holders, as soon as reasonably practicable, an earnings statement meeting the
requirements of Section 11(a) of the Securities Act, which the Company shall be
entitled to satisfy by complying with the requirements of Rule 158 promulgated
thereunder, and promptly furnish a copy of the same to S.R. One;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement; and
(x) use commercially reasonable efforts to list all Registrable
Securities covered by such registration statement on any national securities
exchange or
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over-the-counter market, if any, on which Registrable Securities of the same
class, and if applicable, series, covered by such registration statement are
then listed.
S.R. One agrees that upon receipt of any notice from the Company of
the happening of an event of the kind described in Section 2.3.1(vii), S.R. One
shall forthwith discontinue its disposition of Registrable Securities pursuant
to the registration statement relating to such Registrable Securities until S.R.
One's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.3.1(vii).
2.4 Underwritten Offerings.
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2.4.1 Requested Underwritten Offerings. If requested by the
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underwriters for any underwritten offering by S.R. One pursuant to a
registration requested under Section 2.1, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the Company, S.R. One and
the underwriters, and to contain such representations and warranties by the
Company and S.R. One and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.6 or as are generally prevailing
in agreements of that type. S.R. One shall cooperate with the Company in the
negotiation of the underwriting agreement and shall give consideration to the
reasonable suggestions of the Company regarding the form and substance thereof.
S.R. One shall be a party to such underwriting agreement. S.R. One shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding S.R. One, S.R. One's Registrable Securities, S.R. One's intended
method of distribution and any other representations or warranties required by
law or customarily given by selling shareholders in an underwritten public
offering or as reasonably required by the managing underwriter of the offering
of Registrable Securities.
2.4.2 Piggyback Underwritten Offerings. If the Company proposes
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to register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, subject to the priority and other provisions of Section 2.2.2, the
Company shall, if requested by S.R. One, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by S.R. One among
the securities of the Company to be distributed by such underwriters. S.R. One
shall become a party to the underwriting agreement negotiated between the
Company and such underwriters. S.R. One shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding S.R.
One, S.R. One's Registrable Securities and S.R. One's intended method of
distribution or any other representations or warranties required by law or
customarily given by selling shareholders in an underwritten
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public offering or as reasonably required by the managing underwriter of the
offering of Registrable Securities.
2.4.3 Holdback Agreements.
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(i) In connection with the initial Public Offering or any registration
of Registrable Securities in connection with an underwritten public offering,
S.R. One agrees if required by the underwriter or underwriters not to effect any
public or private sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, of any Registrable Securities, and not to effect any
such public or private sale or distribution of any other equity security of the
Company or of any security convertible into or exchangeable or exercisable for
any equity security of the Company (in each case, other than as part of such
underwritten public offering) during the 365-day period, or such shorter period
set forth in the underwriting agreement with respect to such offering as the
managing underwriter of such offering shall reasonably require, beginning on,
the effective date of such registration statement, provided that (a) S.R. One
has received written notice of such registration at least 15 days prior to such
effective date and (b), with respect to any offering other than pursuant to a
firm commitment underwriting, the underwriters continue to actively market the
Registrable Securities until the earlier of the end of such lock-up period and
the closing with respect to the sale of all, or the final portion of, the
Registrable Securities offered by S.R. One; provided, however, that the
restrictions imposed on S.R. One by this Section 2.4.3(i) shall terminate on the
earlier of the end of such lock-up period and thirty (30) days after such
closing.
(ii) If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees (x) if
required by the underwriter or underwriters, not to effect any public sale or
distribution of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any equity security of the Company (other
than in connection with any employee stock option or other benefit plan which
has been duly adopted by the Company and which provides for the distribution to
participants in the plan of equity securities of the Company or securities
convertible or exchangeable or exercisable for equity securities of the Company,
or in connection with a merger or acquisition approved by the Board of Directors
of the Company) during the 365-day period, or such shorter period as the
managing underwriter of such offering shall reasonably require, beginning on the
effective date of such registration statement (except as part of such
registration) and (y) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed equity securities shall contain a provision under which holders of such
securities agree that, if required by the underwriter or underwriters, they will
not effect any public sale or distribution of any such securities during the
period referred to in the foregoing clause (x), including any sale pursuant to
Rule 144 under the Securities Act
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(except as part of such registration, if permitted), if such holder is
participating in the offering pursuant to such registration.
2.5 Preparation; Reasonable Investigation. In connection with the
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preparation and filing of any registration statement under the Securities Act in
which S.R. One is a selling shareholder, the Company shall give S.R. One not
less than 30 days prior written notice of the preparation of such registration
statement and give S.R. One and its counsel and accountants the opportunity to
participate, at S.R. One's expense, in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto (provided that S.R. One shall
furnish the Company with comments on any such amendment or supplement as
promptly as the Company shall reasonably require), and give each of them such
access to its books and records, such opportunities to discuss the business of
the Company with officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of S.R.
One's counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. Any expenses incurred by S.R. One in connection with any such
investigation shall be borne by S.R. One, other than the reasonable fees and
disbursements of S.R. One's outside counsel.
2.6 Indemnification.
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2.6.1 Indemnification by the Company. In the event of any
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registration of any securities of the Company under the Securities Act in which
S.R. One is or may be a selling shareholder, the Company shall, and hereby does,
indemnify and hold harmless, S.R. One, its directors, officers, employees,
agents and affiliates and, to the extent required by any underwriting agreement
entered into by the Company, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls S.R. One or any such underwriter within the meaning of the Securities
Act, insofar as losses, claims, damages, or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (a) any untrue statement or alleged untrue statement of any
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a 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 (b) any
violation by the Company, its directors, officers, employees or agents of this
Agreement or any law applicable to and in connection with such registration, and
the Company shall reimburse S.R. One and each such director, officer, agent or
affiliate, and, to the extent required by any underwriting agreement entered
into by the Company, underwriter and controlling Person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding described in
clauses (a) or (b); provided, however, that the Company shall not be
-13-
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by S.R. One, specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
S.R. One or any such director, officer, agent or affiliate or controlling Person
and shall survive the transfer of such securities by S.R. One.
2.6.2 Indemnification by S.R. One. If any Registrable Securities
---------------------------
are included in any registration statement, S.R. One shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
2.6.1 above) the Company, each director of the Company, each officer of the
Company and each employee of the Company and, to the extent required by any
underwriting agreement entered into by S.R. One, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person who controls any such underwriter within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by S.R. One specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that in no event shall
the liability of S.R. One under this Section 2.6.2 exceed the amount of the
proceeds to S.R. One from the sale of the Registrable Securities in any such
registration.
2.6.3 Notice of Claims, Etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 2.6,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, immediately give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.6, except to the extent that the indemnifying party is materially
prejudiced by such failure. The indemnified party shall be entitled to receive
the indemnification payments described in Section 2.6.6 after providing such
written notice to the indemnifying party. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the
-14-
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that the indemnifying parties may agree, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable out of pocket costs
related to the indemnified party's cooperation with the indemnifying party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in respect of such
claim after the assumption of the defense thereof. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Consent of the indemnified party shall be required for the entry of
any judgment or to enter into a settlement only when such judgment or settlement
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
such claim or litigation.
2.6.4 Contribution. If the indemnification provided for in this
------------
Section 2.6 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.6.1 or 2.6.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Sections 2.6.1 or 2.6.2 hereof, the indemnified
party and the indemnifying party under Sections 2.6.1 or 2.6.2 hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on one hand and S.R. One on the other or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect the relative fault of the
Company on one hand and S.R. One on the other that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. No Person guilty of fraudulent misrepresentation
(within the meaning of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. In
addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim, effected without such
Person's written consent, which consent shall not be unreasonably withheld. In
no event shall the liability of S.R. One under this Section 2.6.4 exceed the
amount of the proceeds to S.R. One from the sale of the Registrable Securities
in the related registration.
2.6.5 Other Indemnification. Indemnification and contribution
---------------------
similar to that specified in the preceding paragraphs of this Section 2.6 (with
appropriate modifications) shall be given by the Company and S.R. One with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act.
-15-
3. Rule 144. With a view to making available the benefits of certain
--------
rules and regulations of the Commission that may permit the sale of the
Registrable Securities to the public without registration after an initial
Public Offering, the Company agrees to:
(a) provide information and such other assistance requested by S.R.
One as is customarily provided by issuers in connection with sales of their
common stock by directors or affiliates under Rule 144, promulgated under the
Securities Act;
(b) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act at all
times;
(c) 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 Exchange Act; and
(d) deliver a written statement as to whether it has complied with
such requirements of this Section, to S.R. One
upon S.R. One's request.
4. Modification; Waivers. This Agreement may be modified or amended only
---------------------
with the written consent of each party hereto. No party shall be released from
its obligations hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but any such waiver shall be effective only if in
a writing signed by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on the part of any
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
5. Entire Agreement. This Agreement represents the entire understanding
----------------
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
6. Severability. If any provision of this Agreement, or the application
------------
of such provision to any Person or circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision to other
Persons or circumstances, to the extent permitted by law, shall not be affected
thereby; provided, that the parties shall
-16-
negotiate in good faith with respect to an equitable modification of the
provision or application thereof held to be invalid.
7. Notices.
-------
(i) Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person, receipt requested, or courier
guaranteeing next day delivery, or facsimile (with written confirmation of
receipt) to such other party's address or facsimile number set forth below.
If to Careside, Inc.:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇ Stoughton
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to S.R. One:
S.R. One, Limited
Four Tower Bridge
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
with a copy to:
(ii) All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered or facsimiled
(with written confirmation of receipt); and the next business day after timely
delivery to the courier, if sent by courier guaranteeing next day delivery.
-17-
8. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and shall be binding upon the Company and S.R. One and their respective
successors and permitted assigns. S.R. One may assign its rights under this
Agreement to any Person to whom S.R. One transfers any of the Registrable
Securities or any interest therein without the necessity of obtaining any
consent to such assignment, provided that such Person becomes a party to that
certain stockholders agreement, by and among the Company, S.R. One and certain
other holders of the Common Stock. In the event that S.R. One assigns its
rights to a holder or holders of only a portion of the Registrable Securities,
then all references to S.R. One herein shall also be deemed to refer to such
other holder or holders, but in such event S.R. One shall have the sole right to
make all decisions by and give notices for such holder or holders under this
Agreement; provided, that if S.R. One no longer owns any Registrable Securities,
then all decisions and notices hereunder shall be made by the holders of not
less than a majority of the Registrable Securities outstanding and all other
holders of Registrable Securities shall be bound by any such decision.
9. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute the same agreement.
10. Headings. The Section headings in this Agreement are for convenience
--------
of reference only, and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
11. Construction. This Agreement shall be governed, construed and
------------
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its principles of conflict of laws.
12. No Inconsistent Agreements. The Company has not previously, and shall
--------------------------
not hereafter, enter into any agreement with respect to its securities which is
inconsistent with the rights granted to S.R. One in this Agreement.
13. Recapitalizations, etc. In the event that any capital stock or other
----------------------
securities are issued in respect of, in exchange for, or in substitution of, any
Registrable Securities by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable Securities or any other
similar change in the Company's capital structure, appropriate adjustments shall
be made in this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties hereto under
this Agreement.
14. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules
-18-
of the American Arbitration Association in effect at the time such arbitration
is instituted. The arbitration panel shall be composed of three arbitrators, one
of whom shall be chosen by the Company, one of whom shall be chosen by S.R. One,
and one of whom shall be chosen by the two arbitrators previously designated. If
both or either of the Company and/or S.R. One fails to choose an arbitrator
within fourteen (14) calendar days after receiving notice of commencement of
arbitration or if the two arbitrators fail to choose a third arbitrator within
fourteen (14) calendar days of their appointment, such arbitrators shall be
chosen by the American Arbitration Association. Unless the parties to the
arbitration shall otherwise agree to a different place of arbitration, the place
of arbitration shall be Philadelphia, PA. The arbitration award shall be final
and binding upon the parties thereto and may be entered in any court having
jurisdiction. Each party shall bear (i) its own expenses in connection with such
arbitration and (ii) one-half of the fees and expenses of the American
Arbitration Association and all arbitrators. No arbitration award shall contain
any provision which is inconsistent with the preceding sentence.
15. Specific Performance. The parties hereto agree that the Registrable
--------------------
Securities of the Company cannot be purchased or sold in the open market and
that, for these reasons, among others, the holder or holders of the Registrable
Securities will be irreparably damaged in the event that this Agreement is not
specifically enforceable. Accordingly, in the event of any controversy
concerning the Registrable Securities which are the subject of this Agreement,
or any right or obligation to register such securities, such right or obligation
determined as part of an arbitration award described in Section 14 shall be
enforceable in a court of equity by specific performance. The rights granted in
this Section 15 shall be cumulative and not exclusive, and shall be in addition
to any and all other rights which the parties hereto may have hereunder, at law
or in equity. S.R. One consents to the jurisdiction of the federal courts of
the Commonwealth of Pennsylvania in any suit, action or proceeding brought
pursuant to this Section 15, waives any objection it may have to the laying of
venue in any such suit, action or proceeding in any of such court, and agrees
that service of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process.
16. Term. This Agreement shall continue in full force and effect until
----
the earlier of (i) ten (10) years after the last issuance of any Antidilution
Shares or Conversion Shares and (ii) the first date on which S.R. One and its
permitted assigns may sell all of the Registrable Securities held by them in a
ninety (90) day period pursuant to Rule 144 under the Securities Act.
-19-
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the date first above written and delivered by their
respective duly authorized officers.
CARESIDE, INC.
By: ________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
S.R. One, Limited
By: ________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: