INVESTORS’ RIGHTS AGREEMENT FOR COMPACT PARTICLE ACCELERATION CORPORATION
Exhibit 10.3
INVESTORS’ RIGHTS AGREEMENT
FOR
COMPACT PARTICLE ACCELERATION CORPORATION
TABLE OF CONTENTS
| Page | ||||
1. Definitions |
1 | |||
2. Registration Rights |
4 | |||
2.1 Demand Registration |
4 | |||
2.2 Company Registration |
5 | |||
2.3 Underwriting Requirements |
5 | |||
2.4 Obligations of the Company |
7 | |||
2.5 Furnish Information |
8 | |||
2.6 Expenses of Registration |
8 | |||
2.7 Delay of Registration |
9 | |||
2.8 Indemnification |
9 | |||
2.9 Reports Under Exchange Act |
11 | |||
2.10 Restrictions on Transfer |
12 | |||
2.11 Termination of Registration Rights |
13 | |||
3. Additional Covenants |
13 | |||
3.1 Insurance |
13 | |||
3.2 Qualified Small Business Stock |
13 | |||
3.3 Successor Indemnification |
14 | |||
3.4 Termination of Covenants |
14 | |||
4. Miscellaneous |
14 | |||
4.1 Successors and Assigns |
14 | |||
4.2 Governing Law |
15 | |||
4.3 Counterparts; Facsimile |
15 | |||
4.4 Titles and Subtitles |
15 | |||
4.5 Notices |
15 | |||
4.6 Amendments and Waivers |
15 | |||
4.7 Severability |
16 | |||
4.8 Aggregation of Stock |
16 | |||
4.9 Additional Investors |
16 | |||
4.10 Entire Agreement |
16 | |||
4.11 Dispute Resolution |
16 | |||
4.12 Delays or Omissions |
16 | |||
Schedule A — Schedule of Investors |
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INVESTORS’ RIGHTS AGREEMENT
THIS INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of the 25th day of
April, 2008, by and among Compact Particle Acceleration Corporation, a Wisconsin corporation (the
“Company”), each of the investors listed on Schedule A hereto (each of which is referred to in this
Agreement as an “Investor”), and any Additional Purchaser (as defined in the Purchase Agreement)
that acquires Series B Common Stock and becomes a party to this Agreement in accordance with
Section 4.9 hereof.
RECITALS
WHEREAS, the Company and the Investors are parties to the Stock Purchase Agreement of even
date herewith (the “Purchase Agreement”); and
WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the
Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the
Company hereby agree that this Agreement shall govern the rights of the Investors to cause the
Company to register shares of Common Stock issuable to the Investors, to receive certain
information from the Company, and to participate in future equity offerings by the Company, and
shall govern certain other matters as set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1 “Affiliate” means, with respect to any specified Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with such Person, including
without limitation any general partner, managing member, officer or director of such Person or any
venture capital fund now or hereafter existing that is controlled by one or more general partners
or managing members of, or shares the same management company with, such Person.
1.2 “Common Stock” means shares of the Company’s common stock, $0.001 par value per share.
1.3 “Damages” means any loss, damage, or liability (joint or several) to which a party hereto
may become subject under the Securities Act, the Exchange Act, or other federal or state law,
insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any
registration statement of the Company, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or
any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law,
or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law.
1.4 “Derivative Securities” means any securities or rights convertible into, or exercisable or
exchangeable for (in each case, directly or indirectly), Common Stock, including options and
warrants.
1.5 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
1.6 “Excluded Registration” means (i) a registration relating to the sale of securities to
employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar
plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form
that does not include substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities; or (iv) a registration in
which the only Common Stock being registered is Common Stock issuable upon conversion of debt
securities that are also being registered.
1.7 “Form S-1” means such form under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by the SEC.
1.8 “Form S-2” means such form under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by the SEC.
1.9 “Form S-3” means such form under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by the SEC that permits
incorporation of substantial information by reference to other documents filed by the Company with
the SEC.
1.10 “GAAP” means generally accepted accounting principles in the United States.
1.11 “Holder” means any holder of Registrable Securities who is a party to this Agreement.
1.12 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to
herein.
1.13 “Initiating Holders” means, collectively, Holders who properly initiate a registration
request under this Agreement.
1.14 “IPO” means the Company’s first underwritten public offering of its Common Stock under
the Securities Act.
1.15 “New Securities” means, collectively, equity securities of the Company, whether or not
currently authorized, as well as rights, options, or warrants to purchase such
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equity securities, or securities of any type whatsoever that are, or may become, convertible
or exchangeable into or exercisable for such equity securities.
1.16 “Person” means any individual, corporation, partnership, trust, limited liability
company, association or other entity.
1.17 “Registrable Securities” means (i) any Series B Common Stock, or any Series B Common
Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other
securities of the Company, acquired by the Investors after the date hereof; and (ii) any Series B
Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other
security that is issued as) a dividend or other distribution with respect to, or in exchange for or
in replacement of, the shares referenced in clause (i) above; excluding in all cases, however, any
Registrable Securities sold by a Person in a transaction in which the applicable rights under this
Agreement are not assigned pursuant to Section 6.1, and excluding for purposes of Section 2 any
shares for which registration rights have terminated pursuant to Section 2.11 of this Agreement.
1.18 “Registrable Securities then outstanding” means the number of shares determined by adding
the number of shares of outstanding Series B Common Stock that are Registrable Securities and the
number of shares of Series B Common Stock issuable (directly or indirectly) pursuant to then
exercisable and/or convertible securities that are Registrable Securities.
1.19 “Restricted Securities” means the securities of the Company required to bear the legend
set forth in Section 2.10(b) hereof.
1.20 “SEC” means the Securities and Exchange Commission.
1.21 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.
1.22 “SEC Rule 144(k)” means Rule 144(k) promulgated by the SEC under the Securities Act.
1.23 “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.
1.24 “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
1.25 “Selling Expenses” means all underwriting discounts, selling commissions, and stock
transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of
counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne
and paid by the Company as provided in Section 2.6.
1.26 “Series B Common Stock” means, collectively, shares of the Company’s Common Stock
designated as Series B Common Stock.
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1.27 “TomoTherapy” means TomoTherapy, Incorporated, a Wisconsin corporation.
2. Registration Rights. The Company covenants and agrees as follows:
2.1 Demand Registration.
(a) Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the
date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the
registration statement for the IPO, the Company receives a request from Holders of a majority of
the Registrable Securities then outstanding that the Company file a Form S-1 registration statement
with respect to at least forty percent (40%) of the Registrable Securities then outstanding, then
the Company shall (i) within ten (10) days after the date such request is given, give notice
thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (ii) as soon as
practicable, and in any event within sixty (60) days after the date such request is given by the
Initiating Holders, select an underwriter(s) for such offering and within ninety (90) days after
such selection file a Form S-1 registration statement under the Securities Act covering all
Registrable Securities that the Initiating Holders requested to be registered and any additional
Registrable Securities requested to be included in such registration by any other Holders, as
specified by notice given by each such Holder to the Company within twenty (20) days of the date
the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and
Section 2.3.
(b) Form S-3 Demand. If at any time when it is eligible to use a Form S-3
registration statement, the Company receives a request from Holders of at least thirty percent
(30%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration
statement with respect to outstanding Registrable Securities of such Holders having an anticipated
aggregate offering price, net of Selling Expenses, of at least $5 million, then the Company shall
(i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders
other than the Initiating Holders; and (ii) as soon as practicable, and in any event within
forty-five (45) days after the date such request is given by the Initiating Holders, file a Form
S-3 registration statement under the Securities Act covering all Registrable Securities requested
to be included in such registration by any other Holders, as specified by notice given by each such
Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each
case, subject to the limitations of Section 2.1(c) and Section 2.3.
(c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting
a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive
officer stating that in the good faith judgment of the Company’s Board of Directors it would be
materially detrimental to the Company and its stockholders for such registration statement to
either become effective or remain effective for as long as such registration statement otherwise
would be required to remain effective, because such action would be materially detrimental to the
Company and its stockholders for such registration statement to be filed and it is therefore
necessary to defer the filing of such registration statement, then the Company shall have the right
to defer taking action with respect to such filing, and any time periods with respect to filing or
effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred
twenty (120) days after the request
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of the Initiating Holders is given; provided, however, that the Company may not invoke this
right more than once in any twelve (12) month period; and provided, further, that the Company shall
not register any securities for its own account or that of any other stockholder during such one
hundred twenty (120) day period other than an Excluded Registration.
(d) The Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to Section 2.1(a) (i) during the period that is sixty (60) days before the
Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred
eighty (180) days after the effective date of, a Company-initiated registration, provided, that the
Company is actively employing in good faith commercially reasonable efforts to cause such
registration statement to become effective; (ii) after the Company has effected a registration
pursuant to Section 2.1(a) or 2.1(b); or (iii) if the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a
request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take
any action to effect, any registration pursuant to Section 2.1(b) (i) during the period that is
thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a
date that is ninety (90) days after the effective date of, a Company-initiated registration,
provided, that the Company is actively employing in good faith commercially reasonable efforts to
cause such registration statement to become effective; or (ii) if the Company has effected a
registration pursuant to Section 2.1(a) or 2.1(b). A registration shall not be counted as
“effected” for purposes of this Section 2.1(d) until such time as the applicable registration
statement has been declared effective by the SEC, unless the Initiating Holders withdraw their
request for such registration, elect not to pay the registration expenses therefor, and forfeit
their right to one demand registration statement pursuant to Section 2.6, in which case such
withdrawn registration statement shall be counted as “effected” for purposes of this Section
2.1(d).
2.2 Company Registration. If the Company proposes to register (including, for this
purpose, a registration effected by the Company for stockholders other than the Holders) any of its
Common Stock under the Securities Act in connection with the public offering of such securities
solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly
give each Holder notice of such registration. Upon the request of each Holder given within twenty
(20) days after such notice is given by the Company, the Company shall, subject to the provisions
of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has
requested to be included in such registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.2 before the effective date of such
registration, whether or not any Holder has elected to include Registrable Securities in such
registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be
borne by the Company in accordance with Section 2.6.
2.3 Underwriting Requirements.
(a) If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to Section 2.1, and the Company shall include such
information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the
right of any Holder to include such Holder’s Registrable
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Securities in such registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an
underwriting agreement in customary form with the underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s)
the Initiating Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable
Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be allocated among such Holders of
Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable)
to the number of Registrable Securities owned by each Holder or in such other proportion as shall
mutually be agreed to by all such selling Holders; provided, however, that the number of
Registrable Securities held by the Holders to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting. 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.
(b) In connection with any offering involving an underwriting of shares of the Company’s
capital stock pursuant to Section 2.2, the Company shall not be required to include any of the
Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and its underwriters, and then only in such
quantity as the underwriters in their sole discretion determine will not jeopardize the success of
the offering by the Company. If the total number of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the number of securities to be
sold (other than by the Company) that the underwriters in their reasonable discretion determine is
compatible with the success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities, which the
underwriters and the Company in their sole discretion determine will not jeopardize the success of
the offering. If the underwriters determine that less than all of the Registrable Securities
requested to be registered can be included in such offering, then the Registrable Securities that
are included in such offering shall be allocated among the selling Holders in proportion (as nearly
as practicable to) the number of Registrable Securities owned by each selling Holder or in such
other proportions as shall mutually be agreed to by all such selling Holders. 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. Notwithstanding the
foregoing, in no event shall (i) the number of Registrable Securities included in the offering be
reduced unless all other securities (other than securities to be sold by the Company) are first
entirely excluded from the offering, or (ii) the number of Registrable Securities included in the
offering be reduced below twenty percent (20%) of the total number of securities included in such
offering, unless such offering is the IPO, in which case the selling Holders may be excluded
further if the underwriters make the determination described above and no other stockholder’s
securities are included in such offering. For purposes of the provision in this Section 2.3(b)
concerning apportionment, for any selling Holder that is a partnership, limited liability company,
or corporation, the partners, members, retired partners, retired members, stockholders, and
Affiliates of such Holder, or the
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estates and Immediate Family Members of any such partners, retired partners, members, and
retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to
be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder”
shall be based upon the aggregate number of Registrable Securities owned by all Persons included in
such “selling Holder,” as defined in this sentence.
2.4 Obligations of the Company. Subject to the terms of any underwriting agreement to
which the Company may become a party, whenever required under this Section 2 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such registration statement to
become effective and, upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for a period of up to one hundred
twenty (120) days or, if earlier, until the distribution contemplated in the registration statement
has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be
extended for a period of time equal to the period the Holder refrains, at the request of an
underwriter of Common Stock (or other securities) of the Company, from selling any securities
included in such registration, and (ii) in the case of any registration of Registrable Securities
on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance
with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to
ninety (90) days, if necessary, to keep the registration statement effective until all such
Registrable Securities are sold;
(b) prepare and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration statement, as may be
necessary to comply with the Securities Act in order to enable the disposition of all securities
covered by such registration statement;
(c) furnish to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other documents as the Holders
may reasonably request in order to facilitate their disposition of their Registrable Securities;
(d) use its commercially reasonable efforts to register and qualify the securities covered by
such registration statement under such other securities or blue-sky laws of such jurisdictions as
shall be reasonably requested by the selling Holders; provided that the Company shall not be
required to qualify to do business or to file a general consent to service of process in any such
states or jurisdictions, unless the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act;
(e) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the underwriter(s) of such
offering;
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(f) use its commercially reasonable efforts to cause all such Registrable Securities covered
by such registration statement to be listed on a national securities exchange or trading system and
each securities exchange and trading system (if any) on which similar securities issued by the
Company are then listed;
(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not
later than the effective date of such registration;
(h) promptly make available for inspection by the selling Holders, any managing underwriter(s)
participating in any disposition pursuant to such registration statement, and any attorney or
accountant or other agent retained by any such underwriter or selected by the selling Holders, all
financial and other records, pertinent corporate documents, and properties of the Company, and
cause the Company’s officers, directors, employees, and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney, accountant, or agent,
in each case, as necessary or advisable to verify the accuracy of the information in such
registration statement and to conduct appropriate due diligence in connection therewith;
(i) notify each selling Holder, promptly after the Company receives notice thereof, of the
time when such registration statement has been declared effective or a supplement to any prospectus
forming a part of such registration statement has been filed; and
(j) after such registration statement becomes effective, notify each selling Holder of any
request by the SEC that the Company amend or supplement such registration statement or prospectus.
2.5 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of
any selling Holder that such Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of such securities as
is reasonably required to effect the registration of such Holder’s Registrable Securities.
2.6 Expenses of Registration. All expenses (other than Selling Expenses) incurred in
connection with registrations, filings, or qualifications pursuant to Section 2, including all
registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements
of counsel for the Company; and the reasonable fees and disbursements, not to exceed $30,000, of
one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the
Company; provided, however, that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable Securities to be
registered (in which case all selling Holders shall bear such expenses pro rata based upon the
number of Registrable Securities that were to be included in the withdrawn registration), unless
the Holders of a majority of the Registrable Securities agree to forfeit their right to one
registration pursuant to Section 2.1(a) or Section 2.1(b), as the case may be; and provided,
further, that if, at the time of such withdrawal, the Holders shall have learned
8
of a material adverse change in the condition, business or prospects of the Company from that
known to the Holders at the time of their request and have withdrawn the request with reasonable
promptness after learning of such information, then the Holders shall not be required to pay any of
such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) or
Section 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to
this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of
Registrable Securities registered on their behalf.
2.7 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any registration pursuant to this Agreement as the
result of any controversy that might arise with respect to the interpretation or implementation of
this Section 2.
2.8 Indemnification. If any Registrable Securities are included in a registration
statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling
Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal
counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act)
for each such Holder; and each Person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to
each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or
other expenses reasonably incurred thereby in connection with investigating or defending any claim
or proceeding from which Damages may result, as such expenses are incurred; provided, however, that
the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is effected without the consent of
the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for
any Damages to the extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on behalf of any such
Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in
connection with such registration.
(b) To the extent permitted by law, each selling Holder, severally and not jointly, will
indemnify and hold harmless the Company, and each of its directors, each of its officers who has
signed the registration statement, each Person (if any), who controls the Company within the
meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as
defined in the Securities Act), any other Holder selling securities in such registration statement,
and any controlling Person of any such underwriter or other Holder, against any Damages, in each
case only to the extent that such Damages arise out of or are based upon actions or omissions made
in reliance upon and in conformity with written information furnished by or on behalf of such
selling Holder expressly for use in connection with such registration; and each such selling Holder
will pay to the Company and each other aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or defending any claim or proceeding from which
Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement
contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or
proceeding if
9
such settlement is effected without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided, further, that in no event shall the aggregate amounts payable
by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the
proceeds from the offering received by such Holder (net of any Selling Expenses paid by such
Holder), except in the case of fraud or willful misconduct by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the
commencement of any action (including any governmental action) for which a party may be entitled to
indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 2.8, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right to participate in such action
and, to the extent the indemnifying party so desires, participate jointly with any other
indemnifying party to which notice has been given, and to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified party (together with
all other indemnified parties that may be represented without conflict by one counsel) shall have
the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such action. The failure to
give notice to the indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified party under this
Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability
to defend such action. The failure to give notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under this Section 2.8.
(d) To provide for just and equitable contribution to joint liability under the Securities Act
in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a
claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such indemnification may not be enforced
in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such
case, or (ii) contribution under the Securities Act may be required on the part of any party hereto
for which indemnification is provided under this Section 2.8, then, and in each such case, such
parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which
they may be subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of each of the indemnifying party and the indemnified party in
connection with the statements, omissions, or other actions that resulted in such loss, claim,
damage, liability, or expense, as well as to reflect any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or allegedly untrue statement of a material
fact, or the omission or alleged omission of a material fact, relates to information supplied by
the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or omission; provided,
however, that, in any such case, (x) no Holder will be required to contribute any amount in excess
of the public offering price of all such Registrable Securities offered and sold by such Holder
pursuant to such registration statement, and (y) no Person guilty
10
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation; and provided, further, that in no event shall a Holder’s liability pursuant to
this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to
Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling
Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) Unless otherwise superseded by an underwriting agreement entered into in connection with
the underwritten public offering, the obligations of the Company and Holders under this Section 2.8
shall survive the completion of any offering of Registrable Securities in a registration under this
Section 2, and otherwise shall survive the termination of this Agreement.
2.9 Reports Under Exchange Act. With a view to making available to the Holders the
benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company shall:
(a) make and keep available adequate current public information, as those terms are understood
and defined in SEC Rule 144, at all times after the effective date of the registration statement
filed by the Company for the IPO;
(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the Exchange Act (at any
time after the Company has become subject to such reporting requirements); and
(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) to the extent accurate, a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the
effective date of the registration statement filed by the Company for the IPO), the Securities Act,
and the Exchange Act (at any time after the Company has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by the Company; and
(iii) such other information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC that permits the selling of any such securities without registration (at any
time after the Company has become subject to the reporting requirements under the Exchange Act) or
pursuant to Form S-3 (at any time after the Company so qualifies to use such form).
11
2.10 Restrictions on Transfer.
(a) The Registrable Securities shall not be sold, pledged, or otherwise transferred, and the
Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with
respect to any such sale, pledge, or transfer, except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the provisions of the Securities
Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the
Registrable Securities held by such Holder to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
(b) Each certificate or instrument representing (i) the Series B Common Stock, (ii) the
Registrable Securities, and (iii) any other securities issued in respect of the securities
referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger,
consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section
2.10(c)) be stamped or otherwise imprinted with a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY
BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.
The Holders consent to the Company making a notation in its records and giving instructions to any
transfer agent of the Restricted Securities in order to implement the restrictions on transfer set
forth in this Section 2.10.
(c) The holder of each certificate representing Restricted Securities, by acceptance thereof,
agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale,
pledge, or transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transaction, the Holder thereof shall give
notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each
such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer
in sufficient detail and, if reasonably requested by the Company, 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 transaction may be effected without registration under the Securities Act; (ii) a
“no action” letter from the SEC to the effect that the proposed sale,
12
pledge, or transfer of such Restricted Securities without registration will not result in a
recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any
other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed
sale, pledge, or transfer of the Restricted Securities may be effected without registration under
the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell,
pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by
the Holder to the Company. The Company will not require such a legal opinion or “no action” letter
(x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such
Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration;
provided that each transferee agrees in writing to be subject to the terms of this Section 2.10.
Each certificate or instrument evidencing the Restricted Securities transferred as above provided
shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive
legend set forth in Section 2.10(b), except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such Holder and the Company, such legend is not required
in order to establish compliance with any provisions of the Securities Act.
2.11 Termination of Registration Rights. The right of any Holder to request
registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or
Section 2.2 shall terminate upon the earliest to occur of:
(a) when all of such Holder’s Registrable Securities could be sold without restriction under
SEC Rule 144(k);
(b) the failure of such Holder to fulfill such Holder’s purchase obligations in connection
with the 2nd Tranche Sale or the 3rd Tranche Sale pursuant to the Purchase
Agreement; or
(c) the fifth (5th) anniversary of the IPO.
3. Additional Covenants.
3.1 Insurance. The Company shall use its commercially reasonable efforts to obtain,
within ninety (90) days of the date hereof, from financially sound and reputable insurers Directors
and Officers liability insurance in an amount and on terms and conditions satisfactory to the Board
of Directors, and will use commercially reasonable efforts to cause such insurance policies to be
maintained until such time as the Board of Directors determines that such insurance should be
discontinued.
3.2 Qualified Small Business Stock. The Company shall use commercially reasonable
efforts to cause the shares of Common Stock issued pursuant to the Purchase Agreement, as well as
any shares into which such shares are converted, within the meaning of Section 1202(f) of the
Internal Revenue Code (the “Code”), to constitute “qualified small business stock” as defined in
Section 1202(c) of the Code; provided, however, that such requirement shall not be applicable if
the Board of Directors of the Company determines, in its good-faith business judgment, that such
qualification is inconsistent with the best interests of the Company. The Company shall submit to
its stockholders (including the Investors) and to the Internal Revenue Service any reports that may
be required under Section 1202(d)(1)(C) of the
13
Code and the regulations promulgated thereunder. In addition, within twenty (20) business
days after any Investor’s written request therefor, the Company shall, at its option, either (i)
deliver to such Investor a written statement indicating whether (and what portion of) such
Investor’s interest in the Company constitutes “qualified small business stock” as defined in
Section 1202(c) of the Code or (ii) deliver to such Investor such factual information in the
Company’s possession as is reasonably necessary to enable such Investor to determine whether (and
what portion of) such Investor’s interest in the Company constitutes “qualified small business
stock” as defined in Section 1202(c) of the Code.
3.3 Successor Indemnification. If the Company or any of its successors or assignees
consolidates with or merges into any other Person and is not the continuing or surviving
corporation or entity of such consolidation or merger, then to the extent necessary, proper
provision shall be made so that the successors and assignees of the Company assume the obligations
of the Company with respect to indemnification of members of the Board of Directors as in effect
immediately before such transaction, whether such obligations are contained in the Company’s
Bylaws, its Articles of Incorporation, or elsewhere, as the case may be.
3.4 Termination of Covenants. The covenants set forth in this Section 3, except for
Section 3.3, shall terminate and be of no further force or effect (i) immediately before the
consummation of the IPO or (ii) when the Company first becomes subject to the periodic reporting
requirements of Section 12(g) or 15(d) of the Exchange Act, whichever event occurs first.
4. Miscellaneous.
4.1 Successors and Assigns. The rights under this Agreement may be assigned (but only
with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an
Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an
individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such
transfer, holds at least 1,000,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided,
however, that (x) the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee and the Registrable Securities with
respect to which such rights are being transferred; (y) such transferee agrees in a written
instrument delivered to the Company to be bound by and subject to the terms and conditions of this
Agreement; and (z) such transfer is not made to a Person that the Company’s Board of Directors or
TomoTherapy determines is, or is an Affiliate of, a competitor of the Company or of TomoTherapy.
For the purposes of determining the number of shares of Registrable Securities held by a
transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2)
who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual
Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the
transferring Holder; provided, however, that all transferees who would not qualify individually for
assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights,
receiving notices, or taking any action under this Agreement. The terms and conditions of this
Agreement inure to the benefit of and are binding upon the respective successors and permitted
assignees of the parties. Nothing in
14
this Agreement, express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as expressly provided
herein.
4.2 Governing Law. This Agreement and any controversy arising out of or relating to
this Agreement shall be governed by and construed in accordance with the internal laws of State of
Wisconsin, without regard to conflict of law principles that would result in the application of any
law other than the law of the State of Wisconsin, and without regard to rules of construction
concerning the draftsman hereof.
4.3 Counterparts; Facsimile. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may also be executed and delivered by facsimile or PDF
format signature and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
4.4 Titles and Subtitles. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this Agreement.
4.5 Notices. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual
receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by
electronic mail or facsimile during the recipient’s normal business hours, and if not sent during
normal business hours, then on the recipient’s next business day; (iii) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one
(1) business day after the business day of deposit with a nationally recognized overnight courier,
freight prepaid, specifying next-day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at their addresses as set forth on
Schedule A hereto, or to the principal office of the Company and to the attention of the Chief
Executive Officer, in the case of the Company, or to such email address, facsimile number, or
address as subsequently modified by written notice given in accordance with this Section 4.5.
4.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance, and either retroactively or prospectively) only with the written consent of the Company
and the holders of a majority of the Registrable Securities then outstanding; provided, however,
that the Company may in its sole discretion waive compliance with Section 2.10(c) (and the
Company’s failure to object promptly in writing after notification of a proposed assignment
allegedly in violation of Section 2.10(c) shall be deemed to be a waiver); and provided, further,
that any provision hereof may be waived by any waiving party on such party’s own behalf, without
the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended
or terminated and the observance of any term hereof may not be waived with respect to any Investor
without the written consent of such Investor, unless such amendment, termination, or waiver applies
to all Investors in the same fashion. The Company shall give prompt notice of any amendment or
termination hereof or waiver hereunder to any party hereto that did not consent in writing to such
amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance
with this Section 4.6 shall be binding
15
on all parties hereto, regardless of whether any such party has consented thereto. No waivers
of or exceptions to any term, condition, or provision of this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver of any such term,
condition, or provision.
4.7 Severability. In case any one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement,
and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it
will be valid, legal, and enforceable to the maximum extent permitted by law.
4.8 Aggregation of Stock. All shares of Registrable Securities held or acquired by
Affiliates shall be aggregated together for the purpose of determining the availability of any
rights under this Agreement and such Affiliated persons may apportion such rights as among
themselves in any manner they deem appropriate.
4.9 Additional Investors. Notwithstanding anything to the contrary contained herein,
if the Company issues additional shares of the Company’s Series B Common Stock after the date
hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares may
become a party to this Agreement by executing and delivering or joinder agreement or an additional
counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all
purposes hereunder. No action or consent by the Investors shall be required for such joinder to
this Agreement by such additional Investor, so long as such additional Investor has agreed in
writing to be bound by all of the obligations as an “Investor” hereunder.
4.10 Entire Agreement. This Agreement (including any Schedules and Exhibits hereto)
constitutes the full and entire understanding and agreement among the parties with respect to the
subject matter hereof, and any other written or oral agreement relating to the subject matter
hereof existing between the parties is expressly canceled.
4.11 Dispute Resolution. The parties (a) hereby irrevocably and unconditionally
submit to the jurisdiction of the federal and state courts located within the geographic boundaries
of Dane County in the State of Wisconsin for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other
proceeding arising out of or based upon this Agreement except in the federal and state courts
located within the geographic boundaries of Dane County in the State of Wisconsin, and (c) hereby
waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or execution, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action
or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court. The prevailing party shall be entitled to reasonable attorneys’ fees, costs
and necessary disbursements in addition to any other relief to which such party may be entitled.
4.12 Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any party under this Agreement, upon any breach or default of any other
16
party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching
or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such
breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded
to any party, shall be cumulative and not alternative.
[Remainder of Page Intentionally Left Blank]
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
| COMPANY: | ||||||
| COMPACT PARTICLE ACCELERATION CORPORATION | ||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇ ▇▇▇▇ | |||||
| Title: | General Manager | |||||
| INVESTORS: | ||||||
| DaneVest Tech Fund I, LP | ||||||
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ | |||||
| Its: | Manager | |||||
| The Endeavors Group, LLC | ||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Its: | Managing Member | |||||
| ▇▇▇▇▇ One LLC | ||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇-y-▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇ ▇▇▇▇ ▇▇▇▇-y-▇▇▇▇▇▇ | |||||
| Its: | Manager | |||||
| TomoPro Investment, LLC | ||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||
| Its: | Manager | |||||
Schedule intentionally omitted.