EXHIBIT 10.1
===============================================================================
SECURITYHOLDERS AGREEMENT
among
ENDEAVOR PHARMACEUTICALS INC.
and
THE SECURITYHOLDERS NAMED HEREIN
------------------------------------------
Dated as of August 8, 2000
------------------------------------------
SECURITYHOLDERS AGREEMENT
This SECURITYHOLDERS AGREEMENT (this "Agreement"), dated as of August
8, 2000, is entered into by and among ENDEAVOR PHARMACEUTICALS INC., a Delaware
corporation (the "Company"), and the securityholders listed on Schedule 1
attached hereto as it may be modified and supplemented from time to time (the
"Securityholders").
BACKGROUND STATEMENT
As of the date hereof, as set forth on Schedule 1 attached hereto, the
Securityholders own in the aggregate all of the issued and outstanding shares
of capital stock of the Company and all securities exercisable or convertible
into shares of capital stock of the Company.
The Company and the Securityholders are entering into this
Securityholders Agreement to provide for the continuity of management of the
Company, to avoid possible dissension among the Stockholders (as hereinafter
defined), to restrict the transfer of the Shares (as hereinafter defined), to
provide the Rightholders (as hereunder defined) with first refusal rights, to
provide the Securityholders with certain registration rights, to provide the
Rightholders with certain preemptive rights and to establish certain other
rights under certain conditions. With respect to Alta BioPharma Partners, L.P.,
the rights established pursuant to this Agreement are in addition to those
separate rights granted by the Company to Alta BioPharma Partners, L.P. under
that agreement of even date herewith regarding Management Rights, Investments
in Certain Countries, Indemnification and Superfund Requirements, a copy of
which is attached hereto as Exhibit C. This Securityholders Agreement amends
and restates in its entirety the Securityholders Agreement dated as of November
17, 1995 between the Company and certain of the securityholders party thereto
(the "1995 Securityholders Agreement").
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
"AAI" means Applied Analytical Industries, Inc., a Delaware
corporation, and its successors and assigns.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person;
1
provided, however, that none of the Goldman Entities or any of their Affiliates
shall be deemed an Affiliate of AAI and AAI shall not be deemed an Affiliate of
any of the Goldman Entities or any of their Affiliates.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of Wilmington, North Carolina are
authorized or required by law or executive order to close.
"Charter Documents" means the Restated Certificate and By-laws of the
Company as in effect on the date hereof, copies of which are attached hereto as
Exhibits A and B, respectively.
"Closing Date" has the meaning assigned to such term in Section 3.1.1.
"Common Stock" means the Common Stock of the Company.
"Common Stock Equivalents" means (i) the Series A Preferred Stock,
(ii) the Series B Preferred Stock, (iii) the Series C Preferred Stock, (iv) the
Series D Preferred Stock, (v) the Series E Preferred Stock, (vi) any other
security or obligation which is by its terms convertible into shares of Common
Stock, and (vii) any warrant, option (to the extent vested), or other
subscription or purchase right with respect to Common Stock or Preferred Stock
convertible into Common Stock.
"Control" when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Demand Registration" has the meaning specified in Section 7.1(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Employees" means R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"GCL" means the General Corporation Law of the State of Delaware, as
it may be amended from time to time.
"Goldman Entities" means GS Capital Partners, GS Capital Partners II
Offshore, L.P., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, L.P., and Bridge Street Fund 1995, L.P., collectively.
"GS Capital Partners" means GS Capital Partners II, L.P., a Delaware
limited partnership, and its successors and assigns.
2
"Initial Public Offering" has the meaning assigned to such term in the
Restated Certificate.
"Involuntary Transfer" means any transfer, proceeding or action by or
in which a Securityholder shall be deprived or divested of any right, title, or
interest in or to any of its Shares including, without limitation, any seizure
under levy of attachment or execution, any transfer in connection with
bankruptcy (whether pursuant to a voluntary filing or an involuntary petition
under the United States Bankruptcy Code of 1978, or any modifications or
revisions thereto), or other court proceeding to a debtor in possession,
trustee in bankruptcy or receiver or other officer or agency, any transfer to a
state or to a public officer or agency pursuant to any statute pertaining to
escheat or abandoned property, any transfer pursuant to a divorce or separation
agreement or a final decree of a court in a divorce action and any merger of
such Securityholder with another Person in which such Securityholder is not the
survivor of such merger, including a merger in which the equity holders of such
Securityholder immediately prior to such merger do not own immediately after
such merger a majority stake of the survivor of such merger.
"Involuntary Transferee" has the meaning assigned to such term in
Section 3.2.1.
"Key Employee Warrants," has the meaning assigned to such term in
Section 6.2
"Liens" has the meaning assigned to such term in section 3.1.5.
"Liquidation Preference" has the meaning assigned to such term in the
Restated Certificate.
"MPM Capital" means MPM Asset Management LLC, a limited liability
company organized under the laws of Delaware.
"MPM Entities" means MPM BioVentures II, L.P., MPM BioVentures II-QP,
L.P., MPM BioVentures GmbH & CO. Parallel-Beteiligungs KG and MPM Asset
Management Investors 2000 B LLC, collectively.
"Offered Securities" has the meaning assigned to such term in Section
3.1.1.
"Offering Notice" has the meaning assigned to such term in Section
3.1.1.
"Offer Price" has the meaning assigned to such term in Section 3.1.1.
"Option Period" has the meaning assigned to such term in Section
3.1.3.
"Permitted Transferee" has the meaning assigned to such term in
Section 2.2.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental body or other entity.
3
"Piggyback Registration" has the meaning specified in Section 7.2(a).
"Preferred Stock" means the capital stock of the Company having
rights, preferences, or powers ranking senior to those of the Common Stock and
includes, without limitation, the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E
Preferred Stock.
"Purchasing Rightholders" has the meaning assigned to such term in
Section 3.1.3(c), subject to the limitation in the definition of "Rightholders"
contained herein.
"Qualified IPO" has the meaning assigned to such term in the Restated
Certificate.
"Registrable Securities" means (i) shares of Common Stock issued or
issuable upon conversion of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series
E Preferred Stock, (ii) shares of Common Stock issued or issuable upon exercise
of the Sutro Warrant, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants or the Key Employee
Warrants, and (iii) any shares of 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 of Common Stock referenced in (i) and (ii) above,
excluding in all cases, however, any securities sold (y) pursuant to a
registration statement that has been declared effective and such securities
have been disposed of pursuant to such effective registration statement, or (z)
in a transaction in which such Registrable Securities are sold pursuant to Rule
144 (or any similar provision then in force) under the Securities Act. For
purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person is the holder of record or has the
right to acquire such Registrable Securities (by conversion or otherwise but
disregarding any restrictions upon the exercise of such right), whether or not
such acquisition has actually been effected.
"Registration Expenses" has the meaning specified in Section 7.5(a).
"Restated Certificate" means the Company's Amended and Restated
Certificate of Incorporation filed with the Secretary of State of the State of
Delaware in conjunction with the sale of Series E Preferred Stock and the Sutro
Warrant pursuant to the Series E Purchase Agreement.
"Rightholders" means the Stockholders and the Executive Employees,
collectively (and each a "Rightholder"); provided, however, that for purposes
of Sections 3.1.3(a), 3.2.1, and 6.1 hereof, the term "Rightholders" shall
refer only to those Stockholders and Executive Employees who are Accredited
Investors as defined in Rule 501(a) of the Securities Act.
4
"▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇" means The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc., a
Delaware corporation.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants" means the warrants to purchase up to
13,500 shares of Common Stock issued by the Company as of April 25, 1994 to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.
"SBVC" means Schering Berlin Venture Corporation, a Delaware
corporation, and its successors and assigns.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securityholder" means the Persons listed on Schedule 1 attached
hereto as it may be modified and supplemented from time to time.
"Selling Securityholder" has the meaning assigned to such term in
Section 3.1.1.
"Series A Holder" means a holder of Series A Preferred Stock or a
holder of Common Stock issued on conversion of Series A Preferred Stock, in
either case, who has agreed to be bound by the terms and conditions of this
Agreement.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company.
"Series B Holder" means a holder of Series B Preferred Stock or a
holder of Common Stock issued on conversion of Series B Preferred Stock, in
either case, who has agreed to be bound by the terms and conditions of this
Agreement.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company.
"Series C Holder" means a holder of Series C Preferred Stock or a
holder of Common Stock issued on conversion of Series C Preferred Stock, in
either case, who has agreed to be bound by the terms and conditions of this
Agreement.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock of the Company.
"Series D Holder" means a holder of Series D Preferred Stock or a
holder of Common Stock issued on conversion of Series D Preferred Stock, in
either case, who has agreed to be bound by the terms and conditions of this
Agreement.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock of the Company.
5
"Series D Purchase Agreement" means the Purchase Agreement dated as of
November 17, 1995 between the Company and the purchasers listed on Schedule 1
thereto.
"Series E Holder" means a holder of Series E Preferred Stock or a
holder of Common Stock issued on conversion of Series E Preferred Stock, in
either case, who has agreed to be bound by the terms and conditions of this
Agreement.
"Series E Preferred Stock" means the Series E Convertible Preferred
Stock of the Company.
"Series E Purchase Agreement" means the Purchase Agreement of even
date herewith between the Company and the purchasers listed on Schedule 1
thereto.
"Shares" means all shares, whether now owned or hereafter acquired, of
Common Stock and any Common Stock Equivalents calculated on an as-converted or
as-exercised basis, as applicable.
"Special Holders" means R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, AAI, and SBVC, collectively (and each of which is a "Special Holder")
and any Permitted Transferee of a Special Holder.
"Stockholders" means collectively the holders of any outstanding
shares of capital stock of the Company who are parties to this Agreement or who
have agreed to be bound by the terms and conditions of this Agreement in
accordance with Section 4 and any transferee of the foregoing who has agreed to
be bound by the terms and conditions of this Agreement in accordance with
Section 4, and the term "Stockholder" shall mean any such Person.
"Stockholders Meeting" has the meaning assigned to such term in
Section 5.1.
"Stock Options" means the stock options granted to or reserved for
issuance to officers, key employees, key consultants and directors of the
Company pursuant to stock option plans adopted by the Board of Directors to
purchase, in the aggregate, up to 405,000 shares of Common Stock.
"Stock Split" has the meaning assigned to such term in the Restated
Certificate.
"Sutro" means Sutro & Co. Incorporated, a Delaware corporation.
"Sutro Warrant" has the meaning assigned to such term in the Series E
Purchase Agreement, subject to adjustment under Section 2.5 of such agreement.
"Third Party" means any Person other than the Company or its Affiliate
or any Securityholder or Permitted Transferee of a Securityholder.
6
"Third Party Offer" has the meaning assigned to such term in Section
3.1.1.
"Third Party Offeror" has the meaning assigned to such term in Section
3.1.1.
"Transfer" has the meaning assigned to such term in Section 2.1.
"Transferred Shares" has the meaning assigned to such term in Section
3.2.1.
"Warrants" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants, the Key Employee
Warrants, and the Sutro Warrant.
"Written Consent" has the meaning assigned to such term in Section
5.1.
"1995 Securityholders Agreement" has the meaning assigned to such term
in the Background Statement hereto.
2. Restrictions on Transfer of Shares.
2.1 Limitation on Transfer. No Securityholder shall sell, give,
assign, hypothecate, pledge, encumber, grant a security interest in or
otherwise dispose of (whether by operation of law or otherwise) (each a
"Transfer") any Shares or any right, title or interest therein or thereto,
except (a) in accordance with the provisions of this Agreement and (b) pursuant
to an effective registration statement under the Securities Act or pursuant to
an exemption from the registration requirements thereof. Any attempt to
Transfer any Shares or any rights thereunder in violation of the preceding
sentence shall be null and void ab initio and the Company shall refuse to
register any such Transfer.
2.2 Permitted Transfers. At any time, any Securityholder may,
subject only to Sections 2.1, 2.2, 2.3 and 4, Transfer Shares (a) with respect
to a Securityholder who is an individual, to a member of such Securityholder's
immediate family, which shall include his grandparents, parents, spouse,
sibling, children or grandchildren ("Family Members"), or a trust, corporation,
limited liability company or partnership, all of the beneficial interests in
which shall be held by such Securityholder or one or more Family Members of
such Securityholder; provided, however, that during the period any such trust,
corporation, limited liability company or partnership holds any right, title or
interest in any Shares, no Person other than such Securityholder or one or more
Family Members of such Securityholder may be or become beneficiaries,
equityholders or limited or general partners thereof; (b) with respect to a
Securityholder that is not an individual, to (i) any corporation, partnership
or other entity which is an Affiliate of such Securityholder, or (ii) any
general or limited partners of such Securityholder or Affiliate of such
Securityholder; (c) with respect to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, to (i) any entity
controlled by individuals who are now or hereafter may be employed by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, or (ii) any employees of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇; and (d) with
respect to AAI, up to 80,000 Shares to any employees of AAI or any employee
benefit plan of AAI (the
7
Persons referred to in the preceding clauses (a), (b), (c), and (d) are herein
each called a "Permitted Transferee").
2.3 Permitted Transfer Procedures. If any Securityholder desires
to Transfer all or any portion of its Shares to a Permitted Transferee under
this Section 2, it shall give notice to the Company of its intention to make
such Transfer not less than five (5) days prior to effecting such Transfer,
which notice shall state the name and address of each Permitted Transferee to
whom such Transfer is proposed and the number of Shares proposed to be
transferred to such Permitted Transferee.
2.4 Transfer Restrictions on Special Holders. Except as provided
in Section 2.2 hereof, no Special Holder shall Transfer any Shares owned by
such Special Holder without first obtaining the consent of at least two-thirds
of the Series E Holders. Any Special Holder that desires to Transfer all or any
portion of his Shares (other than to a Permitted Transferee) shall, in addition
to and prior to complying with Section 3 hereof, send to Series E Holders
written notice (a "Special Holder Sale Notice") that satisfies the requirements
of an Offering Notice (defined below). Any Series E Holder that has not
consented or objected within 30 days after receiving the Special Holder Sale
Notice shall be deemed to have consented. If a Special Holder Sale Notice does
not receive the required two-thirds consent within the specified 30-day period,
the Special Holder shall not proceed with the proposed Transfer. If a Special
Holder Sale Notice receives the required two-thirds consent within the
specified 30-day period, the Special Holder may proceed with the proposed
Transfer pursuant to Section 3 hereof. This Section 2.4 shall not apply to any
Transfer to the Company by an employee, consultant, or director of the Company
pursuant to a repurchase provision in an employment, consulting, or other
similar agreement with the Company. This Section 2.4 shall automatically
terminate in the event that the Series E Holders as of the date hereof (a) hold
less than 200,000 shares of Series E Preferred Stock or (b) enter into any
agreement or arrangement the consummation of which would result in such holders
holding less than 200,000 shares of Series E Preferred Stock.
3. Right of First Refusal and Tag Along and Bring Along Rights.
3.1 Proposed Voluntary Transfer.
3.1.1 Offering Notice. If any Securityholder (a "Selling
Securityholder") desires to Transfer all or any portion of his Shares to any
Person (other than a Permitted Transferee or the Company pursuant to a
repurchase provision in an employment, consulting, or other similar agreement
with the Company) (a "Third Party Offeror") or has received a bona fide offer
to buy all or any portion of his Shares from any Third Party Offeror and
desires to accept such offer (in each case, a "Third Party Offer") such Selling
Securityholder shall send written notice (the "Offering Notice") to the Company
and the Rightholders which shall state (a) the number of securities of each
class of Shares proposed to be Transferred (the "Offered Securities"), (b) the
proposed purchase price per Share to be paid by the Third Party Offeror (the
"Offer Price"), (c) the
8
name of the Third Party Offeror, (d) that the proposed purchase of the Offered
Securities shall be consummated on or prior to the first Business Day (the
"Closing Date") which occurs thirty (30) days after the expiration of the
Option Period (as hereinafter defined), and (e) that the Third Party Offer has
been accepted by the Selling Securityholder subject to the rights of the
Rightholders contained in this Section 3.1. The Offering Notice shall also
state any other material terms and conditions of the Third Party Offer and
shall include a copy of all writings between the Third Party Offeror and the
Selling Securityholder necessary to establish the terms of the Third Party
Offer. If the Selling Securityholder is an Executive Employee, the rights of
Rightholders under Section 3 hereof shall be subject to the Company's prior
right of first refusal, if any.
3.1.2 Conditions to Effectiveness of Offering Notice. The
Offering Notice shall not be effective unless and until all of the following
conditions are met:
(a) The Offering Notice shall be accompanied by a
certificate of the Third Party Offeror stating that (i) the Third Party Offer
has been approved by its board of directors (or the equivalent if the Third
Party Offeror is not a corporation), if necessary, (ii) the description of the
Third Party Offer contained in the Offering Notice is complete and accurate,
(iii) the Third Party Offeror is aware of the rights of the Rightholders
contained in Section 3.1 hereof, and (iv) prior to the purchase of any Offered
Securities by the Third Party Offeror it will become a party to this Agreement
and agree to be bound by the terms and conditions hereof to the same extent and
in the same manner as the Selling Securityholder;
(b) The Third Party Offer shall not be subject to any
conditions, except that it may be conditioned upon the truth as of the closing
of the proposed purchase of customary representations and warranties, the
delivery of a customary legal opinion, and customary due diligence;
(c) The Offer Price shall be payable wholly in cash; and
(d) The Third Party Offeror shall have furnished
evidence satisfactory to the Company in its reasonable judgment as to the
financial ability of such Third Party Offeror to consummate the proposed
purchase.
3.1.3 Rightholders Option. For a period of sixty (60) days
after the effectiveness of the Offering Notice pursuant to Section 3.1.2 (the
"Option Period"):
(a) the Rightholders shall have the right to purchase
all (but not less than all) of the Offered Securities at a purchase price equal
to the Offer Price and upon the terms and conditions of the Third Party Offer.
Each Rightholder shall have the right to purchase that percentage of the
Offered Securities determined by dividing (i) the total number of shares of
Common Stock then owned by such Rightholder by (ii) the total number of shares
of Common Stock then owned by all Rightholders electing to participate in the
purchase of the Offered Securities (including such Rightholder's shares
9
of Common Stock). If any Rightholder does not fully subscribe for the number or
amount of Offered Securities it is entitled to purchase, then each other
participating Rightholder shall have the right to purchase that percentage of
the Offered Securities not so subscribed for (the "Excess Offered Securities")
determined by dividing (x) the total number of shares of Common Stock then
owned by such fully participating Rightholder by (y) the total number of shares
of Common Stock then owned by all fully participating Rightholders who elect to
purchase the Excess Offered Securities (including such Rightholder's shares of
Common Stock); or
(b) if the Rightholders do not elect to purchase all of
the Offered Securities pursuant to clause (a) of this Section 3.1.3, each
Rightholder shall have the right to sell, to the Third Party Offeror upon the
terms set forth in the Third Party Offer, that number of Shares held by such
Rightholder equal to that percentage of the Offered Securities determined by
dividing (i) the total number of shares of Common Stock then owned by such
Rightholder by (ii) the total number of shares of Common Stock then owned by
all Rightholders participating in the sale to the Third Party Offeror
(including such Rightholder's shares of Common Stock). Shares to be sold to the
Third Party Offeror by a Rightholder pursuant to this Section 3.1.3(b) shall be
of the same class and series as the Offered Securities, except that, for the
purposes of this Section 3.1.3(b), shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series
E Preferred Stock shall be deemed to be of the same series, and to the extent
the Offered Securities include Warrants, any Shares shall be deemed to be the
same series as the Offered Securities (provided, however, that the price to be
paid by a Third Party Offeror for any Shares to be purchased in lieu of
Warrants shall be increased per Share by the exercise price of such Warrants).
To the extent any Rightholder exercises its right to sell Shares pursuant to
this Section 3.1.3(b), the number of the Offered Securities to be sold to the
Third Party Offeror by the Selling Securityholder shall be reduced; or
(c) if any Rightholder or Rightholders (each a
"Purchasing Rightholder" and collectively the "Purchasing Rightholders") elect
to purchase all of the Offered Securities pursuant to clause (a) of this
Section 3.1.3, then prior to the expiration of the Option Period, each other
Rightholder shall have the right to sell to the Purchasing Rightholders, upon
the terms and conditions of the Third Party Offer, that number of Shares held
by such Rightholder equal to that percentage of the Offered Securities
determined by dividing (i) the total number of shares of Common Stock then
owned by such Rightholder by (ii) the total number of shares of Common Stock
then owned by all Rightholders participating in the sale to the Purchasing
Rightholders. Shares to be sold to the Purchasing Rightholders by a Rightholder
pursuant to this Section 3.1.3(c) shall be of the same class and series as the
Offered Securities except that, for the purposes of this Section 3.1.3(c),
shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock shall
be deemed to be of the same series, and to the extent the Offered Securities
include Warrants, any Shares shall be deemed to be the same series as the
Offered Securities (provided,
10
however, that the price to be paid by the Purchasing Rightholders for any
Shares to be purchased in lieu of Warrants shall be increased per Share by the
exercise price of such Warrants). To the extent any Rightholder exercises its
rights to sell Shares pursuant to this Section 3.1.3(c), the number of shares
of the Offered Securities to be sold to the Purchasing Rightholders by the
Selling Securityholder shall be reduced.
(d) For purposes of Section 3.1.3, the number of shares
of Common Stock held by a Rightholder shall be calculated on a fully diluted
basis, as if all shares of Preferred Stock and all other convertible securities
of the Company held by such Rightholder had been fully converted into shares of
Common Stock and any outstanding warrants, options, or other rights for the
purchase of shares of capital stock or convertible securities of the Company
held by such Rightholder had been fully exercised (and the resulting securities
fully converted into shares of Common Stock, if so convertible).
3.1.4 Exercise of Options. The options of a Rightholder
under Section 3.1.3 shall be exercisable by delivering written notice, prior to
the expiration of the Option Period, to the Selling Securityholder with a copy
to the Company and the other Rightholders. Such notice shall state, as
appropriate, (i) the number of Shares held by such Rightholder, (ii) the number
of Shares that such Rightholder desires to purchase pursuant to Section
3.1.3(a), (iii) the number of Shares that such Rightholder desires to sell
pursuant to Section 3.1.3(b), and (iv) the number of Shares that such
Rightholder desires to sell pursuant to Section 3.1.3(c). The failure of a
Rightholder to respond within the Option Period to the Selling Securityholder
shall be deemed to be a waiver of its rights under this Section 3.
3.1.5 Sale to the Purchasing Rightholders. The closing of
the purchase of Offered Securities subscribed to by the Purchasing Rightholders
under Section 3.1.3(a) shall be held at the principal office of the Company at
11:00 a.m. local time on the Closing Date or at such other time and place as
the parties to the transaction may agree. At such closing, the Selling
Securityholder and all Rightholders who elect to participate in the sale of the
Offered Securities to the Purchasing Rightholders pursuant to Section 3.1.3(c),
shall deliver certificates representing the Offered Securities, duly endorsed
with a signature guarantee for transfer and accompanied by all requisite
transfer taxes, if any, and such Offered Securities shall be free and clear of
any liens, claims, options, charges, encumbrances or rights ("Liens") (other
than those arising hereunder), and the Selling Securityholder and such
Rightholders who elect to participate in such sale pursuant to Section 3.1.3(c)
shall so represent and warrant, and each shall further represent and warrant
that it is the beneficial and record owner of such Offered Securities. Each
Purchasing Rightholder shall deliver, at the closing, payment in full in
immediately available funds for the Offered Securities purchased by it. At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate.
11
3.1.6 Sale to Third Party Offeror. Unless the Rightholders
elect to purchase all of the Offered Securities pursuant to Section 3.1.3(a),
the Selling Securityholder and all Rightholders who elect to participate in the
Third Party Offer pursuant to Section 3.1.3(b), may sell such portions of their
Shares as can be sold under Section 3.1.3(b) to the Third Party Offeror on the
terms and conditions of the Third Party Offer; provided, however, that such
sale is bona fide and made prior to or on the Closing Date. If such sale is not
consummated prior to or on the Closing Date for any reason, then the
restrictions provided for herein shall again become effective, and no transfer
of such Offered Securities may be made thereafter (other than to a Permitted
Transferee or to the Company pursuant to a buy-back provision in an employment,
consulting, or other similar agreement with the Company) by the Selling
Securityholder without again obtaining the consent of the Series E Holders
pursuant to Section 2.4, if applicable, and offering the same to the
Rightholders in accordance with this Section 3.1.
3.2 Involuntary Transfers.
3.2.1 Rights of First Refusal upon Involuntary Transfer.
If an Involuntary Transfer of any Shares (the "Transferred Shares") owned by
any of the Securityholders shall occur, the Rightholders shall have the same
rights as specified in Section 3.1.3(a) with respect to such Transferred Shares
as if the Involuntary Transfer had been a proposed voluntary transfer by a
Selling Securityholder except that: (a) the Option Period shall run from the
date of receipt by the Company and the Rightholders of notice of the
Involuntary Transfer, (b) the Closing Date shall be sixty (60) days after the
expiration of the Option Period, (c) such rights shall be exercised by notice
to the transferee of such Transferred Shares (the "Involuntary Transferee")
rather than to the Securityholder who suffered or will suffer the Involuntary
Transfer, and (d) the purchase price per Transferred Share shall be agreed
between the Involuntary Transferee and the Purchasing Rightholders; provided,
however, if such parties fail to agree as to such purchase price, the purchase
price shall be the fair market value thereof as determined in accordance with
Section 3.2.2.
3.2.2 Fair Market Value. The fair market value of the
Transferred Shares shall be determined by an independent appraiser in the
manner described herein. Within fifteen (15) days after the notice to the
Involuntary Transferee with respect to the exercise of the right to purchase
the Transferred Shares, the Involuntary Transferee and the Board of Directors
shall each designate one independent recognized investment banking firm or
recognized expert experienced in the valuation of corporations that is willing
and able to perform the services required of it herein. (If either the
Involuntary Transferee or the Board of Directors fails to make such designation
within such period, the independent firm designated by the other party shall
perform the appraisal contemplated hereby.) The two designated firms shall,
within a period of fifteen (15) days after the designation of the second firm,
agree to designate an independent recognized investment banking firm or
recognized expert experienced in the valuation of corporations willing to
perform the appraisal contemplated hereby. Such third firm so
12
designated shall conduct its determination of the fair market value of the
Transferred Shares as promptly as practicable. Such determination shall be
final and binding on the Involuntary Transferee and the Purchasing
Rightholders. The Involuntary Transferee and the Purchasing Rightholders shall
each share half the fees and expenses of the appraisal, the Involuntary
Transferee shall be responsible for any other fees and expenses of the firm
designated by it, and the Purchasing Rightholders shall be responsible for any
other fees and expenses of the firm designated by or on behalf of the Board of
Directors.
3.2.3 Closing. The closing of any purchase under this
Section 3.2 shall be held at the principal office of the Company at 11:00 a.m.
local time on the Closing Date or at such other time and place as the parties
to the transaction may agree. At such closing, the Involuntary Transferee shall
deliver certificates, if applicable, or other instruments or documents
representing the Transferred Shares being purchased under this Section 3.2,
duly endorsed with a signature guarantee for transfer and accompanied by all
requisite transfer taxes, if any, and such Shares shall be free and clear of
any Lien (other than that arising hereunder), including without limitation any
Lien arising through the action or inaction of the Involuntary Transferee, and
the Involuntary Transferee shall so represent and warrant, and shall further
represent and warrant that it is the beneficial owner of such Transferred
Shares. Each Purchasing Rightholder shall deliver at closing payment in full in
immediately available funds for such Transferred Shares. At such closing, all
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
3.2.4 General. In the event that the provisions of this
Section 3.2 shall be held to be unenforceable with respect to any particular
Involuntary Transfer, the Rightholders shall have the rights specified in
Section 3.1.3 with respect to any transfer by an Involuntary Transferee subject
to a bona fide offer from a third party for such Shares, and each
Securityholder agrees that any Involuntary Transfer shall be subject to such
rights, in which case the Involuntary Transferee shall be deemed to be the
Selling Securityholder for purposes of Section 3.1 of this Agreement and shall
be bound by the provisions of section 3.1 and the other provisions of this
Agreement.
3.3 Rights to Compel Sale. Subject to prior compliance with
Section 3.1 hereof and the relevant voting rights of the Company's stockholders
pursuant to the Restated Certificate, including, without limitation, Section
4.3(c)(iii)(B) of the Restated Certificate, if at any time Securityholders
owning of record at least sixty-six percent of the Shares desire to transfer
all their Shares to a Third Party in an arms-length transaction, then such
Securityholders may, at their option, and upon fifteen (15) days notice in
writing to all other holders of Shares, require such other holders to sell all
Shares owned by them to the Third Party for the same consideration per Share
(with respect to Common Stock Equivalents, per share of Common Stock that may
then be acquired upon exercise and/or conversion of such Common Stock
Equivalent) and otherwise on the same terms and conditions upon which such
Securityholders are selling their Shares (with respect to any warrant, option,
or other subscription or purchase right
13
with respect to shares of Common Stock or Preferred Stock convertible into
Common Stock, subject to reduction for the amount per share of Common Stock of
the exercise or purchase price thereof); provided that such other holders of
Shares shall not be required to make any representations and warranties
relating to the Company or provide any indemnities with respect thereto.
4. All Transfers in Compliance with Law and Subject to this Agreement:
Substitution of Transferee. Notwithstanding any other provision of this
Agreement, no Transfer may be made under Sections 2.2 or 3 unless (a) each
transferee of Shares has agreed in writing to be bound by the terms and
conditions of this Agreement to the same extent and in the same manner as the
Securityholder transferring such Shares, and (b) the Transfer complies in all
respects with the applicable provisions of this Agreement and with applicable
federal and state securities laws including, without limitation, the Securities
Act. Upon becoming a party to this Agreement, a transferee shall be substituted
fully for, and shall enjoy the same rights and be subject to the same
obligations as, its predecessor hereunder.
5. Governance.
5.1 General. From and after the execution of this Agreement, each
Stockholder shall vote its Shares, at any regular or special meeting of
stockholders of the Company (a "Stockholders Meeting") or in any written
consent executed in lieu of such a meeting of stockholders (a "Written
Consent"), and shall take all other actions necessary, to give effect to the
agreements contained in this Agreement and to ensure that the Charter Documents
do not, at any time hereafter, conflict in any respect with the provisions of
this Agreement. In addition, each Stockholder shall vote its Shares at any
Stockholders Meeting or act by Written Consent with respect to such Shares upon
any matter submitted for action by the Company's stockholders or with respect
to which such Stockholder may vote or act by Written Consent, in conformity
with the specific terms and provisions of this Agreement and the Charter
Documents. For the purposes of this Section 5, Stockholders are agreeing to
vote their Shares for certain matters only to the extent that such Shares have
the power to vote for such matters.
5.2 Stockholders Actions. In order to effectuate the provisions
of this Section 5, each Stockholder hereby agrees that when any action or vote
is required to be taken by such Stockholder pursuant to this Agreement, such
Stockholder shall use its best efforts to call, or cause the appropriate
officer and directors of the Company to call, a Stockholders Meeting or to
execute or cause to be executed a Written Consent pursuant to Section 228(a) of
the GCL to effectuate such stockholder action. Further, each Stockholder shall
use its best efforts to cause the Board of Directors to adopt, either at a
meeting of the Board of Directors or by unanimous written consent of the Board
of Directors pursuant to Section 141(f) of the GCL, all the resolutions
necessary to effectuate the provisions of this Agreement. Each Stockholder
shall use its best efforts to cause the Board of Directors to cause the
Secretary of the Company, or if there be no
14
secretary, such other officer of the Company as the Board of Directors may
appoint to fulfill the duties of Secretary, to not record any vote or consent
contrary to the terms of this Section 5.
5.3 Election of Directors. Each Stockholder shall vote its Shares
(to the extent such Shares have voting power) at any Stockholders Meeting, or
act by Written Consent with respect to such Shares, and take all other actions
necessary to ensure that the number of directors constituting the entire Board
of Directors shall be six (6). Each Stockholder shall vote its Shares at any
Stockholders Meeting called for the purpose of filling the positions on the
Board of Directors, or in any Written Consent executed for such purpose, and
each Stockholder and the Company shall take all other actions necessary to
ensure the election to the Board of Directors of the following individuals:
(a) one individual who shall be designated by the Series
A Holders;
(b) one individual who shall be designated by the Series
C Holders;
(c) one individual who shall be designated by the Series
D Holders;
(d) two individuals who shall be designated by the
Series E Holders, one of whom shall be designated by MPM Capital; and
(e) one individual who shall be designated by all
Stockholders; provided, however, that such individual must be serving as an
officer of the Company and that such individual shall be R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for
as long as he remains an officer of the Company.
5.4 Removal and Replacement. At any time and for any or no
reason, the holders of a majority of the outstanding shares of a series of
Preferred Stock entitled to designate a director pursuant to Section 5.3 hereof
shall be entitled to designate for removal the director designated by the
holders of such series pursuant to Section 5.3. If at any time a vacancy is
created on the Board of Directors by reason of the death, removal, or
resignation of a director, as soon as practicable after the date such vacancy
first occurs and in any event prior to the transaction of any other business by
the Stockholders or the Board of Directors, the Stockholders that designated
such director pursuant to Section 5.3 hereof shall designate a nominee to be
elected to fill such vacancy until the next annual meeting of stockholders of
the Company and each Stockholder shall take action, including the voting of its
Shares, to so elect such nominee.
5.5 Agreements and Transactions with AAI: Compensation Committee.
The Company's Board of Directors shall maintain a compensation committee, which
shall have full authority to determine compensation (including stock options,
but not the Key Employee Warrants which may be granted by the president of the
Company pursuant to delegated authority, with no one Person receiving Key
Employee Warrants for more than
15
11,000 Shares), to be paid to Company employees and members of the Company's
management who are employees, officers, directors, or Affiliates of AAI.
6. Issuance of Additional Shares. The Company represents and warrants to
the Securityholders that, as of the date hereof, the only outstanding shares of
capital stock of the Company and the only outstanding securities exercisable or
convertible into shares of capital stock of the Company are the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Warrants, Key Employee Warrants to purchase up to 4,900 shares of Common Stock,
Stock Options to purchase up to 250,317 shares of Common Stock, and the Sutro
Warrant as set forth on Schedule 1 attached hereto.
6.1 Preemptive Rights. The Company shall not issue any Shares,
other than (i) shares of Common Stock issued or issuable upon the conversion of
shares of Preferred Stock (including shares of Preferred Stock issued pursuant
to the Stock Split) or the exercise of the Stock Options, the Sutro Warrant,
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants, or the Key Employee Warrants, (ii) Key Employee
Warrants in the aggregate amounts and to the Persons set forth in Section 6.2
hereof, (iii) the Sutro Warrant, (iv) options and shares of Common Stock
pursuant to stock option plans approved by the Board of Directors, (v) shares
of Series D Preferred Stock pursuant to Section 2.4 of the Series D Purchase
Agreement, (vi) shares of Series E Preferred Stock pursuant to the Series E
Purchase Agreement, including pursuant to Section 2.5 of the Series E Purchase
Agreement, (vii) shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, and Series D Preferred Stock pursuant to the Stock
Split, or (viii) Shares issued in an Initial Public Offering, without first
offering such Shares to the Rightholders in the manner set forth in Section 3.1
(excluding Sections 3.1.3(b) and (c)) as though the Company was a "Selling
Securityholder," provided that the Company may propose an issuance without
having identified a "Third Party Offeror" and the terms of the "Third Party
Offer" may be the terms of an offering as proposed by the Company. Each of the
parties hereto waives all rights under Section 6.1 of the 1995 Securityholders
Agreement (to the extent it was a party to such agreement) with respect to the
issuance of (i) the Sutro Warrant pursuant to the Series E Purchase Agreement;
(ii) shares of Common Stock upon exercise of the Sutro Warrant; (iii) shares of
Series E Preferred Stock pursuant to the Series E Purchase Agreement; (iv)
shares of Common Stock upon conversion of the Series E Preferred Stock issued
pursuant to the Series E Purchase Agreement; (v) shares of Series E Preferred
Stock and Common Stock issuable pursuant to Section 2.5 of the Series E
Purchase Agreement; (vi) shares of Common Stock issuable upon conversion of
shares of Series E Preferred Stock issued pursuant to Section 2.5 of the Series
E Purchase Agreement; (vii) shares of Series D Preferred Stock and Common Stock
issuable pursuant to Section 2.4 of the Series D Purchase Agreement; (viii)
shares of Common Stock issuable upon conversion of shares of Series D Preferred
Stock issued pursuant to Section 2.4 of the Series D Purchase Agreement; (ix)
options and shares of Common Stock pursuant to stock option plans approved by
the Board of Directors; (x) shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock,
16
and Series D Preferred Stock pursuant to the Stock Split; and (xi) shares of
Common Stock upon conversion of the Preferred Stock issued pursuant to the
Stock Split.
6.2 Issuance of Certain Warrants. The Company may issue to any
Person who is an employee, officer, or director of the Company or AAI warrants
for the purchase of up to 50,100 shares of Common Stock at an exercise price of
no less than $5.00 per share, provided that immediately prior to the receipt of
any such warrant the recipient thereof agrees to be bound by the terms and
conditions of this Agreement (such warrants, together with similar outstanding
warrants to purchase up to 4,900 shares of Common Stock, the "Key Employee
Warrants"). The Company shall not issue Key Employee Warrants for the purchase
of more than 55,000 shares of Common Stock, in the aggregate. Key Employee
Warrants issued after the date hereof must terminate, if not exercised, no
later than April 25, 2004.
6.3 Additional Shares for Purchase Price Adjustments. In the
event the Company is required to issue additional shares of Series D Preferred
Stock or Common Stock pursuant to Section 2.4 of the Series D Purchase
Agreement or additional shares of Series E Preferred Stock or Common Stock
pursuant to the Series E Purchase Agreement, the Company and each Stockholder
shall take all actions necessary to amend the Restated Certificate to increase
the number of authorized shares of the Company to the extent necessary to issue
such additional shares and reserve a sufficient number of shares of Common
Stock for issuance upon conversion of shares of Preferred Stock so issued,
including, without limitation, (i) causing the Board of Directors to adopt,
either at a meeting of the Board of Directors or by unanimous written consent
of the Board of Directors pursuant to Section 141(f) of the GCL, all the
resolutions necessary to effectuate the issuance of such additional shares and
reservation of such Common Stock, and (ii) calling, or causing the appropriate
officer and directors of the Company to call, a Stockholders Meeting or to
execute or cause to be executed a Written Consent pursuant to Section 228(a) of
the GCL to effectuate the stockholder actions required in connection with the
issuance of such additional shares and reservation of such Common Stock.
7. Registration Rights. The Company grants to each of the Securityholders
who are or may become parties to this Agreement registration rights as set
forth in this Section 7 with respect to the Registrable Securities owned by
them prior to an Initial Public Offering.
7.1 Demand Registrations.
(a) Right to Demand Registrations. Subject to the conditions of
this Section 7.1, at any time or times after an Initial Public Offering, Series
E Holders who in the aggregate hold at least a majority of the Series E
Preferred Stock then outstanding or the holders (other than Series E Holders)
of eight percent (8%) or more of the Registrable Securities (other than Series
E Preferred Stock) then outstanding may request that the Company register (a
"Demand Registration"), under and in accordance with the provisions of the
Securities Act, all or any part of their Registrable Securities; provided,
17
however, that the holders of such Registrable Securities may not request any
Demand Registration and the Company shall not be obligated to effect, or to
take any action to effect, any such registration pursuant to this Section 7.1:
(i) after the Company has given the notice of a Piggyback Registration (as
hereinafter defined) referred to in Section 7.2(a) until the first to occur of
(A) 150 days (or, in the event the Company is permitted to use any applicable
short form, 90 days) after the date of such notice, (B) 90 days (or, in the
event the Company is permitted to use any applicable short form, 45 days) after
the date of such notice if the Company has not yet filed a registration
statement with respect to such Piggyback Registration, (C) the withdrawal of
any registration statement the Company has filed with respect to such Piggyback
Registration (or any public announcement by the Company that it no longer
intends to pursue such public offering), or (D) five Business Days after the
effectiveness of such Piggyback Registration; (ii) prior to 180 calendar days
after the effective date of the Initial Public Offering registration statement;
(iii) prior to 180 calendar days after the effective date of the immediately
preceding Demand Registration; (iv) if holders of Registrable Securities
propose to dispose of Registrable Securities that may be registered on Form S-3
pursuant to Section 7.3 hereof; (v) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service
in such jurisdiction and except as may be required under the Securities Act; or
(vi) if the Company shall furnish to holders of Registrable Securities
requesting a registration pursuant to this Section 7.1, a certificate signed by
the Company's Chief Executive Officer or Chairman of the Board of Directors
stating that in the good faith judgment of the Board of Directors, it would be
seriously detrimental to the Company and its stockholders for such registration
to be effected at such time, in which event the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request of the holders of Registrable Securities, provided that such
right to delay a request shall be exercised by the Company not more than once
in any twelve (12)-month period and provided further, that the Company shall
not register any other of its shares during such ninety (90) day period.
Subject to the conditions of this Section 7.1, the Series E Holders shall be
entitled to demand no more than two (2) Demand Registrations and the other
holders of Registrable Securities shall be entitled to demand no more than
three (3) Demand Registrations. Each request for a Demand Registration shall
specify the approximate number of such Registrable Securities requested to be
registered and the anticipated per share price range for such offering. Within
ten days after receipt of such requests by the holders of such Registrable
Securities, the Company will give written notice of such request to all other
holders of Registrable Securities and will (subject to the limitations set
forth below) include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion
therein within 30 days after the receipt of the Company's notice. Demand
Registrations will be on Form S-2 or S-3 or any similar short-form registration
statement whenever the Company is permitted to use any applicable short form.
After the Company has become subject to the reporting requirements of the
Exchange Act, the Company will use its commercially reasonable
18
best efforts to make Demand Registrations on Form S-2 or Form S-3, or any
similar short-form registration statement, available for the sale of
Registrable Securities.
(b) Priority on Demand Registrations. If in a Demand Registration
the managing underwriters (if any) advise the Company in writing that in their
opinion the number of Registrable Securities requested to be included in such
registration exceeds the number of Registrable Securities that can be sold in
an orderly manner in such offering within a price range acceptable to the
holders of a majority of the Registrable Securities requested to be included,
the Company will include in such registration in the following order and prior
to the inclusion of any securities which are not Registrable Securities:
(i) first, the number of Registrable Securities
requested to be included in such registration acquired or acquirable by the
holders thereof upon conversion of Series A Preferred Stock, Series B Preferred
Stock, Series D Preferred Stock or Series E Preferred Stock, pro rata among the
respective holders of such Registrable Securities on the basis of the number of
Registrable Securities requested to be included therein by such holders;
(ii) second, the number of Registrable Securities
requested to be included in such registration acquired by the holders thereof
upon conversion of Series C Preferred Stock, pro rata among the respective
holders of such Registrable Securities on the basis of the number of
Registrable Securities requested to be included therein by such holders; and
(iii) third, the number of Registrable Securities
requested to be included in such registration acquired by the holders thereof
upon the exercise of the Stock Options, the Sutro Warrant, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants, and the Key Employee Warrants and the number of
securities requested to be included in such registration by the Company for its
own account, pro rata among the respective holders of such Registrable
Securities and securities requested to be included therein by such holders and
the Company.
(c) Selection of Underwriters. In any underwritten Demand
Registration, the Company will have the right, subject to the provisions of the
Series D Purchase Agreement, to select the investment banker(s) and manager(s)
to administer the offering, subject to the approval of the holders of a
majority of the Registrable Securities included in any such Demand
Registration, which approval will not be unreasonably withheld.
(d) Other Registration Rights. Except as provided in this
Agreement, the Company will not grant to any Person the right to request the
Company to register any equity securities of the Company or any securities
convertible into or exercisable for equity securities of the Company, unless
such registration rights are subordinate to the registration rights granted
pursuant to this Agreement, without (i) the written consent of the holders of
sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities, (ii)
so long as it owns any Registrable Securities, the written consent of AAI,
SBVC, Noro-
19
▇▇▇▇▇▇▇ Partners II, L.P. and Wakefield Group Limited Partnership, (iii) so
long as any of the Goldman Entities owns any Registrable Securities, the
written consent of GS Capital Partners, and (iv) so long as any of the MPM
Entities owns any Registrable Securities, the written consent of MPM Capital.
7.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to
register any of its securities under the Securities Act in any primary,
secondary, or combined offering (other than a Demand Registration, a
registration pursuant to Section 7.3 hereof, a registration relating solely to
employee benefit plans, or a registration relating to a corporate
reorganization or other transaction on Form S-4), including the Company's
Initial Public Offering, and the registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), the
Company will give prompt written notice to all holders of Registrable
Securities of its intention to effect such a registration and will (subject to
the priorities established below) include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within fifteen (15) Business Days after the receipt of the
Company's notice.
(b) Piggyback Expenses. The Company's Registration
Expenses will be paid by the Company in all Piggyback Registrations.
(c) Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten registration, and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities requested to be included in such registration exceeds the number of
Registrable Securities which can be sold in an orderly manner in such offering
after the Company has been able to sell the number of securities it proposes to
sell within a price range acceptable to the Company (for purposes of this
Section 7.2(c) the "Available Amount"), the Company will include in such
registration the number of securities the Company proposes to sell and then in
the following order and prior to the inclusion of any securities which are not
Registrable Securities:
(i) if the registration is the Company's
Initial Public Offering:
(A) first, the number of Registrable
Securities requested to be included in such registration acquired or acquirable
by the holders thereof upon conversion of Series A Preferred Stock, Series B
Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock, pro
rata among the respective holders of such Registrable Securities on the basis
of the number of Registrable Securities requested to be included therein by
such holders; provided, however, the number of Registrable Securities
determined pursuant to this clause (A) shall be reduced share for share to the
extent Registrable Securities covered in clause (B) below are requested to be
included in such registration and the number of Registrable Securities
determined pursuant to this clause (A) would otherwise exceed sixty percent
(60%) of the Available Amount;
20
(B) second, the number of Registrable
Securities requested to be included in such registration acquired by the
holders thereof upon conversion of Series C Preferred Stock, pro rata among the
respective holders of such Registrable Securities on the basis of the number of
Registrable Securities requested to be included therein by such holders; and
(C) third, the number of Registrable
Securities requested to be included in such registration acquired by the
holders thereof upon the exercise of the Stock Options, the Sutro Warrant, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrants, and the Key Employee Warrants, pro rata among the
respective holders of such Registrable Securities requested to be included
therein by such holders.
(ii) in all other Piggyback Registrations, in
the order set forth in Section 7.1(b).
(d) Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the Company will have the right,
subject to the provisions of the Series D Purchase Agreement, to select the
investment banker(s) and manager(s) to administer the offering.
(e) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 7.2 prior to the effectiveness of such registration whether or not
any holder of Registrable Securities has elected to include securities in such
registration. The expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 7.5 hereof.
(f) If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Section 7.1,
Section 7.2 or Section 7.3, and if such previous registration has not been
withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its Registrable Securities or securities
convertible or exchangeable into or exercisable for its Registrable Securities
under the Securities Act (except on Form S-8 or Form S-4 or any successor
forms), whether on its own behalf or at the request of any holder or holders of
such Registrable Securities, until a period of at least ninety (90) days has
elapsed from the effective date of such previous registration.
7.3 Registration on Form S-3.
(a) After the Company has qualified for registration on
Form S-3, in addition to the rights contained in the foregoing provisions of
this Section 7, the Series E Holders shall have the right to request
registrations on Form S-3 (such requests shall be in writing and shall state
the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such holders) (a "Form S-3
Registration"); provided, however, that the Company shall not be obligated to
effect any such registration: (i) if the holders of Registrable Securities
requesting registration under
21
this Section 7.3(a), together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) on Form S-3 at an aggregate price
to the public of less than $5,000,000; (ii) in the circumstances described in
Section 7.1(a)(i); (iii) if the Company shall furnish the certification
described in Section 7.1(a)(vii) (but subject to the limitations set forth
therein); (iv) if the Company has, within the twelve (12)-month period
preceding the date of such request, already effected one (1) Form S-3
Registration; or (v) if it is to be effected more than five (5) years after the
Company's Initial Public Offering.
(b) If a request complying with the requirements of
Section 7.3(a) hereof is delivered to the Company, the Company will give prompt
written notice to all holders of Registrable Securities of its intention to
effect a registration on Form S-3 and will include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 30 days after the receipt of the
Company's notice, subject to the provisions of Sections 7.1(a)(vii), 7.1(b),
and 7.1(c) hereof in the same manner as if the Form S-3 Registration were a
Demand Registration.
7.4 Holdback Agreement.
(a) Each holder of Registrable Securities agrees not to
effect any public sale or distribution (including sales pursuant to Rule 144)
of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days
prior to and the 180-day period beginning on the effective date of any
underwritten Demand Registration, underwritten Piggyback Registration, or
underwritten Form S-3 Registration in which Registrable Securities are included
(except as part of such underwritten registration or as bona fide gifts),
unless the underwriters managing the registered public offering otherwise
agree.
(b) The Company agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days
prior to and during the 180-day period beginning on the effective date of any
underwritten Demand Registration, underwritten Piggyback Registration, or
underwritten Form S-3 Registration (except (i) as part of such underwritten
registration, (ii) as offerings pursuant to registrations on Form S-8 or any
successor form, or (iii) upon the exercise or conversion of any Common Stock
Equivalents then outstanding), unless the underwriters managing the registered
public offering otherwise agree.
7.5 Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered
pursuant to this Agreement, the Company will use its commercially reasonable
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
22
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its commercially reasonable best efforts to cause such registration
statement to become effective (provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to one counsel selected by the holders of a majority
of the Registrable Securities covered by such registration statement copies of
all such documents proposed to be filed, which documents will be subject to the
timely review of such counsel); provided, however, that each seller of
Registrable Securities shall reimburse the Company the pro rata portion of the
registration fees paid by the Company to the Securities and Exchange
Commission;
(b) prepare and file with the Securities and Exchange
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 for a period of not less than six months or
until such time as all of the securities covered by such registration statement
have been sold and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as each such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by each such seller;
(d) use its commercially reasonable best efforts to
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as any seller reasonably requests and do
any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller (provided,
however, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 7.5(d), (ii) subject itself to taxation in any
such jurisdiction, (iii) consent to general service of process in any such
jurisdiction, or (iv) register the Registrable Securities or seek an exemption
from registration under the securities laws of any state that requires, as a
condition to registration or such exemption, that the Company indefinitely file
in such jurisdiction substantially all reports required to be filed by the
Company with the Securities and Exchange Commission);
(e) notify each seller of such Registrable Securities,
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of which
the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to
23
make the statements therein not misleading, and, at the request of any such
seller, the Company will promptly prepare (and, when completed, give notice to
each seller of Registrable Securities) a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading; provided, however, that upon such notification by the
Company, each seller of such Registrable Securities will not sell such
Registrable Securities until the Company has notified such seller that it has
prepared a supplement or amendment to such prospectus;
(f) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company
are then listed and, if not so listed, to be listed on the NASD automated
quotation system; provided, however, that each seller of Registrable Securities
shall reimburse the Company the pro rata portion of any listing fees so paid by
the Company;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection on a confidential
basis by any seller of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors, employees, attorneys
and independent accountants to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection with
such registration statement;
(j) otherwise use its commercially reasonable best
efforts to comply with all applicable rules and regulations of the Securities
and Exchange Commission, and make available to its securityholders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months beginning with the first day of the Company's first full fiscal
quarter after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
(k) permit any holder of Registrable Securities that, in
such holder's sole and exclusive judgment, might be deemed to be an underwriter
or a controlling person of the Company within the meaning of Section 15 of the
Securities Act, to participate in the
24
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which in
the reasonable judgment of such holder and its counsel should be included,
provided that such material shall not contain any untrue statement of material
fact or omit any statement of material fact required to be stated therein or
necessary to make the statements therein not misleading and shall otherwise be
furnished under such circumstances as shall cause it to be subject to the
indemnification provisions provided pursuant to Section 7.7(b) hereof;
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement for
sale in any jurisdiction, the Company will use its commercially reasonable best
efforts promptly to obtain the withdrawal of such order; and
(m) furnish to the holders of Registrable Securities to
be registered at the time of the disposition of such Registrable Securities an
opinion of counsel for the Company, in form and substance satisfactory to such
holders of such Registrable Securities to the effect that (i) the Company is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation with full corporate power and authority to
own and hold its properties, including such properties as it holds under lease,
and to conduct its business as described in the registration statement, and is
qualified to conduct business and is in good standing in each jurisdiction
where the conduct of its business requires such qualification and in which the
failure to be so qualified could have a material adverse effect on the Company;
(ii) such Registrable Securities have been validly issued and are fully paid
and nonassessable; (iii) a registration statement covering such Registrable
Securities has been filed with the Securities and Exchange Commission under the
Securities Act and has been made effective by order of such Commission; (iv)
such registration statement and the prospectus contained therein appear on
their face to be appropriately responsive in all material respects to the
requirements of the Securities Act, and nothing has come to such counsel's
attention that would cause it to believe that either such registration
statement or such prospectus contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; (v) such Registrable Securities conform in all
material respects to the description thereof contained in such registration
statement; (vii) to the best of such counsel's knowledge, no stop order has
been issued by the Securities and Exchange Commission suspending the
effectiveness of such registration statement.
7.6 Registration Expenses.
(a) Other than registration and listing fees applicable
to shares of Registrable Securities included in a registration pursuant to this
Section 7 held by
25
Stockholders other than Series E Holders which shall be paid pro rata by the
holders of such Registrable Securities, all expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
the registration and listing fees applicable to shares of Registrable
Securities held by Series E Holders and all other fees and expenses of
compliance with securities or blue sky laws (other than registration fees),
printing expenses, messenger and delivery expenses, reasonable fees and
disbursements of one counsel for the selling holders of Registrable Securities,
fees and disbursements of counsel for the Company and the Company's independent
certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses") will be borne by the Company, except as
otherwise provided in this Agreement, except that the Company will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any liability insurance for the Company and its Board
of Directors and the expenses (other than the registration and listing fees
applicable to shares of Registrable Securities held by Stockholders other than
Series E Holders) for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) To the extent Registration Expenses are not required
to be paid by the Company, each holder of securities other than Series E
Holders included in any registration hereunder will pay those Registration
Expenses allocable to the registration of such holder's securities so included,
and any Registration Expenses not so allocable will be borne by all sellers of
securities included in such registration other than Series E Holders in
proportion to the aggregate selling price of the securities to be so
registered. Such expenses would include, without limitation, underwriters'
discounts and commissions, registration fees payable to the Securities and
Exchange Commission or any state or foreign securities regulatory authority,
and listing fees payable to a securities exchange or the NASD automated
quotation system.
7.7 Indemnification.
(a) The Company agrees to indemnify, to the extent
permitted by law, each holder of Registrable Securities, its officers,
directors, employees and agents and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses (including legal fees and expenses) caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are (i) caused by or contained in
any information or material furnished in writing to the Company by such holder
expressly for use therein, (ii) caused by such holder's failure to deliver a
copy of the registration statement or prospectus or any
26
amendments or supplements thereto after the Company has furnished such holder
with a sufficient number of copies of the same, or (iii) caused by such
holder's sale of Registrable Securities in violation of the proviso to Section
7.5(e) hereof. In connection with any underwritten offering, the Company will
indemnify such underwriters, their officers, directors, employees and agents
and each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in
which a holder of Registrable Securities is participating, each such holder
will furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder expressly for use therein;
provided, however, that the obligation to indemnify will be individual to each
holder and will be limited to the net amount of proceeds received by such
holder from the sale of Registrable Securities pursuant to such registration
statement.
(c) Any Person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and will survive the transfer of
securities. The Company also agrees to make such
27
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification is
unavailable for any reason.
7.8 Participation in Underwritten Registrations. No person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements and which are
customary in such transactions, and (c) to the extent such Person participates
in the preparation of a registration statement or prospectus or otherwise
provides the Company with information or material for use in connection with
any such registration statement or prospectus, such information and material
shall not contain any untrue statement of material fact or omit any statement
of material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that no holder of
Registrable Securities included in any underwritten registration shall be
required to make any representations or warranties to the Company or the
underwriters other than representations and warranties regarding such holder
and such holder's intended method of distribution.
7.9 No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement.
7.10 Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially
and adversely affect the marketability of such Registrable Securities in any
such registration (including, without limitation, effecting a stock split or a
combination of shares). The Company agrees that it will take all reasonable
steps necessary to effect a subdivision of Shares if in the reasonable judgment
of (a) the holder of Registrable Securities that requests a Demand Registration
and (b) the managing underwriter for the offering in respect of such Demand
Registration, such subdivision would enhance the marketability of the
Registrable Securities. Each Stockholder agrees to vote its Shares at any
Stockholders meeting, or act by Written Consent with respect to such Shares,
and to take all actions necessary to permit the Company to carry out the intent
of the preceding sentence including, without limitation, voting in favor of an
amendment to the Restated Certificate in order to increase the number of
authorized shares of capital stock of the Company.
7.11 Availability of Rule 144. From and after an Initial Public
Offering, the Company shall take all action necessary to satisfy the "current
public information"
28
requirement of Rule 144(c) of the Securities and Exchange Commission adopted
under the Securities Act, or any successor regulation.
7.12 "Market Stand-Off" Agreement. Each holder of Registrable
Securities hereby agrees that it will not, without the prior written consent of
the Company and the managing underwriter, during the period commencing on the
date of the final prospectus relating to the Company's Initial Public Offering
and ending on the date specified by the Company and the managing underwriter
(such period not to exceed one hundred eighty (180) days) (i) lend, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (whether such shares or any such securities are
then owned by such holder or are thereafter acquired), or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
provisions of this Section 7.12 shall apply only to the Company's Initial
Public Offering, shall not apply to the sale of any shares to an underwriter
pursuant to an underwriting agreement, and shall only be applicable to the
holders of Registrable Securities if all officers and directors and greater
than five percent (5%) stockholders of the Company enter into similar
agreements. The underwriters in connection with the Company's Initial Public
Offering are intended third party beneficiaries of this Section 7.12 and shall
have the right, power and authority to enforce the provisions hereof as though
they were a party hereto. Notwithstanding the foregoing, nothing in this
Section 7.12 shall prevent the undersigned from making a transfer of any Common
Stock that was listed on a national stock exchange or traded on Nasdaq at the
time it was acquired by the holder or was acquired by the undersigned pursuant
to Rule 144A of the Securities Act, including any shares acquired in the
Company's Initial Public Offering. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such
period.
8. Stock Certificate Legend. A copy of this Agreement shall be filed with
the Secretary of the Company and kept with the records of the Company. Each
certificate representing Shares now held or hereafter acquired by any
Securityholder shall, for as long as this Agreement is effective, bear legends
substantially in the following forms and any additional legends as may be
required by applicable federal or state securities laws:
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR
OTHER DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED BY
29
THE TERMS OF THE SECURITYHOLDERS AGREEMENT AMONG THE COMPANY
AND THE SECURITYHOLDERS NAMED THEREIN, A COPY OF WHICH MAY
BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY
WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE
BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN
MADE IN COMPLIANCE WITH THE TERMS OF THE SECURITYHOLDERS
AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
9. Specific Performance. The parties hereto intend that each of the
parties have the right to seek damages or specific performance in the event
that any other party hereto fails to perform such party's obligations
hereunder. The parties hereto further agree that any remedy at law may be
inadequate to compensate for a breach of this Agreement or any provision
herein. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
10. Covenants.
10.1 Financial Information. During the term of this Agreement, the
Company shall furnish to each of the Stockholders by delivery in the manner
specified in Section 11.1:
(a) as soon as practicable and in any event within
forty-five (45) days after the close of each calendar quarter, beginning with
the current calendar quarter, a balance sheet of the Company as of the close of
each such calendar quarter, and statements of operations and cash flows for the
calendar quarter then ended and that portion of the fiscal year then ended, all
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding calendar quarter or containing
disclosure of the effect on the financial position or results of operations of
any change in the application of accounting principles and practices during the
calendar quarter, and certified by the Company's chief executive officer and
chief financial officer to be true and accurate;
30
(b) as soon as practicable, and in any event within
ninety (90) days, after the close of the fiscal year of the Company, beginning
with the close of the current fiscal year, an audited balance sheet of the
Company as of the close of such fiscal year and audited financial statements of
operations, shareholders equity, and cash flows for the fiscal year then ended,
including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding fiscal year,
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding year or containing disclosure of
the effect on the financial position or results of operation of any change in
the application of accounting principles and practices during the year, and
accompanied by a report thereon by a public accounting firm of national
reputation containing an opinion that is not qualified with respect to scope
limitations imposed by the Company or with respect to accounting principles
followed by the Company not in accordance with generally accepted accounting
principles;
(c) from time to time upon completion thereof, and in
any event within thirty (30) days after the close of each fiscal year,
beginning with the current fiscal year, an annual budget for the operations of
the Company for the following fiscal year; and
(d) from time to time such other financial and other
information as a Stockholder may reasonably request.
10.2 Confidentiality. The parties acknowledge that the success of
the Company's business activities depends upon maintaining confidential all
information regarding the products developed by the Company, products being
examined for development by the Company, the status of any development efforts,
and similar information. Accordingly, each of the parties hereto agrees that
any information regarding the operations or prospective operations of the
Company will be kept strictly confidential and will not be disclosed in any
manner whatsoever, except that (a) such information may be disclosed (i) to the
extent required by law (in which case such party shall provide the Company
notice of such intended disclosure as far in advance of such disclosure as is
possible) and (ii) to representatives, attorneys and accountants of such party
to the extent such Persons need to know such information and upon appropriate
arrangements obligating such Persons to keep such information confidential and
(b) each of the Goldman Entities may provide to its investors (x) summary
nonfinancial information relating to the Company's condition, progress (e.g.
business growth) and prospects, provided, however, such information shall not
include non-public information regarding the products developed by the Company,
products being examined for development by the Company, or the status of any of
the Company's development efforts without the Company's consent, and (y) and
financial information relating to the Company's revenues and earnings. The
obligation of confidentiality set forth in this Section 10.9 shall not apply to
information that (i) now or hereafter comes into the public domain without
breach of this Agreement, (ii) is demonstrated by the party to be previously
known to or developed by it prior to the disclosure of said confidential
31
information, or (iii) is demonstrated by the party to have been received from a
third party without similar restrictions and without breach of this Agreement.
10.3 Product Liability Insurance. The Company will use its
commercially reasonable best efforts to obtain, prior to any approval by the
Food and Drug Administration of any product owned by the Company for marketing
of such product in the United States, product liability insurance in amounts
and with terms customary in the pharmaceutical industry, which insurance may be
provided by any Person then a party to any contract or arrangement with the
Company by naming the Company as an additional insured on a policy providing
such coverage.
10.4 Redemption Rights. The Company shall not grant redemption
rights (other than the redemption rights pursuant to Section 4.3(f) of the
Restated Certificate) to any Stockholders (other than Series E Holders) prior
to the date on which Series E Holders may redeem their Series E Preferred Stock
pursuant to Section 4.3(c)(v) of the Restated Certificate.
11. Miscellaneous.
11.1 Notices. All notices or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally, telecopied
or sent by certified, registered or express mail or, if mailed, five days after
the date of deposit in the United States mail, as follows:
To the Company:
Endeavor Pharmaceuticals Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To a Securityholder:
at the address set forth for such Person on Schedule 1.
Any party may by notice given in accordance with this Section 11.1 designate
another address or person for receipt of notices hereunder.
11.2 Amendment and Waiver.
(a) No failure or delay on the part of any party hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy. The remedies
32
provided for herein are cumulative and are not exclusive of any remedies that
may be available to the parties hereto at law, in equity, or otherwise.
(b) Any amendment, supplement, or modification of or to
any provision of this Agreement, any waiver of any provision of this Agreement,
and any consent to any departure by any party from the terms of any provision
of this Agreement, shall be effective (i) only if it is made or given in
writing and signed by (A) the holders of at least sixty-six and two-thirds
percent (66 2/3%) of the Shares, and (B), so long as it owns any Shares, each of
AAI, SBVC, the Goldman Entities, Noro-▇▇▇▇▇▇▇ Partners II, L.P., the MPM
Entities and Wakefield Group Limited Partnership, and (ii) only in the specific
instance and for the specific purpose for which made or given.
11.3 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
11.4 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
11.5 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties, or undertakings, other than those set forth or referred to herein
or therein. This Agreement, together with the exhibits and schedules hereto,
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
11.6 Term of Agreement. The provisions of this Agreement, other
than Sections 7, 8, 9, 10.2 and 11, shall automatically terminate upon the
earlier to occur of (a) a Qualified IPO and (b) the tenth (10th) anniversary of
the date of this Agreement; provided, however, that Section 2.4 hereof may
terminate earlier according to its terms.
11.7 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
11.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES) OF THE STATE
OF DELAWARE. Each of the parties hereto irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
Delaware and of any United States federal court sitting in Delaware, for any
action, proceeding or investigation in any court or before any governmental
33
authority ("Litigation") arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any Litigation
relating thereto except in such courts), and further agrees that service of any
process, summons, notice or document by U.S. registered mail to its respective
address set forth in this Agreement shall be effective service of process for
any Litigation brought against it in any such court. Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of Delaware or any United States federal
court sitting in Delaware and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
Litigation brought in any such court has been brought in an inconvenient forum.
11.9 Further Assurances. Each of the parties shall, and shall
cause their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
11.10 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except in compliance
with Section 4.
11.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
[Remainder of this page intentionally left blank]
34
IN WITNESS WHEREOF, each of the undersigned has executed, or has
caused to be executed, this Agreement as of the date first written above (or
the date set forth opposite such party's signature if such party is entering
into the Agreement upon a transfer pursuant to Section 4 hereof).
THE COMPANY
ENDEAVOR PHARMACEUTICALS INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
SECURITYHOLDERS
NORO-▇▇▇▇▇▇▇ PARTNERS II, L.P.
By: ▇▇▇▇▇▇▇ & Company, II
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Partner
WAKEFIELD GROUP LIMITED PARTNERSHIP
By: /s/
-------------------------------------
Name:
Title:
SCHERING BERLIN VENTURE
CORPORATION
By: /s/
-------------------------------------
Name:
Title:
Securityholders Agreement Signature Page
APPLIED ANALYTICAL INDUSTRIES, INC.
By: /s/
--------------------------------------
Name:
Title:
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
By: /s/
--------------------------------------
Name:
Title:
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually for purposes of
Sections 2, 3, 6.1 and 7 only
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually for purposes of
Sections 2, 3, 6.1 and 7 only
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, individually for purposes of
Sections 2, 3, 6.1 and 7 only
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ H. Utian
----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, individually for purposes of
Sections 2 and 7 only
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, PH.D.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.▇.
▇▇▇▇▇▇ FOUNDATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
MPM BIOVENTURES II, L.P.
By: MPM ASSET MANAGEMENT II, L.P.
its General Partner
By: MPM ASSET MANAGEMENT II LLC
its General Partner
By: /s/
-------------------------------------
Name:
Title:
MPM BIOVENTURES II-QP, L.P.
By: MPM ASSET MANAGEMENT II, L.P.
its General Partner
By: MPM ASSET MANAGEMENT II LLC
its General Partner
By: /s/
-------------------------------------
Name:
Title:
MPM BIOVENTURES GMBH & CO.
PARALLEL-BETEILIGUNGS KG
By: MPM ASSET MANAGEMENT II, L.P.
its General Partner
By: MPM ASSET MANAGEMENT II LLC
its General Partner
By: /s/
-------------------------------------
Name:
Title:
MPM ASSET MANAGEMENT INVESTORS
2000 B LLC
By: /s/
----------------------------------------
Name:
Title:
ALTA BIOPHARMA PARTNERS, L.P.
By: Alta BioPharma Management, LLC
By: /s/
----------------------------------------
Managing Director
ENDEAVOR PHARMACEUTICALS CHASE
PARTNERS (ALTA BIO), LLC
By: Alta/Chase BioPharma Management, LLC
By: /s/
----------------------------------------
Member
ALTA EMBARCADERO BIOPHARMA PARTNERS, LLC
By: /s/
----------------------------------------
Under Power of Attorney
SUTRO & CO. INCORPORATED
By: /s/
----------------------------------------
Name:
Title:
SUTRO INVESTMENT PARTNERS VI LLC
By: /s/
----------------------------------------
Name:
Title:
GOLDMAN ENTITIES
GS CAPITAL PARTNERS II, L.P.
By: GS ADVISORS, L.P.
its General Partner
By: /s/
-------------------------------
Name:
Title:
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors, II (Cayman), L.P.
its General Partner
By: GS Advisors II, Inc.
its General Partner
By: /s/
-------------------------------
Name:
Title:
▇▇▇▇▇▇▇, SACHS & CO.
VERWALTUNGS GmbH
By: /s/
----------------------------------------
Name:
Title:
STONE STREET FUND 1995, L.P.
By: Stone Street Value Corp.
its General Partner
By: /s/
-------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇.
By: Stone Street Value Corp.
its Managing General Partner
By: /s/
-------------------------------
Name:
Title:
Schedule 1
to
Securityholders Agreement
dated August 8, 2000
Name and Address of Number of
Securityholder Security Held Shares
-------------- ------------- ------
Wakefield Group Limited Series A Preferred Stock 244,398
Partnership Series E Preferred Stock 23,365
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Noro-▇▇▇▇▇▇▇ Series A Preferred Stock 244,398
Partners II, L.P. Series E Preferred Stock 23,365
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Series A Preferred Stock 4,073
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Series A Preferred Stock 3,258
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Series A Preferred Stock 4,073
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ Series A Preferred Stock 6,517
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Series A Preferred Stock 8,146
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Series A Preferred Stock 4,073
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ Kenan Series A Preferred Stock 4,073
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Garrison M. Kitchen Series A Preferred Stock 3,258
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Series A Preferred Stock 8,146
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Series A Preferred Stock 1,629
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Series A Preferred Stock 1,629
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Series A Preferred Stock 16,293
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Series A Preferred Stock 8,146
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series A Preferred Stock 8,146
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Series A Preferred Stock 8,146
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schering Berlin Series B Preferred Stock 162,932
Venture Corporation Series E Preferred Stock 15,576
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Applied Analytical Series C Preferred Stock 651,728
Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: __________________
GS Capital Partners II, L.P. Series D Preferred Stock 73,546
c/o Goldman, ▇▇▇▇▇ & Co. Series E Preferred Stock 153,615
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
GS Capital Partners II Series D Preferred Stock 29,237
Offshore, L.P. Series E Preferred Stock 61,068
/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. Series D Preferred Stock 2,712
Verwaltungs GmbH Series E Preferred Stock 5,666
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Street Fund 1995, L.P. Series D Preferred Stock 5,515
c/o Goldman, Sachs & Co. Series E Preferred Stock 11,519
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Bridge Street Fund 1995, L.P. Series D Preferred Stock 6,206
c/o Goldman, Sachs & Co. Series E Preferred Stock 12,963
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Foundation Series E Preferred Stock 28,038
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D. Series E Preferred Stock 34,269
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MPM BioVentures II, L.P. Series E Preferred Stock 66,103
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MPM BioVentures II-QP, L.P. Series E Preferred Stock 598,932
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MPM BioVentures GmbH & Co. Series E Preferred Stock 210,854
Parallel-Beteiligungs KG
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MPM Asset Management Investors Series E Preferred Stock 13,790
2000 B LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Alta BioPharma Partners, L.P. Series E Preferred Stock 207,379
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Endeavor Pharmaceuticals Chase Series E Preferred Stock 118,433
Partners (Alta Bio), LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Alta Embarcadero BioPharma, LLC Series E Preferred Stock 7,817
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sutro Investment Partners VI LLC Series E Preferred Stock 11,121
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Sutro & Co. Incorporated Sutro Warrant 61,721
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ exercisable for
Suite ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Options exercisable for Common Stock 119,337
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Options exercisable for Common Stock 59,688
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Options exercisable for Common Stock 59,688
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇ Options exercisable for Common Stock 11,144
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Warrant 13,500
Company, Inc. exercisable for Common Stock
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.- ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. Warrant exercisable for Common Stock 300
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ Warrant exercisable for Common Stock 300
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ Warrant exercisable for Common Stock 150
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. Warrant exercisable for Common Stock 500
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. Warrant exercisable for Common Stock 250
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D. Warrant exercisable for Common Stock 300
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Warrant exercisable for Common Stock 400
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ Warrant exercisable for Common Stock 500
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, Ph.D. Warrant exercisable for Common Stock 200
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. Warrant exercisable for Common Stock 500
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Warrant exercisable for Common Stock 200
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Warrant exercisable for Common Stock 300
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Warrant exercisable for Common Stock 500
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Warrant exercisable for Common Stock 500
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBITS
A Amended and Restated Certificate of Incorporation
B By-laws
C Agreement by among Endeavor Pharmaceuticals Inc. and Alta BioPharma
Partners, L.P. of even date herewith regarding Management Rights,
Investments in Certain Countries, Indemnification and Superfund
Requirements