RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
THIS RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is made as of
September 9, 1997, by and among ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ (the "Original
Shareholders"), CLONTECH LABORATORIES, INC., a California corporation (the
"Company"), SUMMIT VENTURES IV, L.P., a Delaware limited partnership, SUMMIT
INVESTORS III, L.P., a Delaware limited partnership, and SUMMIT SUBORDINATED
DEBT FUND II, L.P., a Delaware limited partnership (collectively, the
"Investors").
In consideration of the mutual covenants set forth herein, the parties
agree as follows:
1. DEFINITIONS.
(a) "STOCK" shall mean any and all shares of the Company's Common
Stock or other capital stock or equity securities of the Company now owned or
subsequently acquired by the Original Shareholders.
(b) "COMMON STOCK" shall mean the Company's outstanding Common Stock
and all shares of Common Stock issued or issuable upon exercise of the Company's
outstanding Warrants to purchase Common Stock, or upon exercise of options
issued under any stock option or other employee benefit plan of the Company.
2. RIGHT OF FIRST REFUSAL.
(a) If any Original Shareholder proposes to sell or transfer any
shares of Stock (the "Offered Stock") in one or more related transactions, then
such Original Shareholder shall promptly give written notice (the "Notice") to
the Company and each Investor at least 20 days prior to the closing of such sale
or transfer. The Notice shall describe in reasonable detail the proposed sale
or transfer including, without limitation, the number of shares of Stock to be
sold or transferred, the nature of such sale or transfer, the consideration to
be paid, and the name and address of each prospective purchaser or transferee.
In the event that the sale or transfer is being made pursuant to the provisions
of paragraph 4(a) or 4(b) hereof, the Notice shall state under which paragraph
the sale or transfer is being made.
(b) Each Investor will have the right, exercisable upon written
notice to such Original Shareholder within 20 days after receipt of the Notice,
to purchase up to such Investor's Pro Rata Portion of the Offered Stock on the
same terms and conditions (the "Right of First Refusal"). Any such notice of an
Investor's election to purchase Offered Stock shall set forth the number of
shares that the Investor desires to purchase. For purposes hereof, "Pro Rata
Portion" means, as to any Investor, a fraction, the numerator of which is the
number of shares of Common Stock owned by such Investor at the time of the sale
or transfer and the denominator of which is the total number of shares of Common
Stock owned by all of the Investors at the time of the sale or transfer.
(c) If any Investor fails to elect to purchase its full Pro Rata
Portion of the Offered Stock pursuant to this Section 2, the Original
Shareholder shall give notice of such failure to the Investors who did so elect
(the "ROFR Participants"). Such notice may be made by
1.
telephone if confirmed in writing within two days. The ROFR Participants
shall have five days from the date such notice was given to elect to purchase
their pro rata share of the unpurchased portion. For purposes of this
paragraph, an ROFR Participant's pro rata share shall be equal to the product
obtained by multiplying (i) the number of shares in the unpurchased portion
by (ii) a fraction, the numerator of which is the number of shares of Common
Stock held by such ROFR Participant and the denominator of which is the total
number of shares of Common Stock held by all of the ROFR Participants. Any
shares which the Investors elect not to purchase pursuant to the Right of
First Refusal shall be subject to the Co-Sale Right provided in Section 3.
(d) The purchase price for the Offered Stock to be purchased by an
Investor pursuant to its Right of First Refusal will be the consideration per
share set forth in the Notice, payable as provided below in this paragraph. If
such consideration includes consideration other than cash, the cash equivalent
value of the non-cash consideration will be determined by the Board of Directors
of the Company in its reasonable good faith judgment, which determination will
be binding upon the Company and the Investor.
(e) The closing of the purchase and sale of the Offered Stock shall
occur within ten (10) days after the last ROFR Participant delivers its written
notice of election to purchase the Offered Stock. At such closing, (i) the
Original Shareholder will deliver to each ROFR Participant all certificates
evidencing the Offered Stock purchased by such ROFR Participant, accompanied by
stock powers duly endorsed in blank or as instructed by the ROFR Participant,
against (ii) payment by the ROFR Participant of the purchase price for such
Offered Stock. Payment of the purchase price will be made, at the option of the
ROFR Participant, (i) in cash (by check); (ii) by cancellation of all or a
portion of any outstanding indebtedness of the Original Shareholder to the ROFR
Participant, or (iii) by any combination of the foregoing. Upon payment for the
Offered Stock purchased by the ROFR Participant pursuant to its Right of First
Refusal hereunder, the Original Shareholder will have no further rights as a
holder of such Offered Stock.
(f) If the Investors do not elect pursuant to the Right of First
Refusal (including under paragraph (c) above) to purchase all of the Offered
Stock, then the Original Shareholder may sell or transfer the remaining Offered
Stock (if any) permitted to be sold by the Original Shareholder to any person
named as a proposed transferee in the Notice, for the consideration set forth in
the Notice (or for greater consideration that includes at least the same amount
of cash consideration as that set forth in the Notice), provided that such sale
or transfer (i) is consummated within thirty (30) days after the date of the
Notice and (ii) is in accordance with the terms and conditions of this
Agreement. If the Offered Stock is not so transferred during such thirty (30)
day period, then the Original Shareholder will not transfer any of such Offered
Stock without complying again in full with the provisions of this Agreement.
(g) The exercise or non-exercise of the rights of the Investors
hereunder to purchase any Offered Stock pursuant to their Right of First Refusal
shall not adversely affect their right to purchase any other Stock subject to
Section 2 of this Agreement.
2.
3. CO-SALE RIGHTS.
(a) In addition to their Right of First Refusal, the Investors shall
have the right, exercisable upon written notice to any Original Shareholder who
delivers a notice within 20 days after receipt of the Notice, to participate in
the sale of Offered Stock (not purchased pursuant to the Right of First Refusal)
on the same terms and conditions as set forth in the relevant Notice (the
"Co-Sale Right"). To the extent that the Investors exercise such right of
participation in accordance with the terms and conditions set forth below, the
number of shares of Offered Stock that the Original Shareholder may sell in the
transaction shall be correspondingly reduced.
(b) Each Investor may sell all or any part of that number of shares
of Offered Stock equal to the product obtained by multiplying (i) the aggregate
number of shares of Offered Stock covered by the Notice by (ii) a fraction the
numerator of which is the number of shares of Common Stock owned by the
individual Investor at the time of the sale or transfer and the denominator of
which is the total number of shares of Common Stock owned by the Original
Shareholder and the Investors at the time of the sale or transfer.
(c) If any Investor fails to elect to fully participate in such
Original Shareholder's sale pursuant to this Section 3, the Original Shareholder
shall give notice of such failure to the Investors who did so elect (the Co-Sale
Participants"). Such notice may be made by telephone if confirmed in writing
within two days. The Co-Sale Participants shall have five days from the date
such notice was given to agree to sell their pro rata share of the unsold
portion. For purposes of this paragraph, a Co-Sale Participant's pro rata share
shall be equal to the product obtained by multiplying (i) the number of shares
in the unsold portion by (ii) a fraction, the numerator of which is the number
of shares of Common Stock held by such Co-Sale Participant and the denominator
of which is the total number of shares of Common Stock held by all of the
Co-Sale Participants and the Original Shareholder.
(d) Each Co-Sale Participant shall effect its participation by
promptly delivering to the Original Shareholder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent the type and number of shares of Common Stock which the Co-Sale
Participant elects to sell.
(e) The stock certificate or certificates that the Co-Sale
Participant delivers to the Original Shareholder pursuant to paragraph 3(d)
shall be transferred to the prospective purchaser in consummation of the sale of
the Offered Stock pursuant to the terms and conditions specified in the Notice,
and the Original Shareholder shall concurrently therewith remit to such Co-Sale
Participant that portion of the sale proceeds to which the Co-Sale Participant
is entitled by reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or otherwise
refuses to purchase shares or other securities from any Investor exercising its
Co-Sale Right, the Original Shareholder shall not sell to such prospective
purchaser or purchasers any Offered Stock unless and until, simultaneously with
such sale, the Original Shareholder shall purchase such shares or other
securities from such Investor.
3.
(f) The exercise or non-exercise of the rights of the Investors
hereunder to participate in one or more sales of Offered Stock made by the
Original Shareholder shall not adversely affect their rights to participate in
subsequent sales of Offered Stock subject to Section 3 of this Agreement.
(g) If none of the Investors elects to participate in the sale of the
Offered Stock subject to the Notice, the Original Shareholder may, not later
than thirty (30) days following delivery to the Company and each of the
Investors of the Notice, enter into an agreement providing for the closing of
the transfer of the Offered Stock covered by the Notice within thirty (30) days
of such agreement on terms and conditions not more favorable to the transferor
than those described in the Notice. Any proposed transfer on terms and
conditions more favorable than those described in the Notice, as well as any
subsequent proposed transfer of any such Offered Stock by the Original
Shareholder, shall again be subject to the co-sale rights of the Investors and
shall require compliance by the Original Shareholder with the procedures
described in this Section 3.
4. EXEMPT TRANSFERS.
(a) Notwithstanding the foregoing, the Co-Sale Rights of the
Investors shall not apply to any sale of Stock by the Original Shareholders
which, together with all other sales of Stock hereafter by the Original
Shareholders, constitute 1,347,429 or less of the aggregate number of shares of
Common Stock held by the Original Shareholders, and the Rights of First Refusal
and Co-Sale Rights of the Investors shall not apply to (i) any pledge of Stock
made pursuant to a bona fide loan transaction that creates a mere security
interest, (ii) any transfer to the ancestors, descendants or spouse or to mists
for the benefit of such persons or an Original Shareholder, (iii) any bona fide
gift; provided that: (A) the transferring Original Shareholder shall inform the
Investor of such pledge, transfer or gift prior to effecting it, and obtain the
consent of each of the Investors (not to be unreasonably withheld); and (B) the
pledgee, transferee or donee shall furnish each of the Investors with a written
agreement to be bound by and comply with all provisions of Sections 2 and 3.
Such written agreement shall be in form and substance satisfactory to the
Investors in their sole discretion. The transferred Stock shall remain "Stock"
hereunder, and such pledgee, transferee or donee shall be treated as an
"Original Shareholder" for purposes of this Agreement.
(b) Notwithstanding the foregoing, the provisions of Sections 2 and 3
shall not apply to the sale of any Stock to the public pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), or the acquisition of the Company by another entity by means
of merger or consolidation resulting in the exchange of the outstanding shares
of the Company's capital stock for securities or consideration issued by the
acquiring company, in which exchange all shareholders of the Company may
participate.
5. PROHIBITED TRANSFERS.
(a) In the event an Original Shareholder should sell any Offered
Stock in contravention of the Co-Sale Rights of the Investors under this
agreement (a "Co-Sale Prohibited Transfer"), each Investor, in addition to such
other remedies as may be available at law, in equity
4.
or hereunder, shall have the put option provided below, and the Original
Shareholder shall be bound by the applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each Investor shall have
the right to sell to the Original Shareholder the type and number of shares of
Stock equal to the number of shares the Investor would have been entitled to
transfer to the purchaser had the Prohibited Transfer been effected pursuant to
and in compliance with the terms hereof. Such sale shall be made on the
following terms and conditions:
(i) The price per share at which the shares are to be sold
to the Original Shareholder shall be equal to the price per share paid by the
purchaser to the Original Shareholder in the Prohibited Transfer. The Original
Shareholder shall also reimburse the Investors for any and all fees and
expenses, including legal fees and expense, incurred pursuant to the exercise or
the attempted exercise of the Investors' rights under Section 3.
(ii) Within 20 days after the later of the dates on which
the Investors (A) received notice of the Prohibited Transfer, or (B) otherwise
becomes aware of the Prohibited Transfer, each Investor shall, if exercising the
option created hereby, deliver to the Original Shareholder the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(iii) The Original Shareholder shall, upon receipt of the
certificate or certificates for the shares to be sold by each Investor, pursuant
to this subparagraph 5(b), pay the aggregate purchase price therefor and the
amount of reimbursable fees and expense, as specified in subparagraph 5(b)(i),
in cash or by other means acceptable to the Investor.
(c) No Original Shareholder shall sell or transfer any Offered Stock
to any person or entity (other than the Investors) who will as a result thereof
become the beneficial owner of five percent (5%) or more of the aggregate amount
of Stock, unless such transferee shall furnish to each of the Investors a
written agreement conforming to the requirements of Section 4(a)(iii)(B) hereof.
(d) Notwithstanding the foregoing, any attempt by an Original
Shareholder to transfer Stock in violation of Section 2, 3 or 5(a) hereof shall
be void and the Company agrees it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares without the written
consent of the Investors.
6. LEGEND.
(a) Each certificate representing shares of Stock now or hereafter
owned by the Original Shareholders or issued to any person in connection with a
transfer pursuant to Section 3(a) hereof shall be endorsed with the following
legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT BY AND AMONG
5.
THE COMPANY, THE INVESTOR. AND CERTAIN OTHER HOLDERS OF STOCK OF THE
COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY."
(b) Each Original Shareholder agrees that the Company may instruct
its transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in the immediately preceding
paragraph to enforce the provisions of this Agreement and the Company agrees to
promptly do so. The legend shall be removed upon termination of this Agreement.
7. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, without regard to the principles of
conflicts of law thereof.
(b) AMENDMENT. Any provision may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of (i) as to the
Company, only by the Company, (ii) as to the Investors, by persons holding more
than fifty percent (50%) in interest of the Preferred Stock held by the
Investors and their permitted assignees, and (iii) as to each Original
Shareholder, such Original Shareholder. Any amendment or waiver effected in
accordance with clauses (i), (ii) and (iii) of this paragraph shall be binding
upon the Investors, the Company and the Original Shareholder in question, and
their respective successors and assigns.
(c) ASSIGNMENT OF RIGHTS. This Agreement and the rights and
obligations of the parties hereunder shall inure to benefit of, and be binding
upon, their respective successors, assigns and legal representatives. The
rights of the Investors hereunder are assignable to an assignee or transferee
who acquires at least 452,572 shares of Common Stock from any of the Investors
(such number of shares to be adjusted appropriately for subsequent stock splits,
stock combinations, stock dividends and like events).
(d) TERM. This Agreement shall terminate upon the earlier of (i) the
closing of a Qualified IPO, as defined in the Investor Rights Agreement of even
date herewith by and between the Company and the Investors, (ii) the closing of
the Company's sale of all or substantially all of its assets or the acquisition
of the Company by another entity by means of merger or consolidation resulting
in the exchange of the outstanding shares of the Company's capital stock for
securities or consideration issued, or caused to be issued, by the acquiring
entity or its subsidiary, or (iii) the tenth anniversary of the date of this
Agreement.
(e) OWNERSHIP. Each Original Shareholder represents and warrants
that (i) such Original Shareholder is the sole legal and beneficial owner of the
shares of Stock subject to this Agreement and that no other person has any
interest (other than a community property interest) in such shares and (ii) upon
consummation of the sale of any Offered Stock pursuant to
6.
any exercise of the Right of First Refusal, the Investor will acquire good and
marketable title to such Offered Stock, free and clear of any Liens or
Encumbrances.
(f) NOTICES. All notices required or permitted-hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five days after deposit in the United States mail, by
registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties hereto. Notwithstanding the foregoing, the telephone notice
permitted by Section 2(d) shall be effective at the time it is given.
(g) SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(h) ATTORNEY FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
7.
The foregoing agreement is hereby executed as of the date first above
written.
CLONTECH LABORATORIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇
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Title: President and Chief Executive Officer
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Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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8.
INVESTORS:
Date: September 9, 1997 SUMMIT VENTURES IV, L.P.
as Investor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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General Partner
Date: September 9, 1997 SUMMIT INVESTORS III, L.P.
as Investor
By: Stamps, ▇▇▇▇▇▇▇ & Co.
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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General Partner
Date: September 9, 1997 SUMMIT SUBORDINATED DEBT FUND II
By: Summit Partners SD II, LLC L.P.
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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General Partner
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT]
ORIGINAL SHAREHOLDERS:
Date: September 9, 1997
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▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇
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(Signature)
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Right of First Refusal and
Co-Sale Agreement (the "Agreement") and that I know its contents. I am aware
that by its provisions if I and/or my spouse agree to sell all or part of the
shares of Stock of the Company held of record by either or both of us,
including my community interest m such shares, if any, the right of first
refusal and co-sale rights described in the Agreement must be granted to each
of the Investors by the Original Shareholder. I hereby agree that those
shares of Stock and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to
hinder operation of, or violate, the Agreement.
September 9, 1997 /s/ ▇▇▇ ▇▇▇▇
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Dated Name