Investor Rights Agreement - Align Technology Inc.
ALIGN TECHNOLOGY, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended And Restated Investor Rights Agreement (the "Agreement")
is entered into as of the 13th day of September, 2000, by and among Align
Technology, Inc., a Delaware corporation (the "Company"), the holders of the
Company's Series A Preferred Stock (the "Series A Stock") set forth on Exhibit A
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hereto, the holders of the Company's Series B Preferred Stock (the "Series B
Stock") set forth on Exhibit B hereto, the holders of the Company's Series C
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Preferred Stock (the "Series C Stock") set forth on Exhibit C hereto, the
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holders of the Company's Series D Preferred Stock (the "Series D Stock") set
forth in Parts I and II of Exhibit D hereto and the purchasers of the Company's
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Series D Stock set forth in Part III of Exhibit A of that certain Series D
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Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement") and Part III of Exhibit D hereto. The holders of the Series A
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Stock, the holders of the Series B Stock, the holders of the Series C Stock, the
holders of the Series D Stock and the purchasers of the Series D Stock shall be
referred to hereinafter as the "Investors" and each individually as an
"Investor."
Recitals
Whereas, certain Investors hold shares of the Company's Series A
Stock, Series B Stock, Series C Stock, Series D Stock and/or shares of Common
Stock issued upon conversion thereof and possess registration rights and other
rights provided pursuant to an Amended and Restated Investor Rights Agreement
dated as of May 25, 2000 (the "Prior Agreement");
Whereas, the Company and the Investors who hold Series A Stock, Series
B Stock, Series C Stock and Series D Stock agreed in Section 5.6 (c) of the
Prior Agreement that the Prior Agreement could be amended with only the written
consent of the Company to include additional purchasers of shares of Series D
Stock;
Whereas, the Company proposes to sell and issue up to an additional
894,118 shares of its Series D Stock pursuant to the Purchase Agreement to the
Investors set forth in Part III of Exhibit D hereto; and
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Whereas, as a condition of entering into the Purchase Agreement,
certain of the Investors have requested that the Company extend to any
additional purchasers of the Series D Stock the registration rights, information
rights and other rights as set forth in the Prior Agreement, which rights are
restated in their entirety below.
Now, Therefore, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree that the
Prior Agreement is amended and restated to read in its entirety as follows:
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SECTION 1. GENERAL
1.1 Definitions.
As used in this Agreement the following terms shall have the following
respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Form S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities that
have not been sold to the public, or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
"Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act with aggregate proceeds in excess of $75,000,000.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (a) Common Stock of the Company issued
or issuable upon conversion of the Shares; and (b) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such above-described
securities or the Shares. Notwithstanding the foregoing, Registrable Securities
shall not include any securities sold by a person to the public either pursuant
to a registration statement or Rule 144 or sold in a private transaction in
which the transferor's rights under Section 2 of this Agreement are not
assigned.
"Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifty Thousand Dollars ($50,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
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"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series D Holders" shall mean Investors that hold outstanding shares
of Series D Stock and Investors that purchase Series D Stock pursuant to the
Purchase Agreement and their permitted transferees and assigns.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"Shares" shall mean the Series A Stock, Series B Stock, Series C Stock
and Series D Stock outstanding as of the date hereof and Series D Stock issued
pursuant to the Purchase Agreement, all as held by the Investors listed on
Exhibits A, B, C and D hereto and their permitted assigns.
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SECTION 2. RESTRICTIONS ON TRANSFER; REGISTRATION.
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (A) The transferee (other than a transferee of Shares or
Registrable Securities pursuant to Rule 144 or pursuant to a transfer of the
type referred to in Section 2(a)(iii) below) has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement, opinion of counsel or agreement to be
bound by this Agreement shall be necessary for a transfer by a Holder which is
(A) a partnership to its partners or former partners in accordance with
partnership interests, (B) a corporation to its stockholders in accordance with
their interest in the corporation, (C) a limited liability company to its
members or former members in accordance with their interest in the limited
liability company, or (D) to the Holder's family member or to a trust for the
benefit of an individual Holder; provided that in each case the transferee will
be subject to the terms of this Agreement to the same extent as if he were an
original Holder hereunder.
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(b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of at least fifty percent (50%)
of the Registrable Securities then outstanding or the holders of at least twenty
(20) percent of the Company's Common Stock issued or issuable upon conversion of
the Series D Stock (the "Initiating Holders") that the Company file a
registration statement under the Securities Act covering the registration of
Registrable Securities having an aggregate offering price to the public in
excess of $20,000,000 (a "Qualified Public Offering"), then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and, subject to the limitations of this Section 2.2, use its best
efforts to effect, as soon as practicable, and in any event within sixty (60)
days of the receipt of such request, the registration under the Securities Act
of all Registrable Securities that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2(a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting
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(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority-in-interest of the Initiating
Holders (which underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 2.2 or Section
2.4, if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares that may be included in the underwriting shall be allocated to the
Holders of such Registrable Securities on a pro rata basis based on the number
of Registrable Securities held by all such Holders (including the Initiating
Holders), provided however that the number of Shares of Registrable Securities
to be included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the earlier of (A) the second anniversary of the
date of this Agreement and (B) the date which is 180 days after the effective
date of the registration statement pertaining to the Initial Offering; or
(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2 for all Registrable Securities and two (2)
registrations for the Holders of Series D Preferred Stock and such registrations
have been declared or ordered effective; or
(iii) during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date of
the registration statement pertaining to the Initial Offering; provided that the
Company makes all reasonable good faith efforts to cause such registration
statement to become effective; or
(iv) if within ten (10) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders of the Company's intention to make its Initial Offering within
ninety (90) days; provided, that, (a) the Company makes all reasonable good
faith efforts to file and cause to become effective within such 90 day period
the registration statement pertaining to such Initial Offering and (b) such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period; or
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement 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 Initiating
Holders; provided that
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such right to delay a request shall be exercised by the Company not more than
once in any twelve (12) month period.
2.3 Piggyback Registration.
The Company shall notify all Holders in writing at least thirty (30)
days prior to the initial filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, and registrations commenced pursuant to
Section 2.2, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within 20 days after receipt of the above-described notice from the
Company, so notify the Company in writing and the Company shall, subject to
Section 2.3(a), cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered. If
a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders. In such event, the right of any such Holder
to be included in a registration pursuant to this Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities entitled and requested by the Holders to be
included in the offering under this Section 2.3; and third, to any stockholder
of the Company (other than a Holder) on a pro rata basis. No such reduction
shall reduce the amount of securities of the selling Holders included in the
registration below thirty percent (30%) of the total amount of securities
included in such registration, unless such offering is the Initial Offering and
such registration does not include shares of any other selling stockholder, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no event will
shares of any other selling stockholder be included in such registration which
would reduce the number of shares which may be included by Holders without the
written consent of Holders of not less than a majority of the Registrable
Securities proposed to be sold in the offering.
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(b) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.
2.4 Form S-3 Registration.
In case the Company shall receive from any Holder or Holders a written
request or requests that the Company effect a registration on Form S-3 (or any
successor to Form S-3) or any similar short-form registration statement and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable and in any event within sixty (60) days of
the receipt of such request, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 20
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, 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) at an aggregate
price to the public of less than $500,000, or
(iii) if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4; provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period, or
(iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4, or
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(v) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registrations or registrations
pursuant to Section 2.2.
2.5 Expenses of Registration.
Except as specifically provided herein, all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Sections 2.2, 2.3 or 2.4 herein shall be borne by the Company. All
Selling Expenses incurred in connection with any registration hereunder, shall
be borne by the holders of the securities so registered pro rata on the basis of
the number of shares so registered. The Company shall not, however, be required
to pay for expenses of any registration proceeding begun pursuant to Sections
2.2 or 2.4, the request of which has been subsequently withdrawn by the
Initiating Holders unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) the Holders of a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Sections 2.2 or 2.4, as applicable, in which event such
right shall be forfeited by all Holders). If the Holders are required to pay
the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If the
Company is required to pay the Registration Expenses of a withdrawn offering
pursuant to clause (a) above, then the Holders shall not forfeit their rights to
a demand registration pursuant to Sections 2.2 or 2.4.
2.6 Obligations of the Company.
Whenever required to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred and twenty (120)
days or, if earlier, until the Holder or Holders have completed the distribution
related thereto. If requested by any Initiating Holder, any registration
effected pursuant to Section 2.2 or Section 2.4 will be a registration that
contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 promulgated under the Securities Act, in which case the
applicable registration statement shall be kept effective until all securities
covered thereby have been sold.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as
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may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement 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, as
then in effect, includes an 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 not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Cooperate and assist in any filings to be made with the National
Association of Securities Dealers.
(j) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten
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public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and if
permitted by applicable accounting standards, to the Holders requesting
registration of Registrable Securities.
2.7 Termination of Registration Rights.
All registration rights granted under this Section 2 shall terminate
and be of no further force and effect five (5) years after the date of the
Company's Initial Offering. In addition, a Holder's registration rights shall
expire if (a) the Company has completed its Initial Offering and is subject to
the provisions of the Exchange Act and (b) all Registrable Securities held by
and issuable to such Holder (and its affiliates, partners and former partners)
may be sold under Rule 144 during any ninety (90) day period.
2.8 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.9 Indemnification.
In the event any Registrable Securities are included in a registration
statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, stockholders, members, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer, director,
stockholder, member, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection
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with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
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Section 2.9(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, legal counsel, underwriter or
controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director, or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party
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within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.9.
(D) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(f) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities pursuant to a
registration statement and the termination of this Agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
2.10 Assignment of Registration Rights.
The rights to cause the Company to register Registrable Securities
pursuant to this Section 2 may be assigned by a Holder to a transferee or
assignee of Registrable Securities which (a) is a subsidiary, parent, general
partner, limited partner, member, stockholder, affiliate or retired partner or
retired member of a Holder, (b) is a Holder's family member or is a trust for
the benefit of an individual Holder, or (c) acquires at least fifty thousand
(50,000) shares of Registrable Securities (as adjusted for stock splits and
combinations) or 100% of the Registrable Securities held by the transferring
Holder; provided, however, (i) the transferor shall, within fifteen (15) days
-------- -------
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration
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<PAGE>
rights are being assigned and (ii) such transferee shall agree to be subject to
all restrictions set forth in this Agreement.
2.11 Amendment of Registration Rights.
Any provision of this Section 2 may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Holders of at least 66-2/3% of the Registrable Securities then
outstanding and holders of 76% of the outstanding Registrable Securities held by
all Series D Holders. Any amendment or waiver effected in accordance with this
Section 2.11 shall be binding upon each Holder and the Company. By acceptance
of any benefits under this Section 2, Holders of Registrable Securities hereby
agree to be bound by the provisions hereunder.
2.12 Limitation on Subsequent Registration Rights.
After the date of this Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Securities
then outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company that would grant such holder registration
rights senior to, or on parity with, those granted to the Holders hereunder.
2.13 "Market Stand-Off' Agreement.
Each Holder hereby agrees that such Holder shall not sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such Holder (other than those included in the registration) for
a period specified by the representative of the underwriters of Common Stock (or
other securities) of the Company not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that:
(i) such agreement shall apply only to the Company's Initial
Offering; and
(ii) all officers, directors, one-percent security holders of the
Company, and other persons holding a majority in interest of securities of the
Company with registration rights (whether or not pursuant to this Agreement),
enter into similar agreements.
Each Holder agrees to execute and deliver such other agreements as
may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said one hundred eighty
(180) day period.
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2.14 Rule 144 Reporting.
(a) With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees to
use its best efforts to:
(b) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(c) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(d) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
SECTION 3. Covenants Of The Company
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, the Company will furnish to
each Investor a consolidated balance sheet of the Company, as at the end of such
fiscal year, and a consolidated statement of operations and a consolidated
statement of cash flows of the Company, for such year, all prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of
national standing selected by the Company's Board of Directors.
(c) The Company will furnish to each Investor, as soon as practicable
after the end of each month, and in any event within thirty (30) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such period, and a consolidated statement of operations and a consolidated
statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
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<PAGE>
principles, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
(d) So long as an Investor (with its affiliates) shall own not less
than one hundred thousand (100,000) shares of Registrable Securities (as
adjusted for stock splits and combinations) (a "Major Investor"), the Company
will furnish to each such Major Investor (i) at least thirty (30) days prior to
the beginning of each fiscal year an annual budget, business and operating plans
for such fiscal year (and as soon as available, any subsequent revisions
thereto); and (ii) as soon as practicable after the end of each month, and in
any event within twenty (20) days thereafter, a consolidated balance sheet of
the Company as of the end of each such month, and a consolidated statement of
operations and a consolidated statement of cash flows of the Company for such
month and for the current fiscal year to date, including a comparison to plan
figures for such period, prepared in accordance with generally accepted
accounting principles consistently applied, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not have
been made.
3.2 Inspection Rights.
Each Investor shall have the right to visit and inspect any of the
properties of the Company or any of its subsidiaries, and to discuss the
affairs, finances and accounts of the Company or any of its subsidiaries with
its officers, and to review such information as is reasonably requested all at
such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated under this Section 3.2 to
provide such access for any competitor of the Company or to any information
which the Board of Directors determines in good faith is confidential and should
not, therefore, be disclosed.
3.3 Confidentiality of Records.
Each Investor agrees to use, and to use its best efforts to ensure
that its authorized representatives use, the same degree of care as such
Investor uses to protect its own confidential information to keep confidential
any information furnished to it which the Company identifies as being
confidential or proprietary (so long as such information is not in the public
domain), except that such Investor may disclose such proprietary or confidential
information to any partner, subsidiary, affiliate or parent of such Investor for
the purpose of evaluating its investment in the Company as long as such partner,
subsidiary or parent is advised of the confidentiality provisions of this
Section 3.3).
3.4 Reservation of Common Stock.
The Company will at all times reserve and keep available, solely for
issuance and delivery upon the conversion of the Series A Stock, Series B Stock,
Series C Stock and Series D Stock, all Common Stock issuable from time to time
upon such conversion.
3.5 Stock Vesting.
Unless otherwise approved by the Board of Directors, all stock
options, stock and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (a) twenty-five
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<PAGE>
percent (25%) of such stock shall vest at the end of the first year following
the date of issuance or such person's services commencement date with the
Company, if earlier, and (b) seventy-five percent (75%) of such stock shall vest
in monthly increments over the remaining three (3) years. With respect to any
shares of stock purchased by any such person, the Company's repurchase option
shall provide that upon such person's termination of employment or service with
the Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person. In
addition, with respect to any shares of stock purchased by any such person, the
Company shall have a right of first refusal with respect to all transfers of any
such shares of stock (with customary exceptions for transfers in connection with
estate planning and similar matters).
3.6 Proprietary Information and Inventions Agreement.
The Company shall require all employees and consultants to execute and
deliver a Proprietary Information and Inventions Agreement in the form attached
to the Purchase Agreement.
3.7 Real Property Holding Corporation.
The Company covenants that it will operate in a manner such that it
will not become a "United States real property holding corporation" ("USRPHC"),
as that term is defined in Section 897(c)(2) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder ("FIRPTA"). The Company agrees
to make determinations as to its status as a USRPHC, and will file statements
concerning those determinations with the Internal Revenue Service, in the manner
and at the times required under Reg. (S) 1.897-2(h), or any supplementary or
successor provision thereto. Within 30 days of a request from an Investor or
any of its partners, the Company will inform the requesting party, in the manner
set forth in Reg. (S) 1.897-2(h)(1)(iv) or any supplementary or successor
provision thereto, whether that party's interest in the Company constitutes a
United States real property interest (within the meaning of Internal Revenue
Code Section 897(c)(1) and the regulations thereunder) and whether the Company
has provided to the Internal Revenue Service all required notices as to its
USRPHC status.
3.8 Visitation Rights.
For so long as any entity whose investment decisions are directed by
QuestMark Advisers, LLC shall hold any of the Company's securities, the Company
shall allow one representative designated by QuestMark Advisers, LLC to attend
all meetings of the Company's Board of Directors in a non-voting capacity and,
in connection therewith, the Company shall give such representative copies of
all notices, minutes, consents and other materials, financial or otherwise,
which the Company provides to its Board of Directors; provided, however, that
-------- -------
the Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the attorney-
client privilege, to protect Confidential Information, or for other similar
reasons. For so long as any entity whose investment decisions are directed by
any of Oak Hill Capital Partners, L.P., The Carlyle Group or ABS Ventures (the
"Series D Investors") shall hold any of the Company's securities, the Company
shall allow one
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<PAGE>
representative designated by each Series D Investor, as applicable, to attend
all meetings of the Company's Board of Directors (including the Executive
Committee of the Board of Directors) in a non-voting capacity and, in connection
therewith, the Company shall give each such representative copies of all
notices, minutes, consents and other materials, financial or otherwise, which
the Company provides to its Board of Directors; provided, however, that the
-------- -------
Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the attorney-
client privilege.
3.9 Major Company Investments.
Without the prior written consent of the holders of a majority of the
outstanding Shares, voting separately as a class, the Company will not, and will
not permit any of its subsidiaries to purchase or otherwise acquire (by merger,
consolidation, reorganization, combination or otherwise), in one transaction or
a series of related transactions, the capital stock or equity securities of any
entity or all or any substantial portion of the assets of any person or entity,
if the aggregate fair market value of the consideration paid or surrendered
therefore equals or exceeds $50,000,000.
3.10 Termination of Covenants.
All covenants of the Company contained in Section 3 of this Agreement
(except those contained in Sections 3.4; and those contained in Section 3.8,
which Section 3.8 covenants shall expire on the second anniversary of the
effective date of the Initial Offering) shall expire and terminate as to each
Investor on the effective date of the registration statement pertaining to the
Initial Offering.
SECTION 4. RIGHTS OF FIRST REFUSAL
4.1 Subsequent Offerings.
Each Investor shall have a right of first refusal to purchase its pro
rata share of all Equity Securities, as defined below, that the Company may,
from time to time, propose to sell and issue after the date of this Agreement,
other than the Equity Securities excluded by Section 4.6 hereof. Each
Investor's pro rata share is equal to the ratio of (a) the number of shares of
the Company's Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares) of which such Investor is deemed to be a
holder immediately prior to the issuance of such Equity Securities to (b) the
total number of shares of the Company's outstanding Common Stock (including all
shares of Common Stock issued or issuable upon conversion of any securities
convertible into Common Stock or upon the exercise of any outstanding warrants
or options) immediately prior to the issuance of the Equity Securities. The
term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant, option or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant, option
or right.
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4.2 Exercise of Rights.
If the Company proposes to issue any Equity Securities, it shall give
each Investor written notice of its intention, describing the Equity Securities,
the price and the terms and conditions upon which the Company proposes to issue
the same. Each Investor shall have twenty (20) days from the receipt of such
notice to agree to purchase its pro rata share of the Equity Securities for the
price and upon the terms and conditions specified in the notice by giving
written notice to the Company and stating therein the quantity of Equity
Securities to be purchased. Notwithstanding the foregoing, the Company shall
not be required to offer or sell such Equity Securities to any Investor who
would cause the Company to be in violation of applicable federal securities laws
by virtue of such offer or sale.
4.3 Issuance of Equity Securities to Other Persons.
If not all of the Investors elect to purchase their pro rata share of
the Equity Securities, then the Company shall promptly notify in writing the
Investors who do so elect and shall offer such Investors the right to acquire
such unsubscribed shares. The Investors shall have 10 days after receipt of
such notice to notify the Company of their election to purchase their pro rata
portion of all or a portion of the unsubscribed shares. If the Investors fail
to exercise in full the rights of first refusal, the Company shall have ninety
(90) days thereafter to sell the Equity Securities in respect of which the
Investors' rights were not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified
in the Company's notice to the Investors pursuant to Section 4.2 hereof. If the
Company has not sold such Equity Securities within ninety (90) days of the
notice provided pursuant to Section 4.2, the Company shall not thereafter issue
or sell any Equity Securities without first offering such securities to the
Investors in the manner provided above.
4.4 Termination of Rights of First Refusal.
The rights of first refusal established by this Section 4 shall not
apply to, and shall terminate upon the effective date of the registration
statement pertaining to, the Initial Offering.
4.5 Transfer of Rights of First Refusal.
The rights of first refusal of each Investor under this Section 4 may
be transferred to the same parties and subject to the same restrictions as any
transfer of registration rights pursuant to Section 2.10.
4.6 Excluded Securities.
The rights of first refusal established by this Section 4 shall have
no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights) issued or to be issued to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary for
the primary purpose of soliciting or retaining their services, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors; provided, however, that following the effective date of this
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Agreement, options, warrants or other Common Stock purchase rights to purchase
more than an aggregate of 1,665,989 shares of the Company's Common Stock (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) shall not be issued without the approval of the holders of at least
seventy-six percent (76%) of the outstanding Series D Preferred.
(b) stock issued pursuant to Common Stock purchase rights, options
and warrants outstanding as of the date of this Agreement; and stock issued
pursuant to any Common Stock purchase rights, options and warrants granted after
the date of this Agreement, provided that the rights of first refusal
established by this Section 4 applied with respect to the initial sale or grant
by the Company of such rights, options or warrants;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
and approved by at least seventy-six percent (76%) of the outstanding Series D
Preferred;
(d) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement, or commercial credit arrangement from a bank or similar financial
institution; and
(g) any Equity Securities that are issued by the Company in its
Initial Offering.
(h) shares of Series D Preferred Stock issued at closings subsequent
to the date of this Agreement as contemplated by the Purchase Agreement.
SECTION 5. MISCELLANEOUS.
5.1 Governing Law.
This Agreement shall be governed by and construed under the laws of
the State of California as applied to agreements among California residents
entered into and to be performed entirely within California.
5.2 Survival.
The representations, warranties, covenants, and agreements made herein
shall survive any investigation made by any Investor and the closing of the
transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
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5.3 Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and shall inure to
the benefit of and be enforceable by each person who shall be a holder of
Registrable Securities from time to time; provided, however, that prior to the
receipt by the Company of adequate written notice of the transfer of any
Registrable Securities specifying the full name and address of the transferee,
the Company may deem and treat the person listed as the holder of such shares in
its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.
5.4 Entire Agreement.
This Agreement, the Exhibits hereto, the Purchase Agreement and the
other documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
5.5 Severability.
In case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
5.6 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least 66-2/3% of the Registrable Securities; provided, however, any
-------- -------
amendment or modification which adversely affects the rights, of the holders of
Series D Stock shall require the written consent of the holders of at least 76%
of the shares of Series D Stock.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least 66-2/3% of the Registrable
Securities; provided, however, any waiver which adversely affects the rights, of
-------- -------
the holders of Series D Stock shall require the written consent of the holders
of at least 76% of the shares of Series D Stock.
(c) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.7 Delays or Omissions.
It is agreed that no delay or omission to exercise any right, power,
or remedy accruing to any Holder, upon any breach, default or noncompliance of
the Company under this Agreement shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver
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<PAGE>
of any such breach, default or noncompliance, or any acquiescence therein, or of
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
5.8 Notices.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as set forth on the signature pages hereof or the
Exhibits hereto or at such other address as such party may designate by ten (10)
days advance written notice to the other parties hereto.
5.9 Attorneys' 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.
5.10 Titles and Subtitles.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
5.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
5.12 Regulatory Matters.
(a) Cooperation of Other Parties. Each party hereto agrees to
----------------------------
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and ABS
Ventures, a copy of which is attached hereto as Exhibit E, regarding small
---------
business matters (the "Small Business Sideletter"), including without
limitation, voting to approve the Company's Amended and Restated Certificate of
Incorporation (the "Certificate"), the Company's By-Laws or this Agreement in a
manner reasonably acceptable to the parties and ABS Ventures or any Regulated
Holder (as defined in the Small Business Sideletter) entitled to make such
request pursuant to the Small Business Sideletter in order to remedy a
Regulatory Problem (as defined in the Small Business Sideletter). Anything
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<PAGE>
contained in this Section 5.12 to the contrary notwithstanding, no party shall
be required under this Section 5.12 to take any action that would adversely
affect such party's rights under this Agreement or as a stockholder of the
Company.
(b) Covenant Not to Amend. The Company and each party agree not to
---------------------
amend or waive the voting or other provisions of the Certificate, the Company's
By-Laws or this Agreement if such amendment or waiver would cause any Regulated
Holder to have a Regulatory Problem (as defined in the Small Business
Sideletter). Investor agrees to notify the Company as to whether or not it
would have a Regulatory Problem promptly after ABS Ventures has notice of such
amendment or waiver. Anything contained in this Section 5.12 to the contrary
notwithstanding, no party shall be required under this Section 5.12 to take any
action that would adversely affect such party's rights under this Agreement or
as a stockholder of the Company.
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In Witness Whereof, the parties hereto have executed this Amended and
Restated Investors Rights Agreement as of the date set forth in the first
paragraph hereof.
COMPANY:
Align Technology, Inc.
By:________________________________________
Zia Chishti, Chief Executive Officer
442 Potrero Avenue
Sunnyvale, CA 94086
<PAGE>
Exhibit A
SCHEDULE OF SERIES A INVESTORS
Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
KPCB Life Sciences Zaibatsu Fund II, L.P.
Muhammad Ziaullah Chishti
Gretchen Daily
Leela DeSouza
Mark DeSouza
Ann Ehrlich and Paul Ehrlich
Barbara Freyburger and Peter Freyburger
Barbara Garvey and James Garvey
Pam Green
Nick Lapham
Apostolos Lerios
Garret McDonald
Rachel Obstler
Richard Ridgley
Diane Voght and William Voght
Julie Weber
Christopher Wirth
Kelsey Wirth
Timothy Wirth
Wren Wirth
Robin Kellogg
David Golob
Greg Wadden
Dan Huttenlocher
Professional Community Management of California, Inc.
John Larson
Theros Logothetis
F. Scott Jackson, Esq.
Nitin Mehta
Edward G. Hall and Elaine C. Hall
Carly M. Kurth
Amy N. Kurth
Richard C. and Margaret A. Kurth
Krista L. Danner
Gregory D. Danner
Dennis and Rona Danner
Exhibit A-1
<PAGE>
Exhibit B
SCHEDULE OF SERIES B INVESTORS
Domain Partners III, L.P.
3i Bioscience Investment Trust plc
DP III Associates, L.P.
Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
KPCB Life Sciences Zaibatsu Fund II, L.P
Gordon Gund
Grant Gund
Zachary Gund
Gordon Gund - Grant Gund Trust
Gordon Gund - Zachary Gund Trust
Mehta Family Partners for Series B
John Larson
Ike Udechuku
Russell Byers, Jr.
Paul and Anne Ehrlich
Josh Green
Wren Wirth
Timothy Wirth
Kelsey Wirth
Christopher Wirth
Warren Thaler
The Mandato Family Trust
Robert Grady
Nick Lapham
Gretchen Daily
Pam Green
Steve Nichols
Garrett McDonald
Professional Community Management of California
James Heslin
David Golob
Omar Ralph Godin
Ross Miller
Karen Terrey
The Van Linge Family Trust, Bradley V. Van Linge and
Stephanie W. Elkins Co-Trustees
F. Scott Jackson
Barbara and James Garvey
Rachel Obstler
Leela DeSouza
Exhibit B-1
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Carly M. Kurth
Amy N. Kurth
Richard C. and Margaret A. Kurth
Krista Danner
Gregory D. Danner
Dennis and Rona Danner
Exhibit B-2
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Exhibit C
SCHEDULE OF SERIES C INVESTORS
QuestMark Partners, L.P.
QuestMark Partners Side Fund, L.P.
Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
Domain Partners III, L.P.
3i Bioscience Investment Trust plc
Gordon Gund
Grant Gund
Zachary Gund
Grant Gund 1978 Trust
G. Zachary Gund 1978 Trust
Vector Later-Stage Equity Fund II (Q.P.), L.P.
Vector Later-Stage Equity Fund II, L.P.
Bayview 99 I, L.P.
Bayview 99 II, L.P.
BancBoston Robertson Stephens
Gretchen Daily
Paul and Anne Ehrlich
David Golob
Pam Green
F. Scott Jackson
Richard and Margaret Kurth
Nick Lapham
John Larson
Garrett McDonald
Mehta Family Partners
Professional Com. Mgmt of CA
Christopher Wirth
Kelsey Wirth
Timothy Wirth
Wren Wirth
James Heslin
Karen Terrey
Ike Udechuku
Brad Van Linge
Jae Ahn
Rafael Arapeles
Dr. Andy Barron
Joe Breeland
Doug Bukaty
Ka Man Cheang
Exhibit C-1
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Julie Child
Julie Dela Fuente
Gene Detwiler
Trang Duong
Francisco Garcia
Marty Graham
Robert Hall
Beth Halloran
Cynthia & Joe Huber
Robert Huber
Ed Ivers
Bruce Jacobs
Alamgir Khan
Dr. James Kohl
Eric Kuo
Grace & Ben Kuo
Min-Jin Kuo
Helen Lear
Can Nguyen
Scott O'Neil
Elena Pavlovskaia
Mari Sawtelle
Lisa Scott
Bill Steuben
Ray Stewart
Jeff Tunnell
Russell Whorton
Cliff Williams
Ian Williams
Andrew Trosien
Allen Lee
Len Hedge
Kay White
Alex Benton
Elliott Benton
Ethan Benton
Meredith Benton
Leland Benton
Michele Beers
Jonathon and Leilani Beers
Raymond James & Assoc. Inc. CSDN FBO
Ronald B. Cooper DDS PA MPPP
John V. Terrey
Jeffrey D. Terrey
Janice Sykes
Rita or Troy P. Miller Jr.
Exhibit C-2
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Pearl C. Vargha
Exhibit C-3