Co-Sale Agreement - Toxco, CombiMatrix Corp. and Acacia Research Corp.
CO-SALE AGREEMENT
THIS CO-SALE AGREEMENT (the "Co-Sale Agreement") is entered into as of
November __, 2000, by and among Toxco., a _______ corporation (the "Company"),
CombiMatrix Corporation, a Delaware corporation ("CombiMatrix") and Acacia
Research Corporation, a Delaware corporation ("Acacia"; together with
CombiMatrix, the "Investors" each of which is herein referred to as an
"Investor".)
RECITALS
WHEREAS, the Company and the Investors are acquiring the Common Stock of
the Company (the "Common Stock");
WHEREAS, the rights and obligations granted in this Co-Sale Agreement
are a condition to the effectiveness of the acquisition of such Common Stock;
NOW, THEREFORE, the parties agree as follows:
5. Definitions. For purposes of this Co-Sale Agreement, the following terms
shall have the following meanings.
5.1 "Act" means the Securities Act of 1933, as amended.
5.2 "Common Stock" means the common stock, par value $.001 per share,
of the Company.
5.3 "Common Stock Equivalents" means and includes all shares of
Common Stock issued and outstanding at the relevant time plus (i)
all shares of Common Stock that may be issued upon exercise of
any options, warrants and other rights of any kind that are then
exercisable, and (ii) all shares of Common Stock that may be
issued upon conversion or exchange of any convertible securities
which are by their terms then convertible into or exchangeable
for Common Stock, including without limitation, preferred stock.
6. Investors' Right of First Offer. Before any Common Stock owned by any
Investor may be Transferred (as defined hereinafter), the other Investor shall
have a right of first offer with respect to such Common Stock, all on the terms
and conditions set forth in this Section 2.
Each time an Investor proposes to sell, transfer or otherwise
dispose of Common Stock other than to any wholly owned subsidiary or parent of,
or to any corporation that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such investor, in the case of a
limited liability company, to its members, or gift transfers to its family
members or one or more trusts for the benefit of the foregoing (in each case a
"Transfer"),
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that Investor (the "Transferring Investor") shall first make an offering of
Common Stock to the other Investor (the "Other Investor") in accordance with the
following provisions:
(a) The Transferring Investor shall provide notice (an "Investor
Transfer Notice") to the Other Investor stating (i) its bona fide intention to
Transfer such Common Stock, (ii) the number of such Common Stock shares proposed
to be Transferred (the "Offered Stock"), (iii) the name of each proposed
transferee, and (iv) the cash price or other consideration (including the cash
equivalent value of any non-cash consideration) per share for which the
Transferring Investor proposes to transfer the Offered Stock (the "Offered
Price").
(b) By written notification received by the Other Investor within
ten (10) calendar days of the mailing of the Investor Transfer Notice, the Other
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Investor Transfer Notice, all of the Offered Stock.
(c) If all Offered Stock which the Other Investor is entitled to
obtain pursuant to subsection 2(b) is not elected to be obtained, the
Transferring Investor may, during the sixty (60) day period following the
expiration of the period provided in subsection 2(b) hereof, offer the Offered
Stock to any person or persons, subject to Section 3 hereof, at a price not less
than, and upon terms no more favorable to the offeree than those specified in
the Investor Transfer Notice. If the Transferring Investor does not enter into
an agreement for the sale of the Common Stock within such period, or if such
agreement is not consummated within ninety (90) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such Offered
Stock shall not be transferred unless first reoffered to the Other Investor in
accordance herewith.
(d) The right of first offer set forth in this Section 2 shall
terminate upon the completion of an underwritten public offering of shares of
Common Stock of the Company (a "Qualified Public Offering").
(e) Any attempt by an Investor to transfer Common Stock in
violation of Section 2 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 a majority in interest of the
Investors.
7. Rights of Co-Sale
7.1 Investors' Rights. If the Other Investor does not fully exercise
its right of first offer pursuant to Section 2(b) hereof, such
Other Investor shall have a right of co-sale with respect to the
sale of any Common Stock owned by the Transferring Investor, all
on the terms and conditions set forth in this Section 3.
7.2 Notice of Proposed Transfer. Before a Transferring Investor may
transfer its shares of Common Stock and after the Other Investor
has elected not to fully exercise its right of first offer
pursuant to Section 2, such Transferring Investor shall provide
notice (a "Transferring Investor Notice") to the Other Investor
stating (i) its bona
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fide intention to Transfer such Common Stock, (ii) the number of
shares of Offered Stock, (iii) the name of each proposed
transferee, and (iv) the Offered Price.
7.3 Right of Co-Sale.
(a) Exercise of Right of Co-Sale. The Other Investor
shall have the right to participate in the
Transferring Investor's transfer of the Offered
Stock to the proposed transferee pursuant to the
specified terms and conditions of the Transfer as
set forth in the Transferring Investor Notice and
in accordance with the terms and conditions of the
Transfer as set forth in this Section 3.3 (the
"Right of Co-Sale"). For purposes of the preceding
sentence, the participation of the Other Investor
shall be on the same terms as the Transferring
Investor. To the extent the Other Investor
exercises his, her or its Right of Co-Sale, the
number of shares of Offered Stock that the
Transferring Investor may transfer pursuant to the
Transferring Investor Notice shall be
correspondingly reduced. The Other Investor shall
be responsible for its pro rata share of the
reasonable fees and expenses of the Transferring
Investor relating to the negotiation of the
transaction. The Right of Co-Sale of the Other
Investor shall be subject to the following terms
and conditions:
(i) The Other Investor may transfer all or any
part of such Investor's Common Stock that is
not in excess of the number obtained by
multiplying the aggregate number of shares
of Common Stock constituting the Offered
Stock by a fraction (A) the numerator of
which is the number of shares of such
Investor's Common Stock, and (B) the
denominator of which is the total number of
Common Stock Equivalents then owned by the
Investors and investors, if any, who are
parties to any other co-sale agreement with
the Company and the Investors which is in
existence at the time of the Transfer.
(ii) By written notice received by the Company
within fifteen (15) calendar days of the
mailing of the Transferring Investor Notice
by the Transferring Investor to the Company,
the Other Investor may effect its election
to participate in the transfer subject to
this Section 3.3. Such written notice shall
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contain the Other Investor's election to
participate in the Transfer of the Offered
Stock setting forth the number and type of
shares that the Other Investor elects to
include in the Transfer, accompanied by one
or more certificates or other documentation,
properly endorsed for transfer, representing
those shares (if the Other Investor so
elects, then such Other Investor shall be
referred to in this Co-Sale Agreement as a
"Participant"). The Company shall keep the
Transferring Investor promptly informed at
all times as to the Other Investor's
election to participate.
(b) Delivery of Stock Certificates and Proceeds. Upon
the closing of the Transfer subject to this Section
3.3, the stock certificate(s) or other
documentation representing the Common Stock to be
transferred shall be transferred and delivered to
the investor or transferee pursuant to the terms
and conditions specified in the Transferring
Investor Notice, and there shall be promptly
thereafter remitted to the Participant that portion
of the proceeds from the Transfer to which it is
entitled by reason of participating in the
Transfer.
7.4 Offering Investor's Right to Transfer. The Transferring Investor
may transfer that portion of the Offered Stock permitted to be
transferred by the Transferring Investor, after application of
the Right of Co-Sale contained in Section 3.3 hereof, to any
person named as an investor or other transferee in the
Transferring Investor Notice, at the Offered Price, provided that
the transfer (i) is consummated within ninety (90) days after the
date of the Transferring Investor Notice and (ii) is in
accordance with all the terms of this Co-Sale Agreement. If the
Offered Stock is transferred in accordance with the terms and
conditions of this Co-Sale Agreement, then the transferee(s) of
the Offered Stock shall thereafter hold the Offered Stock free of
this Co-Sale Agreement and the Right of Co-Sale set forth herein.
If the Offered Stock is not so transferred during such ninety
(90) day period, then the Transferring Investor shall not
transfer any of the Offered Stock without complying again in full
with the provisions of this Co-Sale Agreement.
7.5 Effect of Prohibited Transfer. In the event an Investor should
sell any Common Stock in contravention of the co-sale rights of
the other Investor under this Co-Sale Agreement (such an investor
a "Violating Investor"; such a transaction a "Prohibited
Transfer"), the other Investor, in addition to all other remedies
available at law, in equity or hereunder, shall have the put
option provided below, and the Violating Investor shall be bound
by the applicable provisions of that option. Any attempt by a
Violating Investor to transfer Common Stock in
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violation of Section 3 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 a majority in interest of the Investors.
7.6 Put Option. Notwithstanding Section 3.5 hereof, in the event of a
Prohibited Transfer, the other Investor shall have the right to
sell to the Violating Investor the type and number of shares of
Common Stock equal to the number of shares such Investor would
have been entitled to sell to the Violating Investor or
transferee under Section 3.3 hereof had the Prohibited Transfer
been effected pursuant to and in compliance with the terms
hereof. This sale shall be made on the following terms and
conditions:
(a) The price per share at which the Common Stock is to
be sold to the Violating Investor shall be equal to
the price per share (on an as-converted basis) paid
by the transferee to the Violating Investor in the
Prohibited Transfer. The Violating Investor shall
also reimburse the other Investor for any and all
fees and expenses, including legal fees and
expenses, incurred pursuant to the exercise or the
attempted exercise of the Investor's rights under
Section 3.
(b) Within ninety (90) days after the later of the
dates on which the other Investor (A) receives
notice of the Prohibited Transfer or (B) otherwise
becomes aware of the Prohibited Transfer, the other
Investor, if exercising the option created hereby,
shall deliver to the Violating Investor the
certificate or certificates representing shares to
be sold, each certificate to be properly endorsed
for transfer.
(c) The Violating Investor shall, upon receipt of the
certificate or certificates for the shares to be
sold by the Investor pursuant to this Section 3.6,
pay the aggregate purchase price therefor and the
amount of reimbursable fees and expenses, as
specified in Section 3.6(a), in cash or by other
means acceptable to the other Investor.
8. Exceptions, Termination.
8.1 Exceptions. Notwithstanding anything in this Co-Sale Agreement to
the contrary, the Right of Co-Sale set forth in this Co-Sale
Agreement shall not apply to any Transfer or series of Transfers
of Common Stock by an Investor (i) pursuant to a reorganization
or merger of the Company with or into any other corporation or
entity, or a sale of all or substantially all of the assets of
the Company, in which the Investors in the aggregate own
immediately after such transaction less than
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50% of the voting equity securities of the surviving entity, (ii)
pursuant to the winding up and dissolution of the Company or
(iii) in connection with a Qualified Public Offering.
8.2 Termination of Rights. The Right of Co-Sale set forth herein
shall terminate upon the earlier to occur of (i) the closing of a
Qualified Public Offering, or (ii) the date on which this Co-Sale
Agreement is terminated by a written agreement to such effect
executed by the Company and holders of at least seventy five
percent (75%) of the shares of Common Stock then held by the
Investors.
9. Restrictive Legend and Stop-Transfer Orders.
9.1 Legend. The Investors understand and agree that the Company shall
cause the legend set forth below, or a legend substantially
equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Common Stock:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN A CO-SALE AGREEMENT ENTERED INTO
BY THE ORIGINAL HOLDER OF THESE SHARES, THE COMPANY AND OTHER PERSONS, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH
RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES UNDER SOME
CIRCUMSTANCES.
9.2 StopTransfer Instructions. The Investors agree, to ensure
compliance with the restrictions referred to herein, that the
Company may issue appropriate "stop transfer" certificates or
instructions with respect to the Common Stock and that, the
Company may make appropriate notations to the same effect in its
records.
10. Miscellaneous Provisions.
10.1 Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Co-Sale
Agreement to any party by any of the other parties shall be in
writing and shall be deemed to have been duly given when (a)
delivered in person, (b) the day following dispatch by a
nationally recognized overnight courier service (such as Federal
Express or UPS, etc.) for next day delivery, (c) five (5) days
after dispatch by certified or registered first class mail,
postage prepaid, return receipt requested, to the party to whom
the same is so given or made or (d) in the case of notice sent by
telecopy, on the date of dispatch, provided that the report
generated by the sender's telecopy machine shows that all pages
of such notice or other communication were properly transmitted
to each recipient's telecopy number. Any notice or other
communication given hereunder shall be addressed to the Company,
at its principal offices as set forth below or to the Investors
at their addresses indicated on the signature page hereto.
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10.2 Binding on Successors and Assigns. This Co-Sale Agreement, and
the rights and obligations of the parties hereunder, shall inure
to the benefit of, and be binding upon, their respective
successors, assigns and legal representatives.
10.3 Severability. If one or more of the provisions of this Co-Sale
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
Co-Sale Agreement, and such invalid, illegal or unenforceable
provision shall be enforced to the extent permissible.
10.4 Amendment. Any amendment, modification or waiver of this Co-Sale
Agreement shall be effective only with the written consent of (i)
Investors holding more than seventy five percent (75%) of the
then outstanding Common Stock, and (ii) the Company; provided,
however, that any person may waive, reduce or release (in whole
or in part) any of its rights hereunder without the consent of
any other parties hereto. Any waiver by a party of its rights
hereunder shall be effective only if evidenced by a written
instrument executed by a duly authorized representative of such
party.
10.5 Governing Law. This Co-Sale Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws
pertaining to choice of conflict of laws) of the State of
Delaware. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this
Co-Sale Agreement shall be adjudicated before a court located in
Wilmington, Delaware and they hereby submit to the exclusive
jurisdiction of the courts of the State of Delaware located in
Wilmington, Delaware and of the federal courts in the State of
Delaware with respect to any action or legal proceeding commenced
by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that
such court is an inconvenient forum, relating to or arising out
of this Co-Sale Agreement or any acts or omissions relating to
the sale of the securities hereunder, and consent to the service
of process in any such action or legal proceeding by means of
registered or certified mail, return receipt requested, in care
of the address set forth in Section 6.1 or such other address as
each party shall furnish in writing to the other parties.
10.6 Obligations of Company. The Company agrees to use its best
efforts to enforce and abide by the terms of this Co-Sale
Agreement, to inform the Investors of any breach hereof (to the
extent the company has knowledge thereof) and to assist the
Investors in the exercise of their rights hereunder.
10.7 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Co-Sale Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief
to which such party may be entitled.
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10.8 Counterparts. This Co-Sale Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same
instrument.
10.9 Facsimile Signatures. Any signature page delivered by a fax
machine or telecopy machine shall be binding to the same extent
as an original signature page, with regard to any agreement
subject to the terms hereof or any amendment thereto. Any party
who delivers such a signature page agrees to later deliver an
original counterpart to any party which requests it.
10.10 Entire Agreement. This Co-Sale Agreement, together with the
exhibit hereto, constitutes the entire understanding and
agreement of the parties with respect to the subject matter
hereof and supersedes all prior understandings and agreements
with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Co-Sale
Agreement as of the date first written above.
TOXCO, INC.,
a _________ corporation
By:
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Address:
INVESTORS:
ACACIA RESEARCH CORPORATION, a Delaware
corporation
By:
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Address:
COMBIMATRIX CORPORATION, a Delaware
corporation
By:
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Address: