1
RESTATED INVESTORS' RIGHTS AGREEMENT
THIS RESTATED INVESTORS' RIGHTS AGREEMENT (the "AGREEMENT") is made as of
____________, 1998 by and among BIOSTAR, INC., a Delaware corporation, and its
successors or assigns (the "COMPANY"), Cortech, Inc., a Delaware corporation
("Cortech") and the investors listed on Schedule A hereto. Each such investor is
herein referred to individually as an "INVESTOR" and collectively as the
"INVESTORS."
RECITALS
WHEREAS, the Company has entered into an Agreement and Plan of Merger and
Reorganization dated as of December 22, 1997 (the "MERGER AGREEMENT") with
Cortech, and Cortech Merger Sub, Inc., a wholly-owned subsidiary of Cortech
("MERGER SUB"), pursuant to which Merger Sub will merge with and into the
Company (the "MERGER"). Upon consummation of the Merger, Merger Sub will cease
to exist and the Company will be a wholly-owned subsidiary of Cortech;
WHEREAS, stock rights were previously granted to the Investors pursuant to
the Restated Investors' Rights Agreement dated as of June 27, 1994, as amended
November 14, 1994, March 12, 1996, June 20, 1997 and February 2, 1998 (the
"PRIOR RIGHTS AGREEMENT");
WHEREAS, pursuant to Section 5.14 of the Merger Agreement, upon the
Effective Time of the Merger, Cortech shall assume the Company's obligations
under the Prior Agreement, as to be amended and restated as further set forth
herein; and
WHEREAS, in order to induce Cortech, Merger Sub and the Company to
consummate the Merger, the Investors and the Company hereby agree to amend and
restate the Prior Rights Agreement as further set forth herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) The term "ACT" means the Securities Act of 1933, as amended;
(b) The term "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(c) The term "REGISTRABLE SECURITIES" means the Cortech Common
Stock (as defined in the Merger Agreement) issued in exchange for: (1) the
Series A Preferred Stock, (2) the Series B Preferred Stock, (3) the Series B
Preferred Stock issuable upon exercise of a warrant potentially exercisable for
a maximum of 60,750 shares of the Company's Series B Preferred Stock (the
"SERIES B WARRANT") issued to Dominion Ventures, Inc. ("DVI") pursuant
1.
2
to that certain Warrant to Purchase Shares of Series B Preferred Stock, dated
November 2, 1992, (4) the Series C Preferred Stock issuable in exchange for
cancellation of the Convertible Contingent Payment Instrument (the "CONVERTIBLE
INSTRUMENT") issued to the BMPI Liquidating Trust (the "TRUST") pursuant to that
certain Asset Purchase Agreement dated June 17, 1992, by and between the Company
and the Trust (the "ASSET PURCHASE Agreement"), (5) the Series D Preferred
Stock, (6) the Series E Preferred Stock, (7) the Series E Preferred Stock
issuable upon exercise of warrants potentially exercisable for a maximum of
53,357 shares of the Company's Series E Preferred Stock issued to DVI pursuant
to that certain Warrant to Purchase shares of Series E Preferred Stock, dated
February 18, 1994, (8) the Common Stock issuable upon exercise of warrants
potentially exercisable for a maximum of 2,571,426 shares of the Company's
Common Stock, issued pursuant to that certain Note and Warrant Purchase
Agreement dated as of March 20, 1996 by and between the Company and various
investors, (9) the Series E Preferred Stock issuable upon exercise of warrants
potentially exercisable for a maximum of 85,714 shares of the Company's Series E
Preferred stock issued to Silicon Valley Bank pursuant to that certain Loan and
Security Agreement, dated September 15, 1995 and the Series E Preferred Stock
issuable upon exercise of warrants potentially exercisable for a maximum of
321,429 shares of the Company's Series E Preferred Stock issued to Venture
Lending, a Division of Cupertino National Bank and Trust ("VENTURE LENDING")
pursuant to that certain Bridge Loan Agreement, dated April 30, 1997, (10) the
Series F Preferred Stock issuable upon exercise of warrants issued in connection
with the sale of Subordinated Notes in June 1997 and issued to Venture Lending
in connection with the Loan and Security Agreement, dated January , 1998, upon
conversion of Convertible Notes issued in March and April of 1996 (as amended)
and accrued interest thereon and upon conversion of Subordinated Notes issued in
June 1997 (as amended) and accrued interest thereon and (11) any Common Stock of
the Company issued (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 Series A, Series
B, Series C, Series D, Series E or Series F Preferred Stock or Common Stock,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which his rights under this Section 1 are not assigned;
(d) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(e) The term "HOLDER" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof; and
(f) The term "FORM S-3" means such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently adopted
by the Securities and Exchange Commission ("SEC") which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
2.
3
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive after the earlier of (A) ninety
(90) days after the effective date of a registration statement for the first
public offering of securities of Cortech (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or a SEC Rule 145 transaction)
following the Effective Time of the Merger (as defined in the Merger Agreement),
and (B) the first anniversary of the Effective Time of the Merger, a written
request from the Holders of at least a majority of the Registrable Securities
then outstanding that the Company file a registration statement under the Act
covering the registration of at least twenty percent (20%) of the Registrable
Securities then outstanding (or a lesser percent if the anticipated aggregate
offering price, net of underwriting discounts and commissions would exceed
$5,000,000), then the Company shall, within ten (10) days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations of subsection 1.2(b), effect as soon as practicable, and in
any event shall use its best efforts to effect within sixty (60) days of the
receipt of such request, the registration under the Act of all Registrable
Securities which the Holders request to be registered within twenty (20) days of
the mailing of such notice by the Company in accordance with paragraph 2.6.
(b) If the Holders initiating the registration request hereunder
("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 1.2 and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include his 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 (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
(together with the Company as provided in subsection 1.4(e)) 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. Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; 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.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 1.2.
(d) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by
3.
4
the President 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 shareholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer taking action with respect to such filing
for a period of not more than 60 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
1.3 COMPANY REGISTRATION. If, after the earlier of (A) ninety (90)
days after the effective date of a registration statement for the first public
offering of securities of Cortech following the Effective Time of the Merger and
(B) the first anniversary of the Effective Time of the Merger (but without any
obligation to do so), the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its stock or other securities under the Act in connection with
the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of such
registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 2.6, the
Company shall, subject to the provisions of Section 1.8, cause to be registered
under the Act all of the Registrable Securities that each such Holder has
requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best 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 twenty (120) days.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
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 jurisdiction as
4.
5
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 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 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) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, 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 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, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated 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 public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
1.5 FURNISH INFORMATION.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
5.
6
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2 including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel or the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all Participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to Section
1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and Commissions relating
to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall (i) the amount of securities
of the selling Holders included in the offering be reduced below thirty percent
(30%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities in which
case the selling stockholders may be excluded if the underwriters make the
determination described above and no other stockholder's securities are included
or (ii) notwithstanding (i) above, any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning
6.
7
apportionment, for any selling stockholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling stockholder," and
any pro-rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder," as defined in
this sentence.
1.9 DELAY OF REGISTRATION. 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 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 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"): (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 Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(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 any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under
7.
8
the Act, the 1934 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 expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.10(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, that, in no event
shall any indemnity under this subsection 1.10(b) exceed the gross proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 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 1.10, 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
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, 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 1.10.
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
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 statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or 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.
8.
9
(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
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.1 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the Effective Time of the Merger;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the 1998 fiscal year;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 FORM S-3 REGISTRATION. In case, after the earlier of (A) ninety
(90) days after the effective date of a registration statement for the first
public offering of Cortech's shares following the Effective Time of the Merger
and (B) the first anniversary of the Effective Time of the Merger, the Company
shall receive from any Holder or Holders of twenty percent (20%) or more of the
Registrable Securities then outstanding a written request or requests that the
Company effect a registration on Form S-3 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:
9.
10
(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, 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
fifteen (15) 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 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) 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 (net of any
underwriters' discounts or commissions) of less than $250,000; (3) if the
Company shall furnish to the Holders a certificate signed by the president 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
shareholders 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 sixty (60) days after
receipt of the request of the Holder or Holders under this Section 1.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve-month period; (4) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected two registrations on
Form S-3 for the Holders pursuant to this Section 1.12; or (5) 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
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. All expenses incurred in connection with a
registration requested pursuant to Section 1.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne pro rata by
the Holder or Holders participating in the Form S-3 Registration. Registrations
effected pursuant to this Section 1.12 shall not be counted as demands for
registration or registrations effected pursuant to Sections 1.2 or 1.3,
respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 500,000 shares of Registrable Securities (subject to appropriate
adjustment to reflect the Exchange Ratio (as defined in the Merger Agreement),
stock splits, stock dividends, combinations and other recapitalization), or if
less, the entire amount of Registrable Securities held by such Holder is
transferred, provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration
10.
11
rights are being assigned; and provided, further, that such assignment shall be
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Act. For
the purposes of determining the number of shares of Registrable Securities held
by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights receiving notices or taking any action under this Section
1. For the purposes of determining the number of shares of Registrable
Securities held by a transferee or assignee the holdings of transferees and
assignees of a trust who are beneficiaries of such trust (including spouses and
ancestors, lineal descendants and siblings of such beneficiaries or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the trust; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1. The
registration rights of the Holders under this Agreement may be transferred to
any transferee which is an affiliated Limited Partnership (as defined in the
Series B Warrant) or fund of such Holder ("AFFILIATED FUND") without the prior
written consent of the Company and without regard to the number of shares of
Registrable Securities held by such transferee.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 1.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Investor hereby agrees that,
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Act, shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that (i) all officers and directors of the
Company and all other persons with registration rights (whether or not pursuant
to this Agreement) enter into similar agreements, (ii) the provisions of this
Section 1.15 shall terminate and be of no further force or effect three (3)
years after the consummation of the first public offering of securities of
Cortech after the Effective Time of the
11.
12
Merger (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction) and (iii) such period of
duration shall not exceed one hundred eighty (180) days; provided that the
parties hereto expressly agree to and understand that such 180-day period may be
shortened or lengthened by a writing signed by the holders of a majority of the
Registrable Securities.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 AMENDMENT AND WAIVER OF REGISTRATION RIGHTS. Any provision of
this Section 1 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 fifty percent (50%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
1.17 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled
to exercise any right provided for in this Section 1 after five (5) years after
the earlier of (A) one (1) year following the Effective Time of the Merger or
(B) ninety (90) days after the effective date of the registration statement for
the consummation of the first public offering of securities of Cortech after the
Effective Time of the Merger.
2. MISCELLANEOUS.
2.1 EFFECTIVENESS OF AGREEMENT; SUPERSEDES PRIOR RIGHTS AGREEMENT;
ASSUMPTIONS OF OBLIGATIONS BY CORTECH. This Agreement shall be effective from
and after the Effective Time of the Merger and shall supersede the Prior
Agreement, which agreement shall be terminated as of the Effective Time of the
Merger without any liability to any party thereto and shall be of no further
force or effect. By executing this Agreement, each signatory consents to the
termination of such prior agreement, without liability to any party thereto, as
provided by this Section 2. Upon the effectiveness of this Agreement, Cortech
shall be deemed a successor and assign of the Company for purposes of this
Agreement and shall assume all of the Company's obligations under this
Agreement, and the term the "Company" as used herein shall be deemed to
specifically include Cortech from and after the effectiveness hereof.
2.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
12.
13
2.3 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
2.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.6 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
2.7 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this 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.
2.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended,
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only as
set forth in Section 1.16 above. Any amendment or waiver effected in accordance
with this Agreement shall be binding upon each holder of any Cortech Common
Stock issued in exchange for any Registrable Securities pursuant to the Merger
Agreement and the Company.
2.9 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
2.10 ASSIGNMENT. Except as provided in Section 1.13, neither this
Agreement nor the rights and obligations contained herein may be assigned by an
Investor without the prior written consent of the Company. Any assignment in
violation of the preceding sentence shall be void.
2.11 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
2.12 AGGREGATION OF STOCK. All shares of the Company's Common Stock or
Preferred Stock held or acquired by affiliated venture capital or partnerships
or limited or general partners of such partnerships shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
13.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BIOSTAR, INC. CORTECH, INC.
By: By:
------------------------------- -------------------------------
Teresa W. Ayers, President/Chief Kenneth R. Lynn, President/Chief
Executive Officer Executive Officer
Address: 6655 Lookout Road Address: 6850 N. Broadway, Suite G
Boulder, CO 80301 Denver, CO 80221
INVESTORS:
KLEINER PERKINS CAUFIELD & BYERS VI SILICON VALLEY BANK
By: By:
------------------------------- --------------------------------
A general partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
HILL PARTNERSHIP III SKANDIGEN AB
By: Hill, Carman Ventures
A Limited Partnership By:
---------------------------------
By:
------------------------------- Address: Norrlandsgatan 15
A general partner S-111 43
Stockholm, Sweden
Address: 885 Arapahoe Avenue
Boulder, CO 80303
MARQUETTE VENTURE PARTNERS II, L.P. MVP II AFFILIATES FUND, L.P.
By: Marquette General II, L.P. By: Marquette General II,
its General Partner its General Partner
By: By:
------------------------------- --------------------------------
An authorized signatory An authorized signatory
Address: 520 Lake Cook Road, Suite 450 Address: 520 Lake Cook Road,
Deerfield, IL 60015 Suite 450
Deerfield, IL 60015
14.
15
INTEGRAL CAPITAL PARTNERS, L.P. INTEGRAL CAPITAL PARTNERS
INTERNATIONAL, C.V.
By: Integral Capital Management, L.P., By: Integral Capital Management, L.P.,
its General Parmer its Investment General Partner
By: By:
------------------------------- -------------------------------------
Its general partner Its general partner
Address: 2750 Sand Hill Road Address: 2750 Sand Hill Road
Menlo Park, CA 94025 Menlo Park, CA 94025
WILLIAM H. GATES, L.P. DOMINION VENTURES, INC.
By: By:
------------------------------- -------------------------------------
Address: 15302 Woodfern Drive, S.E. Address: Attn: Andy Evans
Millcreek, WA 98012 15302 25th Drive, SE
Millcreek, WA 98012
AB THOMAS FISCHER & CO.
By:
------------------------------- -------------------------------------
Marc D. Beer
Address: 50 Silverhill Road Address: Skandigen AB
Sudbury, MA 01776 c/o Krister Wallin
Norrlandsgatan 15
S-111 43
Stockholm, Sweden
BMPI LIQUIDATING TRUST
By:
-------------------------------- -------------------------------------
Philip L. McMahon
Address: c/o Colorado Venture
Management Inc. Address: 2200 Alpine Drive
4845 Pearl Street, East Boulder, CO 80304
Suite 300
Boulder, CO 80301
15.
16
MARVIN H. CARUTHERS TRUST FOR MARVIN H. CARUTHERS TRUST FOR
ANDREW HARRY CARUTHERS JONATHAN MARVIN CARUTHERS
By: By:
-------------------------------- ----------------------------------
Trustee Trustee
Address: 2450 Cragmoor Road Address: 2450 Cragmoor Road
Boulder, CO 80303 Boulder, CO 80303
VENTURE BANKING GROUP, A DIVISION GC&H INVESTMENTS
OF CUPERTINO NATIONAL BANK AND TRUST
By: By:
---------------------------------- -----------------------------------
Address: Three Palo Alto Square Address: c/o Cooley Godward LLP
Suite 150 One Maritime Plaza
Palo Alto, CA 94306 20th Floor
San Francisco, CA 94111-3580
---------------------------------- -------------------------------------
Henry T. Pietraszek Frank Barnes
Address: 4951 North Abendia de Vizcaya Address: Frank Barnes & Associates
Tucson, AZ 85718 809 W. 57th Street
Kansas City, MO 64113
MAYFIELD MEDICAL PARTNERS MAYFIELD ASSOCIATES
By: By:
------------------------------- -------------------------------
A general partner A general partner
Address: 2800 Sand Hill Rd., Suite 250 Address: 2800 Sand Hill Rd.,
Menlo Park, CA 94025 Suite 250
Menlo Park, CA 94025
16.
17
MAYFIELD VI
By:
------------------------------------
A general partner
Address: 2800 Sand Hill Rd., Suite 250
Menlo Park, CA 94025
17.
18
SCHEDULE A
SCHEDULE OF INVESTORS
Kleiner Perkins Caufield & Byers VI
Hill Partnership III
Marquette Venture Partners II, L.P.
MVP II Affiliates Fund L.P.
Integral Capital Partners
Integral Capital Partners International
Skandigen AB
BMPI Liquidating Trust
Thomas Fischer
Mayfield VI
Mayfield Associates
Mayfield Medical Partners
William H. Gates, L.P.
Dominion Ventures, Inc.
AB Thomas Fischer & Co.
Henry T. Pietraszek
Philip L. McMahon
Marc D. Beer
Marvin H. Caruthers Trust for Jonathan Marvin Caruthers
Marvin H. Caruthers Trust for Andrew Harry Caruthers
GC&H Investments
Frank Barnes
Venture Banking Group