This Investors’ Rights Agreement (the “Agreement”) is made as of by and among ACME Resources LLC, a TX LLC (the “Company”), and the investors listed on Schedule A (each, an “Investor” and collectively the “Investors”), in connection with the Company’s sale of Preferred Stock pursuant to the Stock Purchase Agreement dated .
“Registrable Securities” means the Common Stock issuable upon conversion of the Preferred Stock held by the Investors and any Common Stock issued as a dividend or other distribution with respect thereto. “Major Investor” means any Investor that holds at least shares of Registrable Securities (as adjusted for splits and combinations).
(a) Demand Registration. At any time beginning the earlier of years after the date of this Agreement or months after the Company’s initial public offering, the holders of at least a majority of the Registrable Securities may demand that the Company register their Registrable Securities, provided the anticipated aggregate offering price is at least . The Company is obligated to effect no more than two (2) such demand registrations.
(b) Piggyback Registration. If the Company proposes to register any of its securities (other than on Form S-8 or in connection with a business combination), the Investors will be entitled to include their Registrable Securities, subject to customary underwriter cutbacks that may not reduce the Investors’ shares below of the total registered (except in the IPO).
(c) Form S-3 Registration. Once eligible to use Form S-3, the Company will effect registrations on Form S-3 upon request from holders of Registrable Securities with an anticipated aggregate offering price of at least .
(d) Expenses. The Company will pay all registration expenses (other than underwriting discounts and selling commissions) for the registrations described above.
(e) Market Stand-Off. Each Investor agrees not to sell or otherwise transfer any securities of the Company during the -day period following the effective date of the Company’s initial public offering, subject to the same restriction applying to officers, directors, and other 1% holders.
So long as a Major Investor holds Registrable Securities, the Company will deliver to such Major Investor: (a) annual unaudited (or, if available, audited) financial statements within days after the end of each fiscal year; (b) quarterly unaudited financial statements within days after the end of each quarter; and (c) an annual budget and operating plan prior to the start of each fiscal year. The Company will also afford each Major Investor reasonable inspection rights. These information rights terminate upon the closing of a qualified initial public offering or a Change of Control.
Each Major Investor has a right of first offer to purchase its pro rata share of any New Securities the Company proposes to issue. A Major Investor’s “pro rata share” equals the ratio of (a) the number of shares of Registrable Securities held by such Major Investor to (b) the Company’s total outstanding shares on a fully diluted, as-converted basis. The Company will give written notice of any proposed issuance, describing the New Securities and the price and terms; each Major Investor will have days to elect to purchase its pro rata share. “New Securities” excludes customary carve-outs, including shares issued under board-approved equity incentive plans, in connection with acquisitions, to lenders or lessors, and upon conversion of outstanding convertible securities.
The Company covenants that it will: (a) maintain in force director and officer insurance if and as approved by the Board; (b) ensure that all current and future employees and consultants execute confidential information and invention assignment agreements; (c) cause founder and key-employee equity to be subject to vesting as approved by the Board; and (d) not amend its charter or bylaws in a manner adverse to the Investors’ rights under this Agreement without the requisite consent.
The registration rights in Section 2 terminate upon the earlier of (a) a Change of Control, (b) the date on which all Registrable Securities may be sold without restriction under Rule 144 in a single 90-day period, or (c) years after the Company’s initial public offering. The information and preemptive rights terminate upon a qualified IPO or Change of Control.
This Agreement may be amended or waived only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding, and any such amendment or waiver will bind all parties. This Agreement is governed by the laws of the State of TX and may be executed in counterparts, including by electronic signature.
By: Michael Yuan
Title: General Manager
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