EXHIBIT 10.15
LIPOMED, INC.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is entered into as of
December 22, 2000, by and among LipoMed, Inc., a Delaware corporation (the
"Company"), the holders of the Company's Series D Preferred Stock listed on
Exhibit A attached hereto (the "Investors"), and those persons listed on Exhibit
B attached hereto (each individually a "Common Holder" and, collectively, the
"Common Holders").
WHEREAS, in connection with the issuance and sale of shares of Company's
Series D Preferred Stock (the "Series D Stock") to the Investors pursuant to
that certain Series D Preferred Stock Purchase Agreement, dated as of the date
hereof, by and between the Company and the Investors (the "Series D Agreement"),
the Company desires to provide the Investors certain rights with respect to
registration of the shares of stock held by them and certain other rights with
respect to such shares as an inducement to the Investors to purchase shares of
the Series D Stock.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
conditions contained herein, the Company, the Investors and the Common Holders
hereby agree as follows.
Section 1.
RESTRICTIONS ON TRANSFER
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1.1 Restrictive Legend. Each certificate representing (i) the Series D
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Stock, (ii) the Common Stock of the Company (the "Common Stock") issued upon
conversion of the Series D Stock, and (iii) any other securities issued in
respect of the Series D Stock or Common Stock issued upon conversion of the
Series D Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of this Section 1.1 or Section 1.2 below) be stamped or otherwise
imprinted with a legend in substantially the following form (in addition to any
legend required under applicable state securities laws).
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
COPIES OF THE
STOCK PURCHASE AGREEMENT AND INVESTOR RIGHTS AGREEMENT PROVIDING FOR
RESTRICTIONS ON TRANSFER OF THESE SECURITIES MAY BE OBTAINED UPON WRITTEN
REQUEST BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION."
Each Holder (as defined below) consents to the Company's making a notation
on its records and giving instructions to any transfer agent of the Series D
Stock or the Common Stock in order to implement the restrictions on transfer
established in this Section 1. Such legend shall be removed by the Company from
any certificate at such time as the holder of the shares represented by the
certificate satisfies the requirements of Rule 144(k) under the Securities Act
of 1933, as amended (the "1933 Act"), provided that Rule 144(k) as then in
effect does not differ substantially from Rule 144(k) as in effect as of the
date of this Agreement, and provided further that the Company has received from
the Holder a written representation that (i) such Holder is not an affiliate of
the Company and has not been an affiliate during the preceding three months,
(ii) such Holder has beneficially owned the shares represented by the
certificate for a period of at least two years, (iii) such Holder otherwise
satisfies the requirements of Rule 144(k) as then in effect with respect to such
shares, and (iv) such Holder will submit the certificate for any such shares to
the Company for reapplication of the legend at such time as the holder becomes
an affiliate of the Company or otherwise ceases to satisfy the requirements of
Rule 144(k) as then in effect.
1.2 Notice of Proposed Transfers. The holder of each certificate
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representing Registrable Securities (as defined below) by acceptance thereof
agrees to comply in all respects with the provisions of this Section 1.2. Prior
to any proposed sale, assignment, transfer or pledge of any Registrable
Securities, unless there is in effect a registration statement under the 1933
Act covering the proposed transfer, the holder thereof shall give written notice
to the Company of such holder's intention to effect such transfer, sale,
assignment or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or pledge in sufficient
detail, and, if reasonably requested by the Company, shall be accompanied at
such holder's expense by either (i) a written opinion of legal counsel who
shall, and whose legal opinion shall, be reasonably satisfactory to the Company
addressed to the Company, to the effect that the proposed transfer of the
Registrable Securities may be effected without registration under the 1933 Act
or (ii) a "no action" letter from the SEC to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Securities and Exchange Commission (the "SEC") that action be taken
with respect thereto, whereupon the holder of such Registrable Securities shall
be entitled to transfer such Registrable Securities in accordance with the terms
of the notice delivered by the holder to the Company. The Company will not
require such a legal opinion or "no action" letter in any transaction in
compliance with Rule 144 or for a transfer by a Holder, (a) which is a
partnership, to such partnership's partners or employees or former employees or
former partners or employees in accordance with partnership interests and in
accordance with the partnership's agreement, (b) which is a limited liability
company, to such limited liability company's members or former members in
accordance with their interests in
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the limited liability company, (c) which is a corporation, to such corporation's
stockholders in accordance with their stock ownership, (d) to a subsidiary or
affiliate of the Holder or (e) to the Holder's family member or 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, she or it
were an original Holder hereunder. Each certificate evidencing the Registrable
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.1 above, except that such certificate shall not bear such restrictive
legend if in the opinion of counsel for such holder and the Company such legend
is not required in order to establish compliance with any provisions of the 1933
Act.
Section 2.
REGISTRATION RIGHTS
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The Company hereby grants to each of the Holders (as defined below) the
registration rights set forth in this Section 2, with respect to the Registrable
Securities (as defined below) owned by such Holders. The Company and the Holders
agree that the registration rights provided herein set forth the sole and entire
agreement, and supersede any prior agreement, between the Company and the
Holders with respect to registration rights for the Company's securities.
2.1 Certain Definitions. As used in this Section 2:
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(a) The terms "register," "registered" and "registration" refer to a
registration effected by filing with the SEC a registration statement (the
"Registration Statement") in compliance with the 1933 Act, and the declaration
or ordering by the SEC of the effectiveness of such Registration Statement.
(b) The term "Registrable Securities" means (i) Common Stock issued
or issuable upon conversion of the shares of Series D Stock held by Investors or
any transferee as permitted by Section 2.9 hereof, and (ii) any Common Stock
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange or in replacement of, such Registrable Securities; provided,
however, that shares of Common Stock or other securities shall only be treated
as Registrable Securities if and so long as (A) they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, (B) they have not been sold in a transaction exempt from
the registration and prospectus delivery requirements of the 1933 Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale, and (C) the
registration rights associated with such securities have not been terminated
pursuant to Section 2.16 hereof.
(c) The term "Holder" (collectively, "Holders") means each Investor
and any transferee, as permitted by Section 2.9 hereof, holding Registrable
Securities, securities exercisable or convertible into Registrable Securities or
securities exercisable for securities convertible into Registrable Securities.
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2.2 Demand Registration
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(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of at least forty percent (40%)
of the Registrable Securities then outstanding (the "Initiating Holders") that
the Company file a registration statement under the Securities Act covering the
registration of such Registrable Securities, then the Company shall promptly
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, 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,
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 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). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration. If
the underwriter has not limited the number of Registrable Securities to be
underwritten, the Company may include securities for its own account (or for the
account of other stockholders) in such registration if the underwriter so agrees
and if the number of Registrable Securities would not thereby be limited.
(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 third anniversary of the
date of this Agreement or (B) 180 days following the effective date of the
registration statement pertaining to the Company's first underwritten public
offering of its Common Stock registered under the 1933 Act (an "Initial
Offering");
(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective;
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(iii) during the period starting thirty (30) days prior to the
date of filing of, and ending on the date one hundred eighty (180) days
following the effective date of a registration statement pertaining to a public
offering of the Company's securities in which the Holders have the right to
register the Registrable Securities pursuant to Section 2.3; provided that the
Company makes reasonable good faith efforts to cause such registration statement
to become effective;
(iv) 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 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 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 one hundred twenty (120) days
after receipt of the request of the Initiating Holders; provided that such right
to delay a request shall be exercised by the Company not more than once in any
twelve (12) month period;
(v) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 2.4 below; or
(vi) in any particular jurisdiction in which the Company would
be required to qualify to conduct business or execute a general consent to
service of process in effecting such registration, qualification or compliance
unless the Company is already so qualified or subject to service in such
jurisdiction.
2.3 Piggyback Registration.
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(a) Notice of Registration. If at any time or from time to time the
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Company shall determine to register any of its securities, either for its own
account or for the account of security holders, other than a registration
relating solely to employee benefit plans, a registration on Form S-4 relating
solely to an SEC Rule 145 transaction or a registration pursuant to Section 2.2
hereof, the Company will:
(i) promptly (but in any event 10 days prior to the filing of
any such registration statement) give to each Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under state securities laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 15 days after receipt of such written
notice from the Company, by any Holder or Holders, except as set forth in
Section 2.3(b) below.
Such Registrable Securities shall only be included in any registration
pursuant to this section 2.3 to the extent that such inclusion will not diminish
the number of securities included by the Company.
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(b) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.3(a)(i). In such event the right of any Holder to
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, together with the Company and the other parties
distributing their securities through such underwriting, 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 Section 2.3, 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 held by the Holders;
and third, to any stockholder of the Company (other than a Holder) on a pro rata
basis, provided, however, that no such reduction shall reduce the amount of
securities of the selling Holders included in the registration below twenty-five
percent (25%) 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 stockholders, in which event any or all of
the Registrable Securities of the Holders may be excluded in accordance with
this 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. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder 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 person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
(c) Right to Terminate Registration. The Company shall have the
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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 the event the Company shall receive from the
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Initiating 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
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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 of Registrable
Securities; 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 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) in such
registration at an aggregate price to the public of less than one million
dollars ($1,000,000); or
(iii) during the period starting sixty (60) days prior to 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 a
public offering of the Company's securities in which the Holders have the right
to register the Registrable Securities pursuant to Section 2.3; provided that
the Company makes reasonable good faith efforts to cause such registration
statement to become effective; or
(iv) 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 one hundred twenty (120) 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
(v) 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 Section 2.4; or
(vi) in any particular jurisdiction on 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.
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(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 registration or registrations
effected pursuant to Section 2.2 hereof.
2.5 Expenses of Registration. All expenses incurred in connection with all
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registrations effected pursuant to Sections 2.2, 2.3 and 2.4, including without
limitation all registration, filing and qualification fees (including state
securities law fees and expenses), printing expenses, escrow fees, fees and
disbursements of counsel for the Company and expenses of any special audits
incidental to or required by such registration shall be borne by the Company;
provided, however, that the Company shall not be required to pay stock transfer
taxes or underwriters' discounts or selling commissions relating to Registrable
Securities; and provided, further, that the Company shall not be required to pay
for any expenses of any registration pursuant to Section 2.4 after the Company
has effected two (2) registrations pursuant to Section 2.4, in which event the
Holders of Registrable Securities to be registered shall bear all such expenses
pro rata on the basis of the Registrable Securities to be registered.
2.6 Obligations of the Company. Whenever required under this Section 2 to
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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 diligent efforts to cause
such Registration Statement to become effective, and keep such Registration
Statement effective for the lesser of 180 days or until the Holder or Holders
have completed the distribution relating thereto; provided, however, that the
Company shall have the right to terminate such Registration Statement, or to
place a stop-transfer order with respect to the shares for which registration
has been requested thereunder, upon notice to the participating Holders to the
extent necessary, in the sole discretion of the Company upon the advice of
counsel, to avoid any requirement that the Company disclose material, nonpublic
information, the disclosure of which would be seriously detrimental to the
Company and its stockholders provided, further, that (i) such 180-day period
shall be extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 180-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Act, permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Act, or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, in the registration
statement; and
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provided further that in no event shall the Company be required to keep any such
Registration Statement effective for longer than eighteen (18) months.
(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 keep such Registration Statement
effective and to comply with the provisions of the 1933 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
1933 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 diligent efforts to register or otherwise qualify the
securities covered by such Registration Statement under such other securities
laws of such states and other jurisdictions as shall be reasonably requested by
the Holders or the managing underwriter, 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 1933 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 diligent efforts to list the Registrable Securities
covered by such Registration Statement with any securities exchange on which the
Common Stock is then listed.
(h) make available for inspection by each Holder including
Registrable Securities in such registration, any underwriter participating in
any distribution pursuant to such registration, and any attorney, accountant or
other agent retained by such Holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, as such
parties may reasonably request, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement.
(i) cooperate with Holders including Registrable Securities in such
registration and the managing underwriters, if any, to facilitate the timely
preparation and
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delivery of certificates representing Registrable Securities to be sold, such
certificates to be in such denominations and registered in such names as such
Holders or the managing underwriters may request at least two business days
prior to any sale of Registrable Securities.
(j) permit any Holder, which Holder, in the sole and exclusive
judgment, exercised in good faith, of such Holder, might be deemed to be a
controlling person of the Company, to participate in good faith in the
preparation of such Registration Statement and to require the insertion therein
of material, furnished to the Company in writing, that in the reasonable
judgment of such Holder and its counsel should be included.
2.7 Indemnification.
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(a) The Company will, and does hereby undertake to, indemnify and
hold harmless each Holder of Registrable Securities, each of such Holder's
officers, directors, managers, partners, members and agents, and each person
controlling such Holder, with respect to any registration, qualification or
compliance effected pursuant to this Section 2, and each underwriter, if any,
and each person who controls any underwriter, of the Registrable Securities held
by or issuable to such Holder, against all claims, losses, damages and
liabilities (or actions in respect thereto) to which they may become subject
under the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), or other federal or state law arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other similar document (including any related
Registration Statement, notification, or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, or (ii) any violation or alleged
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse, as incurred, each such Holder,
each such underwriter and each such director, manager, officer, partner, member,
agent and controlling person, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action; provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission made in conformity
with written information furnished to the Company by an instrument duly executed
by such Holder or underwriter specifically for use therein.
(b) Each Holder will, and if Registrable Securities held by or
issuable to such Holder are included in such registration, qualification or
compliance pursuant to this Section 2, does hereby undertake to indemnify and
hold harmless the Company, each of its directors and officers, and each person
controlling the Company, each underwriter, if any, and each person who controls
any underwriter, of the Company's securities covered by such a Registration
Statement, and each other Holder, each of such other Holder's officers,
directors, managers, partners, members and agents and each person controlling
such other Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising
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out of or based on (i) any failure of such Holder or its agents or
representatives to comply with the prospectus delivery requirements of the 1933
Act or any other applicable securities or Blue Sky law, or (ii) any untrue
statement (or alleged untrue statement) of a material fact contained in any such
Registration Statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, and will reimburse, as
incurred, the Company, each such underwriter, each such other Holder, and each
such director, officer, manager, partner, member and controlling person of the
foregoing, for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case arising under (ii) above, to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) was made in such Registration Statement, prospectus, offering
circular or other document, in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein; provided, however, that
the liability of each Holder hereunder (unless such Holder's liability hereunder
is based upon such Holder's willful misconduct) shall be limited to the
proportion of any such claim, loss, damage or liability that is equal to the
proportion that the public offering price of the shares sold by such Holder
under such Registration Statement bears to the total public offering price of
all securities sold thereunder, but in any event not to exceed the net proceeds
received by such Holder from the sale of securities under such Registration
Statement.
(c) Each party entitled to indemnification under this Section
2.6 (the "Indemnified Party") shall give notice to the party required to provide
such indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld) and the Indemnified Party may
participate in such defense at the Indemnified Party's expense if representation
of such Indemnified 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; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 2, except
to the extent that such failure to give notice shall materially adversely affect
the Indemnifying Party in the defense of any such claim or any such litigation.
An Indemnifying Party, in the defense of any such claim or litigation, may,
without the consent of each Indemnified Party, consent to entry of any judgment
or enter into any settlement that includes as an unconditional term thereof the
giving by the claimant or plaintiff therein, to such Indemnified Party, of a
release from all liability with respect to such claim or litigation.
(d) In order to provide for just and equitable contribution to
joint liability under the 1933 Act in any case in which either (i) any Holder
exercising rights under this Agreement, or any controlling person of any such
Holder, makes a claim for indemnification pursuant to this Section 2.6 but it is
judicially determined (by the entry of a final judgment or
11
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.6 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any such Holder or any such controlling person in
circumstances for which indemnification is provided under this Section 2.6;
then, and in each such case, the Company and such Holder will contribute to the
aggregate claims, losses, damages or liabilities to which they may be subject
(after contribution from others) in such proportions as shall be appropriate to
reflect the relative fault of the Company, on the one hand, and each such
Holder, on the other hand, with such relative fault determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by each such Holder, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any case, (A) no
such Holder will be required to contribute any amount in excess of the public
offering price of all securities offered by it pursuant to such Registration
Statement, after deduction of underwriting discounts and commissions (unless
such Holder's liability hereunder is based upon such Holder's willful
misconduct); and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11 (f) of the 0000 Xxx) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
(e) The indemnities provided in this Section 2.6 shall survive the
transfer of any Registrable Securities by such Holder.
2.8 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 2. The Company shall not be required to
include any Holder's Registrable Securities in any registration hereunder unless
such information shall have been provided.
2.9 Transfer of Rights. The rights contained in Sections 2 and 3 hereof
------------------
may be assigned or otherwise conveyed to transferees or assignees of Registrable
Securities, who shall be considered a "Holder" for purposes hereof, provided
that such transfer is effected in compliance with Section 1.2 hereof and such
transfer is a "Permitted Transfer" as defined herein.
For purposes of this Agreement, a "Permitted Transfer" shall mean:
(i) a transaction not involving a change in beneficial ownership; (ii)
transactions involving distribution by a stockholder that is a partnership,
limited liability company or corporation to any of its partners, members or
stockholders (as the case may be), retired partners, members or stockholders, to
affiliates of the partnership, limited liability company or corporation or to
the estate of any of its partners, members or stockholders; (iii) transactions
involving distribution without consideration by a stockholder that is a
corporation to any of its stockholders; (iv) transfers by any stockholder who is
an individual to a trust for the benefit of
12
such stockholder or his family; (v) a transfer in which the transferee acquires
at least 25% of the transferor's shares of Registrable Securities, subject to
adjustments for combinations, consolidations, recapitalizations, stock splits,
stock dividends and the like; or (vi) transfers by gift, will or intestate
succession to the spouse, lineal descendants or ancestors of any stockholder or
spouse of a stockholder.
2.10 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 2.
2.11 Subsequent Registration Rights. From and after the date hereof,
------------------------------
the Company shall not, without the prior written consent of the Holders of a
majority of the Series D Stock 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.
2.12 Rule 144 Reporting. With a view to making available to the Holders
------------------
the benefits of certain rules and regulations of the SEC that may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its diligent efforts to:
(a) Make and keep current public information available, within the
meaning of SEC Rule 144 or any similar or analogous rule promulgated under the
1933 Act, at all times after it has become subject to the reporting requirements
of the 1934 Act;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1933 Act and 1934 Act (after it has
become subject to such reporting requirements);
(c) 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 (at any time
commencing 90 days after the effective date of the first registration filed by
the Company for an offering of its securities to the general public), the 1933
Act and the 1934 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.
2.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that
----------------------------
during a period, not to exceed 180 days, following the effective date of any
registration statement of the Company filed under the 1933 Act, it shall not, to
the extent requested by the Company and any underwriter, sell, pledge, transfer,
make any short sale of, loan, grant any option for the purchase of, 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
any Common Stock which may be included in such registration; provided, however,
that all other
13
"One Percent Stockholders" with registration rights (whether or not pursuant to
this Agreement) and all officers and directors of the Company enter into similar
agreements.
For purposes of this Section 2.12, the term "One Percent Stockholder"
shall mean a stockholder of the Company who holds at least one percent of the
outstanding Common Stock of the Company (assuming conversion of all outstanding
convertible securities of the Company).
In order to enforce the foregoing covenant, the Company may impose stop
transfer instructions with respect to the Registrable Securities of each Holder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
2.14 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 a majority of the
Registrable Securities then outstanding and not registered. Any amendment or
wavier effected in accordance with this Section shall be binding upon each
Holder, each future Holder of Registrable Securities and the Company.
2.15 Inclusion of Stock Held by Common Holders. In connection with any
-----------------------------------------
registration effected pursuant to Section 2.2 hereof, the Common Holders shall
be entitled to include in such registration (on the same terms and conditions as
Holders selling their Registrable Securities in such registration) shares of
Common Stock held by such Common Holders; provided that any limitation by the
underwriter on the number of shares to be underwritten in connection with such
registration shall first be applied to the shares so included by such Common
Holders, as provided in Section 2.2(b), and provided further that each such
Common Holder's right to include shares of Common Stock in a registration
pursuant to this Section 2.15 is contingent upon such Common Holder's execution
of an indemnification and hold harmless agreement substantially in accordance
with Section 2.7(b) and an agreement to be bound by all other applicable
restrictions contained in this Section 2.
2.16 Termination of Rights. The rights of any particular Holder to
---------------------
cause the Company to register securities under Section 2 hereof shall terminate
as to any Holder upon the later to occur of (i) three (3) years after the date
of the closing of the Company's initial public offering of stock or (ii) the
time that (a) the Company has completed its initial public offering of stock and
is subject to the provisions of the Exchange Act, (b) such Holder holds less
than 1% of the Company's outstanding Common Stock (treating all shares of
Convertible Preferred Stock on an as-converted basis) and (c) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners,
former partners, members and former members) which may be required to be
aggregated with such Holder's Registrable Securities under Rule 144 may be sold
under Rule 144 during any ninety (90) day period.
14
Section 3
RIGHTS OF FIRST REFUSAL
-----------------------
3.1 Certain Definitions. As used in this Section 3:
-------------------
(a) The term "New Securities" shall mean any capital stock of the
Company, whether now authorized or not, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
does not include: (i) the Series D Stock; (ii) securities issuable upon
conversion of or with respect to Series D Stock shares issuable upon conversion
of any other preferred stock or equity or debt security of the Company issued on
or prior to the date hereof; (iii) shares of Common Stock and options, warrants
or rights convertible into such Common Stock, issued or issuable to employees,
consultants or directors of the Company pursuant to any incentive agreement or
arrangement approved by the Board of Directors of the Company in an aggregate
amount of not more than 2,300,000 shares, appropriately adjusted for any stock
split, stock dividend or other recapitalization; (iv) shares of capital stock or
securities exercisable for or convertible into such capital stock issued in
connection with any equipment leases or borrowings, direct or indirect, from
financial or other institutions regularly engaged in such business; (v) shares
issuable upon exercise of warrants to purchase the Company's preferred stock;
(vi) shares issuable upon conversion of promissory notes; (vi) securities issued
pursuant to any stock dividend, stock split, combination or other
reclassification by the Company of any of its capital stock; (vii) securities
issued pursuant to the acquisition of another corporation or business entity by
the Company or one or more of its wholly owned subsidiaries by merger,
consolidation, share exchange, purchase of substantially all the assets or other
reorganization whereby the stockholders of the Company immediately prior to the
transaction own in the aggregate more than 50% of the voting power of the
Company or other surviving entity after the transaction; or (viii) any
performance based equity issued in connection with strategic relationships or
similar arrangements approved by the Company's Board of Directors;
(b) The term "Pro Rata Share" investor means the ratio (A) the
numerator of which is the number of shares of Common Stock held by such
Investor, or issuable to such Investor upon the conversion or exercise of all
securities convertible into or exercisable for Common Stock of the Company held
by such Investor, on the date of the written notice pursuant to Section 3.2
hereof, and (B) the denominator of which is, with respect to the right of first
refusal set forth in Section 3.2, the number of shares of Common Stock
outstanding, assuming for this purpose conversion or exercise of all securities
convertible into or exercisable for Common Stock of the Company.
3.2 Right of First Refusal. The Company hereby grants to each Investor,
----------------------
subject to the terms and conditions specified in this Section 3.2, the right of
first refusal to purchase, on the terms and conditions set forth in the
Company's notice pursuant to this Section 3.2, up to such Investor's Pro Rata
Share of all New Securities that the Company may, from time to time, propose to
sell and issue. In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Investor written notice of its intention,
describing the type of New Securities, the price and the general terms upon
which the Company proposes to issue the
15
same. Each Investor shall have 20 days from the date of any such notice to
exercise its right of first refusal under this Section 3.2 for the price and
upon the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. The
Company shall have 75 days after the 15-day period described in this Section 3.2
to sell all such New Securities respecting which the Investors' rights of first
refusal hereunder were not exercised, at a price and upon terms no more
favorable in any material respect to the purchasers thereof than specified in
the Company's notice. In the event the Company has not sold all such New
Securities within such 75-day period, the Company shall not thereafter issue or
sell any New Securities without first notifying the Investors in the manner
provided herein.
3.3 Expiration of Right. The rights of first refusal granted under
-------------------
this Section 3 shall not apply to, and shall expire upon, the effectiveness of a
registration statement for the sale of the Company's shares of Common Stock in
an underwritten public offering registered under the 1933 Act yielding gross
proceeds to the Corporation (before deducting underwriter discounts) of at least
$25,000,000 and at a pre-money valuation of $150,000,000 (a "Qualified Public
Offering").
Section 4.
COMPANY COVENANTS
-----------------
The Company hereby covenants and agrees as follows:
4.1 Financial Information.
---------------------
(a) So long as any Investor or any subsidiary, affiliate or
partner of such Investor shall own at least 30% of the shares of Investor Stock
originally acquired by such Investor (including any shares of Common Stock
issued upon conversion thereof, and subject to adjustment for combinations,
consolidations, recapitalizations, stock splits, stock dividends and similar
events), the Company will furnish each such Investor, subject to Section 4.1(b)
below, the following reports:
(i) As soon as practicable after the end of each fiscal year,
and in any event within 120 days thereafter, (1) audited consolidated balance
sheets of the Company and its subsidiaries, if any, as at the end of such fiscal
year, and audited consolidated statements of income and losses, stockholders'
equity and cash flows of the Company and its subsidiaries, if any, for such
fiscal year, prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures for
the previous fiscal year, if any, all in reasonable detail and accompanied by a
report and opinion thereon by independent auditors selected by the Company's
Board of Directors; and (2) a copy of such auditors' management letter prepared
in connection therewith, if any, (as soon as such management letter is
available, which may be greater than the aforesaid 120-day period);
(ii) As soon as practicable after the end of each of the first
three quarters of the fiscal year, but in any event within 45 days after the end
of each such quarter, the
16
unaudited consolidated balance sheets of the Company and its subsidiaries, if
any, as of the end of such quarter, and its unaudited consolidated statements of
income and losses, stockholders' equity and cash flows for such quarter, setting
forth in each case in comparative form the figures for the corresponding period
of the preceding fiscal year, all in reasonable detail and prepared in
accordance with generally accepted accounting principles, except that such
financial statements may not contain notes and will be subject to year-end
adjustment, and certified by the principal financial or accounting officer of
the Company. Such quarterly report shall include a narrative, summary
description of the Company's operations for such quarter, indicating whether the
Company is materially in compliance with this Agreement and other material
agreements and discussing any material variances from the Company's operating
plan;
(iii) As soon as practicable after the adoption thereof, an
annual operating plan for each fiscal year; and
(iv) With reasonable promptness, such other information
respecting the business, properties or the condition or operations, financial or
other, of the Company or any subsidiary as any Holder may from time to time
reasonably request.
(b) The Company shall not be obligated pursuant to this Section 4.1
to provide financial information to any person whom the Company reasonably
believes is a competitor of the Company.
(c) The rights granted pursuant to this Section 4.1 may not be
assigned or otherwise conveyed by any Investor or by any subsequent transferee
of any such rights without the prior written consent of the Company, which
consent shall not be unreasonably withheld; provided that the Company may refuse
such written consent if the proposed transferee is reasonably believed by the
Company to be a competitor of the Company;
4.2 Inspection. The Company shall permit each Investor and each
----------
transferee in a Permitted Transfer (as defined in Section 2.8(b) hereof)
(provided such transfer is effected in compliance with Section 1.2 hereof), its
attorney or its other representative to visit and inspect the Company's
properties, to examine the Company's books of account and other records, to make
copies or extracts therefrom and to discuss the Company's affairs, finances and
accounts with its officers, management, employees and independent auditors all
at such reasonable times and as often as such Investor or transferee may
reasonably request; provided, however, that the Company shall not be obligated
pursuant to this Section 4.2 to provide trade secrets or confidential
information or to provide information to any person whom the Company reasonably
believes is a competitor of the Company; provided, further, that such Investor
shall bear any costs or expenses of such investigations or inquiries.
4.3 Additional Affirmative Covenants. Without limiting any other
--------------------------------
covenant or provision hereof, the Company covenants and agrees that, so long as
at least 500,000 shares of Series D Stock remain outstanding, subject to
adjustment for combinations, stock splits, stock dividends and similar events,
it will, and will cause each subsidiary (to the extent applicable thereto) of
the Company, if and when such subsidiary exists, to:
17
(a) Payment of Taxes. Pay, and cause each subsidiary to pay,
----------------
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income, profits or business, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims that, if unpaid, might become a lien or charge upon any properties
of the Company or any subsidiary, provided that neither the Company nor any
subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by appropriate proceedings if
the Company or any subsidiary shall have set aside on its books sufficient
reserves, if any, with respect thereto;
(b) Payment of Trade Debt. Pay, and cause each subsidiary to
---------------------
pay, when due, or in conformity with customary trade terms but not later than
ninety (90) days from the due date, all lease obligations, all trade debt, and
all other indebtedness incident to the operations of the Company or its
subsidiaries, except such as are being contested in good faith and by proper
proceedings if the Company or subsidiary concerned shall have set aside on its
books sufficient reserves, if any, with respect thereto;
(c) Maintenance of Insurance. Maintain, and cause each
------------------------
subsidiary to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is customarily carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Company or such
subsidiary operates;
(d) Preservation of Corporate Existence. Preserve and
-----------------------------------
maintain, and, unless the Company reasonably deems it not to be in its best
interests, cause each subsidiary to preserve and maintain, its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each subsidiary to
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which such qualification is necessary or desirable in view of its business and
operations or the ownership or lease of its properties, except when the failure
to be so qualified would not have a material adverse effect on the Company and
its subsidiaries taken as a whole; provided that nothing in this Section 4.3(d)
shall prohibit the Company or any of its subsidiaries from engaging in a
corporate transaction in connection with the acquisition of another corporation
or business entity by the Company or one or more of its wholly owned
subsidiaries by merger, consolidation, share exchange, purchase of substantially
all the assets or other reorganization whereby the stockholders of the Company
immediately prior to the transaction own in the aggregate more than 50% of the
voting power of the Company or other surviving entity after the transaction;
(e) Intellectual Property. Secure, preserve and maintain, and
---------------------
cause each subsidiary to secure, preserve and maintain, all licenses and other
rights to use patents, processes, licenses, permits, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or used by it to
the extent necessary to the conduct of its business or the business of any
subsidiary;
18
(f) Compliance with Laws. Comply, and cause each subsidiary to
--------------------
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, the noncompliance with which could
materially adversely affect its business or financial condition;
(g) Records and Books of Account. Keep, and cause each
----------------------------
subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, returns of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made;
(h) Maintenance of Properties. Maintain and preserve, and
-------------------------
cause each subsidiary to maintain and preserve, all of its properties and assets
necessary for the proper conduct of its business, in good repair, working order
and condition, ordinary wear and tear excepted;
(i) Regulatory Compliance. Comply, and cause each subsidiary
---------------------
to comply, with all minimum funding requirements applicable to any pension,
employee benefit plans, or employee contribution plans that are subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or to the
Internal Revenue Code of 1986, as amended (the "Code"), and comply, and cause
each subsidiary to comply, in all other material respects with the provisions of
ERISA and the Code, and the rules and regulations thereunder, which are
applicable to any such plan; provided further that neither the Company nor any
subsidiary will permit any event or condition to exist that would permit any
such plan to be terminated under circumstances that would cause any material
lien provided for in section 4068 of ERISA to attach to the assets of the
Company or any subsidiary;
(j) Financings. Promptly, fully and in detail, inform the
----------
Board of Directors of any discussions, offers or contracts relating to possible
financings of any nature for the Company, whether initiated by the Company or
any other person, except for arrangements with trade creditors in the ordinary
course of business; and
(k) Nature of Business. Continue to conduct its business
------------------
without material change from the nature of the business as conducted or
contemplated as of the date of this Agreement or enter into material
transactions not in the ordinary course of business, except as approved by the
Board of Directors, including the unanimous approval of the directors nominated
by the Investors:
4.4 Reservation of Common Stock. The Company will at all times
---------------------------
reserve and keep available, solely for issuance and delivery upon the conversion
of the Preferred Stock, all Common Stock issuable from time to time upon such
conversion or exercise.
19
4.5 Stock Vesting.
--------------
(a) Unless otherwise approved by the Board of Directors, all
stock options and other stock equivalents issued prior to the date hereof to
employees, directors, consultants and other service providers shall retain their
existing vesting terms.
(b) Unless otherwise approved by the Board of Directors, all
stock options and other stock equivalents issued to employees, directors,
consultants and other service providers shall be subject to vesting as follows:
(i) 25% at the end of the first year following the date of issue, and 2.0833%
per month thereafter over the next 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.
4.6 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 forms provided to the Investors.
4.7 Expiration of Covenants. The covenants set forth in this
-----------------------
Section 4 shall expire and be of no further force or effect upon the
effectiveness of a Qualified Public Offering.
Section 5.
VOTING AGREEMENT
----------------
5.1 Investor Shares. Each of the Investors agrees to hold all
---------------
shares of voting capital stock of the Company (including but not limited to all
shares of Common Stock issued upon conversion of the Preferred Stock) registered
in their respective names or beneficially owned by them as of the date hereof
and any and all other securities of the Company legally or beneficially acquired
by each of the Investors after the date hereof subject to, and to vote such
shares in accordance with, the provisions of this Section 5.
5.2 Common Shares. Each of the Common Holders agrees to hold all
-------------
shares of voting capital stock of the Company registered in their respective
names or beneficially owned by them as of the date hereof and any and all other
securities of the Company legally or beneficially acquired by them after the
date hereof subject to, and to vote such shares in accordance with, the
provisions of this Agreement.
5.3 Election of Independent Directors. The Board of Directors of
---------------------------------
the Company will consist of five (5) persons: (i) Xxxxx X. Xxxxx, representing
the Company's founders and holders of Common Stock, (ii) Xxxxxxx X. Xxxxxx, the
Company's Chief Executive Officer, (iii) Xxxxxx X. Xxxxxxx, representing the
holders of the Company's existing preferred stock, (iv) one director to be
designated by Three Arch Partners, representing the holders of the Series D
Stock, who shall initially be Xxxxxxx Xxxxxx, and (v) one independent director
to be designated by the unanimous vote of the other four directors to be
selected within a reasonable period of time
20
following the date hereof. In the interim period prior to the appointment of
such independent director, Xxxxxxx X. Xxxxxxx shall continue to serve as a
director of the Company. Each time the stockholders of the Company meet, or act
by written consent in lieu of a meeting, for the purpose of electing the
directors to serve on the Company's Board of Directors, each Common Holder and
each Investor shall vote all shares of the Company's capital stock owned by such
Common Holder or Investor, as the case may be, in order to cause the election of
the directors as set forth above. Any vote taken to remove any director elected
pursuant to this Section 5.3, or to fill any vacancy created by the resignation
or death of a director elected pursuant to this Section 5.3, shall also be
subject to the provisions of this Section 5.3.
5.4 Binding Effect of Voting Agreement. The voting agreement set forth
----------------------------------
in this Section 5 shall be binding upon any transferee of shares of the
Company's stock held by the Investors and Common Holders. Each such transferee
shall execute documents assuming the obligations of the transferor under this
Section 5 prior to the completion of such transfer.
5.5 Legends. Each certificate held by or now issued to the Investors or
-------
the Common Holders, whether now outstanding or subsequently issued, shall be
surrendered to the Company for endorsement or be endorsed by the Company prior
to its issuance with substantially the following legend (the "Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
VOTING AGREEMENT AMONG THE HOLDER OF THESE SECURITIES AND CERTAIN
OTHER HOLDERS OF THE ISSUER'S SECURITIES. BY ACCEPTING ANY INTEREST
IN SUCH SECURITIES, THE PERSON ACCEPTING SUCH INTEREST SHALL BE
DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL OF THE PROVISIONS
OF SUCH AGREEMENT. COPIES OF SUCH VOTING AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE CORPORATION."
The Company agrees that, during the term of this Agreement, it will not remove,
and will not permit to be removed (upon registration of transfer, reissuance of
otherwise), the Legend from any such certificate and will place or cause to be
placed the Legend on any new certificate issued to the Investors or the Common
Holders.
5.6 Other Rights. Except as provided by this Agreement or any other
------------
agreement entered into in connection with the Series D Agreement, each Common
Holder and Investor shall exercise the full rights of a holder of capital stock
of the Company with respect to the Common Stock and the Series D Stock held by
such Common Holder and Investor, respectively.
5.7 Termination of Voting Agreement. The covenants set forth in this
-------------------------------
Section 5 shall terminate upon the earlier of (a) the closing of a registration
statement for the sale of the
21
Company's shares of Common Stock in an underwritten public offering registered
under the 1933 Act, or (b) the date ten years from the date hereof.
Section 6.
MISCELLANEOUS
-------------
6.1 Ownership. Each Common Holder represents and warrants to the
---------
Investors that (a) such Common Holder now owns the Common Stock, free and clear
of liens or encumbrances, and has not, prior to or on the date of this
Agreement, executed or delivered any proxy or entered into any other voting
agreement or similar arrangement other than one which has expired or terminated
prior to the date hereof, and (b) such Common Holder has full power and capacity
to execute, deliver and perform this Agreement, which has been duly executed and
delivered by, and evidences the valid and binding obligation of, such Common
Holder enforceable in accordance with its terms.
6.2 Further Action. If and whenever the Common Stock is sold, the
--------------
Common Holder or the personal representative of the Common Holder shall do all
things and execute and deliver all documents and make all transfers, and cause
any transferee of the Common Stock to do all things and execute and deliver all
documents, as may be necessary to consummate such sale consistent with this
Agreement.
6.3 Specific Performance. The parties hereto hereby declare that it is
--------------------
impossible to measure in money the damages which will accrue to a party hereto
or to their heirs, personal representatives, or assigns by reason of a failure
to perform any of the obligations under this Agreement and agree that the terms
of this Agreement shall be specifically enforceable. If any party hereto or his
heirs, personal representatives, or assigns institutes any action or proceeding
to specifically enforce the provisions hereof, any person against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party or such personal representative has an adequate remedy at law, and
such person shall not offer in any such action or proceeding the claim or
defense that such remedy at law exists.
6.4 Governing Law. This Agreement shall be governed by, and construed
-------------
and interpreted in accordance with the laws of the State of Delaware as applied
to agreements among Delaware residents made and to be performed entirely within
the State of Delaware.
6.5 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. The Company shall not permit the transfer of any certificate of
the Company's stock covered hereby or issue a new certificate representing such
shares of the Company's stock unless and until the person to whom such security
is to be transferred shall have executed a written agreement, substantially in
the form of this Agreement, pursuant to which such person becomes a party to
this Agreement and agrees to be bound by all the provisions hereof as if such
person were an Investor of Common Holder, as applicable
22
6.6 Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement among the parties with regard to the subjects
hereof. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto and their successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
6.7 Severability. Any invalidity, illegality or limitation of the
------------
enforceability with respect to any Holder of any one or more of the provisions
of this Agreement, or any part thereof, whether arising by reason of the law of
any such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of this Agreement with respect to any other
Holder. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall to the extent practicable, be modified so as to make it
valid, legal and enforceable and to retain as nearly as practicable the intent
of the parties, and the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6.8 Amendment and Waiver. Except as otherwise expressly provided
--------------------
herein, 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,
either retroactively or prospectively and either for a specified period of time
or indefinitely) with the written consent of the Company and the Investors, or
their transferees holding at least a majority of the shares of Series D Stock,
voting together as a single group (treated as if converted at the conversion
rate then in effect and including, for such purposes shares of Common Stock into
which any shares of Series D Stock shall have been converted that are held by a
Holder); provided, however, that no such amendment or waiver shall reduce the
aforesaid percentage of Series D Stock and Common Stock issued upon conversion
thereof, the holders of which are required to consent to any waiver or
supplemental agreement, without the consent of the holders of all of such Series
D Stock and Common Stock; provided, further, that any amendment to Section 2.15
(or to Section 2 that would affect the rights under Section 2.15) shall also
require the consent of the holders of at least a majority of the shares of
Common Stock issued to, or issuable upon exercise of options held by, the Common
Holders. Any amendment or waiver effected in accordance with this Section 6.8
shall be binding upon each Common Holder, each Investor and each transferee of
the Registrable Securities. Upon the effectuation of each such amendment or
waiver, the Company shall promptly give written notice thereof to the Investors
and Common Holders who have not previously consented thereto in writing.
Notwithstanding anything to the contrary in this Section 6.8, the Company shall
be entitled to include additional purchasers of its Series D Stock pursuant to
the Series D Agreement as parties to this Agreement by having such additional
purchasers execute and deliver an additional counterpart signature page to this
Agreement, or a joinder agreement, and all such additional purchasers shall be
deemed "Investors" and "Holders" hereunder.
6.9 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to the Company, the Investors, or any transferees upon
any breach, default or noncompliance of the Investors or any transferee or the
Company under this Agreement, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such
23
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 the part of
the Company or the Investors of any breach, default or noncompliance under this
Agreement or any waiver on the Company's or the Investors' 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 and that all
remedies, either under this Agreement, by law, or otherwise afforded to the
Company and the Investors, shall be cumulative and not alternative.
6.10 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon confirmed delivery by facsimile or telecopy, or
on the fifth day (or the tenth day if to a party with an address outside of the
United States) following mailing by registered or certified mail, return receipt
requested, postage prepaid, addressed: (a) if to the Company, at:
LipoMed, Inc.
0000 Xxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxx & Xxxxx PLLC
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
or at such other address as the Company shall have furnished to the Investors in
writing, and
(b) if to the Investors, at the addresses of such Investors specified
on Exhibit A hereto, or at such other addresses as the Investors shall have
furnished to the Company in writing.
and (c) if to a Common Holder other than the Investors, at such Common
Holder's address as shall have been furnished to the Company in writing.
6.11 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.
6.12 Additional Shares. In the event that subsequent to the date of
-----------------
this Agreement any shares or other securities are issued on, or in exchange for,
any shares of the Company's stock
24
covered hereunder by reason of any stock dividend, stock split, combination of
shares, reclassification or the like, such shares or securities shall be subject
to the terms and provisions of this Agreement.
6.13 Covenants of the Company. The Company agrees to use its
------------------------
commercially reasonable best efforts to ensure that the rights granted hereunder
are effective and that the parties hereto enjoy the benefits thereof. Such
actions include, without limitation, the use of the Company's commercially
reasonable best efforts to cause the nomination and election of the directors as
provided above. The Company will not, by any voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all of the provisions of this Agreement and in the taking of all
such actions as may be necessary, appropriate or reasonably requested by the
holders of a majority of the outstanding voting securities held by the parties
hereto, assuming conversion of all outstanding securities, in order to protect
the rights of the parties hereunder against impairment.
6.14 No Liability for Election of Recommended Directors. Neither the
--------------------------------------------------
Company, the Common Holders, the Investors, nor any officer, director,
stockholder, partner, employee or agent of such party, makes any representation
or warranty as to the fitness or competence of the nominee of any party
hereunder to serve on the Company's Board by virtue of such party's execution of
this Agreement or by the act of such party in voting for such nominee pursuant
to this Agreement.
6.15 Grant of Proxy. Should the provisions of this Agreement be
--------------
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of the relevant
provisions of this Agreement.
6.16 Manner of Voting. The voting of shares pursuant to this Agreement
----------------
may be effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
6.17 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
25
IN WITNESS WHEREOF, this Investor Rights Agreement has been duly
executed and delivered by the parties as of the date first above written.
COMPANY:
LIPOMED, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
INVESTORS:
THREE ARCH CAPITAL, L.P.
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
By TAC Management L.L.C.
Its General Partner
MCCUTCHEN, DOYLE, XXXXX & ENERSEN, LLP
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Its: Partner
----------------------------------
PALLADIN OPPORTUNITY FUND LLC
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Its: __________________________________
26
COMMON HOLDERS:
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
/s/ F. Xxxxxx Xxxxxxx
--------------------------------
F. Xxxxxx Xxxxxxx
27
EXHIBIT A
(As amended on February 16, 2001)
Schedule of Investors
Three Arch Capital, L.P.
McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP
Palladin Opportunity Fund LLC
Xxxxx Xxxxxxx Healthcare Fund III, L.P
GE Capital Equity Investments, Inc.
Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx TTEES, U/A/D 5-9-94 As Amended, Creating the
Xxxxxx Family Trust
X.X. Xxxxx
Xxxxxxx X. & Xxxxxxxxx X. Xxxxxx TTEES for the Xxxxxx Family Trust UAD 4/14/2000
Xxx X. Xxxxxxxx
The Xxxxx Xxxx Trust, Xxxxxx Xxxx, Trustee
Xxxxxxxx X. XxXxxxx and Xxxxxx X. XxXxxxx
Xxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx X. Xxxxxx, III and Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxx, as Trustee of the Xxxxxx X. Xxxxx Revocable Trust, created U/A
dated February 6, 2001
Xxxxxxxx & Company Inc.
Xxxxxx X. Xxxxxxx Family LP
Xxxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxx
Xxxxxx X. Xxxx
Northcreek Capital Partners, LLC
Pacific Rim Life Science No. 2 Investment Partnership
Xxxx X. Xxxxxxxx, III and Xxxxxx X. Xxxxxxxx
Northern Trust Securities Inc. SEP XXX Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxx FBO Xxxxxx X. Xxxxxxxx XXX Rollover
Satellite Healthcare
Xxxxx Xxxxxx Xxxxxxx, Xx.
Xxxx X. Xxxxxx and Xxxx X. Xxxxxx
Xxxxxxxx Partners
28
Xxxxxx Xxxxxx and Xxxx Xxxxxx
29
EXHIBIT B
Schedule of Common Holders
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
F. Xxxxxx Xxxxxxx
30
FIRST AMENDMENT
TO
INVESTOR RIGHTS AGREEMENT
FIRST AMENDMENT TO INVESTOR RIGHTS AGREEMENT, dated as of August 3,
2001 (the "First Amendment"), by and among LipoMed, Inc., a Delaware corporation
(the "Company"), and certain holders of the capital stock of the Company
(collectively, the "Stockholders").
WHEREAS, the Company and the Stockholders are parties to an Investor
Rights Agreement, dated as of December 22, 2000 (the "Rights Agreement"); and
WHEREAS, pursuant to Section 6.8 of the Rights Agreement, the Company
and the Investors desire to amend and modify the provisions of the Rights
Agreement in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company and the Investors hereby agree as follows:
1. Section 3.1 of the Rights Agreement shall be amended by deleting
the first sentence of paragraph (a) of such Section 3.1 in its entirety and
substituting the following in lieu thereof:
"(a) The term "New Securities" shall mean any capital stock of the
Company, whether now authorized or not, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
does not include: (i) the Series D Stock; (ii) warrants for the purchase of an
aggregate of up to 120,000 shares of Common Stock (appropriately adjusted for
any stock split, stock dividend or other recapitalization) issued to holders of
the Series D Stock and shares of Common Stock issuable upon the exercise of such
warrants; (iii) securities issuable upon conversion of or with respect to Series
D Stock shares issuable upon conversion of any other preferred stock or equity
or debt security of the Company issued on or prior to the date hereof; (iv)
shares of Common Stock and options, warrants or rights convertible into such
Common Stock, issued or issuable to employees, consultants or directors of the
Company pursuant to any incentive agreement or arrangement approved by the Board
of Directors of the Company in an aggregate amount of not more than 3,650,000
shares, appropriately adjusted for any stock split, stock dividend or other
recapitalization; (v) shares of capital stock or securities exercisable for or
convertible into such capital stock issued in connection with any equipment
leases or borrowings, direct or indirect, from financial or other institutions
regularly engaged in such business; (vi) shares issuable upon exercise of
warrants to purchase the Company's preferred stock; (vii) shares issuable upon
conversion of promissory notes; (vi) securities issued pursuant to any stock
dividend, stock split, combination or other reclassification by the Company of
any of its capital stock; (viii) securities issued pursuant to the acquisition
of another corporation or business entity by the
31
Company or one or more of its wholly owned subsidiaries by merger,
consolidation, share exchange, purchase of substantially all the assets or other
reorganization whereby the stockholders of the Company immediately prior to the
transaction own in the aggregate more than 50% of the voting power of the
Company or other surviving entity after the transaction; or (ix) any performance
based equity issued in connection with strategic relationships or similar
arrangements approved by the Company's Board of Directors; "
2. The provisions of the Rights Agreement are hereby amended and
modified by the provisions of this First Amendment. If any of the provisions of
the Rights Agreement are materially different from or inconsistent with the
provisions of this First Amendment, the provisions of this First Amendment shall
control, and the provisions of the Rights Agreement shall, to the extent of such
difference or inconsistency, be deemed to be amended and modified.
3. This First Amendment and the Rights Agreement, as amended and
modified by the provisions of this First Amendment, shall constitute and shall
be construed as a single agreement. The provisions of the Rights Agreement, as
amended and modified by the provisions of this First Amendment, are incorporated
herein by this reference and are ratified and affirmed.
[Remainder of page intentionally left blank.]
32
IN WITNESS WHEREOF, this First Amendment has been executed and
delivered by the Company and the Investors as of the date first written above.
LIPOMED, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx, President
SERIES D INVESTORS:
THREE ARCH CAPITAL, L.P.
By: TAC Management L.L.C.
Its General Partner
By: /s/ Xxxxxxx Xxx
-------------------------
Name: Xxxxxxx Xxx
-----------------------
Title: Partner
----------------------
XXXXX XXXXXXX HEALTHCARE FUND III, L.P
By: Xxxxx Xxxxxxx Healthcare Management III, L.P.
Its: General Partner
By: /s/ Buzz Xxxxxx
-------------------------
Buzz Xxxxxx
President of Piper Ventures Capital,
Inc., its General Partner
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
-------------------------------
Name:
--------------------------
Title:
--------------------------
33
SECOND AMENDMENT
TO
INVESTOR RIGHTS AGREEMENT
SECOND AMENDMENT TO INVESTOR RIGHTS AGREEMENT, dated as of October 12,
2001 (the "Second Amendment"), by and among LipoMed, Inc., a Delaware
corporation (the "Company"), and certain holders of the capital stock of the
Company (collectively, the "Stockholders").
WHEREAS, the Company and the Stockholders are parties to an Investor
Rights Agreement, dated as of December 22, 2000, as amended (the "Rights
Agreement"); and
WHEREAS, pursuant to Section 6.8 of the Rights Agreement, the Company
and the Investors desire to amend and modify the provisions of the Rights
Agreement in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company and the Investors hereby agree as follows:
1. Section 5.3 of the Rights Agreement shall be amended by deleting
the first two sentences of such Section 5.3 in their entirety and substituting
the following sentence in lieu thereof:
"5.3 Election of Independent Directors. The Board of Directors of
---------------------------------
the Company will consist of seven (7) persons: (i) Xxxxx X. Xxxxx,
representing the Company's founders and holders of Common Stock, (ii)
Xxxxxxx X. Xxxxxx, to serve as the Chairman of the Board of Directors
of the Company, (iii) the Company's President and Chief Executive
Officer, who shall initially be F. Xxxxxx Xxxxxxx, (iv) Xxxxxx X.
Xxxxxxx, representing the holders of the Company's existing preferred
stock, (v) Xxxxxxx X. Xxx, representing the holders of the Series D
Stock (vi) Xxxxxxx X. Xxxxxxx, as an independent director, and (vii) an
additional independent director to be recommended by the holders of the
Series D Stock and approved by the full Board of Directors, to be
appointed within a reasonable period of time following the date hereof.
The holders of the Series D Stock agree to give due consideration to
recommendations for such independent director made by the Company and
the other directors. In the interim period prior to the appointment of
such additional independent director, Xxxxx Xxxxxx shall serve as such
independent director."
2. The provisions of the Rights Agreement are hereby amended and
modified by the provisions of this Second Amendment. If any of the provisions of
the Rights Agreement are materially different from or inconsistent with the
provisions of this Second Amendment, the provisions of this Second Amendment
shall control, and the provisions of the Rights Agreement shall, to the extent
of such difference or inconsistency, be deemed to be amended and modified.
34
3. This Second Amendment and the Rights Agreement, as amended and
modified by the provisions of this Second Amendment, shall constitute and shall
be construed as a single agreement. The provisions of the Rights Agreement, as
amended and modified by the provisions of this Second Amendment, are
incorporated herein by this reference and are ratified and affirmed.
35
IN WITNESS WHEREOF, this Second Amendment has been executed and
delivered by the Company and the Investors as of the date first written above.
LIPOMED, INC.
By: /s/ F. Xxxxxx Xxxxxxx
------------------------------------------
F. Xxxxxx Xxxxxxx, President
SERIES D INVESTORS:
THREE ARCH CAPITAL, L.P.
By: TAC Management L.L.C.
Its General Partner
By: /s/ Xxxxxxx Xxx
------------------------------------------
Name: Xxxxxxx Xxx
------------------------------------
Title: Member
-----------------------------------
XXXXX XXXXXXX HEALTHCARE FUND III, L.P.
By: Xxxxx Xxxxxxx Healthcare Management III, L.P.
Its: General Partner
By: /s/ Buzz Xxxxxx
------------------------------------------
Buzz Xxxxxx
President of Piper Ventures Capital, Inc., its
General Partner
EQUITY INVESTMENT TRUST,
a Delaware Business Trust
By: GE Capital Equity Corp.,
Its: Manager
By: /s/ Xxxxx Xxxxx
-------------------------------------------
Name: Xxxxx Xxxxx
----------------------------------------
Title: Attorney-In-Fact
---------------------------------------
36
37
