INVESTOR RIGHTS AGREEMENT
EXHIBIT 4.19
Execution Version
This INVESTOR RIGHTS AGREEMENT (as the same may be amended, supplemented or otherwise modified
from time to time, this “Agreement”) is made as of February 12, 2008, between Artes
Medical, Inc., a Delaware corporation (the “Company”) and Xxxxx Healthcare Royalty
Partners, L.P., a Delaware limited partnership (together with its affiliates, “CHRP”).
RECITALS
WHEREAS, pursuant to the terms of that certain Revenue Interest Financing and Warrant Purchase
Agreement (as the same may be amended, supplemented or otherwise modified from time to time, the
“Revenue Agreement”) dated as of January 28, 2008, CHRP is acquiring a warrant (as the same
may be amended, supplemented or otherwise modified from time to time, the “Second Warrant”)
dated of even date herewith, exercisable for three hundred seventy five thousand (375,000) shares
of common stock, $0.001 par value per share, of the Company (the “Common Stock”) at an
exercise price per share and subject to adjustment as set forth in the Second Warrant;
WHEREAS, pursuant to the terms of that certain Note and Warrant Purchase Agreement (as the
same may be amended, supplemented or otherwise modified from time to time, the “Note and
Warrant Purchase Agreement”) dated of even date with the Revenue Agreement, CHRP is acquiring a
warrant (as the same may be amended, supplemented or otherwise modified from time to time, the
“First Warrant”; together with the Second Warrant, the “Warrants”) dated of even
date herewith, exercisable for one million three hundred thousand (1,300,000) shares of Common
Stock at an exercise price per share and subject to adjustment as set forth in the First Warrant;
WHEREAS, the Warrants each contemplate this Agreement being executed by the parties hereto as
of the date hereof;
WHEREAS, the Company is a party to an Amended and Restated Investors’ Rights Agreement, dated
June 23, 2006 (the “Existing Agreement”), with the investors listed on Schedule A thereto,
in which the investors have certain registration rights and the Company has certain obligations to
such investors;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise provided in this Agreement, capitalized terms used herein shall
have the following meanings:
“Affiliate” shall mean any Person that controls, is controlled by, or is under common
control with another Person. For purposes of this definition, “control” shall mean (i) in
the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the
stock or shares having the right to vote for the election of directors, and (ii) in the case of
non-corporate
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entities, direct or indirect ownership of at least fifty percent (50%) of the equity
interest with the power to direct the management and policies of such non-corporate entities.
“Agreement” has the meaning set forth in the first paragraph of this Agreement.
“Board” has the meaning set forth in Section 6.1.
“Business Day” shall mean any day other than a Saturday, Sunday or U.S. federal
holiday or a day on which banking institutions located in New York, New York are authorized or
obligated to be closed.
“CHRP” has the meaning set forth in the first paragraph of this Agreement.
“CHRP Designees” has the meaning set forth in Section 6.1.
“CHRP Employee Designee” has the meaning set forth in Section 6.1.
“CHRP Industry Designee” has the meaning set forth in Section 6.1.
“Common Stock” has the meaning set forth in the recitals of this Agreement.
“Company” has the meaning set forth in the first paragraph of this Agreement.
“Confidentiality Agreement” has the meaning set forth in Section 7.5.
“Continuously Effective” with respect to the Resale Registration Statement means that
such registration statement shall not cease to be effective and available for Transfers of
Registrable Securities except as permitted by Sections 2.3, 2.4(b), or
2.4(e).
“Director Qualifications” has the meaning set forth in Section 6.3.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC thereunder, all as the same shall be in effect at that time.
“Existing Agreement” has the meaning set forth in the recitals of this Agreement.
“FINRA” means the Financial Industry Regulatory Authority (f/k/a the National
Association of Securities Dealers) and any successor entity.
“First Warrant” has the meaning set forth in the recitals of this Agreement.
“Holder” means with respect to any Registrable Securities, CHRP, unless and until CHRP
Transfers such Registrable Securities to new Holders in accordance with Section 7.4.
“Losses” has the meaning set forth in Section 5(a).
“Note” has the meaning set forth in the Note and Warrant Purchase Agreement.
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“Note and Warrant Purchase Agreement” has the meaning set forth in the recitals of
this Agreement.
“Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated organization or government or
other agency or political subdivision thereof.
“Prospectus” means the prospectus included in the Resale Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference into such
Prospectus.
“Register, Registered and Registration” refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act, and the declaration or
ordering by the SEC of effectiveness of such registration statement or document.
“Registrable Securities” means (a) any Common Stock issuable or issued upon any
exercise of the Warrants and (b) any Common Stock issued or issuable with respect to any of the
securities referred to in clause (a) by way of an event triggering any adjustment in the number of
shares of Common Stock into which the Warrant is exercisable. Except for purposes of Section
2.1(d)(iv), Registrable Securities shall be deemed to be outstanding and in existence, whenever
such Person has the right to acquire such Registrable Securities upon exercise of the Warrants,
whether or not such exercise has actually been effected, and such Person shall be entitled to
exercise the rights of a Holder of such Registrable Securities hereunder. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities when they (x) have
been registered and Transferred pursuant to the Securities Act, (y) have been Transferred pursuant
to Rule 144 or any similar rule promulgated by the SEC pursuant to the Securities Act permitting
the resale of restricted securities without the necessity of a registration statement under the
Securities Act or (z) have been Transferred to a Person, who by virtue of Section 7.4, is
not entitled to the rights provided by this Agreement.
“Registration Default” has the meaning set forth in Section 2.2.
“Registration Expenses” has the meaning set forth in Section 4.1.
“Resale Effective Deadline” has the meaning set forth in Section 2.1(b).
“Resale Filing Deadline” has the meaning set forth in Section 2.1(a).
“Resale Registration Statement” has the meaning set forth in Section 2.1(a).
“Revenue Agreement” has the meaning set forth in the recitals of this Agreement.
“SEC” means the Securities and Exchange Commission and includes any governmental
authority or agency succeeding to the functions thereof.
“Second Warrant” has the meaning set forth in the recitals of this Agreement.
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“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at that time.
“Transfer” means and includes the act of selling, giving, transferring, creating a
trust (voting or otherwise), assigning or otherwise disposing of (other than pledging,
hypothecating or otherwise transferring as security) (and correlative words shall have correlative
meanings); provided, however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event of default under or
with respect to a pledge, hypothecation or other transfer as security shall constitute a
“Transfer”; provided, further, however, no “Transfer” shall be deemed to have
occurred if CHRP continues to be an Affiliate of the Holder of the Registrable Securities after
such transfer or other distribution.
“Underwritten Registration” means a registration in which securities of the Company
are sold to an underwriter for reoffering to the public.
“Violation” has the meaning set forth in Section 5(a).
“Warrants” has the meaning set forth in the recitals of this Agreement.
2. Resale Registration Statement.
2.1 Obligations of the Company. The Company shall (subject to Section 2.3) use
commercially reasonable efforts to:
(a) cause to be filed with the SEC as soon as practicable, but in no event later than April
30, 2008 (the “Resale Filing Deadline”), a registration statement pursuant to Rule 415
under the Securities Act (the “Resale Registration Statement”), which Resale Registration
Statement shall provide for resales and Transfers of all Registrable Securities by the Holders as
permitted by such Rule 415;
(b) cause the Resale Registration Statement to be declared effective by the SEC at the
earliest practicable time (and in any event before any registration under Section 2.2 of
the Existing Agreement becomes effective), but in no event later than the earlier to occur of (i)
if the SEC notifies the Company that it does not intend to review the Resale Registration
Statement, ten (10) days after the Company receives such notice from the SEC; (ii) if the SEC fails
to notify the Company that it intends to review the Resale Registration Statement within the time
period permitted by SEC rule for the SEC to provide such notice, ten (10) days after the expiration
of the time period permitted by SEC rule for the SEC to review such Resale Registration Statement;
or (iii) if the SEC notifies the Company that it intends to review the Resale Registration
Statement, one-hundred twenty (120) days after Resale Filing Deadline (or if such day is not a
Business Day, the next succeeding Business Day, the “Resale Effective Deadline”);
(c) in connection with the foregoing, file all pre-effective amendments to the Resale
Registration Statement as may be necessary in order to cause such Resale Registration Statement to become effective and if applicable, a post-effective amendment to the Resale
Registration Statement pursuant to Rule 430A under the Securities Act; and
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(d) cause the Resale Registration Statement to remain Continuously Effective, supplemented and
amended as required by the provisions of Section 2.4 to the extent necessary to ensure that
it is available for resales and Transfers of Registrable Securities by the Holders, and to ensure
that it conforms with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the SEC as announced from time to time, for a period beginning on the
Resale Effective Deadline and continuing through the earliest to occur of (i) the date none of the
shares of Common Stock issuable upon exercise of the Warrants qualify as Registrable Securities,
(ii) the sixth (6th) anniversary of the date hereof, (iii) the date on which all of the Registrable
Securities may be sold in a single transaction by the Holder to the public pursuant to Rule 144 or
any similar rule promulgated by the SEC pursuant to the Securities Act permitting the resale of
restricted securities without the necessity of a registration statement under the Securities Act,
(iv) the date upon which CHRP has Transferred all of the Registrable Securities or (v) upon the
termination of this Agreement.
2.2 Registration Default. If (i) the Resale Registration Statement required by this Agreement
is not filed with the SEC on or prior to the Resale Filing Deadline; (ii) the Resale Registration
Statement has not been declared effective by the SEC on or prior to the Resale Effective Deadline;
or (iii) any Registration Statement required by this Agreement is filed and declared effective but
shall thereafter cease to be Continuously Effective without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure and that is itself
immediately declared effective (each such event referred to in clauses (i) through (iii), a
“Registration Default”), then the interest rate borne by the Note shall be increased to
*** percent (***%) per annum immediately for all periods where there is one or more
uncured Registration Defaults.
2.3 The Company shall be entitled to (i) postpone the effectiveness of the Resale Registration
Statement filed pursuant to this Agreement and (ii) suspend the use of any Prospectus included in
the Resale Registration Statement, in the event (a) of the issuance by the SEC of any stop order
suspending the effectiveness of the Resale Registration Statement or the initiation of any
proceedings for that purpose; (b) upon the occurrence of an event set forth in Section
2.4(b) or Section 2.4(e); or (c) the Company’s chief executive officer delivers to the
Holders an executed certificate stating that in the good faith judgment of the Board it would be
materially detrimental to the Company and its stockholders either for such Resale Registration
Statement to become effective or for Transfers to be made thereunder (including, without
limitation, due to the inadvisability of filing a required prospectus supplement or post-effective
amendment), because such action would materially interfere with, or require premature disclosure
of, any bona fide plan or proposal by the Company to engage in any material financing, acquisition,
disposition, reorganization, merger or tender offer or other significant transaction.
Notwithstanding anything to the contrary, the Company shall not exercise its rights under this
Section 2.3 more than once in any twelve (12) month period, nor for a period of more
than sixty (60) days. The Holder hereby acknowledges that any notice given by the Company
pursuant to this Section 2.3 shall constitute material non-public information.
| *** | Portions of this page have been omitted pursuant to a request for Confidential Treatment filed separately with the Commission. |
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2.4 Registration Procedures. In connection with the Company’s obligations arising under this
Agreement regarding the Resale Registration Statement (and any other Prospectus required by this
Agreement to permit the resale and Transfer of Registrable Securities), the Company will (subject
to Section 2.3 and, where applicable, subject to the Resale Registration Statement having
been declared effective) use commercially reasonable efforts to:
(a) effect such registration to permit the sale of the Registrable Securities being sold in
accordance with the intended method or methods of distribution selected by the Holders of the
Registrable Securities and permitted by Rule 415, and keep the Resale Registration Statement
Continuously Effective for all periods required by this Agreement;
(b) upon the occurrence of any event that would cause the Resale Registration Statement or any
Prospectus filed in connection therewith (i) to contain a material misstatement or omission or (ii)
not to be effective and usable for resale and Transfer of Registrable Securities during any period
required by this Agreement, the Company shall file promptly an appropriate amendment to the Resale
Registration Statement or a prospectus supplement, in the case of clause (i), correcting any such
misstatement or omission, and, in the case of either clause (i) or (ii), if a post-effective
amendment is utilized, cause such amendment to be declared effective and the Resale Registration
Statement and the related Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter;
(c) prepare and file with the SEC such amendments and post-effective amendments to the Resale
Registration Statement as may be necessary to keep the Resale Registration Statement effective for
the applicable period set forth in Section 2.1;
(d) cause the Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and
comply with the provisions of the Securities Act with respect to the disposition of all securities
covered by the Resale Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in the Resale
Registration Statement or supplement to the Prospectus;
(e) advise the Holders promptly and, if requested by such Persons, to confirm such advice in
writing, (i) when the Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to the Resale Registration Statement or any post-effective amendment
thereto, when the same has become effective; (ii) of any request by the SEC for amendments to the
Resale Registration Statement or amendments or supplements to the Prospectus or for additional
information relating thereto; (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Resale Registration Statement under the Securities Act or of the suspension by
any state securities commission of the qualification of the Registrable Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes;
(iv) of the existence of any fact or the happening of any event that makes any statement of a
material fact made in the Resale Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in the Resale
Registration Statement or the Prospectus in order to make the statements therein not misleading.
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If at any time the SEC shall issue any stop order suspending the effectiveness of the Resale
Registration Statement, or any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from qualification of the Registrable
Securities under state securities or blue sky laws, the Company shall obtain the withdrawal or
lifting of such order as soon as practicable;
(f) furnish without charge to each of the Holders, and each of the underwriter(s) if any,
before filing with the SEC, copies of the Resale Registration Statement or any Prospectus included
therein or any amendments or supplements to the Resale Registration Statement or Prospectus
(including all documents incorporated by reference after the initial filing of the Resale
Registration Statement), which documents will be subject to the review and comment of such Holders
and underwriter(s) in connection with such sale, if any, for a period of at least three (3)
Business Days, and the Company will not file the Resale Registration Statement or Prospectus or any
amendment or supplement to the Resale Registration Statement or Prospectus (including all such
documents incorporated by reference) to which a Holder covered by such registration statement or
the underwriter(s), if any, shall reasonably object in writing within three (3) Business Days after
the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy
transmission within such period), unless the Company receives advice from legal counsel that the
delay required by such review period would be detrimental to the Company. For purposes of this
Section 2.4(f), the objection of a Holder or underwriter, if any, shall be deemed to be
reasonable if the Resale Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or omission;
(g) make available any document that is incorporated by reference into the Resale Registration
Statement or Prospectus, provide copies of such document to the Holders, and to the underwriter(s),
if any, and make the Company’s representatives available for discussion of such document and other
customary due diligence matters;
(h) make available at reasonable times for inspection by the Holders or underwriter(s), if
any, participating in any disposition pursuant to the Resale Registration Statement and any
attorney or accountant retained by the Holders or underwriter(s), if any, all financial and other
records, pertinent corporate documents and properties of the Company and cause the Company’s
officers, directors and employees to supply all information reasonably requested by the Holders,
underwriter(s), if any, or their attorneys or accountants in connection with the Resale
Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness and to participate in meetings with investors to the extent requested by
the underwriter(s), if any; provided that in each such case the requested information must be in
existence and available to the Company and the Company shall not be required to incur out of pocket
expenses;
(i) if requested by a Holder or the underwriter(s), if any, to promptly incorporate in the
Resale Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment
if necessary, such information as the Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information
relating to the “Plan of Distribution” of the Registrable Securities, information with respect to
the Registrable Securities being sold, the purchase price being paid therefor and any other terms
of
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the offering of the Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(j) furnish to each Holder and each of the underwriter(s), if any, upon request, without
charge, at least one copy of the Resale Registration Statement, as first filed with the SEC, and of
each amendment thereto, including financial statements and schedules, all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein by reference);
(k) deliver to each Holder and each of the underwriters, if any, upon request, without charge,
as many copies of the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Holder reasonably may request;
(l) enter into such customary agreements (including a customary underwriting agreement), and
make such customary representations and warranties, and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of the Registrable Securities pursuant
to the Resale Registration Statement contemplated by this Agreement, all to such extent as may be
reasonably requested by any Holder or underwriter, if any, in connection with any resale or
Transfer pursuant to the Resale Registration Statement; and if and only if the registration is an
Underwritten Registration, the Company shall:
(i) furnish to each Holder, and each underwriter, in such substance and scope as they may
reasonably request and as are customarily made by issuers to underwriters in primary underwritten
offerings, upon the initial effective date of the Resale Registration Statement:
(1) a certificate, dated the date of the date of effectiveness of the Resale Registration
Statement signed by (y) the President or any Vice President and (z) a principal financial or
accounting officer of the Company confirming, as of the date thereof, such matters (including,
without limitation representations and warranties) as the Holders and underwriters may reasonably
request;
(2) an opinion, dated the date of effectiveness of the Resale Registration Statement, of
counsel for the Company, covering such matters as the Holders and the underwriters may reasonably
request, and in any event including a statement to the effect that such counsel have participated
in conferences with officers and other representatives of the Company, representatives of the
independent public or certified public accountants for the Company and with representatives of the
underwriter(s), and counsel to the underwriter(s), if any, at which the contents of the Resale
Registration Statement and the related Prospectus and related matters were discussed and, on the
basis of the foregoing, no facts have come to such counsel’s attention that would lead such counsel
to believe that (i) the Resale Registration Statement, at the time of the Resale Registration
Statement or any post effective amendment thereto became effective, or (ii) that the Prospectus contained in the Resale Registration
Statement as of its date, contained or contains an untrue statement of a material fact or omitted
or
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omits to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
(3) a customary comfort letter, dated the date of effectiveness of the Resale Registration
Statement, from the Company’s independent accountants, in the customary form and covering matters
of the type customarily requested to be covered in comfort letters by underwriters in connection
with primary underwritten offerings, and covering or affirming the matters set forth in any comfort
letters delivered pursuant to the Resale Registration Statement;
(ii) set forth in full the indemnification provisions and procedures of Section 5 with
respect to all parties to be indemnified pursuant to said Section; and
(iii) deliver such other documents and certificates as may be reasonably requested by such
parties to evidence compliance with Section 2.4(l)(i) and with any customary conditions
contained in the underwriting agreement entered into by the Company pursuant to this Section
2.4(l).
If at any time the representations and warranties of the Company contemplated in Section
2.4(l)(i) cease to be true and correct, the Company shall so advise the Holders and the
underwriter(s), promptly and, if requested by such Persons, shall confirm such advice in writing;
(m) prior to any public offering of Registrable Securities, cooperate with the Holders, the
underwriter(s), if any, and their respective counsel in connection with the registration and
qualification of the Registrable Securities under the state securities or blue sky laws of such
jurisdictions as the Holders or underwriter(s), if any, may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Resale Registration Statement; provided,
however, that the Company shall be required to register or qualify as a foreign corporation
where it is not then so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions relating to the Resale
Registration Statement, in any jurisdiction where it is not then so subject and provided, further,
that if the Common Stock is not then a “covered security” as defined in Section 18 of the
Securities Act, then the Company shall not be required to register and qualify the Registrable
Securities under the state securities or blue sky laws in more than ten (10) states;
(n) cooperate with the Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing the Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in such denominations
and registered in such names as the Holders or the underwriter(s), if any, may request at least two
(2) Business Days prior to any sale of Registrable Securities made by such Holders or
underwriter(s), if any; provided, the Holders provide the Company with the necessary information to
prepare such certificates at least four (4) Business Days prior to the applicable sale of
Registrable Securities;
(o) if any fact or event contemplated by Section 2.4(e)(iv) shall exist or have
occurred, prepare a supplement or post-effective amendment to the Resale Registration
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Statement or
related Prospectus or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading;
(p) cooperate and assist in any filings required to be made with FINRA and in the performance
of any due diligence investigation by any underwriter (including any “qualified independent
underwriter”) that is required to be retained in accordance with the rules and regulations of
FINRA;
(q) otherwise comply with all applicable rules and regulations of the SEC, and make generally
available to its security holders, as soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (i)
commencing at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts Underwritten Offering or (ii) if not sold to
underwriters in such an offering, beginning with the first month of the Company’s first fiscal
quarter commencing after the effective date of the Resale Registration Statement;
(r) cause all securities covered by the Resale Registration Statement to be listed on each
securities exchange or automated quotation system on which the Common Stock issued by the Company
is then listed if requested by any Holder or the underwriter(s), if any; and
(s) provide promptly to each Holder upon request each document filed with the SEC pursuant to
the requirements of Section 13 and Section 15 of the Exchange Act.
3. Holder Obligations. Each Holder agrees to, and in addition it shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Agreement with respect to the
Registrable Securities of the Holders, that each Holder shall:
(a) Promptly furnish to the Company such information regarding the Holder, the number of the
Registrable Securities owned by it, the number of Registrable Securities to be registered and the
intended method of disposition of such securities as shall be required to effect the registration
of the Registrable Securities of the Holders, and cooperate fully with the Company in preparing the
Resale Registration Statement and any related Prospectus.
(b) If the Company has delivered a Prospectus to the Holder and after having done so the
Prospectus is amended or supplemented to comply with the requirements of the Securities Act, at the
written request of the Company, the Holder shall immediately cease making offers or Registrable
Securities and, upon receipt of the amended or supplemented Prospectus from the Company, the Holder
shall use only such amended or supplemented Prospectus in making offers of the Registrable
Securities.
(c) During such time as the Holder may be engaged in a distribution of Registrable Securities,
the Holder shall comply with Regulation M promulgated under the Exchange Act and pursuant thereto
it shall, among other things, (i) not engage in any stabilization activity in connection with the
securities of the Company in contravention of such regulation or (ii) distribute Registrable Securities under the Resale Registration Statement
other than in the manner described in the Resale Registration Statement.
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(d) If the Company has delivered to the Holder written notice in accordance with Section
2.3, then the Holder shall immediately cease making offers or Transfers of Registrable
Securities until the Company shall have given the Holder written notice that the Holder may once
again commence making offers or Transfers of Registrable Securities under the current (or amended
or supplemented) Prospectus.
4. Registration Expenses.
4.1 Company Expenses. Subject to Section 4.2, all expenses incident to the Company’s
performance of or compliance with this Agreement, including all registration and filing fees, fees
of any transfer agent and registrar, fees and expenses of compliance with securities or blue sky
laws, printing expenses, fees and disbursements of counsel for the Company and its independent
certified public accountants, the Company’s internal expenses and the expenses and fees for listing
the securities to be registered on each securities exchange or quotation system on which similar
securities issued by the Company are then listed or quoted (all such expenses being herein called
“Registration Expenses”) shall be borne by the Company.
4.2 Holder Expenses. In connection with the registration contemplated hereunder, the Company
shall reimburse the Holders included in a registration for the reasonable fees and disbursements of
one counsel, in an amount not to exceed $50,000 in the aggregate. The Holders, and not the
Company, shall be responsible for all fees and expenses of underwriters (including discounts and
commissions attributable to the Registrable Securities included in such registration).
5. Indemnification; Contribution. If any Registrable Securities are included in a registration
statement under this Agreement:
(a) To the extent permitted by applicable law, the Company shall indemnify and hold harmless
each Holder, each Person, if any, who controls such Holder within the meaning of the Securities
Act, and each officer, director, partner and employee of such Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint or several), including
reasonable attorney’s fees and disbursements and reasonable expenses of investigation
(collectively, “Losses”), incurred by such Person pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise
become subject under the Securities Act, the Exchange Act or other federal or state laws, but only
insofar as such Losses arise out of or are based upon any of the following statements or omissions
(collectively, a “Violation”):
(i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement, including any preliminary Prospectus or
final Prospectus contained therein, or any amendments or supplements thereto; or
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
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provided, however, that the indemnification required by this Section 5(a)
shall not apply to amounts paid in settlement of any such Loss if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably withheld), nor shall
the Company be liable in any such case for any such Loss to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of a Holder or any underwriter expressly for use in
connection with such registration; and provided, further, that any indemnification required by this
Section 5(a) shall not apply to the extent that any such Loss is based on or arises out of
an untrue statement or alleged untrue statement of a material fact, or an omission or alleged
omission to state a material fact, included in or omitted from any preliminary prospectus if the
final prospectus shall correct such untrue statement or alleged untrue statement, or such omission
or alleged omission, and a copy of the final prospectus has not been sent or given by the Holder or
any underwriter to the Person alleging damage at or prior to the confirmation of sale to such
Person; and provided, further, that this indemnity shall not apply to the extent that any such Loss
is based on an offer or Transfer of Registrable Securities during any period which the Company has
notified the Holder that such offers and Transfers must cease under the Agreement, including under
Section 2.3, Section 2.4(b) or Section 2.4(e).
(b) To the extent permitted by applicable law, the Holders (severally and not jointly) shall
indemnify and hold harmless the Company, each of the directors of the Company, each of the officers
of the Company who shall have signed the Resale Registration Statement, each Person, if any, who
controls the Company within the meaning of the Securities Act, and each officer, director, partner,
and employee of such controlling Person, against any and all Losses incurred by such Person
pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of
the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or
other federal or state laws, but only insofar as such Losses arise out of or are based upon any
Violation, in each case to the extent that such Violation arises out of or is based upon
information furnished in writing by or on behalf of a Holder expressly for use in connection with
such registration, or upon the Holder’s failure to properly and timely deliver an “official”
Prospectus, or upon the Holder’s use of a written or oral prospectus other than the “official”
Prospectus; provided, however, that any indemnification required by this
Section 5(b) shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of the Holders (which consent shall not be unreasonably
withheld, conditioned or delayed) and in no event shall the amount of any indemnity obligation
under this Section 5(b) exceed the gross proceeds from the applicable offering received by
the Holders.
(c) Promptly after receipt by an indemnified party under this Section 5 of notice of
the commencement of any action, suit, proceeding, investigation or threat thereof made in writing
for which such indemnified party may make a claim under this Section 5, such indemnified
party shall deliver to the indemnifying party a written notice thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party; provided, however, that
an indemnified party shall have the right to retain its own counsel, with the fees and
disbursements and expenses (in each case, to the extent reasonable) to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests between such
indemnified
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party and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time following the
commencement of any such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this Section 5 to
the extent of such prejudice but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than pursuant to this Section 5. Any such
indemnified party shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to promptly assume the
defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it that are different from or in addition to those
available to the indemnifying party and that the assertion of such defenses would create a conflict
of interest such that counsel employed by the indemnifying party could not faithfully represent the
indemnified party (in which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action, claim or
proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (together with appropriate local counsel) at
any time for all such indemnified parties, unless in the reasonable judgment of such indemnified
party a conflict of interest may exist between such indemnified party and any other of such
indemnified parties with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional
counsel or counsels).
(d) If the indemnification required by this Section 5 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any Losses referred to in this
Section 5:
(i) the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Losses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions that resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of
the Losses referred to above shall be deemed to include, subject to the
limitations set forth in Sections 5(a), 5(b) and 5(c),
any legal or other fees or
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expenses reasonably incurred by such party in
connection with any investigation or proceeding;
(ii) the parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in Section 5(d)(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section 5 shall survive
the completion of any offering of Registrable Securities pursuant to the registration statement
under this Agreement, and otherwise.
6. Board Representation.
6.1 Effective as of and contingent upon the Closing, the Company shall cause Xxxx Xxxxx or
another employee of CHRP reasonably acceptable to the Company to be elected as a member of the
Board of Directors of the Company (the “Board”), to fill a vacancy in the Board’s director
class (Class I) with a term ending on May 30, 2010 (the “CHRP Employee Designee”). The
Company shall cause an individual designated by CHRP, who (a) shall have relevant industry
experience in the Company’s industry, (b) shall not be an employee of CHRP, and (c) shall be
acceptable to a majority of the then serving directors on the Board, to be elected as a member of
the Board within nine (9) months of the Closing Date, to fill a vacancy in the Board’s director
class (Class II) with a term ending on May 30, 2011 (the “CHRP Industry Designee” and
collectively with the “CHRP Employee Designee”, the “CHRP Designees”). CHRP shall be
entitled to lead the search effort for the CHRP Industry Designee, which may include the engagement
of an executive recruiter and other related expenses which commercially reasonable expenses shall
be borne by the Company.
6.2 After the date hereof, until the earlier to occur of (i) the end of the Term (as defined
in the Revenue Agreement), (ii) the date the Applicable Percentage (as defined in the Revenue
Agreement) converts to ***% pursuant to the terms of the Revenue Agreement, or (iii) a
Change of Control (as defined in the Revenue Agreement), if CHRP so elects and subject to
Section 6.3, the Company will use commercially reasonable efforts to cause the CHRP
Designees to be included in the slate of nominees recommended by the Board to the Company’s
stockholders for election as directors, including at each annual or special meeting of stockholders
of the Company at which directors are elected and including by voting any proxies it holds and
using its best efforts to cause any officers of the Company who hold proxies to vote such proxies,
except, in either case, as otherwise directed by the stockholder who submitted such proxy, in favor of the election of the CHRP Designees. Upon the occurrence of an event set forth in
clauses (i) and (iii) of the immediately preceding sentence, CHRP shall cause the CHRP Employee
Designee to submit his resignation from the Board, and upon the occurrence of an
| *** | Portions of this page have been omitted pursuant to a request for Confidential Treatment filed separately with the Commission. |
-14-
event set forth in
clause (ii) of the immediately preceding sentence the Company shall have the right to request CHRP
to cause, and if the Company does so request then CHRP shall cause, the CHRP Employee Designee to
submit his resignation from the Board. With respect to the foregoing, the Company shall (i) enter
into Director Indemnification Agreements with each CHRP Designee in the same form as entered into
with the Company’s other directors and executive officers; (ii) reimburse the CHRP Designees for
all reasonable out-of-pocket costs and expenses incurred with respect to membership on (or
observation of) the Board in accordance with the Company’s Board reimbursement policies; and (iii)
otherwise compensate and indemnify the CHRP Designees in accordance with the Company’s policies for
non-employee directors.
6.3 The CHRP Designees will possess such qualifications and meet such standards as are
applicable to all members of the Board (whether under law, rule or regulation or as established by
the Board) (“Director Qualifications”) at the time for the nomination of the CHRP Designees
to the Board. If the Nominating and Corporate Governance Committee of the Board at any time
determines that a particular CHRP Designee does not have the Director Qualifications or that their
fiduciary duties preclude them from nominating a CHRP Designee for election to the Board, then CHRP
shall have a reasonable opportunity to designate a substitute CHRP Designee.
6.4 After the date hereof, until the earlier to occur of (i) the end of the Term (as defined
in the Revenue Agreement), (ii) the date the Applicable Percentage (as defined in the Revenue
Agreement) converts to ***% pursuant to the terms of the Revenue Agreement or (iii) a
Change of Control (as defined in the Revenue Agreement), in the event there is no CHRP Employee
Designee then serving as a director on the Board, CHRP shall be entitled to designate a
representative to attend and participate in all meetings of the Board and committees thereof in a
nonvoting observer capacity and, in this respect, the Company shall give such representative copies
of all notices, financial statements, minutes, consents, and other materials (including, without
limitation, access to such information, documents, records and reports as may be reasonably
requested by the representative) that it provides to its directors at the same time and in the same
manner as provided to such directors; provided CHRP will remain subject to the terms of the
Confidentiality Agreement, and each observer shall execute an individual confidentiality agreement
with the Company with substantially similar terms to the Confidentiality Agreement;
provided, further, that the Company reserves the right to exclude such
representative from access to any material or meeting or portion thereof relating directly to
CHRP’s rights under the Transaction Documents.
7. Miscellaneous.
7.1 Remedies. Any Person having rights under any provision of this Agreement shall be entitled
to enforce such rights specifically, to recover damages caused by reason of any breach
of any provision of this Agreement and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages are not an adequate remedy for any breach
of the provisions of this Agreement and that any party may apply for specific performance and for
| *** | Portions of this page have been omitted pursuant to a request for Confidential Treatment filed separately with the Commission. |
-15-
other injunctive relief in order to enforce or prevent violation of the provisions of this
Agreement.
7.2 Amendments and Waivers.
(a) This Agreement shall not be amended, modified or supplemented except by written instrument
signed by the Company and the holders of a majority of the Registrable Securities.
(b) Any term or provision of this Agreement may be waived, or the time for performance
extended, as authorized in writing by the party or parties entitled to the benefit thereof. No
waiver of any term or condition of this Agreement shall operate as a waiver of any other breach of
such term and condition or any other term or condition, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other provision hereof. No written
waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provisions being waived and no such waiver in any
instance shall constitute a waiver in any other instance or for any other purpose or impair the
right of the party against whom such waiver is claimed in all other instances or for all other
purposes to require full compliance with such provision.
7.3 Further Assurances. Each of the parties hereto shall execute all such further instruments
and documents and take all such further action as any other party hereto may reasonably require in
order to effectuate the terms and purposes of this Agreement.
7.4 Successors, Assigns and Subsequent Holders.
(a) All covenants and agreements in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and the permitted assigns
of the parties hereto.
(b) The rights to cause the Company to register Registrable Securities pursuant to this
Agreement may be assigned (but only with all related obligations) by any Holders, provided such
assignee acquires at least 375,000 shares of Registrable Securities or the right to acquire 375,000
shares of Registrable Securities upon exercise of the Warrants.
(c) No assignment of rights under this Agreement pursuant to this Section 7.4 shall be
effective unless (i) the Company is, within ten (10) days after such assignment of rights under
this Agreement, furnished with written notice of the name and address of the transferee and the
securities with respect to which such registration rights are being assigned; and (ii) such
transferee agrees in writing to be bound by and subject to the terms and conditions of this
Agreement.
7.5 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter contained herein, and supersedes all prior agreements,
negotiations, discussions and understandings among the parties hereto with respect to such subject matter, provided, however, the terms of that certain Confidentiality Agreement by and
between the Company and CHRP dated as of August 24, 2007 (the “Confidentiality Agreement”)
shall continue in effect. No representation, inducement, promise, understanding, condition or
-16-
warranty not set forth herein (or in the Exhibits, Schedules or other Transaction Documents) has
been made or relied upon by either party hereto. Neither this Agreement nor any provision hereof
is intended to confer upon any Person other than the parties hereto any rights or remedies
hereunder.
7.6 Severability. Wherever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law and in such a way as to, as closely
as possible, achieve the intended economic effect of such provision and this Agreement as a whole,
but if any provision contained herein is, for any reason, held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating the remainder of
such provision or any other provisions hereof, unless such a construction would be unreasonable.
7.7 Notices. All notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given (a) when delivered personally, (b) if transmitted by facsimile or
email, when confirmation of transmission is received, (c) if sent by registered or certified mail,
postage prepaid, return receipt requested, when received, or (d) if sent by reputable overnight
courier service, the next Business Day; and shall be addressed as follows (or to such changed
address as a party may give written notice of pursuant to this Section 7.7):
If to CHRP to:
Xxxxx Healthcare Royalty Partners, L.P.
c/x Xxxxx Healthcare Royalty GP, LLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxx.xxxxx@xxxxx.xxx
c/x Xxxxx Healthcare Royalty GP, LLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxx.xxxxx@xxxxx.xxx
with a copy to:
XxXxxxxxx Will & Xxxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X.X. Xxxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxxx@xxx.xxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X.X. Xxxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxxx@xxx.xxx
If to the Company to:
Artes Medical, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, General Counsel
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, General Counsel
-17-
Facsimile No.: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxx.xxx
Email: xxxxxx@xxxxxxxxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxx LLP
0000 Xx Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxx.xxx
0000 Xx Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxx.xxx
7.8 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed, interpreted and enforced in accordance
with, the laws of the state of New York, without giving effect to the principles of conflicts of
law thereof.
(b) Any legal action or proceeding with respect to this Agreement or any other Transaction
Document may be brought in any state or federal court of competent jurisdiction in the state,
county and city of New York. By execution and delivery of this Agreement, each party hereto hereby
irrevocably consents to and accepts, for itself and in respect of its property, generally and
unconditionally the non-exclusive jurisdiction of such courts. Each party hereto hereby further
irrevocably waives any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of any Transaction Document.
(c) Each party hereto hereby irrevocably consents to the service of process out of any of the
courts referred to in subsection (b) above of this Section 7.8 in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it
at its address set forth in this Agreement. Each party hereto hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees not to plead or
claim in any suit, action or proceeding commenced hereunder or under any other Transaction Document
that service of process was in any way invalid or ineffective. Nothing herein shall affect the
right of a party to serve process on the other party in any other manner permitted by law.
7.9 Attorneys’ Fees. In the event of any action or suit based upon or arising out of any
actual or alleged breach by the Company, on the one hand, or any Holder, on the other hand, of any
provision of this Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys’ fees and expenses of such action or suit from the losing party, in addition to any other
relief ordered by the court.
7.10 Execution in Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be considered an original instrument, but all of which together will be
considered one and the same agreement, and will become binding when one or more counterparts have
been signed by and delivered to each of the parties.
[SIGNATURE PAGE FOLLOWS]
-18-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and
year first above written.
| ARTES MEDICAL, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | President & CEO | |||
| XXXXX HEALTHCARE ROYALTY PARTNERS, L.P. |
||||
| By Xxxxx Healthcare Royalty GP, LLC Its General Partner |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | ||||
SIGNATURE PAGE TO
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT
