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EXHIBIT 10.12
September 5, 1997
U.S. Venture Partners IV, L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx #000
Xxxxx Xxxx, Xx 00000
RE: MANAGEMENT RIGHTS
Gentlemen:
This letter will confirm our agreement that pursuant to your purchase of
45,733 shares of Series E Preferred Stock of Signal Pharmaceuticals, Inc. (the
"Company"), U.S. Venture Partners IV, L.P. ("USVP IV") will be entitled to the
following contractual information and management rights, in addition to rights
to non-public financial information, inspection rights, and other rights
specifically provided to all investors in the current financing:
1) The Company shall provide to USVP IV, within 30 days of the end of each
calendar year, a list of all holders of equity interests and rights to
acquire equity interests in the Company as of the end of such year, and
the type and amount of such securities held by each such holder.
2) USVP IV shall be entitled to consult with and advise management of the
Company on significant business issues, including management's proposed
annual operating plans, and management will meet with a
representative(s) of USVP IV regularly during each year at the Company's
facilities at mutually agreeable times for such consultation and advice
and to review progress in achieving said plans.
3) USVP IV may examine the books and records of the Company and inspect its
facilities and may request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, provided that access to highly confidential proprietary
information and facilities need not be provided.
4) If USVP IV is not represented on the Company's Board of Directors, the
Company shall give a representative of USVP IV copies of all notices,
minutes, consents, and other material that it provides to its directors;
provided, however, that the Company reserves the right to exclude such
representative from access to any material or portion thereof if the
Company believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information or for other similar
reasons. Upon reasonable notice and at a scheduled meeting of the Board
or such other time, if any, as the Board may determine in its sole
discretion, such representative may address the Board of Directors with
respect to USVP IV concerns regarding significant business issues facing
the Company.
USVP IV agrees, and any representative of USVP IV will agree, to hold in
confidence and trust and not use or disclose any confidential information
provided to or learned by it in connection with its rights under this letter.
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The rights described herein shall terminate and be of no further force
or effect upon the consummation of the sale of the Company's securities pursuant
to a registration statement filed by the Company under the Securities Act of
1933 in connection with the firm commitment underwritten offering of its
securities to the general public. The confidentially provisions hereof will
survive any such termination.
Very truly yours,
Signal Pharmaceuticals, Inc.
By /s/ XXXXXXX X. XXXXXX
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Title V.P. Finance, CFO
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AGREED AND ACCEPTED THIS 8 DAY OF September, 1997.
U.S. Venture Partners IV, L.P.
By
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Title
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