EXHIBIT 10.26
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED BY MARKING SUCH
PORTIONS WITH ASTERISKS (THE "XXXX"). tHIS EXHIBIT HAS BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE COMMISSION WITHOUT THE XXXX PURSUANT TO THE COMPANY'S
APPLICATION REQUESTING CONFIDENTIAL TREATMENT.
-------------------------
FIRST AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
----------------
December 28, 2001
by
SKINMEDICA, INC.
and
ADVANCED TISSUE SCIENCES, INC.
[** ] and [** ]
[** ]
[** ]
and
[** ]
TABLE OF CONTENTS
-----------------
Page
----
1. Registration Rights.....................................................1
1.1. Definitions......................................................1
1.2. Request for Registration.........................................2
1.3. Company Registration.............................................3
1.4. Obligations of the Company.......................................3
1.5. Furnish Information..............................................5
1.6. Expenses of This Section 1 Registration..........................5
1.7. Underwriting Requirements........................................5
1.8. Delay of Registration............................................6
1.9. Indemnification..................................................6
1.10. Reports Under Securities Exchange Act of 1934....................7
1.11. Form S-3 Registration............................................8
1.12. Assignment of Registration Rights................................9
1.13. Limitations on Subsequent Registration Rights....................9
1.14. Termination of Registration Rights...............................9
2. Covenants of the Company...............................................10
2.1. Right of First Negotiation......................................10
2.2. Right of First Offer............................................11
2.3. Most Favorable Terms............................................12
2.4. Termination of Certain Covenants................................12
3. Miscellaneous..........................................................12
3.1. Successors and Assigns..........................................12
3.2. Governing Law...................................................12
3.3. Counterparts....................................................12
3.4. Titles and Subtitles............................................13
3.5. Notices.........................................................13
3.6. Expenses........................................................13
3.7. Amendments and Waivers..........................................13
3.8. Severability....................................................13
3.9. Aggregation of Stock............................................13
3.10. Entire Agreement; Amendment; Waiver.............................13
i
FIRST AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
-------------------------
THIS FIRST AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this
"Agreement") is made as of the 28th day of December, 2001, by and among
SkinMedica, Inc, a California corporation (the "Company"), Advanced Tissue
Sciences, Inc., a Delaware corporation ("ATS"), [** ] and
[** ], a trust ("[** ]"), [**
], a trust ("[** ]"), [** ] a Delaware limited liability
company ("[** ]") and [** ], an individual ("[** ]" and together
with ATS, [** ] and [** ], collectively the "[** ]").
RECITALS
--------
WHEREAS, the Company and ATS are parties to the Development, License
and Supply Agreement (the "License and Supply Agreement") and the Option to
Purchase Common Stock (the "Option"), each of which is dated as of October 5,
2000;
WHEREAS, in order to induce ATS to enter into the License and Supply
Agreement in October 2000, ATS and the Company entered into an Investor Rights
Agreement dated as of October 5th, 2001 (the "Initial Agreement"), pursuant to
which ATS was granted certain rights to cause the Company to register shares of
Common Stock issuable to ATS upon exercise of the Option and certain other
matters as set forth therein;
WHEREAS, it is contemplated that [** ] and [** ]
(collectively, the "Preferred Stock Investors") will purchase for cash shares of
the Company's Series A Preferred Stock (the "Series A Preferred Stock") in
accordance with the Series A Preferred Stock Purchase Agreement of even date
herewith (the "Preferred Stock Purchase Agreement"); and
WHEREAS, in order to induce the Preferred Stock Investors to complete
the purchase of the Company's Series A Preferred Stock, the Company and ATS are
willing to amend and restate the Initial Agreement to grant the Preferred Stock
Investors substantially similar rights previously granted to ATS on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Right.. The Company covenants and agrees as follows:
------------------
1.1. Definitions. For purposes of this Section 1:
-----------
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
(e) The term "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means the Common Stock
issuable or issued upon exercise of the Option and conversion of the Series A
Preferred Stock.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2. Request for Registration.
------------------------
1.3. If the Company shall receive at any time after six (6)
months after the effective date of the first registration statement for a public
offering of securities of the Company (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or a SEC Rule 145
transaction), a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of [**
] of the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed [** ]), then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(ii) effect as soon as practicable, and in any event
within 60 days of the receipt of such request, the registration under the Act of
all Registrable Securities which the Holders request to be registered, subject
to the limitations of subsection 1.2(b), within twenty (20) days of the mailing
of such notice by the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Initiating Holders
and shall be reasonably acceptable to the Company. In such event, the right of
any Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in subsection 1.4(e)) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of
2
this Section 1.2, if the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all securities other than Registrable
Securities are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than 120 days
after receipt of the request of the Initiating Holders; provided, however, that
any representative of the Investors who also is a member of the Board of
Directors of the Company shall recuse himself from any vote of the Board of
Directors to defer the filing of such registration statement; provided, further,
that the Company may not utilize this right more than once in any twelve-month
period.
(d) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected three (3)
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period starting with the date thirty
(30) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective date of,
a registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) 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 1.11 below.
1.4. Company Registration. . If (but without any obligation to do
--------------------
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, a registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.7, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
3
1.5. Obligations of the Company.
--------------------------
. Whenever required under this Section 1 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for a period of up to one hundred twenty
(120) days or until the distribution contemplated in the Registration Statement
has been completed; provided, however, that (i) such 120-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 120-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 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration
4
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) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.6. Furnish Information. It shall be a condition precedent to
-------------------
the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7. Expenses of This Section 1 Registration. All expenses other
---------------------------------------
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to this Section 1, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company
(including fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holders hereunder; if Company counsel does not make
itself available for this purpose, the Company will pay the reasonable fees and
disbursements of one counsel for the selling Holders) and the reasonable fees
and disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the
5
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to Section
1.2.
1.8. Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by those
persons entitled to select the underwriters, and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata, according to the total amount of securities entitled to be included, among
the Holders' Registrable Securities first, and then, to the extent that the
number of the Holders' Registrable Securities to be included in such offering is
less that the total amount of securities entitled to be included therein,
apportioned pro rata, according to the total amount of securities entitled to be
included therein, among the other selling shareholders) but in no event shall
the amount of Registrable Securities of the selling Holders included in the
offering be reduced if the number of the Holders' Registrable Securities to be
included in such offering is less that the total amount of securities entitled
to be included therein.
1.9. Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10. Indemnification. In the event any Registrable Securities
---------------
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability,
6
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 1.9(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
7
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11. Reports Under Securities Exchange Act of 1934. With a view
---------------------------------------------
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the 1934 Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the offering
of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12. Form S-3 Registration. In case the Company shall receive
---------------------
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
8
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.11: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than [** ]; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 60 days after receipt of
the request of the Holder or Holders under this Section 1.11; provided, however,
that the Company shall not utilize this right more than once in any twelve month
period; (4) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.11; or (5) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.11 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.13. Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities, provided: (a) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.13 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
1.14. Limitations on Subsequent Registration Rights. From and
---------------------------------------------
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will
9
not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in subsection 1.2(a) or within one hundred twenty (120)
days of the effective date of any registration effected pursuant to Section 1.2.
1.15. Termination of Registration Rights.
----------------------------------
(a) No Holder shall be entitled to exercise any right
provided for in this Section 1 after five (5) years following the consummation
of the sale of securities pursuant to a registration statement filed by the
Company under the Act in connection with the initial firm commitment
underwritten offering of its securities to the general public.
(b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1.3 shall
terminate on the closing of the first Company-initiated registered public
offering of Common Stock of the Company if all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period, or on such date after the closing
of the first Company-initiated registered public offering of Common Stock of the
Company as all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any
90-day period; provided, however, that the provisions of this Section 1.14(b)
shall not apply to any Holder who owns more than two percent (2%) of the
Company's outstanding stock until such time as such Holder owns less than two
percent (2%) of the outstanding stock of the Company.
2. Covenants of the Company.
------------------------
2.1. Right of First Negotiation. Upon completion of the purchase
--------------------------
and sale of the Series A Preferred Stock under the Preferred Stock Purchase
Agreement, subject to the terms and conditions specified in this Section 2.1,
the Company hereby grants to ATS so long as it owns the Option or at least
200,000 shares of either Registrable Securities, and to each Preferred Stock
Investor so long as he owns at least 250,000 shares of Series A Preferred Stock
or Registrable Securities, a right of first negotiation with respect to future
offers by the Company of its Shares (as hereinafter defined). Each time the
Company proposes to negotiate an offer of any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall first negotiate with the Investors for an
offering of the Shares in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Negotiation Notice") to the Investors stating its bona fide intention to
negotiate an offer of such Shares.
(b) Within 15 calendar days after receipt of the Negotiation
Notice, ATS may elect to enter into negotiations to purchase or obtain the
Shares. If ATS and the Company agree on the principal terms of such purchase
within such 15-day period, they shall execute a non-binding letter of intent or
similar document outlining the principal terms necessary to complete the
purchase of the Shares and send written notice of such event along with a copy
of the letter of intent or similar document (the "LOI Notice") to the Preferred
Stock Investors on or before expiration of the initial 15-day period. In the
event ATS and the Company execute a letter of intent, they shall have an
additional 30 calendar days from the date the LOI Notice is delivered to the
Preferred Stock Investors in which to complete such purchase; provided, however,
that in such event, the Preferred Stock Investors shall be permitted to
participate in such sale of Shares but only to the extent necessary to maintain
their then-existing pro rata
10
ownership interest in the Company on a fully diluted basis (assuming full
conversion and exercise of all convertible or exercisable securities). If ATS
determines not to proceed with the purchase of the Shares or is unable to reach
agreement with the Company on the principal terms of such purchase, then it
shall promptly notify the Company and the Preferred Stock Investors in writing
of such determination or event.
(c) If ATS does not choose to negotiate to purchase or
obtain the Shares or otherwise is unable to reach agreement on the principal
terms of such purchase within 15 days of receipt of the Negotiation Notice, the
Preferred Stock Investors may elect to enter into negotiations to purchase or
obtain the Shares. In such event, the Preferred Stock Investors shall notify the
Company of a representative chosen by the Preferred Stock Investors to negotiate
on behalf of all Preferred Stock Investors who are interested in acquiring
additional Shares, and such representative shall have 15 calendar days following
expiration of the period provided in subsection 2.1(b) hereof, to reach
agreement on the principal terms of such purchase and execute a non-binding
letter of intent or similar document outlining the principal terms necessary to
complete the purchase of the Shares. In such event, the Company and the
representative shall send the LOI Notice to ATS on or before expiration of such
15-day period. In the event one or more Preferred Stock Investors and the
Company execute a letter of intent, they shall have an additional 30 calendar
days from the date the LOI Notice is delivered to ATS in which to complete such
purchase; provided, however, that in such event, ATS shall be permitted to
participate in such sale of Shares but only to the extent necessary to maintain
its then-existing pro rata ownership interest in the Company on a fully diluted
basis (assuming full conversion and exercise of all convertible or exercisable
securities). If the Preferred Stock Investors determine not to proceed with the
purchase of the Shares or are unable to reach agreement with the Company on the
principal terms of such purchase, then they shall promptly notify the Company
and ATS in writing of such determination or event.
(d) If the Investors do not chose to negotiate to purchase
or obtain the Shares or are otherwise unable to reach agreement with the Company
in the time periods prescribed under subsections 2.1(a) or 2.1(b), then during
the 30-day period following the expiration of the period provided in subsection
2.1(b) hereof, the Company may enter into negotiations to offer the Shares to
any third party or parties. If the Company negotiates an offer of the Shares,
then the Company shall comply with its obligations under Section 2.2 below. If
the Company does not negotiate an offer of the Shares within such period, the
right provided under this Section 2.1 shall be deemed to be revived and
negotiations with respect to future offers of the Shares shall not be entered
into unless first reoffered to the Investors in accordance herewith.
(e) The right of first negotiation in this Section 2.1 shall
not be applicable (i) to any negotiations in connection with the issuance or
sale of shares of common stock (or options therefor) to employees for the
primary purpose of soliciting or retaining their employment, pursuant to a stock
option, stock purchase or stock bonus plan, or (ii) to any negotiations in
connection with a bona fide, firmly underwritten public offering of shares of
common stock, registered under the Act pursuant to a registration statement on
Form S-1, at an offering price of at least $10.00 per share (appropriately
adjusted for any stock split, dividend, combination or other recapitalization)
and $75,000,000 in the aggregate.
(f) The right of first negotiation set forth in this Section
2.1 may not be assigned or transferred, except that such right is assignable by
the ATS or any Preferred Stock Investor, as applicable, to (i) any wholly owned
subsidiary or parent of, or to any corporation or entity that is, within the
meaning of the Act, controlling, controlled by or under common control with,
ATS, (ii) any business organization which the ATS consolidates with, or merges
into, or to which ATS sells or conveys all of ATS's stock or all or
substantially all of the assets of ATS, or (iii) any Preferred Stock Investor's
parents, siblings, spouse, children, or grandchildren or a trust for the benefit
of any of the foregoing.
11
2.2. Right of First Offer. Upon completion of the purchase and
--------------------
sale of the Series A Preferred Stock under the Preferred Stock Purchase
Agreement, subject to the terms and conditions specified in Section 2.1 above
and this Section 2.2, the Company hereby grants to ATS so long as it owns any
Registrable Securities or the Option and to each Preferred Stock Investor so
long as he owns any shares of Series A Preferred Stock or Registrable
Securities, a right of first offer with respect to future sales by the Company
of its Shares. Each time the Company proposes to offer any Shares, the Company
shall first make an offering of such Shares to the Investors in accordance with
the following provisions:
(a) The Company shall deliver a notice by certified mail
("Offer Notice") to the Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) Within 30 calendar days after receipt of the Offer
Notice, the Investors may elect to purchase or obtain, at the price and on the
terms specified in the Offer Notice, up to that portion of such Shares which
equals the proportion that the number of shares of common stock issued and held,
or issuable upon exercise of the Option or conversion of the Series A Preferred
Stock then held by the Investor bears to the total number of shares of common
stock of the Company then outstanding (on a fully diluted basis assuming full
conversion and exercise of all convertible or exercisable securities).
(c) If all Shares which Investor is entitled to obtain
pursuant to subsection 2.2(b) are not elected to be obtained as provided in
subsection 2.2(b) hereof, the Company may, during the 30-day period following
the expiration of the period provided in subsection 2.2(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than those
specified in the Offer Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within 30 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Investor in accordance herewith.
(d) The right of first offer in this Section 2.2 shall not
be applicable (i) to the issuance or sale of shares of common stock (or options
therefor) to employees for the primary purpose of soliciting or retaining their
employment, pursuant to a stock option, stock purchase or stock bonus plan, or
(ii) to or after consummation of a bona fide, firmly underwritten public
offering of shares of common stock, registered under the Act pursuant to a
registration statement on Form S-1, at an offering price of at least $10.00 per
share (appropriately adjusted for any stock split, dividend, combination or
other recapitalization) and $75,000,000 in the aggregate.
(e) The right of first offer set forth in this Section 2.2
may not be assigned or transferred, except that such right is assignable by ATS
or any Preferred Stock Investor, as applicable, to (i) any wholly owned
subsidiary or parent of, or to any corporation or entity that is, within the
meaning of the Act, controlling, controlled by or under common control with,
ATS, (ii) any business organization which ATS consolidates with, or merges into,
or to which ATS sells or conveys all of the ATS's stock or all or substantially
all of the assets of ATS, or (iii) any Preferred Stock Investor's parents,
siblings, spouse, children, or grandchildren or a trust for the benefit of any
of the foregoing.
2.3. Most Favorable Terms. The Company agrees that in the event
--------------------
the Company offers registration and any similar rights provided under this
Agreement to any third party holder of the Company's securities which are
superior or more favorable than the rights granted to Investors hereunder, then
the Company shall promptly and at its sole expense take all
12
necessary actions to amend or modify this Agreement in order to provide
Investors with such superior or more favorable rights.
2.4. Termination of Certain Covenants. The covenants set forth in
--------------------------------
Sections 2.1 and 2.2 shall terminate and be of no further force or effect upon
the consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the firm commitment
underwritten offering of its securities to the general public. In addition, the
covenants set forth in Sections 2.1 and 2.2 shall terminate and be of no further
force or effect between the Company and ATS upon the expiration or termination
of the License and Supply Agreement as a result of default on the License and
Supply Agreement by Investor.
3. Miscellaneous.
-------------
3.1. Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2. Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon (a) upon personal delivery, (b) one day after being sent,
when sent by professional overnight courier service from and to locations within
the continental United States, (c) five days after posting when sent by
registered or certified mail, or (d) on the date of transmission (if transmitted
during normal business hours, otherwise on the next succeeding business day)
when sent by telegram, telegraph, telex or facsimile, addressed to the party to
be notified at the address or facsimile number indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
3.6. Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
13
3.7. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this Section 3.7 shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
3.8. Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9. Aggregation of Stock. All shares of Registrable Securities
--------------------
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.10. Entire Agreement; Amendment; Waiver. This Agreement
-----------------------------------
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SKINMEDICA, INC. [**
]
By: /s/ Xxx Xxxxxx By: /s/ [** ]
-------------------------------- ----------------------------
Xxx Xxxxxx [** ]
Its: President and Chief Executive Trustee
Officer
Address: SkinMedica, Inc. Address: [**
0000 Xxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxxx, Xxxxxxxxxx 00000 ]
Attention: President
Fax No.: 000-000-0000
[** ]
By: /s/ [** ]
-----------------------
ADVANCED TISSUE SCIENCES, INC. [** ]
Trustee
Address: [**
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx X. Xxxxxxxx ]
Its: President
Address: Advanced Tissue Sciences, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx
Xx Xxxxx, XX 00000 [** ]
Attention: President
Fax No.: (000) 000-0000
/s/ [** ]
-----------------------------
[** ]
Managing Member
Address: [**
]
By: /s/ [** ]
--------------------------
[** ]
Address: [**
]
15
