Exhibit 10.5

 

Exhibit 10.5 -Series B Preferred Stock and Warrant Purchase Agreement - Exhibit
G Form of Amended and Restated Stockholders Agreement among LipimetiX
Development, Inc. and The Stockholders Named Herein

  

 

AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT

among

LIPIMETIX DEVELOPMENT, INC.

and

THE STOCKHOLDERS NAMED HEREIN

 

  

 

 

 

Dated as of August 25, 2016

 

  

 

LIPIMETIX DEVELOPMENT, INC.

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

ThiS AMENDED AND RESTATED Stockholders Agreement (this “Agreement”) is made and
entered into as of August 25, 2016 by and among LipimetiX Development, Inc., a
Delaware corporation (the “Company”), Capstone Therapeutics Corp., a Delaware
corporation (“CAPS”), each of the stockholders listed on the signature page
hereto as the LX Stockholders (collectively, the “LX Stockholders”), The UAB
Research Foundation (“UABRF”), each of the holders of Series B Preferred Stock
listed on Schedule 1 hereto and any subsequent purchasers of the Series B
Preferred Stock who become parties to this Agreement pursuant to the terms
hereof (collectively, the “Series B Investors”), and any other subsequent
stockholders of the Company who become parties to this Agreement pursuant to the
terms hereof (each a “Stockholder” and, collectively, the “Stockholders”). CAPS,
the LX Stockholders and UABRF are sometimes referred to herein collectively as
the “Original Stockholders.”

WITNESSETH:

WHEREAS, the Company and the original Stockholders are parties to that certain
Stockholders Agreement dated as of June 23, 2015 (the “Original Stockholders’
Agreement”);

WHEREAS, Section 11.1 of the Original Stockholders Agreement permits amendments
to the Original Stockholders’ Agreement only upon written approval of
Stockholders holding at least 75% of the Common Shares held by all of the
Stockholders;

WHEREAS, the original Stockholders signing below own all of the shares of the
Company’s Common Stock, par value $0.0001 per share (the “Common Stock”);

WHEREAS, concurrently herewith, the Company is entering into that certain Series
B Preferred Stock and Warrant Purchase Agreement (the “Series B Purchase
Agreement”) pursuant to which the Company may issue and sell to the Series B
Investors an aggregate of up to 1,340,176 shares (the “2016 Series B Preferred
Shares”) of its Series B Preferred Stock, together with Warrants (the “Series B
Warrants”) to purchase up to an aggregate of 49,062 shares of its Series B
Preferred Stock (the “Warrant Shares,” and together with the 2016 Series B
Preferred Shares, the “Series B Preferred Shares”);

WHEREAS, the Series B Preferred Shares are convertible at any time and from time
to time into shares of Class A-1 Common Stock of the Company at the option of
the holder of record thereof, and are subject to mandatory conversion under
certain circumstances;

WHEREAS, the Stockholders and the Company have agreed that it is in their mutual
best interests and in the best interest of the Company to amend and restate the
Original Stockholders Agreement as set forth herein; and

WHEREAS, this Amended and Restated Stockholders Agreement amends, restates, and
supersedes in its entirety the Original Stockholders Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties agree as follows:

  

 

AGREEMENT:

In consideration of the foregoing and the mutual promises contained in this
Agreement, the parties agree as follows:

1.                  Definitions.

1.1              Defined Terms. As used in this Agreement:

“Accounting Services Agreement” means that certain Accounting Services Agreement
by and between the Company and CAPS dated as of August 3, 2012, as amended from
time to time.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person;
provided that no securityholder of the Company shall be deemed an Affiliate of
any other securityholder solely by reason of any investment in the Company. For
the purpose of this definition, the term “control” (including, with correlative
meanings, the terms “controlling,” “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.

“Allocation Ratio” means with respect to any Stockholder the fraction (a) the
numerator of which is the number of outstanding Common Shares owned by such
Stockholder (assuming conversion of all outstanding shares of Series B Preferred
Stock) and (b) the denominator of which is the number of then outstanding shares
of Common Shares (assuming conversion of all outstanding shares of Series B
Preferred Stock).

“Benu Management Agreement” means that certain Management Agreement by and
between the Company and Benu BioPharma, Inc., dated as of August 3, 2012, as
amended from time to time.

“Board” means the board of directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized by law to close.

“Bylaws” means the Bylaws of the Company, as amended from time to time.

“Capital Stock” means (a) Common Shares (whether now outstanding or hereafter
issued in any context), (b) shares of Series A Preferred Stock (whether now
outstanding or hereafter issued in any context), (c) shares of Series B
Preferred Stock (whether now outstanding or hereafter issued in any context),
(d) shares of any Other Stock, or (e) any option, warrant or right to receive
any Common Shares, Series A Preferred Stock, Series B Preferred Stock or Other
Stock other than options issued under the Company’s stock option plan(s) in
effect from time to time (but any Common Shares, Series A Preferred Stock,
Series B Preferred Stock or Other Stock issued upon exercise of such options
shall be Capital Stock).

 2 

 

“CAPS Majority Holders” means the holders of a majority of the Common Shares
held by CAPS and/or any of its Permitted Transferees.

“CAPS Stockholders” means CAPS and each of its Permitted Transferees holding
Common Shares.

“Certificate of Incorporation” means the Amended and Restated Certificate of
Incorporation of the Company, as filed with the Secretary of State of the State
of Delaware and in effect as of the date of this Agreement, as amended from time
to time, including amendments made through a certificate of designations filed
with the Secretary of State of the State of Delaware.

“Change of Control” means: (a) the sale of all or substantially all of the
consolidated assets of the Company and the Company Subsidiaries, if any, to a
Third Party Purchaser; (b) a sale resulting in no less than a majority of the
Common Shares being held by a Third Party Purchaser; or (c) a merger,
consolidation, recapitalization or reorganization of the Company with or into a
Third Party Purchaser that results in the inability of the Stockholders to
designate or elect a majority of the board of directors (or its equivalent)) of
the resulting entity or its parent company.

“Class A-1 Common Shares” means shares of Class A-1 Common Stock, par value
$0.00001 per share, of the Company and any stock into which such Class A-1
Common Shares may hereafter be converted or changed.

“Class A-2 Common Shares” means shares of Class A-2 Common Stock, par value
$0.00001 per share, of the Company and any stock into which such Class A-2
Common Shares may hereafter be converted or changed.

“Common Shares” means shares of Class A-1 Common Shares and Class A-2 Common
Shares.

“Company Breach Event” means either of: (i) the failure of the Company during
any calendar year to operate substantially in accordance with the Budget for
such year or to achieve any of the Milestones for such year; or (ii) the failure
of the Company to perform any of its obligations hereunder, including any of the
provisions of Sections 4.4, 4.5, or 4.6 hereof.

“Company Competitor” means any Person who is engaged in the commercial
development, sale or distribution of pharmaceutical products, or any person who
owns, directly or indirectly, an ownership interest in any such Person (other
than a passive ownership of less than one percent (1%) of the outstanding stock
of any entity whose stock is traded on an established stock exchange).

“Company Subsidiary” means a Subsidiary of the Company.

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of law), or any arbitrator, court or tribunal of competent
jurisdiction.

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“Holder” means any Stockholder.

“License Agreement” means that certain Exclusive License Agreement dated August
26, 2011 between UABRF and LipimetiX, LLC (“LX”), as amended on August 3, 2012
and December 15, 2014 by and among UABRF, LX and the Company with LX assigning
its interest therein to the Company in connection therewith, as further amended
from time to time.

“LX Majority Holders” means the holders of a majority of the Common Shares held
by the LX Stockholders and/or any of their respective Permitted Transferees.

“LX Stockholders” has the meaning set forth in the Preamble to this Agreement.

“Majority in Interest of the Stockholders” means one or more Stockholders who
own, collectively, Shares of the of the Company representing at least a majority
of the Voting Power (without giving effect to the conversion of any convertible
Shares or the exercise of any options, warrants or other rights to acquire
Shares).

“New Shares” means any Capital Stock other than (a) any Capital Stock issued
pursuant to an offering of the securities of the Company pursuant to a
registration statement filed pursuant to the Securities Act of 1933, as amended,
(b) Common Shares issuable upon the exercise of options, warrants or other
rights to purchase such shares issued or issuable pursuant to the Company’s
stock option plan(s) in effect from time to time, or upon the conversion of
shares of Series B Preferred Stock, (c) Common Shares or options, warrants or
other rights to purchase Common Shares that are issued or issuable to directors
or employees, or other service providers or contractors (including without
limitation any investment bankers or other financial service providers) of the
Company for compensatory purposes and are approved by the Board, and the Common
Shares issuable upon the exercise of any such options, warrants or other rights,
(d) Capital Stock issued to the Company’s stockholders in connection with any
stock split, stock dividend, reverse stock split, recapitalization,
reclassification or similar event in which new Capital Stock is issued only to
the Persons who were stockholders of the Company immediately prior to such
issuance and in which the allocation of such new Capital Stock is based upon the
proportionate ownership of Capital Stock immediately prior to such issuance, (e)
Capital Stock issued in connection with a lender financing transaction approved
by the Board, (f) Capital Stock issued as consideration for the acquisition of
all or a portion of the business or assets of a Person or all or a portion of
the equity securities of a Person, regardless of the structure of such
transaction, provided such Person is not Affiliated with any Investor
immediately prior to such acquisition and such issuance is approved by the
Board, (g) Capital Stock issued in connection with the formation of a joint
venture or similar arrangement between the Company and a Person, provided such
Person is not Affiliated with any Stockholder immediately prior to such
formation and such issuance is approved by the Board, and (h) the Series B
Preferred Shares and the Warrants.

“Other Stock” means any class or series of capital stock of the Company (other
than Common Shares, Series A Preferred Stock or Series B Preferred Stock) that
may hereafter be authorized.

 4 

 

“Permitted Transfer” means a Transfer of Shares carried out pursuant to Section
3.2 or Section 3.3.

“Permitted Transferee” means a recipient of a Permitted Transfer.

“Person” means an individual, corporation, limited liability company,
partnership, association, trust (revocable or irrevocable) or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

“Preferred Shares” means any Series A Preferred Stock, Series B Preferred Stock
or Other Stock that is designated as a class or series of preferred stock of the
Company.

“Proportionate Share” means with respect to each Stockholder, the fraction whose
numerator is the number of Common Shares owned by such Stockholder at the date
with respect to which such amount is being calculated and the denominator of
which is the sum of the number of Common Shares outstanding at such date, in
each case assuming conversion of all outstanding shares of Series B Preferred
Stock.

“Representative” means, with respect to any Person, any and all directors,
officers, managers, employees, consultants, financial advisors, counsel,
accountants and other agents of such Person.

“Securities Act” means the Securities Act of 1933, as amended.

“Series A Preferred Stock” means shares of Series A Preferred Stock, par value
$0.0001 per share, of the Company.

“Series B Majority Holders” means the holders of a majority of the Common Shares
held by the Series B Investors assuming conversion of all outstanding shares of
Series B Preferred Stock.

“Series B-1 Majority Holders” means the holders of a majority of the Common
Shares held by the holders of the Series B-1 Preferred Stock assuming conversion
of all outstanding shares of Series B-1 Preferred Stock.

“Series B-2 Majority Holders” means the holders of a majority of the Common
Shares held by the holders of the Series B-2 Preferred Stock assuming conversion
of all outstanding shares of Series B-2 Preferred Stock.

“Series B Preferred Stock” means shares of Series B-1 Preferred Stock and Series
B-2 Preferred Stock.

“Series B-1 Preferred Stock” means shares of Series B-1 Preferred Stock, par
value $0.0001 per share, of the Company.

“Series B-2 Preferred Stock” means shares of Series B-2 Preferred Stock, par
value $0.0001 per share, of the Company.

“Shares” means the Common Shares and the Preferred Shares.

 5 

 

“Subsidiary” means, with respect to any Person, any other Person of which a
majority of the outstanding shares or other equity interests having the power to
vote for directors or comparable managers or other governing body are owned,
directly or indirectly, by the first Person.

“Supermajority in Interest of the Stockholders” means one or more Stockholders
who own, collectively, at least sixty percent (60%) or more of the Common Shares
held by all of the Stockholders entitled to vote on or consent to the matter
under consideration, assuming conversion of all outstanding shares of Series B
Preferred Stock.

“Third Party Purchaser” means any Person who, immediately prior to the
contemplated transaction, (a) does not directly or indirectly own or have the
right to acquire any outstanding Shares or (b) is not a Permitted Transferee of
any Person who directly or indirectly owns or has the right to acquire any
Shares.

“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, by operation of law or otherwise, or to enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of, any
Shares owned by a Person or any interest (including a beneficial interest) in
any Shares owned by a Person. “Transfer” when used as a noun shall have a
correlative meaning.

“UABRF Shares” means those certain Common Shares held by UABRF.

“Voting Power” means the power to cast votes in a vote of the stockholders of
the Company in accordance with the Certificate of Incorporation and shall refer
to the total number of votes entitled to be cast in any such matter on which the
stockholders are entitled to vote as a single class.

1.2              Cross-Reference of Defined Terms. Each of the following terms
is defined in the Section set forth opposite such term:

Term Section     Agreement Preamble Budget 6.3 CAPS Preamble Company Preamble
Confidential Information 6.4 Consent of Spouse 11.17 Exercising Buyers 5.1(c)
New Share Offeree 5.1(a) Notice of Proposed Issuance 5.1(a) Offered New Shares
5.1(a) Participating Stockholder 6.2 Proposed Purchaser/Proposed Purchasers
5.1(a) Stockholder/Stockholders Preamble Twenty Day Period 5.1(b) UABRF Preamble
   

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2.                  Board of Directors.

2.1              Board of Directors; Composition; Vacancies. Each Stockholder
shall vote (in person, by proxy or by action by written consent, as applicable)
all of such Stockholder’s Capital Stock, whether now owned or hereafter acquired
or which such Stockholder may be empowered to vote, from time to time and at all
times, in whatever manner shall be necessary to ensure that the number of
directors who comprise the Board shall be seven (7) and the members of the Board
shall consist of the following:

(a)                Subject to the provisions of Section 2.1(e) below, the Board
shall be comprised as follows: (i) provided that the LX Stockholders continue to
hold any Shares, three (3) individuals designated in writing by the LX Majority
Holders (the “LX Directors”), who shall initially be Dennis I. Goldberg, Ph.D.,
Philip M. Friden, Ph.D. and Eric Morrel, Ph.D.; (ii) provided that the CAPS
Stockholders continue to hold any Shares, two (2) individuals designated in
writing by the CAPS Majority Holders (the “CAPS Directors”), who shall initially
be J.M. Holliman, III and Randy Steer; (iii) provided that the Series B
Investors continue to hold any shares of Series B-1 Preferred Stock, one
individual, provided such individual constitutes a Qualified Designee as defined
below, designated in writing by the Series B-1 Majority Holders (the “Series B-1
Director”), who shall initially be Randall R. Lunn; and (iv) provided that the
Series B Investors continue to hold any shares of Series B-2 Preferred Stock,
one individual, provided such individual constitutes a Qualified Designee as
defined below, designated in writing by the Series B- 2 Majority Holders (the
“Series B- 2 Director”, and together with the Series B-1 Director, the “Series B
Directors” ), who shall initially be ____________. To the extent that any of the
clauses in (i) through (iv) shall not be applicable because the LX Stockholders,
CAPS Stockholders or Series B Investors, as applicable, no longer hold any of
the applicable shares of the Company, any members of the Board who would
otherwise have been designated in accordance with the terms thereof shall
instead be voted upon by all of the stockholders of the Company entitled to vote
thereon in accordance with, and pursuant to, the Certificate of Incorporation.

(b)               In the event that a vacancy is created on the Board at any
time due to the death, disability, retirement, resignation or removal of a LX
Director and provided that the LX Majority Holders are still entitled to
designate the LX Directors pursuant to Section 2.1(a) above, then the LX
Majority Holders shall have the right to designate an individual to fill such
vacancy, provided that such individual constitutes a Qualified Designee, and the
Company and each Stockholder hereby agree to take such actions as may be
required to ensure the election or appointment of such designee to fill such
vacancy on the Board. In the event that the LX Majority Holders shall fail to
designate in writing a representative to fill a vacant LX Director position on
the Board, and such failure shall continue for more than fifteen (15) days after
notice from any director to the LX Stockholders with respect to such failure,
then the vacant position shall be filled by an individual designated by the LX
Directors then in office; provided, however, that such individual shall be
removed from such position if the LX Majority Holders so direct and
simultaneously designate a new LX Director.

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(c)                In the event that a vacancy is created on the Board at any
time due to the death, disability, retirement, resignation or removal of a CAPS
Director and provided that the CAPS Majority Holders are still entitled to
designate the CAPS Directors pursuant to Section 2.1(a) above, then the CAPS
Majority Holders shall have the right to designate an individual to fill such
vacancy, provided that such individual constitutes a Qualified Designee, and the
Company and each Stockholder hereby agree to take such actions as may be
required to ensure the election or appointment of such designee to fill such
vacancy on the Board. In the event that the CAPS Majority Holders shall fail to
designate in writing a representative to fill a vacant CAPS Director position on
the Board, and such failure shall continue for more than fifteen (15) days after
notice from any director to the CAPS Stockholders with respect to such failure,
then the vacant position shall be filled by an individual designated by the CAPS
Directors then in office; provided, however, that such individual shall be
removed from such position if the CAPS Majority Holders so direct and
simultaneously designate a new CAPS Director.

(d)               In the event that a vacancy is created on the Board at any
time due to the death, disability, retirement, resignation or removal of a
Series B Director and provided that the Series B-1 Majority Holders or Series
B-2 Majority Holders, as appropriate, are still entitled to designate the
applicable Series B Director pursuant to Section 2.1(a) above, then the Series
B-1 Majority Holders or Series B-2 Majority Holders, as applicable, shall have
the right to designate an individual to fill such vacancy, provided that such
individual constitutes a Qualified Designee, and the Company and each
Stockholder hereby agree to take such actions as may be required to ensure the
election or appointment of such designee to fill such vacancy on the Board. In
the event that the Series B-1 Majority Holders or Series B-2 Majority Holders,
as applicable, shall fail to designate in writing a representative to fill the
applicable vacant Series B Director position on the Board, and such failure
shall continue for more than fifteen (15) days after notice from any director to
the Series B Investors with respect to such failure, then the vacant position
shall be filled by an individual designated by the other Series B Director then
in office; provided, however, that such individual shall be removed from such
position if the applicable Series B Majority Holders so direct and
simultaneously designate a new Series B Director.

(e)                As used herein, a “Qualified Designee” shall mean a designee
for election to the Board that satisfies the following requirements:

(i)         none of the “bad actor” disqualifying events described in Rule
506(d)(1)(i)-(viii) promulgated under the Securities Act of 1933, as amended
(each, a “Disqualification Event”) shall be applicable to such designee; and

(ii)       Such designee shall not be employed by, provide services to, or
otherwise be affiliated with a Directly Competitive Business.

2.2              Removal; Resignation.

(a)                Subject to the provisions of Section 2.2(f) below, a LX
Director may be removed or replaced at any time from the Board, without cause,
upon, and only upon, the written request of the LX Majority Holders, provided
that the LX Majority Holders are still entitled to designate the LX Directors
pursuant to Section 2.1(a) above.

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(b)               Subject to the provisions of Section 2.2(f) below, a CAPS
Director may be removed or replaced at any time from the Board, without cause,
upon, and only upon, the written request of the CAPS Majority Holders, provided
that the CAPS Majority Holders are still entitled to designate the CAPS
Directors pursuant to Section 2.1(a) above.

(c)                Subject to the provisions of Section 2.2(f) below, a Series B
Director may be removed or replaced at any time from the Board, without cause,
upon, and only upon, the written request of the Series B Majority Holders,
provided that the Series B Majority Holders are still entitled to designate the
Series B Directors pursuant to Section 2.1(a) above.

(d)               A director may resign at any time from the Board by delivering
his written resignation to the Board and the Stockholder(s) appointing such
director as provided in Section 2.1. Any such resignation shall be effective
upon receipt thereof unless it is specified to be effective at some other time
or upon the occurrence of some other event. The Board’s or any Stockholder’s
acceptance of a resignation shall not be necessary to make it effective.

(e)                Each Stockholder shall vote (in person, by proxy or by action
by written consent, as applicable) all of such Stockholder’s Capital Stock,
whether now owned or hereafter acquired or which such Stockholder may be
empowered to vote, from time to time and at all times, in whatever manner shall
be necessary to ensure that (a) no director designated pursuant to Section 2.1
may be removed from such office unless such removal is directed or approved in
writing by the Stockholders entitled to designate such director, and (b) any
vacancy created by the resignation, removal or death of a director designated
pursuant to Section 2.1 shall be filled with a director designated by the
Stockholders entitled to designate such director.

(f)                Anything to the contrary in Section 2.1 or 2.2
notwithstanding, any director may be removed for cause by a Majority in Interest
of the Stockholders, and if so removed, may only be replaced thereafter by the
Board or by the stockholders of the Company entitled to vote thereon in
accordance with, and pursuant to, the Certificate of Incorporation. In the event
of such removal, such member of the Board shall thereafter be voted upon by all
of the stockholders of the Company entitled to vote thereon in accordance with,
and pursuant to, the Certificate of Incorporation, rather than selected in
accordance with the provisions of Section 2.1 (a), and the number of Directors
that the persons who designated the removed Director shall thereafter be
entitled to designate shall be reduced by one. For purposes hereof, cause shall
include, without limitation, gross negligence, malfeasance or intentional
misconduct in the performance of such person's duties as a director, a breach of
such person's fiduciary duties to the Company, a Bad Actor Disqualification
Event becoming applicable to such person, or such person's conviction of, or the
entering of a guilty plea or plea of no contest with respect to, a felony.

3.                  Transfer.

3.1              General Restrictions on Transfer.

(a)                Each Stockholder acknowledges and agrees that such
Stockholder (or any Permitted Transferee of such Stockholder) shall not Transfer
any Shares except as may be approved by a Majority in Interest of the
Stockholders (which consent shall not be unreasonably withheld), as permitted
pursuant to Section 3.2 or Section 3.3, or in accordance with the procedures
described in Section 3.4 or Section 3.5, as applicable. No Transfer other than
pursuant to Section 3.4 may be made unless the prospective Transferee has
executed and delivered to the Company a counterpart signature or joinder to this
Agreement, agreeing to be bound by the terms hereof, in a form acceptable to a
Majority in Interest of the Stockholders.

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(b)               Notwithstanding any other provision of this Agreement to the
contrary (including Section 3.2 and Section 3.3), each Stockholder agrees that
it will not, directly or indirectly, Transfer any of its Shares, and the Company
agrees that it shall not issue any Shares or otherwise approve the Transfer of
any Shares:

(i)         except as permitted under the Securities Act and other applicable
federal or state securities or blue sky laws, and then, with respect to a
Transfer of Shares, if requested by the Company, only upon delivery to the
Company of an opinion of counsel in form and substance satisfactory to the
Company to the effect that such Transfer may be effected without registration
under the Securities Act;

(ii)       if such Transfer or issuance would cause the Company or any of the
Company Subsidiaries, if any, to be required to register as an investment
company under the Investment Company Act of 1940, as amended; or

(iii)     if such Transfer or issuance would cause the assets of the Company or
any of the Company Subsidiaries to be deemed “Plan Assets” as defined under the
Employee Retirement Income Security Act of 1974 or its accompanying regulations
or result in any “prohibited transaction” thereunder involving the Company or
any Company Subsidiary, if any.

A Majority in Interest of the Stockholders may refuse: (i) the Transfer of any
Shares to any Person if such Transfer would have a material adverse effect on
the Company as a result of any regulatory or other restrictions imposed by any
Governmental Authority; or (ii) the Transfer of any Shares to any Company
Competitor. No Transfer described in (i) or (ii) of the preceding sentence may
be effected without the prior written consent of a Majority in Interest of the
Stockholders.

(c)                Any Transfer or attempted Transfer of any Shares in violation
of this Agreement shall be null and void, no such Transfer shall be recorded on
the Company’s books and the purported transferee in any such Transfer shall not
be treated (and the purported transferor shall continue be treated) as the owner
of such Shares for all purposes of this Agreement.

3.2              CAPS Permitted Transfers. The provisions of Section 3.1(a)
(other than the last sentence of such section), Section 3.4 (with respect to the
Dragging Stockholders only) and Section 3.5 shall not apply to any of the
following Transfers by CAPS of any of its Shares: (i) a Transfer to an Affiliate
of CAPS and (ii) in the event of a liquidation, dissolution or winding up of
CAPS, a Transfer to its shareholders in accordance with its constitutive
documents. Notwithstanding the foregoing, each of the foregoing Transfers of
Shares shall be subject to Sections 3.1(b) and 3.1(c), and the last sentence of
Section 3.1(a).

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3.3              LX and Series B Investors Permitted Transfers. The provisions
of Section 3.1(a) (other than the last sentence of such section), Section 3.4
(with respect to the Dragging Stockholders only) and Section 3.5 shall not apply
to any of the following Transfers by LX Stockholders or the Series B Investors
of any of their Shares: (i) a Transfer to an Affiliate of the transferor,
provided that all Shares held by the transferor are so transferred or a Transfer
in connection with the death of an LX Stockholder or a Series B Investor who is
a natural person; and (ii) in the event of a liquidation, dissolution or winding
up of a LX Stockholder or a Series B Investor who is a corporation or limited
liability company, a Transfer to such entity’s shareholders or members in
accordance with its constitutive documents. Notwithstanding the foregoing, each
of the foregoing Transfers of Shares shall be subject to Sections 3.1(b) and
3.1(c), and the last sentence of Section 3.1(a).

3.4              Drag-along Rights.

(a)                Participation. If one or more Stockholders (together with
their respective Permitted Transferees) holding no less than a majority of all
the Common Shares (assuming conversion of all outstanding shares of Series B
Preferred Stock) (such Stockholders, the “Dragging Stockholders”), propose to
consummate, in one transaction or a series of related transactions, a Change of
Control (a “Drag-along Sale”), the Dragging Stockholders shall have the right,
after delivering the Drag-along Notice in accordance with Section 3.4(c) and
subject to compliance with Section 3.4(d), to require that each other
Stockholder (each, a “Drag-along Stockholder”) participate in such sale in the
manner set forth in Section 3.4(b).

(b)               Sale of Shares. Subject to compliance with Section 3.4(d):

(i)         If the Drag-along Sale is structured as a sale resulting in a
majority of the Common Shares being held by a Third Party Purchaser, then each
Drag-along Stockholder shall sell, with respect to each class or series of
Shares proposed by the Dragging Stockholders to be included in the Drag-along
Sale, the number of Shares of such class or series equal to the product obtained
by multiplying (A) the number of applicable Shares held by such Drag-along
Stockholder by (B) a fraction (x) the numerator of which is equal to the number
of applicable Shares that the Dragging Stockholders proposes to sell in the
Drag-along Sale and (y) the denominator of which is equal to the number of
applicable Shares held by the Dragging Stockholders at such time; and

(ii)       If the Drag-along Sale is structured as a sale of all or
substantially all of the assets of the Company or as a merger, consolidation,
recapitalization, or reorganization of the Company or other transaction
requiring the consent or approval of a Majority in Interest of the Stockholders
or of other Stockholders, then notwithstanding anything to the contrary in this
Agreement, each Drag-along Stockholder shall vote in favor of the transaction
and otherwise consent to and raise no objection to such transaction, and shall
take all actions to waive any dissenters’, appraisal or other similar rights
that it may have in connection with such transaction.

 11 

 

(c)                Sale Notice. The Dragging Stockholders shall exercise their
rights pursuant to this Section 3.4 by delivering a written notice (the
“Drag-along Notice”) to the Company and each Drag-along Stockholder no more than
ten (10) Business Days after the execution and delivery by all of the parties
thereto of the definitive agreement entered into with respect to the Drag-along
Sale and, in any event, no later than twenty (20) Business Days prior to the
closing date of such Drag-along Sale. The Drag-along Notice shall make reference
to the Dragging Stockholders’ rights and obligations hereunder and shall
describe in reasonable detail: (i) the name of the Person to whom such Shares
are proposed to be sold; (ii) the proposed date, time and location of the
closing of the sale; (iii) the number of each class or series of Shares to be
sold by the Dragging Stockholders, the proposed amount of consideration for the
Drag-along Sale and the other material terms and conditions of the Drag-along
Sale, including a description of any non-cash consideration in sufficient detail
to permit the valuation thereof and including, if available, the purchase price
per Share of each applicable class or series; and (iv) a copy of any form of
agreement proposed to be executed in connection therewith.

(d)               Conditions of Sale. The obligations of the Drag-along
Stockholders in respect of a Drag-along Sale under this Section 3.4 are subject
to the satisfaction of the following conditions:

(i)         The consideration to be received by each Drag-along Stockholder
shall be the same form and amount of consideration to be received by the
Dragging Stockholders per Share of each applicable class or series and the terms
and conditions of such sale shall, except as otherwise provided in Section
3.4(d)(ii), be the same as those upon which the Dragging Stockholders sells its
Shares;

(ii)       If the Dragging Stockholders or any Drag-along Stockholder is given
an option as to the form and amount of consideration to be received, the same
option shall be given to all Drag-along Stockholders; and

(iii)     Each Drag-along Stockholder shall execute the applicable purchase
agreement, if applicable, and make or provide the same representations,
warranties, covenants, indemnities and agreements as the Dragging Stockholders
make or provide in connection with the Drag-along Sale; provided, however, that
each Drag-along Stockholder shall only be obligated to make individual
representations and warranties with respect to its title to and ownership of the
applicable Shares, authorization, execution and delivery of relevant documents,
enforceability of such documents against the Drag-along Stockholder, and other
matters relating to such Drag-along Stockholder, but not with respect to any of
the foregoing with respect to any other Stockholders or their Shares; provided,
further, however, that all representations, warranties, covenants and
indemnities shall be made by the Dragging Stockholders and each Drag-along
Stockholder severally and not jointly and any indemnification obligation shall
be pro rata based on the consideration received by the Dragging Stockholders and
each Drag-along Stockholder, in each case in an amount not to exceed the
aggregate proceeds received by the Dragging Stockholders and each such
Drag-along Stockholder in connection with the Drag-along Sale.

(e)                Cooperation.

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(i)         Each Drag-along Stockholder shall take all actions as may be
reasonably necessary to consummate the Drag-along Sale, including, without
limitation, entering into agreements and delivering certificates and
instruments, in each case, consistent with the agreements being entered into and
the certificates being delivered by the Dragging Stockholders, but subject to
Section 3.4(d)(ii).

(ii)       If a Drag-Along Stockholder fails, for any reason, to execute any
agreements or other documents, or to take any other action necessary to satisfy
its obligations set forth in this Section 3.4, such Drag-along Stockholder: (A)
to the extent applicable, shall be deemed to have assigned all of its right,
title and interest in and to its Shares to the Third party Purchaser and the
Third party Purchaser shall have the right to receive all distributions with
respect to such Shares, (B) shall be deemed to have given the Dragging
Stockholders an irrevocable proxy, coupled with an interest, to vote its Shares
on all matters submitted on which such Drag-along Stockholder is entitled to a
vote, (C) shall be deemed to have given the Dragging Stockholders an irrevocable
power of attorney solely to execute and deliver in such Drag-along Stockholder’s
name and stead all documents, agreements and instruments necessary and
appropriate to effectuate the Drag-along Sale, and (D) shall cease to have any
rights with respect to such Shares except to only the right to receive the
respective amounts for such Drag-along Stockholder’s Shares as computed pursuant
to this Section 3.4 upon the closing of the Drag-along Sale as set forth in this
Section 3.4. This remedy is in addition to any other remedies allowed by law or
by this Agreement.

(f)                Expenses. The fees and expenses of the Dragging Stockholders
incurred in connection with a Drag-along Sale and for the benefit of all
Drag-along Stockholders (it being understood that costs incurred by or on behalf
of Dragging Stockholders for their sole benefit will not be considered to be for
the benefit of all Drag-along Stockholders), to the extent not paid or
reimbursed by the Company or the Third party Purchaser, shall be shared by the
Dragging Stockholder and all the Drag-along Stockholders on a pro rata basis,
based on the consideration received by each such Stockholder; provided, however,
that no Drag-along Stockholder shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Drag-along Sale.

3.5              Tag-along Rights.

(a)                Participation. Subject to the terms and conditions specified
in Section 3.1 and Section 3.2, if any Stockholder (the “Selling Stockholder”)
proposes to Transfer any of its Common Shares to any Person (a “Proposed
Transferee”), each other Stockholder (each, a “Tag-along Stockholder”) shall be
permitted to participate in such sale (a “Tag-along Sale”) on the terms and
conditions set forth in this Section 3.5.

(b)               Application of Transfer Restrictions. The provisions of this
Section 3.5 shall not apply to Transfers in which the Dragging Stockholders have
elected to exercise their drag-along right under Section 3.4.

 13 

 

(c)                Sale Notice. Prior to the consummation of any Transfer of
Common Shares qualifying under Section 3.5(a), the Selling Stockholder shall
deliver to the Company and each other Stockholder holding Common Shares of the
class or series proposed to be Transferred a written notice (a “Sale Notice”) of
the proposed Tag-along Sale. The Sale Notice shall make reference to the
Tag-along Stockholders’ rights hereunder and shall describe in reasonable
detail: (i) the aggregate number of Common Shares the Proposed Transferee has
offered or otherwise agreed to purchase; (ii) the identity of the Proposed
Transferee; (iii) the proposed date, time and location of the closing of the
Tag-along Sale; (iv) the purchase price per applicable Common Share (which shall
be payable solely in cash) and the other material terms and conditions of the
Transfer; and (v) a copy of any form of agreement proposed to be executed in
connection therewith.

(d)               Exercise of Tag-along Right.

(i)         The Selling Stockholder and each Tag-along Stockholder timely
electing to participate in the Tag-along Sale pursuant to Section 3.5(d)(ii)
shall have the right to Transfer in the Tag-along Sale the number of Common
Shares equal to the product of (A) the aggregate number of Common Shares that
the Proposed Transferee proposes or has otherwise agreed to buy as stated in the
Sale Notice and (B) a fraction (x) the numerator of which is equal to the number
of Common Shares then held by the applicable Stockholder, and (y) the
denominator of which is equal to the number of Common Shares then held by the
Selling Stockholder and all of the Tag-along Stockholders timely electing to
participate in the Tag-along Sale pursuant to Section 3.5(d)(ii) (such amount
with respect to the Common Shares, the “Tag-along Portion”).

(ii)       Each Tag-along Stockholder shall exercise its right to participate in
a Tag-along Sale by delivering to the Selling Stockholder a written notice (a
“Tag-along Notice”) stating its election to do so and specifying the number of
Common Shares (up to its Tag-along Portion) to be Transferred by it no later
than ten (10) days after receipt of the Sale Notice (the “Tag-along Period”).

(iii)     The offer of each Tag-along Stockholder set forth in a Tag-along
Notice shall be irrevocable, and, to the extent such offer is accepted, such
Tag-along Stockholder shall be bound and obligated to consummate the Transfer on
the terms and conditions set forth in this Section 3.5.

(e)                Remaining Portions.

(i)         If any Tag-along Stockholder declines to exercise its right under
Section 3.5(d) or elects to exercise it with respect to less than its full
Tag-Along Portion (the aggregate amount of Common Shares resulting from all such
unexercised Tag-Along Portions, the “Remaining Portion”), the Selling
Stockholder shall promptly deliver a written notice (a “Remaining Portion
Notice”) to those Tag-along Stockholders who have elected to Transfer their
Tag-Along Portion in full (each, a “Fully Participating Tag-along Stockholder”).
The Selling Stockholder and each Fully Participating Tag-along Stockholder (with
respect to any Remaining Portion) shall be entitled to Transfer, in addition to
any applicable Common Shares already being Transferred, a number of Common
Shares, held by it equal to the product of (A) the Remaining Portion and (B) a
fraction (x) the numerator of which is equal to the number of Common Shares then
held by the applicable Stockholder, and (y) the denominator of which is equal to
the number of Common Shares then held by the Selling Stockholder and all Fully
Participating Tag-along Stockholders.

 14 

 

(ii)       Each Fully Participating Tag-along Stockholder shall exercise its
right to participate in the Transfer described in Section 3.5(e) by delivering
to the Selling Stockholder a written notice (a “Remaining Tag-along Notice”)
stating its election to do so and specifying the number of Common Shares (up to
the amounts it may Transfer pursuant to Section 3.5(e)), to be Transferred by it
no later than five (5) Business Days after receipt of the Remaining Portion
Notice.

(iii)     The offer of each Fully Participating Tag-along Stockholder set forth
in a Remaining Tag-along Notice shall be irrevocable, and, to the extent such
offer is accepted, such Stockholder shall be bound and obligated to consummate
the Transfer on the terms and conditions set forth in this Section 3.5.

(f)                Waiver. Each Tag-along Stockholder who does not deliver a
Tag-along Notice in compliance with Section 3.5(d)(ii) shall be deemed to have
waived all of such Tag-along Stockholder’s rights to participate in the
Tag-along Sale with respect to the Common Shares owned by such Tag-along
Stockholder, and the Selling Stockholder shall (subject to the rights of any
other participating Tag-along Stockholder and the requirements of Section 3.1)
thereafter be free to sell to the Proposed Transferee the Common Shares
identified in the Sale Notice at a per Common Share price that is no greater
than the applicable per Common Share price set forth in the Sale Notice and on
other terms and conditions which are not in the aggregate materially more
favorable to the Selling Stockholder than those set forth in the Sale Notice,
without any further obligation to the non-accepting Tag-along Stockholders.

(g)               Conditions of Sale.

(i)         Each Stockholder participating in the Tag-along Sale shall receive
the same consideration per Common Share after deduction of such Stockholder’s
proportionate share of the related expenses in accordance with Section 3.5(i)
below.

(ii)       Each Tag-along Stockholder shall make or provide the same
representations, warranties, covenants, indemnities and agreements as the
Selling Stockholder makes or provides in connection with the Tag-along Sale;
provided, however, that each Tag-along Stockholder shall only be obligated to
make individual representations and warranties with respect to its title to and
ownership of the applicable Common Shares, authorization, execution and delivery
of relevant documents, enforceability of such documents against the Tag-along
Stockholder, and other matters relating to such Tag-along Stockholder, but not
with respect to any of the foregoing with respect to any other Stockholders or
their Common Shares; provided, further, however, that all representations,
warranties, covenants and indemnities shall be made by the Selling Stockholder
and each Tag-along Stockholder severally and not jointly and any indemnification
obligation shall be pro rata based on the consideration received by the Selling
Stockholder and each Tag-along Stockholder, in each case in an amount not to
exceed the aggregate proceeds received by the Selling Stockholder and each such
Tag-along Stockholder in connection with the Tag-along Sale.

 15 

 

(h)               Cooperation. Each Tag-along Stockholder shall take all actions
as may be reasonably necessary to consummate the Tag-along Sale, including,
without limitation, entering into agreements and delivering certificates and
instruments, in each case, consistent with the agreements being entered into and
the certificates being delivered by the Selling Stockholder, but subject to
Section 3.5(g)(ii).

(i)                 Expenses. The fees and expenses of the Selling Stockholder
incurred in connection with a Tag-along Sale and for the benefit of all
Tag-along Stockholders (it being understood that costs incurred by or on behalf
of a Selling Stockholder for its sole benefit will not be considered to be for
the benefit of all Tag-along Stockholders), to the extent not paid or reimbursed
by the Company or the Proposed Transferee, shall be shared by the Selling
Stockholder and all the participating Tag-along Stockholders on a pro rata
basis, based on the consideration received by each such Stockholder; provided,
however, that no Tag-along Stockholder shall be obligated to make any
out-of-pocket expenditure prior to the consummation of the Tag-along Sale.

(j)                 Consummation of Sale. The Selling Stockholder shall have
thirty (30) days following the expiration of the Tag-along Period in which to
consummate the Tag-along Sale, on terms not more favorable to the Selling
Stockholder than those set forth in the Tag-along Notice (which 30-day period
may be extended for a reasonable time not to exceed forty-five (45) days to the
extent reasonably necessary to obtain required approvals or consents from any
governmental authority). If at the end of such period the Selling Stockholder
has not completed the Tag-along Sale, the Selling Stockholder may not then
effect a Transfer that is subject to this Section 3.5 without again fully
complying with the provisions of this Section 3.5.

(k)               Transfers in Violation of the Tag-along Right. If the Selling
Stockholder sells or otherwise Transfers to the Proposed Transferee any of its
Common Shares in breach of this Section 3.5, then each Tag-along Stockholder
shall have the right to sell to the Selling Stockholder, and the Selling
Stockholder undertakes to purchase from each Tag-along Stockholder, the number
of Common Shares of each applicable class or series that such Tag-along
Stockholder would have had the right to sell to the Proposed Transferee pursuant
to this Section 3.5, for a per Common Share amount and form of consideration and
upon the terms and conditions on which the Proposed Transferee bought such
Common Shares from the Selling Stockholder, but without indemnity being granted
by any Tag-along Stockholder to the Selling Stockholder; provided, however, that
nothing contained in this Section 3.5(k) shall preclude any Stockholder from
seeking alternative remedies against such Selling Stockholder as a result of its
breach of this Section 3.5. The Selling Stockholder shall also reimburse each
Tag-along Stockholder for any and all reasonable and documented out-of-pocket
fees and expenses, including reasonable legal fees and expenses, incurred
pursuant to the exercise or the attempted exercise of the Tag-along
Stockholders’ rights under this Section 3.5(k).

 16 

 

4.                  Special Shareholder Matters.

4.1              Protective Provisions. In addition to those actions for which
this Agreement specifically requires the consent of one or more Stockholders,
neither the Company, the Board nor the Stockholders shall take any of the
following actions on behalf of the Company without first obtaining the written
consent of the Stockholders as provided in this Section 4.1:

(a)                Issue Shares or any other Capital Stock or securities in the
Company or allow or cause any Company Subsidiary, if any, to do the same;

(b)               Authorize or pay any dividends or other distributions to the
Stockholders;

(c)                Enter into or amend any sale, license or partnering
agreements relating to AEM-28 or any other compound then under development by
the Company including, without limitation, the License Agreement;

(d)               Enter into, amend or terminate any related party transaction
or agreement, including the Benu Management Agreement or the Accounting Services
Agreement;

(e)                Enter into or amend any material contract outside the
ordinary course of the Company’s business;

(f)                Except as otherwise provided in Section 4.2 below, liquidate
or dissolve the Company or any Company Subsidiary;

(g)               Merge or consolidate the Company with or into one or more
Persons as permitted in the Act;

(h)               Sell, lease, exchange, or otherwise dispose of all or any
portion of Company’s property in a single transaction or a series of related
transactions other than in the ordinary course of the Company’s business;

(i)                 Make an assignment for the benefit of creditors of the
Company, file a voluntary petition in bankruptcy, consent to the appointment of
a receiver for the Company or its assets, or engage in any other similar event
or act; or

(j)                 Amend the Company’s Certificate of Incorporation or Bylaws.

Consent of the Stockholders for purposes of this Section 4.1 shall mean the
following:

(i)         The written consent of a Supermajority in Interest of the
Stockholders; or

 17 

 

(ii)       The affirmative vote of a Majority in Interest of the Stockholders at
a duly noticed meeting in accordance with the following procedure: if a Majority
in Interest of the Stockholders wish to consent to some action, such Majority in
Interest of the Stockholders may provide written notice thereof to the Board
(the “Request Notice”), whereupon the Board shall call a meeting of the
Stockholders on a date specified by the Majority in Interest of the Stockholders
that is not less than 15 days after the date of the Request Notice; provided,
that if the action of the Company is necessary before 15 days after the date of
the Request Notice due to the requirements of law or contract or to prevent or
avoid material harm to the Company, the Stockholders may consent to such action
by the written consent of a Majority in Interest of the Stockholders without
regard to the procedures in this paragraph (ii); or

(iii)     The written consent of a Majority in Interest of the Stockholders
delivered to the Company and effective no earlier than the date following the
date of the Stockholder meeting specified by the Majority in Interest of the
Stockholders in the Request Notice.

4.2              Dissolution. The parties agree that the Company shall not be
dissolved without the written consent of the holders of a Super Majority in
Interest of the Stockholders. At the request of the holders of a Super Majority
in Interest of the Stockholders, the Company agrees to take all actions required
to effect the dissolution of the Company.

4.3              Special Voting Provision. The parties acknowledge and agree
that the Common Shares and the Series B Preferred Stock are entitled to vote
together as a single class. If for any reason, the holders of the Class A-2
Shares become entitled to vote as a separate class, under applicable corporate
law or otherwise, the holders of the Class A-2 Shares agree to vote all of their
Shares in the same manner as voted by a majority of the Class A-1 Shares.

4.4              Accounting and Tax Services. The Company and CAPS have
previously entered into the Accounting Services Agreement. The Company agrees to
maintain such Accounting Services Agreement in full force and effect and not to
terminate, amend, modify or fail to renew such agreement, without the written
consent of CAPS. Without limiting the forgoing, the Company agrees that CAPS
shall at all times have full and exclusive authority, unless otherwise agreed by
CAPS, to provide, direct and manage all accounting, treasury, funds management
and finance functions for the Company, including without limitation, maintaining
the Company’s books and records, managing the Company’s funds, including
receipts and disbursements, overseeing the preparation of tax returns, and
preparing financial statements. The Company agrees that CAPS shall have full
access to all Company records and information requested by CAPS in connection
therewith.

4.5              Budget/Milestones. On or before January 15 of each year, the
Company shall prepare a written budget and operational plan (the “Budget”) for
the upcoming calendar year that is acceptable to, and approved by, a majority of
the CAPS Directors, containing operational and other milestones (the
“Milestones”) acceptable to, and approved by, a majority of the CAPS Directors.
The Company shall use best efforts to cause the Company to be operated in
accordance with the Budget and to achieve the Milestones.

4.6              Covenants. Upon the written request of a Majority in Interest
of the Stockholders, the Company agrees to take the following actions:

 18 

 

(a)                declare dividends on the capital stock of the Company out of
funds legally available therefor, in such amounts and with respect to such
classes of stock as the Majority in Interest of the Stockholders shall direct,
subject to the preferential rights of the Preferred Stock as set forth in the
Company’s Certificate of Incorporation; and

(b)               offer, sell and issue New Shares (subject to Section 5.1
below) of the Company on such terms and conditions as may be directed by a
Majority in Interest of the Stockholders.

5.                  Rights to Purchase.

5.1              Rights to Purchase.

(a)                In the event a Majority in Interest of the Stockholders
desires to issue any New Shares, the Company shall first deliver to each
Stockholder (each such Stockholder being referred to in this Section 5 as a “New
Share Offeree”) a written notice (the “Notice of Proposed Issuance”) specifying
in reasonable detail the total number of such New Shares which the Company then
desires to issue (the “Offered New Shares”), the preferences, powers, rights and
privileges of such Offered New Shares, the price per share for the Offered New
Shares and the proposed purchaser(s) of such Offered New Shares (collectively,
the “Proposed Purchasers”; individually, a “Proposed Purchaser”), and stating
that the New Share Offerees shall have the right to purchase the Offered New
Shares in the manner specified in this Section 5.1 at the price and in
accordance with the terms and conditions specified in such Notice of Proposed
Issuance.

(b)               During the twenty (20) day period commencing on the date on
which the Notice of Proposed Issuance has been delivered to all of the New Share
Offerees (the “Twenty Day Period”), the New Share Offerees shall have the option
to purchase Offered New Shares at the price and pursuant to the terms specified
in the Notice of Proposed Issuance. Each New Share Offeree electing to purchase
Offered New Shares must give written notice of such election to the Company
during such Twenty Day Period. Each New Share Offeree shall have the right to
purchase that number of the Offered New Shares as shall be equal to the total
number of the Offered New Shares multiplied by such New Share Offeree’s
Proportionate Share at the date the Notice of Proposed Issuance is given. If, at
the termination of such Twenty Day Period any New Share Offeree shall not have
delivered a notice to the Company exercising such New Share Offeree’s right to
purchase Offered New Shares, such New Share Offeree shall be deemed to have
waived all of its rights under this Section 5 with respect to the purchase of
such Offered New Shares.

(c)                If each New Share Offeree does not elect to purchase its full
proportionate share of any Offered New Shares pursuant to Section 5.1(b) during
the Twenty Day Period applicable to such Offered New Shares, then the Company
shall, within two (2) Business Days after the expiration of such Twenty Day
Period, send written notice to those New Share Offerees who fully exercised
their options within such Twenty Day Period (the “Exercising Buyers”),
indicating the number of remaining Offered New Shares. Each Exercising Buyer
shall have an additional option to purchase all or any part of the balance of
such remaining Offered New Shares. To exercise such option, an Exercising Buyer
must deliver notice of such additional exercise to the Company within five (5)
Business Days after receipt of such notice from the Company stating the number
of such remaining Offered New Shares such Exercising Buyer elects to purchase.
In the event the Exercising Buyers in the aggregate exercise such option for a
total number of remaining Offered New Shares in excess of the number available,
such Offered New Shares will be allocated as follows: first, each Exercising
Buyer who elects to purchase a number of additional Offered New Shares which is
less than the number of additional Offered New Shares multiplied by the
Allocation Ratio applicable to such Exercising Buyer, will purchase the amount
of such Offered New Shares such Exercising Buyer has elected to purchase; and
second, the remaining Offered New Shares will be allocated among the Exercising
Buyers who have exercised their option pursuant to this Section 5.1(c) in
proportion to their respective Allocation Ratios.

 19 

 

(d)               The Company shall have the right, until the expiration of one
hundred eighty (180) days commencing on the first day immediately following the
expiration of the option period provided in Section 5.1(c) with respect to such
Offered New Shares, to issue the remaining Offered New Shares to the Proposed
Purchaser(s) at a price not less than, and on other terms and conditions no more
favorable to the Proposed Purchaser(s) than, the price and other terms and
conditions specified in the Notice of Proposed Issuance. If for any reason the
Offered New Shares are not issued within such period and at such price and on
such terms and conditions, the right to issue such Offered New Shares in
accordance with the Notice of Proposed Issuance shall expire and the provisions
of this Agreement shall continue to be applicable to the Offered New Shares.

5.2              Price. The purchase price for the Offered New Shares shall,
unless otherwise agreed in writing by the parties to such transaction, be paid
in cash or by certified check on the date of the closing.

5.3              Closing. The closing of the purchase and sale of the Offered
New Shares shall occur at the same time and on the same date but shall not be
earlier than thirty (30) days following the last day of the applicable Twenty
Day Period. At such closing, the New Share Offerees or the Proposed
Purchaser(s), as the case may be, shall deliver the consideration required by
Section 5.2 and the Company shall deliver certificates representing the Offered
New Shares.

5.4              No Obligation to Sell. Except as may be required by Section
4.6(b) hereof, the Company shall not be obligated to consummate any proposed
issuance of New Shares, nor be liable to any Stockholder if the Company has not
consummated any proposed issuance of New Shares pursuant to this Section 5 for
any reason, regardless of whether it shall have delivered a Notice of Proposed
Issuance or received any notice of exercise in respect of such proposed
issuance.

5.5              Alternative Procedures. If the Board determines that the
Company requires additional funds from the sale of New Shares prior to the time
such funds would be available if the provisions of this Section 5 were complied
with in full, the Board may authorize the Company to accept subscriptions for,
and issue, New Shares from some or all of the Stockholders without compliance in
full with the procedures provided in this Section 5; provided, however, that the
Company concurrently establishes an alternative procedure whereby each Investor,
as soon as practicable after such issuance, is provided a purchase right with
respect to such New Shares equivalent to, and providing substantially the same
overall effect of, the rights provided in this Section 5.

 20 

 

6.                  Delivery of Corporate Information.

6.1              Delivery of Financial Statements.

(a)                The Company shall deliver the following to each Stockholder
who owns at least two percent (2%) of the outstanding Common Shares (assuming
conversion of all outstanding shares of Series B Preferred Stock):

(i)         Annual Financial Statements. As soon as available, and in any event
within one hundred twenty (120) days after the end of each fiscal year,
unaudited consolidated balance sheets of the Company and Company Subsidiaries,
if any, as at the end of each such Fiscal Year and unaudited consolidated
statements of income, cash flows and Stockholders’ equity for such Fiscal Year,
in each case setting forth in comparative form the figures for the previous
Fiscal Year, all in reasonable detail and all prepared in accordance with GAAP,
consistently applied (subject to normal year-end audit adjustments and the
absence of notes thereto) The parties agree, however, that for so long as CAPS
has no material sources of revenue other than from, or as a result of, the
operations of the Company, delivery of the unaudited consolidated financial
statements of CAPS shall be deemed to satisfy the foregoing requirements.

(ii)       Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each quarterly accounting
period in each Fiscal Year (other than the last fiscal quarter of the Fiscal
Year), unaudited consolidated balance sheets of the Company and Company
Subsidiaries, if any, as at the end of each such fiscal quarter and for the
current Fiscal Year to date and unaudited consolidated statements of income,
cash flows and Stockholders’ equity for such fiscal quarter and for the current
Fiscal Year to date, in each case setting forth in comparative form the figures
for the corresponding periods of the previous fiscal quarter, all in reasonable
detail and all prepared in accordance with GAAP, consistently applied (subject
to normal year-end audit adjustments and the absence of notes thereto). The
parties agree, however, that for so long as CAPS has no material sources of
revenue other than from, or as a result of, the operations of the Company,
delivery of the unaudited consolidated financial statements of CAPS shall be
deemed to satisfy the foregoing requirements.

(b)               Unless earlier terminated, the rights granted pursuant to this
Section 6.1 shall terminate if the Company becomes subject to the periodic
reporting requirements of Section 12(g) or 15(d) of the Exchange Act.

6.2              Inspection Rights. Upon reasonable notice from a Stockholder,
the Company shall, and shall afford each Stockholder and its Representatives
reasonable access during normal business hours to (a) the Company’s and the
Company Subsidiaries’, if any, properties, offices, plants and other facilities,
(b) the corporate, financial and similar records, reports and documents of the
Company and the Company Subsidiaries, if any, including, without limitation, all
books and records, minutes of proceedings, internal management documents,
reports of operations, reports of adverse developments, copies of any management
letters and communications with the Company, and to permit each Stockholder and
its Representatives to examine such documents and make copies thereof, and (c)
the Company’s and the Company Subsidiaries’, if any, officers, senior employees
and public accountants, and to afford each Stockholder and its Representatives
the opportunity to discuss and advise on the affairs, finances and accounts of
the Company and the Company Subsidiaries, if any, with their officers, senior
employees and public accountants (and the Company hereby authorizes said
accountants to discuss with such Stockholder and its Representatives such
affairs, finances and accounts).

 21 

 

6.3              Budget. The Board shall use best efforts to operate the Company
in all material respects in accordance with the Budget.

6.4              Confidentiality and Use of Information.

(a)                Each Stockholder (a “Company Person”) acknowledges that
during the term of this Agreement, it will have access to and become acquainted
with trade secrets, proprietary information and confidential information
belonging to the Company, the Company Subsidiaries, if any, and their Affiliates
that are not generally known to the public, including, but not limited to,
information concerning business plans, financial statements and other
information provided pursuant to this Agreement, operating practices and
methods, expansion plans, strategic plans, marketing plans, contracts, customer
lists or other business documents which the Company treats as confidential, in
any format whatsoever (including oral, written, electronic or any other form or
medium) (collectively, “Confidential Information”). In addition, each Company
Person acknowledges that: (i) the Company has invested, and continues to invest,
substantial time, expense and specialized knowledge in developing its
Confidential Information; (ii) the Confidential Information provides the Company
with a competitive advantage over others in the marketplace; and (iii) the
Company would be irreparably harmed if the Confidential Information were
disclosed to competitors or made available to the public. Without limiting the
applicability of any other agreement to which any Company Person is subject, no
Company Person shall, directly or indirectly, whether through such Company
Person’s agents, employees contractors, affiliates or otherwise, disclose or use
(other than solely for the purposes of such Company Person monitoring and
analyzing his investment in the Company or performing his duties as a director,
manager, officer, employee, consultant or other service provider of the Company)
at any time, including, without limitation, use for personal, commercial or
proprietary advantage or profit, either during his membership, association or
employment with the Company or thereafter, any Confidential Information of which
such Company Person is or becomes aware. Each Company Person in possession of
Confidential Information shall take all appropriate steps to safeguard such
information and to protect it against disclosure, misuse, espionage, loss and
theft.

(b)               Nothing contained in Section 6.4 shall prevent any Company
Person from disclosing Confidential Information: (i) upon the order of any court
or administrative agency; (ii) upon the request or demand of any regulatory
agency or authority having jurisdiction over such Company Person; (iii) to the
extent compelled by legal process or required or requested pursuant to subpoena,
interrogatories or other discovery requests; (iv) to the extent necessary in
connection with the exercise of any remedy hereunder; (v) to other directors or
other Stockholders; (vi) to a Stockholder’s Representatives who, in the
reasonable judgment of such Company Person, needs to know such Confidential
Information; or (vii) to any potential Permitted Transferee in connection with a
proposed Transfer of Shares from a Stockholder, as long as such Transferee
agrees to be bound by the provisions of this Section 6.4 as if a Stockholder;
provided, however, that in the case of clause (i), (ii) or (iii), such Company
Person shall notify the Company, the other directors, and the other Stockholders
of the proposed disclosure as far in advance of such disclosure as practicable
(but in no event make any such disclosure before notifying the Company, the
other directors, and the other Stockholders) and use reasonable efforts to
ensure that any Confidential Information so disclosed is accorded confidential
treatment satisfactory to the Company, when and if available.

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(c)                The restrictions of Section 6.4 shall not apply to
Confidential Information that: (i) is or becomes generally available to the
public other than as a result of a disclosure by a Company Person in violation
of this Agreement; (ii) is or becomes available to a Company Person or any of
its Representatives on a non-confidential basis prior to its disclosure to the
receiving Company Person and any of its Representatives in compliance with this
Agreement; (iii) is or has been independently developed or conceived by such
Company Person without use of Confidential Information; or (iv) becomes
available to the receiving Company Person or any of its Representatives on a
non-confidential basis from a source other than the Company, any other Company
Person or any of their respective Representatives; provided, however, that such
source is not known by the recipient of the Confidential Information to be bound
by a confidentiality agreement with the disclosing Company Person or any of its
Representatives.

(d)               Each Company Person agrees that upon the Transfer of his or
her ownership of all of his or her Shares for any reason whatsoever, such
Company Person shall surrender to the Company in good condition any record or
records kept by such Company Person containing Confidential Information. Upon
request of a Majority in Interest of the Stockholders, such Company Person shall
certify in writing to the Company that he or she has complied with the
foregoing, and that he or she has not retained any Confidential Information in
hard or soft copy, or any other form.

6.5              Other Business Activities. The parties hereto expressly
acknowledge and agree that, subject to all confidentiality provisions contained
in Section 6.4 and subject at all times to this Agreement: (i) UABRF, CAPS and
their Affiliates are permitted to have, and may presently or in the future have,
investments or other business relationships, ventures, agreements or
arrangements with entities engaged in the business of the Company, other than
through the Company and the Company Subsidiaries (an “Other Business”);
provided, however, that no such Other Businesses shall be a Directly Competitive
Business (as defined below), provided, further, that UABRF may engage in an
Other Business or have presently or in the future investments in an Other
Business including a Directly Competitive Business as long as UABRF does not
directly engage in partnering with or investing in a business that develops,
sells or manufactures the Apo E Mimetic molecules, including AEM-28 and AEM-18
and analogs licensed pursuant to the License Agreement; (ii) none of UABRF, CAPS
or their Affiliates will be obligated to inform the Company or any Stockholder
of any business opportunity, relationship or investment (a “Company
Opportunity”) or to present any Company Opportunity to the Company, and the
Company hereby renounces any interest in a Company Opportunity and any
expectancy that a Company Opportunity will be offered to it; (iii) nothing
contained herein shall limit, prohibit or restrict any Manager appointed by the
CAPS Majority Holders from serving on the board of directors or other governing
body of any Other Business; and (iv) the Stockholders will not acquire, be
provided with an option or opportunity to acquire, or be entitled to any
interest or participation in any Other Business as a result of the participation
therein of any of UABRF, CAPS or their Affiliates. The parties hereto expressly
authorize and consent to the involvement of CAPS and/or its Affiliates in any
Other Business subject to the terms contained in this Section 6.5; provided,
however, that any transactions between the Company and/or the Company
Subsidiaries, if any, and an Other Business will be on terms no less favorable
to the Company and/or any Company Subsidiaries, if any, than would be obtainable
in a comparable arm’s-length transaction. For purposes of this Section 6.5, a
“Directly Competitive Business” is a business that engages in the development,
manufacture or sale of any molecules for the treatment of hypercholesterolemia,
hyperlipidemia, acute coronary syndrome, obesity and diabetes.

 23 

 

7.                  Legend on Capital Stock.

7.1              Legend. In addition to any other legend that may be required by
law or another agreement between the Company and a Stockholder, each certificate
representing shares of Capital Stock held by a Stockholder or issued to any
subsequent transferee of such shares shall be endorsed with a legend in
substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER
SUCH ACT AND SUCH STATE LAWS OR A WRITTEN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION FOR
SUCH SALE, OFFER, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER ASSIGNMENT IS
AVAILABLE UNDER SUCH ACT AND SUCH STATE LAWS.

THE VOTING, SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED
BY, THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT BY AND AMONG
THE STOCKHOLDER, THE COMPANY AND CERTAIN OTHER HOLDERS OF STOCK OF THE COMPANY.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY
OF THE COMPANY.

7.2              Stop Transfer Order. Each Stockholder agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate “stop transfer” instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

8.                  Exculpation and Indemnification.

8.1              Exculpation and Covered Persons.

 24 

 

(a)                Covered Persons. As used herein, the term “Covered Person”
shall mean (i) each Stockholder, (ii) each officer, director, shareholder,
partner, member, controlling Affiliate, employee, agent or representative of
each Stockholder, and each of their controlling Affiliates, and (iii) each
director, officer, employee, agent, manager, or representative of the Company.

(b)               Standard of Care. No Covered Person shall be liable to the
Company or any other Covered Person for any loss, damage or claim incurred by
reason of any action taken or omitted to be taken by such Covered Person in good
faith and with the belief that such action or omission is in, or not opposed to,
the best interest of the Company, so long as such action or omission does not
constitute fraud, gross negligence or willful misconduct by such Covered Person.

(c)                Good Faith Reliance. A Covered Person shall be fully
protected in relying in good faith upon the records of the Company and upon such
information, opinions, reports or statements (including financial statements and
information, opinions, reports or statements as to the value or amount of the
assets, liabilities, net income or net losses of the Company or any facts
pertinent to the existence and amount of assets from which dividends or other
might properly be paid) of the following Persons or groups: (i) another
director; (ii) one or more Officers or employees of the Company; (iii) any
attorney, independent accountant, appraiser or other expert or professional
employed or engaged by or on behalf of the Company; or (iv) any other Person
selected in good faith by or on behalf of the Company, in each case as to
matters that such relying Person reasonably believes to be within such other
Person’s professional or expert competence.

8.2              Liabilities and Duties of Covered Persons.

(a)                Limitation of Liability. This Agreement is not intended to,
and does not, create or impose any fiduciary duty on any Covered Person.
Furthermore, each of the Stockholders and the Company hereby waives any and all
fiduciary duties that, absent such waiver, may be implied by Applicable Law, and
in doing so, acknowledges and agrees that the duties and obligation of each
Covered Person to each other and to the Company are only as expressly set forth
in this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the Stockholders to replace such other duties
and liabilities of such Covered Person. To the extent that, at law or in equity,
any Covered Person has duties and liabilities related thereto to the Company or
to any other Covered Person, a Covered Person acting under this Agreement shall
not be liable to the Company or to any other Covered Person for such Covered
Person’s good faith reliance on the provisions of this Agreement.

(b)               Duties. Whenever in this Agreement a Covered Person is
permitted or required to make a decision (including a decision that is in such
Covered Person’s “discretion” or under a grant of similar authority or
latitude), the Covered Person shall be entitled to consider only such interests
and factors as such Covered Person desires, including its own interests, and
shall have no duty or obligation to give any consideration to any interest of or
factors affecting the Company or any other Person. Whenever in this Agreement a
Covered Person is permitted or required to make a decision in such Covered
Person’s “good faith” or under another express standard, the Covered Person
shall act under such express standard and shall not be subject to any other or
different standard imposed by this Agreement or any other Applicable Law.

 25 

 

8.3              Indemnification.

(a)                General. To the fullest extent permitted by the Act, as the
same now exists or may hereafter be amended, substituted or replaced (but, in
the case of any such amendment, substitution or replacement only to the extent
that such amendment, substitution or replacement permits the Company to provide
broader indemnification rights than the Act permitted the Company to provide
prior to such amendment, substitution or replacement), the Company shall
indemnify, hold harmless, defend, pay and reimburse any Covered Person against
any and all losses, claims, damages, judgments, fines or liabilities, including
reasonable legal fees or other expenses incurred in investigating or defending
against such losses, claims, damages, judgments, fines or liabilities, and any
amounts expended in settlement of any claims (collectively, “Losses”) to which
such Covered Person may become subject by reason of:

(i)         Any act or omission or alleged act or omission performed or omitted
to be performed on behalf of the Company, any Stockholder or any direct or
indirect Subsidiary of the foregoing in connection with the business of the
Company; or

(ii)       The fact that such Covered Person is or was acting in connection with
the business of the Company as a partner, member, stockholder, controlling
Affiliate, manager, director, officer, employee or agent of the Company, any
Stockholder, or any of their respective controlling Affiliates, or that such
Covered Person is or was serving at the request of the Company as a partner,
member, manager, director, officer, employee or agent of any Person including
the Company or any Company Subsidiary; provided, however, that (A) such Covered
Person acted in good faith and in a manner believed by such Covered Person to be
in, or not opposed to, the best interests of the Company and, with respect to
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful, and (B) such Covered Person’s conduct did not constitute fraud, gross
negligence or willful misconduct, in either case as determined by a final,
nonappealable order of a court of competent jurisdiction. In connection with the
foregoing, the termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Covered Person did not act
in good faith or, with respect to any criminal proceeding, had reasonable cause
to believe that such Covered Person’s conduct was unlawful, or that the Covered
Person’s conduct constituted fraud, gross negligence or willful misconduct.

(b)               Reimbursement. The Company shall promptly reimburse (and/or
advance to the extent reasonably required) each Covered Person for reasonable
legal or other expenses (as incurred) of such Covered Person in connection with
investigating, preparing to defend or defending any claim, lawsuit or other
proceeding relating to any Losses for which such Covered Person may be
indemnified pursuant to this Section 8.3; provided, however, that if it is
finally judicially determined that such Covered Person is not entitled to the
indemnification provided by this Section 8.3, then such Covered Person shall
promptly reimburse the Company for any reimbursed or advanced expenses.

 26 

 

(c)                Entitlement to Indemnity. The indemnification provided by
this Section 8.3 shall not be deemed exclusive of any other rights to
indemnification to which those seeking indemnification may be entitled under any
agreement or otherwise. The provisions of this Section 8.3 shall continue to
afford protection to each Covered Person regardless of whether such Covered
Person remains in the position or capacity pursuant to which such Covered Person
became entitled to indemnification under this Section 8.3 and shall inure to the
benefit of the executors, administrators, legatees and distributees of such
Covered Person.

(d)               Insurance. To the extent available on commercially reasonable
terms, the Company may purchase, at its expense, insurance to cover Losses
covered by the foregoing indemnification provisions and to otherwise cover
Losses for any breach or alleged breach by any Covered Person of such Covered
Person’s duties in such amount and with such deductibles as the Board may
determine; provided, however, that the failure to obtain such insurance shall
not affect the right to indemnification of any Covered Person under the
indemnification provisions contained herein, including the right to be
reimbursed or advanced expenses or otherwise indemnified for Losses hereunder.
If any Covered Person recovers any amounts in respect of any Losses from any
insurance coverage, then such Covered Person shall, to the extent that such
recovery is duplicative, reimburse the Company for any amounts previously paid
to such Covered Person by the Company in respect of such Losses.

(e)                Funding of Indemnification Obligation. Notwithstanding
anything contained herein to the contrary, any indemnity by the Company relating
to the matters covered in this Section 8.3 shall be provided out of and to the
extent of Company assets only, and no Stockholder (unless such Stockholder
otherwise agrees in writing) shall have personal liability on account thereof.

(f)                Savings Clause. If this Section 8.3 or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify and hold harmless each Covered Person
pursuant to this Section 8.3 to the fullest extent permitted by any applicable
portion of this Section 8.3 that shall not have been invalidated and to the
fullest extent permitted by applicable law.

(g)               Amendment. The provisions of this Section 8.3 shall be a
contract between the Company, on the one hand, and each Covered Person who
served in such capacity at any time while this Section 8.3 is in effect, on the
other hand, pursuant to which the Company and each such Covered Person intend to
be legally bound. No amendment, modification or repeal of this Section 8.3 that
adversely affects the rights of a Covered Person to indemnification for Losses
incurred or relating to a state of facts existing prior to such amendment,
modification or repeal shall apply in such a way as to eliminate or reduce such
Covered Person’s entitlement to indemnification for such Losses without the
Covered Person’s prior written consent.

8.4              Survival. The provisions of Section 8.3 shall survive the
dissolution, liquidation, winding up and termination of the Company.

 27 

 

9.                  Term. This Agreement shall be effective as of the date
hereof and shall continue in effect until and shall terminate upon the earlier
to occur of:

(a)                the written agreement of Stockholders whose outstanding
shares of Capital Stock are sufficient to amend this Agreement pursuant to
Section 11.1;

(b)               the voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company (whether pursuant to a proceeding under
the United States bankruptcy code or any similar law, Federal or state, whether
now or hereafter existing), or the general assignment by the Company of all or
substantially all of its property for the benefit of creditors; or

(c)                the merger of the Company into or the consolidation of the
Company with one or more corporations not Affiliated with (i) the Company or
(ii) Stockholders then owning a majority of the Voting Power if, as a result of
such merger or consolidation, the Stockholders holding a majority of the Voting
Power immediately prior to such merger or consolidation do not own a majority of
the Voting Power (or a majority of the voting power of the surviving entity if
the Company is not the surviving entity) immediately after such merger or
consolidation.

10.              Specific Enforcement. Each party acknowledges and agrees that
each other party will be irreparably damaged in the event any of the provisions
of this Agreement are not performed by the parties in accordance with their
specific terms and conditions or are otherwise breached. Accordingly, it is
agreed that each of the Company and the Stockholders shall be entitled to an
injunction to prevent breaches of this Agreement and to specific enforcement of
this Agreement and its provisions, in addition to any other remedy to which a
party may be entitled at law or in equity (without the posting of any bond or
other security and without having to prove actual damages), and if any action
shall be brought in equity to enforce any of the provisions of this Agreement,
none of the parties shall raise the defense that there is an adequate remedy at
law.

11.              Miscellaneous.

11.1          Amendment.

(a)                This Agreement may be amended or modified and the observance
of any provision hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
executed by a Supermajority in Interest of the Stockholders.

(b)               Any amendment, modification or waiver effected in accordance
herewith shall be binding upon each party and each of their respective
successors and permitted assigns, regardless of whether such Person entered into
or approved such amendment, modification or waiver. The Company shall give
written notice of any amendment or modification of this Agreement or any waiver
under this Agreement to any party that did not consent in writing to such
amendment, modification or waiver after such amendment, modification or waiver
becomes effective.

11.2          Successors and Assigns. Except as otherwise expressly provided
herein, and subject to the restrictions on Transfer set forth herein, the
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective successors, permitted assigns, heirs, executors and
administrators of the parties.

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11.3          No Third Party Beneficiaries. Except as expressly provided in this
Agreement, nothing in this Agreement is intended to confer upon any Person,
other than the parties or their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement. Each Person entitled to
indemnification under Section 8 shall be entitled to the benefits thereof and
authorized to enforce the terms thereof that are for its benefit, even if such
Person is not a party.

11.4          Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing, shall be transmitted to the
appropriate party by hand delivery, by registered or certified mail, return
receipt requested, postage prepaid or by overnight delivery by an
internationally recognized overnight courier and shall be addressed to such
party at his, her or its address shown on the signature page hereto, provided a
copy of any notice provided to the Company shall also be provided to Leslie M.
Taeger, Senior Vice President & Chief Financial Officer, Capstone Therapeutics
Corp., 1275 W. Washington St., Suite 104, Tempe, AZ 85281. Any party may
designate by written notice given to all parties a new address to which any
notice, demand or other communication hereunder shall thereafter be given. Each
notice or other communication transmitted in the manner described in this
Section 11.4 shall be deemed to have been given and received for all purposes:
(a) upon personal delivery to the party to be notified, (b) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (c) two (2) days after deposit with an internationally
recognized overnight courier, with written verification of receipt.

11.5          Further Assurances. Each party agrees to execute such additional
documents or instruments as may be reasonably necessary or desirable in order to
carry out the provisions of this Agreement. Without limiting the foregoing, each
Stockholder shall vote (in person, by proxy or by action by written consent, as
applicable) all of such Stockholder’s Capital Stock, whether now owned or
hereafter acquired or which such Stockholder may be empowered to vote, from time
to time and at all times, in whatever manner shall be necessary to increase the
number of authorized Common Shares from time to time to ensure that there will
be sufficient Common Shares available for conversion of all of the shares of
Preferred Stock outstanding at any given time.

11.6          Severability. The determination by a court of competent
jurisdiction that any provision of this Agreement is invalid or unenforceable
shall in no way affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect in the same manner
and to the same extent as if the invalid or unenforceable provision had not been
contained in this Agreement. If any such invalidity or unenforceability of a
provision of this Agreement becomes known or apparent to any of the parties, the
parties shall negotiate promptly and in good faith in an attempt to make
appropriate changes and adjustments to such provisions specifically and this
Agreement generally to achieve as closely as possible, consistent with
applicable law, the intent and spirit of such provision specifically and this
Agreement generally.

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11.7          Waiver. No delay or omission in exercising, or failure to
exercise, any right, power or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power or remedy of such non-breaching or non-defaulting party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

11.8          Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) contains the entire agreement of the parties with respect to
the subject matter hereof, and supersedes any prior communications,
understandings or agreements of the parties with respect to the subject matter
hereof. This Agreement, however, does not supersede any obligations of
confidentiality that may exist among the parties pursuant to any other
agreements between or among them.

11.9          Governing Law. All issues and questions concerning the
application, construction, validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of laws of any jurisdiction other
than those of the State of Delaware.

11.10      Arbitration. All claims, disputes and other matters in controversy (a
“Dispute”) regarding any matter set forth in this Agreement shall be resolved
exclusively according to the procedures set forth in this Section 11.10.

(a)                If a Dispute arises relating to any matter set forth herein
between or among the parties hereto, it is expected that the parties will
attempt in good faith to resolve any such dispute in an amicable and mutually
satisfactory manner.

(b)               In the event such efforts are unsuccessful, any party may
serve a notice of arbitration (“Notice of Arbitration”) on any other party. The
Notice of Arbitration shall be dated, and without prejudice to any right under
the applicable rules of arbitration permitting subsequent modifications, shall
specify the claims or issues that are to be subjected to arbitration.

(c)                THE PARTIES AGREE THAT IN ORDER TO PROMOTE TO THE FULLEST
EXTENT REASONABLY POSSIBLE A MUTUALLY AMICABLE RESOLUTION OF THE DISPUTE IN A
TIMELY, EFFICIENT AND COST-EFFECTIVE MANNER, THEY WILL WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY AND SETTLE THEIR DISPUTE BY SUBMITTING THE CONTROVERSY
TO ARBITRATION TO AN ARBITRATOR OR ARBITRATION PANEL, AS APPLICABLE, SELECTED IN
ACCORDANCE HEREWITH FOR PROCEEDINGS GOVERNED BY THE COMMERCIAL RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (A.A.A.) EXCEPT THAT ALL PARTIES SHALL BE
ENTITLED TO ALL DISCOVERY RIGHTS ALLOWED UNDER THE DELAWARE RULES OF CIVIL
PROCEDURE.

 30 

 

(d)               The parties shall attempt to select a mutually agreeable
arbitrator. If no agreement is reached within ten (10) Business Days of the
Notice of Arbitration, then each party shall select one Person to act as
arbitrator, and the two so selected shall, within fifteen (15) calendar days of
their selection, select a third arbitrator. If the arbitrators selected by the
parties are unable or fail to agree upon the third arbitrator within the
allotted time, the each party shall replace the Person selected to act as
arbitrator, and the two so replacement arbitrators shall, within fifteen (15)
calendar days of their selection, select a third arbitrator. This process shall
be repeated until a three person arbitration panel is selected. All arbitrators
shall serve as neutral, independent and impartial arbitrators. In all cases, it
shall be a condition of such appointment that the arbitrator(s) can conduct all
proceedings and render a decision within sixty (60) days after selection of the
arbitrator or arbitrator panel, as applicable.

(e)                The arbitration shall be governed by the Federal Arbitration
Act, 9 U.S.C. §1 et seq., and the judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. Any party
may elect to participate in the arbitration telephonically. Any substantive or
procedural rights other than the enforceability of the arbitration agreement
shall be governed by Delaware law, without regards to Delaware’s conflict of
laws principles.

(f)                The parties further expressly agree that (i) the
arbitrator(s) shall only reach his or her decision by applying strict rules of
law to the facts, (ii) the arbitration shall be conducted in the English
language, in Maricopa County, Arizona, (iii) the party in whose favor the
arbitration award is rendered shall be entitled to recover costs and expenses of
the arbitration including, but not limited to, attorneys’ fees and the cost and
expense of administration of the arbitration proceedings, and any costs and
attorney’s fees incurred in executing on or enforcing the arbitration award or,
if the decision is not clearly in favor of one party or other, such costs and
expenses shall be borne as determined by the arbitrator, and (iv) the arbitral
award shall be issued in Maricopa County, Arizona.

(g)               Except as provided in the following sentences, no party shall
be entitled to commence or maintain any action in a court of law upon any matter
in dispute until such matter shall have been submitted and determined as
provided herein and then only for the enforcement of such arbitration award.
Provided that, notwithstanding this dispute resolution policy, either party may
apply to the United States District Court for the District of Delaware or the
Court of Chancery of the State of Delaware, to seek injunctive relief before or
after the pendency of any arbitration proceeding. The institution of any action
for injunctive relief shall not constitute a waiver of the right or obligation
of any party to submit any claim seeking relief other than injunctive relief to
arbitration. Judgment upon the award may be entered by the United States
District Court for the District of Delaware or the Court of Chancery of the
State of Delaware, or application may be made to any such court for the judicial
acceptance of the award and order of enforcement, as the case may be, if the
Arbitrator’s award or decision is not complied with within seven (7) Business
Days of the Arbitrator’s decision.

(h)               Arbitration shall be the sole and exclusive procedure for
resolution of disputes between the parties, including any disputes that might
arise after termination of this Agreement, except as set forth otherwise herein
with respect to equitable remedies.

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11.11      Equitable Remedies. Each party hereto acknowledges that a breach or
threatened breach by such party of any of its obligations under this Agreement
would give rise to irreparable harm to the other parties, for which monetary
damages would not be an adequate remedy, and hereby agrees that in the event of
a breach or a threatened breach by such party of any such obligations, each of
the other parties hereto shall, in addition to any and all other rights and
remedies that may be available to them in respect of such breach, be entitled to
equitable relief, including a temporary restraining order, an injunction,
specific performance and any other relief that may be available from a court of
competent jurisdiction (without any requirement to post bond).

11.12      Attorneys’ Fees. In the event that any party hereto institutes any
legal suit, action or proceeding, including arbitration, against another party
in respect of a matter arising out of or relating to this Agreement, the
prevailing party in the suit, action or proceeding shall be entitled to receive,
in addition to all other damages to which it may be entitled, the costs incurred
by such party in conducting the suit, action or proceeding, including reasonable
attorneys’ fees and expenses and court costs.

11.13      Remedies Cumulative. The rights and remedies under this Agreement are
cumulative and are in addition to and not in substitution for any other rights
and remedies available at law or in equity or otherwise, except to the extent
expressly provided in this Agreement to the contrary.

11.14      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.

11.15      Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, regardless of whether all of the
parties have executed the same counterpart. Counterparts may be delivered via
facsimile, electronic mail (including pdf) or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

11.16      Stock Splits, Stock Dividends, etc. In the event of any issuance of
Capital Stock after the date of this Agreement to the Stockholders (including in
connection with any stock split, stock dividend, recapitalization,
reorganization, or the like), such Capital Stock shall become subject to this
Agreement and shall be endorsed with the legend set forth in Section 7.1 herein.

11.17      Spousal Consent. If any Stockholder has a spouse on the date on which
such Stockholder enters into this Agreement, such Stockholder’s spouse shall
execute and deliver to the Company a Consent of Spouse, effective as of such
date, unless waived by the Company. If any Stockholder should marry or remarry
subsequent to the date on which such Stockholder enters into this Agreement,
such Stockholder shall within thirty (30) days thereafter obtain his or her new
spouse’s acknowledgment of and consent to the provisions of this Agreement by
causing such new spouse to execute and deliver to the Company a Consent of
Spouse, unless waived by the Company. Notwithstanding the execution and delivery
thereof, no Consent of Spouse shall be deemed to confer on or convey to a spouse
any rights in such Stockholder’s Capital Stock or any interest therein.

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11.18      Construction. The parties agree that this Agreement is the product of
negotiations between sophisticated Persons, all of whom were represented by
counsel, and each of whom had an opportunity to participate in, and did
participate in, the drafting of each provision hereof. Accordingly, ambiguities
in this Agreement, if any, shall not be construed strictly or in favor of or
against any party but rather shall be given fair and reasonable construction
without regard to the rule of contra proferentem. As used in this Agreement, the
masculine gender shall include the feminine and neuter gender. The words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified or the context otherwise
requires, (a) references made in this Agreement to an Article, Section, Clause,
Schedule or an Exhibit are to a Section, Clause, Schedule or an Exhibit of or to
this Agreement, (b) the term “or” has the inclusive meaning represented by the
term “and/or”. All Exhibits and Schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized terms used in any Exhibit or Schedule but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation,” whether or not they are in fact followed by those words or words of
like import. References to any Person include the successors and permitted
assigns of that Person. References to “$” or dollar amounts are to lawful
currency of the United States of America, unless otherwise expressly stated.

[signature page follows]

 

 

 

 

 33 

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Stockholders Agreement as of the date first above written.

  THE COMPANY:       LIPIMETIX DEVELOPMENT, INC.       By: /s/ Dennis I.
Goldberg       Name: Dennis I. Goldberg, Ph.D.   Title: President       Address
for Notices:       5 Commonwealth Rd., Suite 2A   Natick, Massachusetts 01760  
Attn: Dennis I. Goldberg, Ph.D.   Email: dgoldberg@lipimetix.com

  STOCKHOLDERS:      

CAPS:

 

CAPSTONE THERAPEUTICS CORP.,
a Delaware corporation

By: /s/ J.M. Holliman, III

J.M. Holliman, III

Executive Chairman

 

LX STOCKHOLDERS:

 

/s/ Dennis I. Goldberg

Dennis I. Goldberg, Ph.D.

 

/s/ Phillip M. Friden

Phillip M. Friden, Ph.D.

 

/s/ Eric Morrel

Eric Morrel, Ph.D.

 

_____________________

G.M. Anantharamaiah 

 

 

[Signature Page to Amended and Restated Stockholders Agreement]

  

 

 

  __________________________________   Palgunachari Mayakonda      
__________________________________   Frederick Meyer      
__________________________________   Michael Webb      
__________________________________   Jeffrey Elton           THE UAB RESEARCH
FOUNDATION           By: _______________________________   Kathy L. Nugent  
Chief Executive Officer

  

  SERIES B INVESTORS:

 

 

 

[Signature Page to Amended and Restated Stockholders Agreement]