EXHIBIT 10.13B

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 14,
2005, is by and between TERCICA, INC. (the “Company”) and KINGSBRIDGE CAPITAL
LIMITED (the “Investor”).

 

WHEREAS, the Company and the Investor have entered into that certain Common
Stock Purchase Agreement, dated as of the date hereof (the “Purchase
Agreement”), pursuant to which the Company may issue, from time to time, to the
Investor up to $75 million worth of shares of Common Stock as provided for
therein;

 

WHEREAS, pursuant to the terms of, and in partial consideration for the Investor
entering into, the Purchase Agreement, the Company has issued to the Investor a
warrant, exercisable from time to time, in accordance with its terms, within
five (5) years following the six-month anniversary of the date of issuance (the
“Warrant”) for the purchase of an aggregate of up to 260,000 shares of Common
Stock at a price specified in such Warrant;

 

WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor’s agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Registrable Securities (as defined in the Purchase Agreement) as set forth
herein;

 

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Purchase Agreement):

 

ARTICLE I

REGISTRATION RIGHTS

 

Section 1.1. Registration Statement.

 

(a) Filing of the Registration Statement. Upon the terms and subject to the
conditions set forth in this Agreement, the Company shall file with the
Commission within sixty (60) calendar days after the Closing Date a registration
statement on Form S-3 under the Securities Act or such other form as deemed
appropriate by counsel to the Company for the registration for the resale by the
Investor of the Registrable Securities (the “Registration Statement”).

 

(b) Effectiveness of the Registration Statement. The Company shall use
commercially reasonable efforts (i) to have the Registration Statement declared
effective by the Commission as soon as reasonably practicable, but in any event
no later than one hundred eighty (180) calendar days after the Closing Date and
(ii) to ensure that the Registration Statement remains in effect throughout the
term of this Agreement as set forth in Section 4.2, subject to the terms and
conditions of this Agreement.

 

(c) Regulatory Disapproval. The contemplated effective date for the Registration
Statement as described in Section 1.1(b) shall be extended without default or
liquidated damages hereunder or under the Purchase Agreement in the event that
the Company’s failure to obtain the effectiveness of the Registration Statement
on a timely basis results solely from the Commission’s disapproval of the
structure of the transactions contemplated by the Purchase Agreement. In such
event, the parties agree to cooperate with one another in good faith to arrive
at a resolution acceptable to the Commission.

--------------------------------------------------------------------------------

(d) Failure to Maintain Effectiveness of Registration Statement. In the event
the Company fails to maintain the effectiveness of the Registration Statement
(or the Prospectus) throughout the period set forth in Section 4.2, other than
temporary suspensions as set forth in Section 1.1(e) and the Investor holds any
Registrable Securities at any time during the period of such ineffectiveness (an
“Ineffective Period”), the Company shall pay to the Investor in immediately
available funds into an account designated by the Investor an amount equal to
the product of (x) the total number of Registrable Securities issued to the
Investor under the Purchase Agreement and owned by the Investor at any time
during such Ineffective Period and (y) the result, if greater than zero,
obtained by subtracting the VWAP on the Trading Day immediately following the
last day of such Ineffective Period from the VWAP on the Trading Day immediately
preceding the day on which any such Ineffective Period began; provided, however,
(i) that the foregoing payments shall not apply in respect of Registrable
Securities that are otherwise freely tradable by the Investor and (ii) that the
Company shall be under no obligation to supplement the Prospectus to reflect the
issuance of any Shares pursuant to a Draw Down at any time prior to the day
following the Settlement Date with respect to such Shares and that the failure
to supplement the Prospectus prior to such time period shall not be deemed a
failure to maintain the effectiveness of the Registration Statement (or
Prospectus) for purposes of this Agreement (including this Section 1.1(d)).

 

(e) Deferral or Suspension During a Blackout Period. Notwithstanding the
provisions of Section 1.1(d), if in the good faith judgment of the Company,
following consultation with legal counsel, it would be detrimental to the
Company or its stockholders for the Registration Statement to be filed or for
resales of Registrable Securities to be made pursuant to the Registration
Statement due to (i) the existence of a material development or potential
material development involving the Company that the Company would be obligated
to disclose in the Registration Statement, which disclosure would be premature
or otherwise inadvisable at such time or would have a Material Adverse Effect on
the Company or its stockholders, or (ii) a filing of a Company-initiated
registration of any class of its equity securities, which, in the good faith
judgment of the Company, would adversely effect or require premature disclosure
of the filing of such Company-initiated registration (notice thereof, a
“Blackout Notice”), the Company shall have the right to (A) immediately defer
such filing for a period of not more than sixty (60) days beyond the date by
which such Registration Statement was otherwise required hereunder to be filed
or (B) suspend use of such Registration Statement for a period of not more than
thirty (30) days (any such deferral or suspension period, a “Blackout Period”).
The Investor acknowledges that it would be seriously detrimental to the Company
and its stockholders for such Registration Statement to be filed (or remain in
effect) during a Blackout Period and therefore essential to defer such filing
(or suspend the use thereof) during such Blackout Period and agrees to cease any
disposition of the Registrable Securities during such Blackout Period. The
Company may not utilize any of its rights under this Section 1.1(e) to defer the
filing of a Registration Statement (or suspend its effectiveness) more than six
(6) times in any twelve (12) month period. In the event that, within fifteen
(15) Trading Days following any Settlement Date, the Company gives a Blackout
Notice to the Investor and the VWAP on the Trading Day immediately preceding
such Blackout Period (“Old VWAP”) is greater than the VWAP on the first Trading
Day following such Blackout Period that the Investor may sell its Registrable
Securities pursuant to an effective Registration Statement (“New VWAP”), then
the Company shall pay to the Investor, by wire transfer of immediately funds to
an account designated by the Investor, the “Blackout Amount.” For the purposes
of this Agreement, Blackout Amount means a percentage equal to: (1) seventy-five
percent (75%) if such Blackout Notice is delivered prior to the fifth
(5th) Trading Day following such Settlement Date; (2) fifty percent (50%) if
such Blackout Notice is delivered on or after the fifth (5th) Trading Day
following such Settlement Date, but prior to the tenth (10th) Trading Day
following such Settlement Date; (3) twenty-five percent (25%) if such Blackout
Notice is delivered on or after the tenth (10th) Trading Day following such
Settlement Date, but prior to the fifteenth (15th) Trading Day following such
Settlement Date; and (4) zero percent (0%) thereafter of: the product of (i) the
number of Registrable Securities purchased by the Investor pursuant to the most
recent Draw Down and actually held by the Investor immediately prior to the
Blackout Period and (ii) the result, if greater than zero, obtained by

--------------------------------------------------------------------------------

subtracting the New VWAP from the Old VWAP. For any Blackout Period in respect
of which a Blackout Amount becomes due and payable, rather than paying the
Blackout Amount, the Company may at is sole discretion, issue to the Investor
shares of Common Stock with an aggregate market value determined as of the first
Trading Day following such Blackout Period equal to the Blackout Amount
(“Blackout Shares”).

 

(f) Liquidated Damages. The Company and the Investor hereto acknowledge and
agree that the amounts payable under Sections 1.1(d) and 1.1(e) and the Blackout
Shares, if any, deliverable under Section 1.1(e) above shall constitute
liquidated damages and not penalties. The parties further acknowledge that
(i) the amount of loss or damages likely to be incurred by the Investor is
incapable or is difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of the
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm’s length.

 

(g) Additional Registration Statements. In the event and to the extent that the
Registration Statement fails to register a sufficient amount of Common Stock
necessary for the Company to issue and sell to the Investor and the Investor to
purchase from the Company all of the Registrable Securities to be issued, sold
and purchased under the Purchase Agreement and the Warrant, the Company shall,
upon a timetable mutually agreeable to both the Company and Investor, prepare
and file with the Commission an additional registration statement or statements
in order to effectuate the purpose of this Agreement, the Purchase Agreement,
and the Warrant.

 

ARTICLE II

REGISTRATION PROCEDURES

 

Section 2.1. Filings; Information. The Company shall effect the registration
with respect to the sale of the Registrable Securities by the Investor in
accordance with the intended methods of disposition thereof. Without limiting
the foregoing, the Company in each such case will do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:

 

(a) Subject to Section 1.1(e), the Company shall (i) prepare and file with the
Commission the Registration Statement; (ii) use commercially reasonable efforts
to cause such filed Registration Statement to become and to remain effective
(pursuant to Rule 415 under the Securities Act or otherwise); (iii) prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective for the time period prescribed by
Section 4.2 and in order to effectuate the purpose of this Agreement, the
Purchase Agreement, and the Warrant and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the Investor set forth in such Registration Statement;
provided, however, that that the Company shall be under no obligation to
supplement the Prospectus to reflect the issuance of any Shares pursuant to a
Draw Down at any time prior to the Trading Day following the Settlement Date
with respect to such Shares; and; provided further, that the Investor shall be
responsible for the delivery of the Prospectus to the Persons to whom the
Investor sells the Shares and the Warrant Shares, and the Investor agrees to
dispose of Registrable Securities in compliance with the plan of distribution
described in the Registration Statement and otherwise in compliance with
applicable federal and state securities laws.

--------------------------------------------------------------------------------

(b) Three (3) Trading Days prior to filing the Registration Statement or
Prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein,
supplements to the Prospectus required in respect of any particular Settlement
Date, and supplements to the Registration Statement for which consent of or
notice to the Investor is not required pursuant to Section 6.12 of the Purchase
Agreement), the Company shall deliver to the Investor and to counsel
representing the Investor, in accordance with the notice provisions of
Section 4.8, copies of the Registration Statement, Prospectus and/or any
amendments or supplements thereto as proposed to be filed, together with
exhibits thereto, which documents will be subject to review by the Investor and
such counsel. Thereafter the Company shall deliver to the Investor and such
counsel, in accordance with the notice provisions of Section 4.8, such number of
copies of the Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the Prospectus (including each
preliminary prospectus) and such other documents or information as the Investor
or counsel may reasonably request in order to facilitate the disposition of the
Registrable Securities, provided, however, that to the extent reasonably
practicable, such delivery may be accomplished via electronic means.

 

(c) After the filing of the Registration Statement, the Company shall promptly
notify the Investor of any stop order issued or threatened by the Commission in
connection therewith and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.

 

(d) The Company shall use commercially reasonable efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of each jurisdiction in the United States as the Investor may reasonably (in
light of its intended plan of distribution) request, and (ii) cause the
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
customary acts and things that may be reasonably necessary or advisable to
enable the Investor to consummate the disposition of the Registrable Securities;
provided, however, that the Company will not be required to qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 2.1(d), subject itself to taxation in any such
jurisdiction, consent or subject itself to general service of process in any
such jurisdiction, change any existing business practices, benefit plans or
outstanding securities or amend or otherwise modify the Charter or Bylaws.

 

(e) The Company shall make available to the Investor (and will deliver to
Investor’s counsel), (A) subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
public correspondence between the Commission and the Company concerning the
Registration Statement and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the “Inspectors”), (B) upon reasonable advance notice
during normal business hours all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement; provided, however, that any such Inspectors must agree
in writing for the benefit of the Company not to use or disclose any such
Records except as provided in this Section 2.1(e). Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless the
disclosure or release of such Records is requested or required pursuant to oral
questions, interrogatories, requests for information or documents or a subpoena
or other order from a court of competent jurisdiction or other judicial or
governmental process; provided, however, that prior to any disclosure or release
pursuant to the immediately preceding clause, the Inspectors shall provide the
Company with prompt notice of any such

--------------------------------------------------------------------------------

request or requirement so that the Company may seek an appropriate protective
order or waive such Inspectors’ obligation not to disclose such Records; and,
provided, further, that if failing the entry of a protective order or the waiver
by the Company permitting the disclosure or release of such Records, the
Inspectors, upon advice of counsel, are compelled to disclose such Records, the
Inspectors may disclose that portion of the Records that counsel has advised the
Inspectors that the Inspectors are compelled to disclose; provided, however,
that upon any such required disclosure, such Inspector shall use his or her best
efforts to obtain reasonable assurances that confidential treatment will be
afforded such information. The Investor agrees that information obtained by it
solely as a result of such inspections (not including any information obtained
from a third party who, insofar as is known to the Investor after reasonable
inquiry, is not prohibited from providing such information by a contractual,
legal or fiduciary obligation to the Company) shall be deemed confidential and
shall not be used for any purposes other than as indicated above or by it as the
basis for any market transactions in the securities of the Company or its
affiliates unless and until such information is made generally available to the
public. The Investor further agrees that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.

 

(f) The Company shall otherwise comply with all applicable rules and regulations
of the Commission, including, without limitation, compliance with applicable
reporting requirements under the Exchange Act.

 

(g) The Company shall appoint (or shall have appointed) a transfer agent and
registrar for all of the Registrable Securities covered by such Registration
Statement not later than the effective date of such Registration Statement.

 

(h) The Investor shall cooperate with the Company, as reasonably requested by
the Company, in connection with the preparation and filing of any Registration
Statement hereunder. The Company may require the Investor to promptly furnish in
writing to the Company such information as may be required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD or any state securities commission and
all such information regarding the Investor, the Registrable Securities held by
the Investor and the intended method of disposition of the Registrable
Securities. The Investor agrees to provide such information requested in
connection with such registration within five (5) business days after receiving
such written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of the Registration Statement caused
by the Investor’s failure to timely provide such information.

 

(i) Upon receipt of a Blackout Notice from the Company, the Investor shall
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until (i) the
Company advises the Investor that the Blackout Period has terminated and
(ii) the Investor receives copies of a supplemented or amended prospectus, if
necessary. If so directed by the Company, the Investor will deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor’s possession (other than
a limited number of file copies) of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.

 

Section 2.2. Registration Expenses. The Company shall pay all registration
expenses incurred in connection with the Registration Statement (the
“Registration Expenses”), including, without limitation: (i) all registration,
filing, securities exchange listing and fees required by the National
Association of Securities Dealers, (ii) all registration, filing, qualification
and other fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) all word processing,

--------------------------------------------------------------------------------

duplicating, printing, messenger and delivery expenses, (iv) the Company’s
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred by the Company in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s),
(vii) the fees and expenses of any special experts retained by the Company in
connection with such registration and amendments and supplements to the
Registration Statement and Prospectus, and (viii) premiums and other costs of
the Company for policies of insurance against liabilities arising out of any
public offering of the Registrable Securities being registered. Any fees and
disbursements of underwriters, broker-dealers or investment bankers, including
without limitation underwriting fees, discounts, transfer taxes or commissions,
and any other fees or expenses (including legal fees and expenses) if any,
attributable to the sale of Registrable Securities, shall be payable by each
holder of Registrable Securities pro rata on the basis of the number of
Registrable Securities of each such holder that are included in a registration
under this Agreement.

 

ARTICLE III

INDEMNIFICATION

 

Section 3.1. Indemnification. The Company agrees to indemnify and hold harmless
the Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, and each Person or entity, if any, who controls the Investor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the partners, affiliates, officers, directors,
employees and duly authorized agents of such controlling Person or entity
(collectively, the “Controlling Persons”), from and against any loss, claim,
damage, liability, costs and expenses (including, without limitation, reasonable
attorneys’ fees and disbursements and costs and expenses of investigating and
defending any such claim) (collectively, “Damages”), joint or several, and any
action or proceeding in respect thereof to which the Investor, its partners,
affiliates, officers, directors, employees and duly authorized agents, and any
Controlling Person, may become subject under the Securities Act or otherwise, as
incurred, insofar as such Damages (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, or in any
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement relating to the Registrable Securities or arises out of, or are based
upon, any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein under the
circumstances not misleading, and shall reimburse the Investor, its partners,
affiliates, officers, directors, employees and duly authorized agents, and each
such Controlling Person, for any legal and other expenses reasonably incurred by
the Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person, as incurred, in investigating
or defending or preparing to defend against any such Damages or actions or
proceedings; provided, however, that the Company shall not be liable to the
extent that any such Damages arise out of the Investor’s (or any other
indemnified Person’s) (i) failure to send or give a copy of the final prospectus
or supplement (as then amended or supplemented) to the persons asserting an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of Registrable Securities to
such person if such statement or omission was corrected in such final prospectus
or supplement or (ii) written confirmation of the sale of Registrable Securities
purchased in any specific Draw Down prior to the filing of a supplement to the
Prospectus to reflect such Draw Down (provided the Company is in compliance with
its covenants with respect to the filing of such supplement); provided, further,
that the Company shall not be liable to the extent that any such Damages arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement, or any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or

--------------------------------------------------------------------------------

on behalf of the Investor or any other person who participates as an underwriter
in the offering or sale of such securities, in either case, specifically stating
that it is for use in the preparation thereof. In connection with any
Registration Statement with respect to which the Investor is participating, such
Investor will indemnify and hold harmless, to the same extent and in the same
manner as set forth in the preceding paragraph, the Company, each of its
partners, affiliates, officers, directors, employees and duly authorized agents
of such controlling Person (each a “Company Indemnified Person”) against any
Damages to which any Company Indemnified Person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Damages arise out
of or are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, or in any preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
relating to the Registrable Securities or arise out of, or are based upon, any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein under the
circumstances not misleading to the extent that such violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Investor or on behalf of the Investor expressly for use in
connection with such Registration Statement, (b) any failure by the Investor to
comply with prospectus delivery requirements of the Securities Act, the Exchange
Act or any other law or legal requirement applicable to sales under the
Registration Statement, or (c) a written confirmation of the sale of Registrable
Securities purchased by such Investor in any specific Draw Down prior to the
filing of a supplement to the Prospectus to reflect such Draw Down (provided the
Company is in compliance with its covenants with respect to the filing of such
supplement).

 

Section 3.2. Conduct of Indemnification Proceedings. All claims for
indemnification under Section 3.1 shall be asserted and resolved in accordance
with the provisions of Section 9.02 and 9.03 of the Purchase Agreement.

 

Section 3.3. Additional Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company and the Investor with respect to
any registration or other qualification of securities under any federal or state
law or regulation of any governmental authority other than the Securities Act
that is required pursuant to this Agreement. The provisions of this Article III
shall be in addition to any other rights to indemnification, contribution or
other remedies which an Indemnified Party or a Company Indemnified Person may
have pursuant to law, equity, contract or otherwise.

 

To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under this
Article III to the fullest extent permitted by law. However, (a) no contribution
will be made under circumstances where maker of such contribution would not have
been required to indemnify the indemnified party under the fault standards set
forth in this Article III, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation, and (c) contribution (together with
any indemnification obligations under this Agreement) by any seller of
Registrable Securities will be limited in amount of proceeds received by such
seller from the sale of such Registrable Securities.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1. No Outstanding Registration Rights. Except as otherwise disclosed
in accordance with the Purchase Agreement or in the Commission Documents, the
Company represents and warrants to the Investor that there is not in effect on
the date hereof any agreement by the Company pursuant to which any holders of
securities of the Company have a right to cause the Company to register or
qualify such securities under the Securities Act or any securities or blue sky
laws of any jurisdiction.

--------------------------------------------------------------------------------

Section 4.2. Term. The registration rights provided to the holders of
Registrable Securities hereunder, and the Company’s obligation to keep the
Registration Statement effective, shall terminate at the earlier of (i) such
time that is two years following the termination of the Purchase Agreement,
(ii) such time as all Registrable Securities have been issued and have ceased to
be Registrable Securities, or (iii) upon the consummation of an “Excluded Merger
or Sale” as defined in the Warrant. Notwithstanding the foregoing, paragraph (d)
of Section 1.1, Article III, Section 4.7, Section 4.8, Section 4.9, Section 4.10
and Section 4.13 shall survive the termination of this Agreement.

 

Section 4.3. Rule 144. The Company will, at its expense, promptly take such
action as holders of Registrable Securities may reasonably request to enable
such holders of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act (“Rule 144”), as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. If at any time the Company is not required to file
such reports, it will, at its expense, forthwith upon the written request of any
holder of Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 or such other information as necessary to permit sales pursuant to
Rule 144. Upon the request of the Investor, the Company will deliver to the
Investor a written statement, signed by the Company’s principal financial
officer, as to whether it has complied with such requirements.

 

Section 4.4. Certificate. The Company will, at its expense, forthwith upon the
request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company’s principal financial officer, stating
(a) the Company’s name, address and telephone number (including area code),
(b) the Company’s Internal Revenue Service identification number, (c) the
Company’s Commission file number, (d) the number of shares of each class of
Stock outstanding as shown by the most recent report or statement published by
the Company, and (e) whether the Company has filed the reports required to be
filed under the Exchange Act for a period of at least ninety (90) days prior to
the date of such certificate and in addition has filed the most recent annual
report required to be filed thereunder.

 

Section 4.5. Amendment And Modification. Any provision of this Agreement may be
waived, provided that such waiver is set forth in a writing executed by both
parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the Investor. No course
of dealing between or among any Person having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.

 

Section 4.6. Successors and Assigns; Entire Agreement. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Company may assign this Agreement at any time in connection with a sale or
acquisition of the Company, whether by merger, consolidation, sale of all or
substantially all of the Company’s assets, or similar transaction, without the
consent of the Investor, provided that the successor or acquiring Person or
entity agrees in writing to assume all of the Company’s rights and obligations
under this Agreement. Investor may assign its rights and obligations under this
Agreement only with the prior written consent of the Company, and any purported
assignment by the Investor absent the Company’s consent shall be null and void.
This Agreement, together with the Purchase Agreement and the Warrant(s) sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.

--------------------------------------------------------------------------------

Section 4.7. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party
hereto.

 

Section 4.8. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be given in
accordance with Section 10.04 of the Purchase Agreement.

 

Section 4.9. Governing Law; Dispute Resolution. This Agreement shall be
construed under the laws of the State of New York. Any dispute arising out of or
relating to this Agreement shall be resolved by means of arbitration pursuant to
the provisions of Article IX of the Purchase Agreement.

 

Section 4.10. Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.

 

Section 4.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.

 

Section 4.12. Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.

 

Section 4.13. Absence of Presumption. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.

 

KINGSBRIDGE CAPITAL LIMITED By:  

/s/ MARIA O’DONOGHUE

--------------------------------------------------------------------------------

    Maria O’Donoghue     Director TERCICA, INC. By:  

/s/ DR. JOHN A. SCARLETT

--------------------------------------------------------------------------------

    Dr. John A. Scarlett     President and Chief Executive Officer