Stockholders Agreement



 






Exhibit 10.2




STOCKHOLDERS AGREEMENT




     This Stockholders Agreement (this “Agreement”) dated as of February 1, 2005, is made
and entered into by and among (i) Triad Pharmaceuticals, Inc., a Delaware corporation (the
“Corporation”), (ii) 2004 Oikos Investment Partners, LP, a limited partnership
(“Oikos”), (iii) Kos Pharmaceuticals, Inc., a Florida corporation (“Kos,” and
together with Oikos, the “Purchasers”), (iv) Stone Life Sciences Holdings, Ltd., a Florida
limited partnership (“Stone Life”), (v) William W. Bachovchin (“Bachovchin”), (vi)
Tufts University, a Massachusetts not-for-profit corporation (“Tufts”), (vii) Future
Stockholders, (viii) Christopher Kiritsy (“Kiritsy”) and (ix) each other Person acquiring
Equity Securities of the Corporation in a Permitted Transfer hereunder.



     WHEREAS, the Corporation, Michael Jaharis (“Michael Jaharis”), Stone Life and
Bachovchin entered into a Stock Purchase Agreement dated as of September 8, 1999, as amended (the
“Series A Stock Purchase Agreement”), pursuant to which the Corporation issued and sold to
Michael Jaharis and Stone Life, and Michael Jaharis and Stone Life purchased from the Corporation,
shares of Series A Convertible Preferred Stock, $.10 par value per share (“Series A Preferred
Stock”), and, in the case of Michael Jaharis, Series B Convertible Preferred Stock, $.10 par
value per share (“Series B Preferred Stock”), of the Corporation;



     WHEREAS, the Corporation, Michael Jaharis, Stone Life and Bachovchin entered into a Stock
Purchase Agreement dated as of July 17, 2002, as amended (the “Series C Stock Purchase
Agreement”), pursuant to which the Corporation issued and sold to Michael Jaharis, and Michael
Jaharis purchased from the Corporation, shares of Series C Convertible Preferred Stock, $.10 par
value per share (“Series C Preferred Stock”), and Series D Convertible Preferred Stock,
$.10 par value per share (“Series D Preferred Stock”), of the Corporation;



     WHEREAS, the Corporation, Michael Jaharis, Stone Life and Bachovchin entered into a Stock
Purchase Agreement dated as of October 31, 2003, as amended (the “Series E Stock Purchase
Agreement”), pursuant to which the Corporation issued and sold to Michael Jaharis, and Michael
Jaharis purchased from the Corporation, shares of Series E Convertible Preferred Stock, $.10 par
value per share (“Series E Preferred Stock”), of the Corporation;



     WHEREAS, on November 8, 2004 Michael Jaharis transferred and assigned all of his right, title
and interest to the shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock owned by him to his wife
Mary Jaharis (“Mary Jaharis”), including, without limitation, all rights and obligations of
Michael Jaharis under the Series A Stock Purchase Agreement, the Series C Stock Purchase Agreement,
the Series E Stock Purchase Agreement, the Stock Restriction Agreement (as defined below) and the
Voting Agreement (as defined below) attendant to such shares;



     WHEREAS, on December 30, 2004 Mary Jaharis transferred and assigned all of her right, title
and interest to (i) 190,000 shares of Series A Preferred Stock, (ii) 285,000 shares of Series B
Preferred Stock, (iii) 126,666 shares of Series C Preferred Stock, (iv) 126,667 shares of Series
D Preferred Stock, and (v) 152,000 shares of Series E Preferred Stock owned by her to Oikos,
including, without limitation, all rights and obligations of Mary Jaharis under the Series A



 









 







Stock Purchase Agreement, the Series C Stock Purchase Agreement, the Series E Stock Purchase
Agreement, the Stock Restriction Agreement and the Voting Agreement attendant to such shares;



     WHEREAS, on January 31, 2005 Mary Jaharis transferred and assigned (the “Mary Jaharis
Transfer” ) all of her right, title and interest to (i) 10,000 shares of Series A Preferred
Stock, (ii) 15,000 shares of Series B Preferred Stock, (iii) 6,667 shares of Series C Preferred
Stock, (iv) 6,666 shares of Series D Preferred Stock and (v) 8,000 shares of Series E Preferred
Stock owned by her to Kiritsy;



     WHEREAS, concurrently herewith, the Corporation and the Purchasers are entering into a Series
F Preferred Stock Purchase Agreement of even date herewith (the “Series F Stock Purchase
Agreement”), pursuant to which the Corporation has agreed to issue and sell to the Purchasers,
and the Purchasers have agreed to purchase from the Corporation, certain shares of Series F
Convertible Preferred Stock, $.10 par value per share (“Series F Preferred Stock” and,
together with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, the “Preferred Stock”), of the
Corporation (such sale and purchase of shares, the “Series F Financing”);



     WHEREAS, after giving effect to the Series F Financing, each signatory hereto owns, as of the
date hereof, that number of Equity Securities of the Corporation set forth opposite such party’s
name on Annex I hereto and believes that in connection with the Series F Financing, it is
advisable and in the best interests of the Corporation and the Stockholders to enter into this
Agreement to provide for the continued stability of the business and policies of the Corporation
and its subsidiaries, as the same may exist from time to time.



     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:



     1. Certain Definitions. In addition to the terms defined in the Whereas clauses
above, as used in this Agreement, the following terms have the meaning set forth below:



     “Acceptance Period” has the meaning set forth in Section 5.3(a).



     “Accredited Investor” has the meaning set forth in Section 12.1.



     “Affiliate” means, with respect to any Person, any (a) director, officer, limited or
general partner, member or stockholder holding 5% or more of the outstanding capital stock or other
equity interests of such Person, (b) spouse, parent, sibling or descendant of such Person (or a
spouse, parent, sibling or descendant of a Person specified in clause (a) above relating to such
Person) and (c) other Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person. The term “control”
includes, without limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.



     “Bachovchin Permitted Transfer” has the meaning set forth in Section 5.2(c).



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     “Board” means the Board of Directors of the Corporation.



     “Budget” has the meaning set forth in Section 3.3.



     “Bylaws” means the Bylaws of the Corporation in effect as of the date hereof, as the
same may be amended, modified or supplemented after the date hereof.



     “Certificate of Incorporation” means the Amended and Restated Certificate of
Incorporation of the Corporation in effect as of the date hereof, as the same may be amended,
modified or supplemented after the date hereof.



     “Common Stock” means the common stock of the Corporation, $.001 par value per share.



     “Co-Sale Notice” has the meaning set forth in Section 5.4(a).



     “Co-Sale Offeree” has the meaning set forth in Section 5.4(a).



     “Co-Sale Offeror” has the meaning set forth in Section 5.4(a).



     “Equity Securities” means all shares of capital stock of the Corporation, whether or
not currently authorized, all securities convertible into or exchangeable for shares of capital
stock of the Corporation or issuable as payment under any notes or other indebtedness of the
Corporation, and all options, warrants, and other rights to purchase or otherwise acquire from the
Corporation shares of such capital stock, including any stock appreciation or similar rights,
contractual or otherwise.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Excluded Stock” means (i) securities offered to the public pursuant to a registration
statement filed under the Securities Act; (ii) securities issued pursuant to the acquisition of
another corporation by the Corporation by merger, purchase of substantially all of the assets or
stock, or other transaction whereby the Corporation acquires not less than 51% of the voting power
of such corporation; (iii) up to 377,100 shares (appropriately adjusted to take account of any
stock split, stock dividend, combination of shares or the like) of Common Stock (or related
options) issued to employees, officers or other persons performing services for the Corporation
pursuant to any stock offering, plan or arrangement approved by the Board of Directors as such
number of shares may be increased by the Board of Directors in accordance with Article Fourth,
Section B.3(c)(i)(4)(A) of the Certificate of Incorporation; (iv) shares of the Corporation’s
Common Stock issued in connection with any stock split, stock dividend or recapitalization by the
Corporation; (v) Equity Securities issued in connection with any line of credit from a bank or any
lease financing established not less than 30 days following delivery to the Investors of a notice
of intention to establish such line of credit or lease financing setting forth the material terms
of such line of credit or lease financing (but only if one or more of the Investors do not agree
within such 30-day period to provide such line of credit or lease financing to the Corporation on
substantially the same terms, including any terms related to such Equity Securities); (vi) shares
of the Corporation’s Common Stock issued upon conversion of the Preferred Stock; and (viii) shares
of Series F Preferred Stock issued or issuable after the date of this Agreement pursuant to the
Series F Stock Purchase Agreement.



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     “First Offer” has the meaning set forth in Section 5.3(a).



     “First Offeree” has the meaning set forth in Section 5.3(a).



     “First Offeror” has the meaning set forth in Section 5.3(a).



     “Full Allotment” has the meaning set forth in Section 5.3(b).



     “Future Stockholder” shall have the meaning set forth in Section 5.1.



     “GAAP” means United States generally accepted accounting principles.



     “Group” means:




     (a) in the case of any Stockholder who is an individual, (i) such Stockholder, (ii)
such Stockholder’s spouse, parents, siblings, immediate issue (whether by the whole or half
blood and whether or not adopted), nieces and nephews, grandchildren or descendents, (iii) a
trustee of an inter vivos trust for the benefit of the Stockholder’s spouse, parents,
siblings, immediate issue (whether by the whole or half blood and whether or not adopted),
nieces and nephews, grandchildren or descendents, (iv) any corporation, partnership, limited
liability company or other entity, the shareholders, partners, members or beneficial owners
holding a majority in interest of which are such Stockholder and/or such Stockholder’s
spouse, parents, siblings, immediate issue (whether by the whole or half blood and whether
or not adopted), nieces and nephews, grandchildren or descendents, (v) any trust for the
benefit of such Stockholder and (vi) all Affiliates of such Stockholder;




     (b) in the case of Oikos, (i) each Person that is included in Oikos’ Group pursuant to
clause (c) below, (ii) each Person that would be included in the Oikos Group pursuant to
clause (a) above assuming for these purposes that Michael Jaharis was a Stockholder
hereunder, (iii) any Person who, at the time of the Transfer in question, is a employee,
consultant, board member or officer of the Corporation or consultant to Michael Jaharis and
(iv) any other Person as Oikos (or a designee of Oikos pursuant to Section 12.3 herein)
might name by delivery of written notice to the Corporation and the Right Holders; provided,
however, that any Transfer of Equity Securities to any such Person by Oikos pursuant to the
foregoing clause (iv) shall be counted toward the 35% amount set forth in Section 5.2(b)(ii)
hereof;




     (c) in the case of any Stockholder that is a partnership, (i) such Stockholder, (ii)
its limited, special and general partners, (iii) any Person to which such Stockholder shall
Transfer all or substantially all of its assets, and (iv) all Affiliates of such
Stockholder;




     (d) in the case of any Stockholder that is a corporation, (i) such Stockholder, (ii)
its stockholders, (iii) any Person to which such Stockholder shall Transfer all or
substantially all of its assets, and (iv) all Affiliates of such Stockholder;



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     (e) in the case of any Stockholder that is a limited liability company, (i) such
Stockholder, (ii) its members, (iii) any Person to whom such Stockholder shall Transfer all
or substantially all of its assets, and (iv) all Affiliates of such Stockholder; and




     (f) in the case of a Stockholder that is a trust, such Stockholder and the
beneficiaries of the trust.



     “Investor” means the Purchasers, Stone Life, any Future Stockholder executing a
counterpart signature page of this Agreement as an Investor pursuant to Section 5.1(i) and any
Transferee of an Investor pursuant to a Permitted Transfer to the extent that the rights of the
Transferor Investor are assigned to the Transferee pursuant to Section 12.1.



     “Kiritsy Permitted Transfer” has the meaning set forth in Section 5.2(d)



     “Joinder Agreement” has the meaning set forth in Section 5.2(d).



     “Liquidation” means (i) any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, other than any dissolution, liquidation or winding up
in connection with any reincorporation of the Corporation in another jurisdiction, or (ii) any Sale
of the Corporation.



     “New Securities” means all Equity Securities other than Excluded Stock and shares of
Common Stock issued in a Qualified IPO.



     “Observer” has the meaning set forth in Section 2.4.



     “Offered Shares” has the meaning set forth in Section 5.3(a).



     “Oikos Permitted Transfer” has the meaning set forth in Section 5.2(b)



     “Permitted Transfer” means a Bachovchin Permitted Transfer, a Kiritsy Permitted
Transfer, an Oikos Permitted Transfer, a Stockholder Permitted Transfer, a Transfer in accordance
with Section 5.2(b)(ii) and a Transfer which is not a Bachovchin Permitted Transfer but is
otherwise effected in accordance with Section 5.2(c).



     “Person” shall be construed in the broadest sense and means and includes a natural
person, a partnership, a corporation, an association, a joint stock company, a limited liability
company, a trust, a joint venture, an unincorporated organization and any other entity and any
federal, state, municipal, foreign or other government, governmental department, commission, board,
bureau, agency or instrumentality, or any private or public court or tribunal.



     “Pro Rata Amount” means (i) with respect to each Right Holders’ preemptive right
provided by Section 4, the quotient obtained by dividing (A) the number of shares of Common Stock
held by such Right Holder by (B) the aggregate number of shares of Common Stock outstanding,
assuming in each case the conversion or exchange of all securities by their terms convertible into
or exchangeable for Common Stock and the exercise of all vested and “in the money” options to
purchase or rights to subscribe for Common Stock (including warrants) or securities convertible
into or exchangeable for Common Stock, and (ii) with respect to each



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Right Holder’s right of first refusal and right of co-sale provided by Sections 5.3 and 5.4,
respectively, the quotient obtained by dividing (X) the number of shares of Common Stock held by
such Right Holder by (Y) the aggregate number of shares of Common Stock held by all Right Holders
(except for any Right Holder that is a First Offeror in the case of Section 5.3) assuming in each
case the conversion or exchange of all securities by their terms convertible into or exchangeable
for Common Stock .



     “Qualified IPO” means the closing of an underwritten public offering of Common Stock
pursuant to an effective registration statement under the Securities Act of 1933, as amended, in
which (A) the initial public offering price per share is not less than $13.00 (appropriately
adjusted to take account of any stock split, stock dividend, combination of shares,
recapitalization or similar event) and (B) the aggregate net proceeds to the Corporation from such
offering (before underwriters discounts and commissions) are not less than $5,000,000.



     “Registration Rights Agreement” means the Amended and Restated Registration Rights
Agreement dated as of even date herewith, by and among the Corporation, the Stockholders and Tufts.



     “Right Holder” means Bachovchin, Kiritsy, each Investor and any Transferee of
Bachovchin, Kiritsy or an Investor pursuant to a Permitted Transfer to the extent that the rights
of the Transferor are assigned pursuant to Section 12.1.



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



     “Securities Laws” has the meaning set forth in Section 5.2(d).



     “Shares” has the meaning set forth in Section 2.1.



     “Stockholders” means Bachovchin, Kiritsy, Tufts, the Investors, any Future
Stockholders and any other Person acquiring Equity Securities of the Corporation who become party
to this Agreement as permitted hereunder; provided that solely for purposes of Section 5.2 and
Section 5.4 hereof, the term “Stockholder” and “Stockholders” shall not include Tufts and any
Transferee of Tufts.



     “Stockholder Permitted Transfer” has the meaning set forth in Section 5.2(a).



     “Stock Restriction Agreement” means the Stock Restriction Agreement dated as September
8, 1999 among the Corporation, certain holders of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, Tufts and
Bachovchin, as amended.



     “Subsidiary” means, with respect to any Person, any other entity the majority of whose
Equity Securities or voting securities are directly or indirectly owned or controlled by such
Person.



     “Tag-Along Notice” has the meaning set forth in Section 5.4(d).



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     “Termination Date” means the earlier to occur of: (i) the closing of a Qualified IPO
and (ii) the closing of a Liquidation.



     “Transfer” means to sell, transfer, assign, pledge, hypothecate or otherwise dispose
of, either voluntarily or involuntarily and with or without consideration.



     “Transferee” means any Person to whom a Stockholder (other than, for the avoidance of
doubt, Tufts) shall Transfer Equity Securities of the Corporation.



     “Transferor” means a Stockholder (other than, for the avoidance of doubt, Tufts) who
is Transferring Equity Securities of the Corporation to another Person.



     “Voting Agreement” means the Voting Agreement dated as of September 8, 1999 by and
among the Corporation, Bachovchin, Stone Life, Oikos, Kiritsy and Tufts, as amended.



     2. Voting Rights: Board of Directors



          2.1 The Stockholders agree to vote all shares of the Corporation’s Common Stock, $.001 par
value per share (the “Common Stock”), the Preferred Stock and any other class of voting
security of the Corporation (collectively, the “Shares”) now or hereafter owned or
controlled by them, to set the number of directors of the Corporation at thirteen (13) and to elect
as directors, on the date of this Agreement and in any subsequent election of directors of the
Corporation: (a) Bachovchin; (b) seven (7) persons designated by Oikos (or by a designee of Oikos
pursuant to Section 12.3 hereof); (c) three (3) persons designated by Kos; (d) one (1) person
designated by Stone Life; and (e) the Chief Executive Officer of the Corporation (the
“CEO”). At any time that the Corporation does not have a CEO, the associated seat on the
Board of Directors shall be filled by a person designated by Bachovchin and reasonably acceptable
to Oikos and Kos, which person shall have relevant industry experience and shall not, prior to such
appointment, be an Affiliate of the Corporation or of any Stockholder.



          2.2 Any Stockholder or Stockholders entitled to designate one or more directors pursuant to
this Agreement shall furnish written notice to the other Stockholders, at least ten (10) days prior
to any election of directors, of such designating Stockholder’s or Stockholders’ respective
director-designee(s). In the absence of such notice, the director-designee(s) of such Stockholder
or Stockholders then serving on the Board of Directors shall continue in office until their
successors are duly elected and qualified. No party hereto shall vote to remove any member of the
Board of Directors designated in accordance with the aforesaid procedure unless the Stockholder or
Stockholders who designated such member of the Board of Directors votes for their removal, and, in
such case, all Stockholders shall likewise vote to remove such member of the Board of Directors.



          2.3 Any vacancy on the Board of Directors created by the resignation, removal, incapacity or
death of any person designated under Section 2.1 and elected to the Board of Directors shall be
filled by another person designated by the Stockholder or Stockholders, as applicable, that
originally designated such member of the Board of Directors. The Stockholders shall vote their
respective Shares in accordance with such new designation, and any such vacancy shall not be filled
in the absence of such a new designation.



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          2.4 In addition to the power to designate persons to serve as directors of the Corporation, if
any, (i) Oikos shall be entitled to designate one person as an observer to attend and observe all
meetings of the Board of Directors of the Corporation and any committees thereof (an
“Observer”), and (ii) Stone Life shall be entitled to designate one person as an Observer.
The Corporation shall provide each Observer with copies of all materials provided to members of the
Board of Directors or any committees thereof, including without limitation notices of all meetings
of the Board of Directors and committees thereof. Notwithstanding the foregoing, the Corporation
reserves the right to exclude any Observer from access to any material or meeting, or portion
thereof, if the Corporation believes that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential information or for other similar reasons.



          The Investors and their respective Observers (where applicable) shall not disclose to any
person or entity (or, in the case of Kos and Stone Life, any person or entity outside of such
Investor’s organization) any confidential information of the Corporation (including, without
limitation, any information relating to the organization, business or finances of the Corporation,
any information relating to the Corporation’s products or services or any other proprietary
information of the Corporation) learned by any of them as a result of the rights granted by this
Section 2.4 or any information concerning a third party that the Corporation is under a duty to
keep confidential (“Confidential Information”). Oikos and Stone Life agree that the
Corporation may enforce this provision directly against its Observer, as the case may be. The term
“Confidential Information” shall not include information that the Corporation has voluntarily
disclosed to the public without restriction or that has otherwise lawfully entered the public
domain without breach of the confidentiality provisions hereof by Oikos, Kos, Stone Life, Kiritsy
or their applicable Observers.



          On or prior to the date hereof, each of Oikos, Kos, Stone Life and Bachovchin shall have
furnished to the Corporation the name of some or all of his or its board designee(s) pursuant to
Section 2.1 of this Agreement. In addition, on or prior to the date hereof, each of Oikos and
Stone Life shall have furnished to the Corporation the name of its Observer who will be entitled to
attend meetings of the Board of Directors and receive materials and information pursuant to this
Section 2.4. If either Oikos or Stone Life desires to change its Observer, it shall give the
Corporation at least five (5) business days prior written notice.



          2.5 Notwithstanding anything in this Agreement to the contrary, in the event that the
aggregate number of shares of Common Stock beneficially owned by a Stockholder entitled to
designate one or more directors and/or an Observer pursuant to this Section 2 (including all shares
held by such Stockholders’ Group and determined as of any date as if all shares of Preferred Stock
or other convertible or exchangeable securities beneficially owned by such Stockholder and Group
had been converted into or exchanged for, as applicable, Common Stock) is less than 250,000 shares
of Common Stock, or in the case of the right to designate an Observer, is less than 50,000 shares
of Common Stock (in either case subject to adjustment for stock splits, stock dividends,
combinations of shares, recapitalizations and similar events), such Stockholder’s right to
designate directors and/or to designate an Observer under this Section 2, if any, shall terminate,
and the obligation of the other Stockholders under this Section 2 to vote for the director(s)
designated by such Stockholder shall terminate, but all other obligations of the Stockholders
hereunder shall continue unless otherwise terminated in accordance with the



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provisions of this Agreement. In addition, in the event that Bachovchin ceases to be employed
by, or a consultant to, the Corporation for any reason, whether voluntarily or involuntarily,
Bachovchin’s right to serve as a director and to designate directors under this Section 2 shall
terminate, and the obligations of the other Stockholders under this Section 2 to vote for
Bachovchin or such director(s) designated by Bachovchin shall terminate, but all other obligations
of the Stockholders hereunder shall continue unless otherwise terminated in accordance with the
provisions of this Agreement.




          2.6 In the event that any director contemplated by this Section 2 shall be made or threatened
to be made a party to any action, suit or proceeding with respect to which he or she may be
entitled to indemnification by the Corporation pursuant to its Certificate of Incorporation or
otherwise, such director shall be entitled to be represented in such action, suit or proceeding by
counsel of his/her choice and the expenses of such representation shall be reimbursed by the
Corporation to the extent provided in or authorized by said Certificate of Incorporation or other
provision and permitted by applicable law.



          The Corporation and the Stockholders agree not to take any action to amend any provision of
the Certificate of Incorporation of the Corporation relating to indemnification of directors, as
presently in effect, without the prior written consent of the Purchasers, provided,
however, that the right of any Purchaser to require its consent as a condition to any such
action to amend shall terminate when such Purchaser’s right to designate one or more directors
under this Section 2 shall terminate.



     3. Management of the Corporation.



          3.1 Visitations Rights; Access to Records. Subject to the limitations set forth in
Section 3.4, the Corporation agrees to afford to each of the Investors and their respective counsel
and authorized representatives, the right periodically upon reasonable notice during normal
business hours without material interference with the business of the Corporation, to examine
financial records and properties of the Corporation at the Corporation’s premises and to discuss
the business affairs and financial accounts and operating results of the Corporation with any of
its officers or employees.



          3.2 Financial Reports. Subject to the limitations set forth in Section 3.4, the
Corporation agrees to furnish each of the Investors with the following:



               (a) As soon as practicable after the end of each fiscal year of the Corporation, and in any
event within one hundred twenty (120) days thereafter (or by such earlier date as may be reasonably
requested by Kos in order for Kos to comply with its reporting obligations under the Exchange Act),
commencing within one hundred twenty (120) days (or such earlier date as aforesaid) of the end of
the Corporation’s fiscal year for 2004, the audited consolidated balance sheet and audited
consolidated statements of income, cash flows and stockholders’ equity of the Corporation and its
subsidiaries, if any, for and as of the end of such fiscal year, together with comparable amounts
for the preceding fiscal year, in each case prepared in accordance with GAAP consistently applied
and all in reasonable detail and accompanied by a report thereon certified by independent public
accountants of recognized national or regional standing selected by the Corporation and reasonably
satisfactory to the



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Investors. Such financial statements shall be accompanied by such accountant’s annual
management letter, if any.




               (b) As soon as practicable after the end of the first three quarters of each fiscal year of
the Corporation, and in any event within thirty (30) days thereafter (or by such earlier date as
may be reasonably requested by Kos in order for Kos to comply with its reporting obligations under
the Exchange Act), an unaudited consolidated balance sheet, statement of income and statement of
cash flows of the Corporation and its subsidiaries, if any, as of the end of each such quarterly
and year to date period, together with comparable amounts for the preceding fiscal year, in each
case prepared in accordance with GAAP consistently applied and all in reasonable detail and
certified on behalf of the Corporation by the Chief Executive Officer or Chief Financial Officer as
having been so prepared.



               (c) As soon as practicable after the end of each month, and in any event within thirty (30)
days thereafter, an unaudited consolidated balance sheet, statement of income and statement of cash
flows of the Corporation and its subsidiaries, if any, for and as of the end of such month and the
year to date period, together with comparable amounts for the preceding fiscal year, in each case
prepared in accordance with GAAP consistently applied and all in reasonable detail and certified on
behalf of the Corporation by the Chief Executive Officer or Chief Financial Officer as having been
so prepared, except such financial statements need not contain the notes required by GAAP and may
be subject to normal year-end adjustments, which adjustments will not be material either
individually or in the aggregate.



               (d) With respect to the then current fiscal year periods, the financial statements delivered
pursuant to Sections 3.2(b) and (c) above shall also include a comparison between the actual
figures for such month, quarter and year to date periods and the comparable figures included in the
Budget for such month, quarter and year to date period, with an explanation of any material
differences between them.



               (e) If for any period the Corporation shall have any subsidiary whose accounts are
consolidated with those of the Corporation, then in respect of such period the financial statements
delivered pursuant to the foregoing Sections 3.2(a), (b) and (c) shall be the consolidated and
consolidating financial statements of the Corporation and all such consolidated subsidiaries.



               (f) Promptly upon becoming available:



                    (i) copies of all financial statements, reports, notices, press releases, proxy statements and
other documents released to the public by the Corporation and copies of all regular and periodic
reports, if any, filed by the Corporation with the Commission or any securities exchange; and



                    (ii) any other financial information available to management of the Corporation as any of the
Investors shall reasonably request from time to time.



          3.3 Budget and Operating Forecast. With respect to the fiscal year of the Corporation
beginning on January 1, 2005, the Corporation will prepare and submit to the Board of Directors and
each of the Investors at least 20 days prior to the end of the first fiscal quarter of



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such fiscal year a proposed operating plan of the Corporation (the “Budget”) for such
fiscal year. With respect to each fiscal year thereafter, the Corporation agrees to prepare and
submit a proposed Budget to the Board of Directors and each of the Investors at least 20 days prior
to the beginning of each such fiscal year. The Budget shall be accepted as the Budget for such
fiscal year when it has been approved by the Board of Directors. The Budget for each fiscal year
shall be reviewed by the Corporation periodically and all changes therein and all material
deviations therefrom which are proposed to be made by the Corporation shall be resubmitted to its
Board of Directors in advance and shall be accepted when approved by, and the Corporation shall not
make any such changes or material deviations to or from the Budget without such prior approval of,
its Board of Directors. The Budget shall include an income statement, balance sheet and cash flow
information. To the extent not already reflected in the most recent Budget delivered pursuant to
this Section 3.3, the Corporation shall prepare, and the Board of Directors shall approve, a
revised Budget for the applicable fiscal year to reflect the funds to be received by the
Corporation in the Second Closing (as such term is defined in the Series F Stock Purchase
Agreement), and the Corporation shall cause such revised Budget to be delivered to the Investors
prior to the date of such Second Closing.




          3.4 Limitations on Certain Rights of Investors Under Section 3.



               (a) The Corporation shall provide the quarterly and annual information required by Sections
3.2(a) and 3.2(b) to each Investor so long as such Investor shall continue to own any shares of
Preferred Stock or Common Stock issued on conversion of Preferred Stock. The Corporation shall
provide the visitation rights, access to records and the monthly financial information required by
Sections 3.1 and 3.2(c) to each Investor only so long as such Investor shall own at least 50,000
shares of Common Stock (determined in the case of a holder of Preferred Stock on an as converted
basis). The foregoing provisions of this Section 3.4 to the contrary notwithstanding, the Investors
(other than Kos) shall not have any rights and the Corporation shall not have any obligations under
the foregoing provisions of this Section 3 (except as to Kos) at such time that the Common Stock is
registered under Section 12 of the Exchange Act or has been sold to the public in an initial public
offering pursuant to a registration statement which has been declared effective by the Securities
and Exchange Commission under the Securities Act.



               (b) With respect to the rights provided by Section 3.2 and 3.3 to receive financial
information and a yearly Budget from the Corporation, such rights shall be satisfied as to Oikos
and as to any member of Oikos’ Group, by delivery of one copy of any such required document to
Oikos and delivery of two copies of each required document to the offices of Steven K. Aronoff (at
the address indicated in Section 7 of the Series F Stock Purchase Agreement), or to such other
person as Oikos may designate from time to time.



          3.5 Confidentiality. Any confidential or proprietary information of the Corporation
obtained by any Stockholder holding Preferred Stock or Common Stock shall be treated as
confidential and shall not be disclosed to a third party without the prior written consent of the
Corporation. The obligations under this Section 3.5 shall survive any termination of this
Agreement and any transfer or conversion of Preferred Stock or Common Stock.



11









 





          3.6 Insurance. The Corporation shall obtain and shall maintain, with financially
sound and responsible insurers (a) fire, casualty, products liability and other liability insurance
policies, with extended coverage in amounts customary for companies similarly situated and (b) such
other insurance, including officer and director insurance, as may be satisfactory to the Board.



     4. Preemptive Rights.



          4.1 The Corporation hereby grants to each of the Right Holders the right of first refusal to
purchase their Pro Rata Amount (or any part thereof) of any New Securities that the Corporation
may, from time to time, propose to sell or issue following the date of this Agreement.



          4.2 In the event that the Corporation proposes to undertake an issuance of New Securities, at
least 30 days before such issuance, it shall give to each Right Holder written notice of its
intention, describing in such notice the type of New Securities, the price, and the general terms
upon which the Corporation proposes to issue the same. Each Right Holder shall have 15 days from
the date of its receipt of any such notice to agree to purchase all or a part of its Pro Rata
Amount of such New Securities for the price and upon the general terms specified in the notice by
giving written notice to the Corporation and the other Right Holders and stating therein the
quantity of New Securities to be purchased. Each Right Holder shall have a right of over-allotment
such that if any Right Holder fails to exercise in whole or in part its right hereunder to purchase
its Pro Rata Amount of New Securities, each other Right Holder who or which elected to purchase in
full its Pro Rata Amount may purchase the nonpurchasing Right Holder’s portion on a pro rata basis,
by giving notice to the Corporation within 5 days from the date such nonpurchasing Right Holder
fails to exercise its right hereunder to purchase its Pro Rata Amount of New Securities.



          4.3 In the event that the Right Holders fail to exercise in full the preemptive right set
forth in this Section 4 within said 15 plus 5 day period, the Corporation shall have 90 days
thereafter to sell the New Securities respecting which such right was not exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in the Corporation’s
notice. In the event the Corporation has not sold such New Securities within said 90 day period,
the Corporation shall not thereafter issue or sell any New Securities, without first offering such
New Securities to the Right Holders in the manner provided above.



     5. Transfers



          5.1 Future Stockholders. The Corporation shall use its best efforts to cause each
Person that is not already a Stockholder hereunder and that acquires Equity Securities directly
from the Corporation after the date hereof entitling them, either directly or indirectly, to hold
more than one percent (1%) of the Common Stock of the Corporation (calculated on a fully-diluted
basis) (a “Future Stockholder”), to execute a counterpart to this Agreement, agreeing to be
treated as (i) an Investor, if such Person acquires shares of a series of the Corporation’s
authorized but unissued Preferred Stock, or (ii) a non-Investor Stockholder, if such Person
acquires shares of the Corporation’s authorized but unissued Common Stock, whereupon such



12









 




Person shall be bound by, and entitled to the benefits of, the provisions of this Agreement
relating to Investors or non-Investor Stockholders, as the case may be.




          5.2 Limitations on Transfers.



               (a) Except as otherwise specifically provided in Sections 5.2(b), 5.2(c) and 5.2(d), each
Stockholder agrees with the other Stockholders and with the Corporation that during the term of
this Agreement such Stockholder will not Transfer any Equity Securities of the Corporation now
owned or hereafter acquired by such Stockholder to any person or entity except in a Stockholder
Permitted Transfer. For purposes of this Agreement, “Stockholder Permitted Transfer” means
(A) any Transfer by a Stockholder to any Person that is a member of the Group of such Stockholder,
(B) any Transfer made accordance with the provisions of Sections 5.3 or 5.4 below, or (C) any other
Transfer made with the prior written consent of the Right Holders holding at least 65% of the then
outstanding shares of Common Stock issued or issuable on conversion of all outstanding shares of
Preferred Stock.



               (b) Oikos agrees with the other Stockholders and with the Corporation that, during the term of
this Agreement:



                    (i) except as provided to the contrary in Section 5.2(b)(ii), neither Oikos nor any member of
Oikos’ Group will Transfer any Equity Securities of the Corporation now owned or hereafter acquired
by Oikos to any person or entity except in an Oikos Permitted Transfer. For purposes of this
Agreement, “Oikos Permitted Transfer” means (A) any Transfer to a member of Oikos’ Group,
provided, however, that the cumulative number of Transferees within Oikos’ Group does not exceed
the lesser of 100 persons (including Oikos) or entities, or such number as would require the
Corporation to register such Transfers or the Equity Securities transferred or any Equity
Securities under any of the Securities Laws, (B) any Transfer made accordance with the provisions
of Sections 5.3 or 5.4 below; or (C) any other Transfer made with the prior written consent of the
Right Holders holding at least 65% of the then outstanding shares of Common Stock issued or
issuable on conversion of all outstanding shares of Preferred Stock; and



                    (ii) Oikos, and Transferees of Oikos that are members of Oikos’ Group, may, collectively,
Transfer up to 35% of the Equity Securities (calculated on an as converted basis) owned by Oikos as
of the date of this Agreement other than pursuant to a Oikos Permitted Transfer.



               (c) Bachovchin agrees with the other Stockholders and with the Corporation that, during the
term of this Agreement, neither Bachovchin nor any member of Bachovchin’s Group will Transfer any
Equity Securities of the Corporation now owned or hereafter acquired by Bachovchin to any person or
entity except in a Bachovchin Permitted Transfer, provided, however, that (i) on or after the third
anniversary of the date of this Agreement, Bachovchin and Transferees from Bachovchin that are
members of Bachovchin’s Group may Transfer in the aggregate up to 10% of the Common Stock owned by
Bachovchin on the date of this Agreement (including for purposes of such calculation Common Stock
issuable to Bachovchin upon the exercise of options outstanding on the date of this Agreement
granted under the Corporation’s 1999 Stock Option Plan) other than pursuant to a Bachovchin
Permitted



13









 




Transfer (and without such Transfer being subject to Sections 5.3 or 5.4), and (ii) on or
after the seventh anniversary of this Agreement all Equity Securities now owned or hereafter
acquired by Bachovchin and any Transferee of Bachovchin that is a member of Bachovchin’s Group may
be Transferred other than pursuant to a Bachovchin Permitted Transfer but subject to the rights of
the other Stockholders pursuant to Sections 5.3 and 5.4. For purposes of this Agreement,
“Bachovchin Permitted Transfer” means (A) any Transfer to a member of his Group, (B) any
Transfer pursuant to Sections 5.4 where neither Bachovchin nor a member of Bachovchin’s Group is a
Co-Sale Offeree, or (C) any other Transfer made with the prior written consent of the Right Holders
holding at least 65% of the then outstanding shares of Common Stock issued or issuable on
conversion of all outstanding shares of Preferred Stock (in which case Bachovchin or such member of
Bachovchin’s Group shall be deemed a First Offeror or a Co-Sale Offeree under Sections 5.3 and 5.4,
which Sections shall be applicable in their entirety to such proposed Transfer by Bachovchin).




               (d) Kiritsy agrees with the other Stockholders and with the Corporation that, during the term
of this Agreement, neither Kiritsy nor any member of Kiritsy’s Group will Transfer any Equity
Securities of the Corporation now owned or hereafter acquired by Kiritsy to any person or entity
except in a Kiritsy Permitted Transfer; provided, however, that in no event shall Kiritsy or a
member of Kiritsy’s Group Transfer Equity Securities if such Transfer is prohibited under either
(i) that certain Jaharis Voting Trust Agreement, dated February 1, 2005, by and among Kiritsy, Mary
Jaharis and Oikos, as the same may be amended from time to time (the “Jaharis Voting Trust
Agreement”), or (ii) that certain Triad Voting Trust Agreement, dated February 1, 2005, by and
among Kiritsy, Kevin Ferro and the Corporation, as the same may be amended from time to time (the
“Triad Voting Trust Agreement”). For purposes of this Agreement, “Kiritsy Permitted
Transfer” means (A) any Transfer to a member of his Group, (B) any Transfer pursuant to
Sections 5.4 where neither Kiritsy nor a member of Kiritsy’s Group is a Co-Sale Offeree, (C) any
Transfer made to either of the respective Trustees pursuant to and in accordance with the Jaharis
Voting Trust Agreement or the Triad Voting Trust Agreement, (D) any pledge or hypothecation of
shares of Preferred Stock held by Kiritsy as collateral security for a loan or loans extended by
Mary Jaharis to Kiritsy in connection with the Mary Jaharis Transfer, or (E) any other Transfer
made with the prior written consent of the Right Holders holding at least 65% of the then
outstanding shares of Common Stock issued or issuable on conversion of all outstanding shares of
Preferred Stock (in which case Kiritsy or such member of Kiritsy’s Group shall be deemed a First
Offeror or a Co-Sale Offeree under Sections 5.3 and 5.4, which Sections shall be applicable in
their entirety to such proposed Transfer by Kiritsy).



               (e) In addition to the requirements of Sections 5.2(a) through 5.2(d), no Transfer shall be
made by any Stockholder, and no Transfer shall be deemed a Permitted Transfer hereunder unless, in
each case (i) the Transferee, unless already a party to this Agreement, shall have furnished to the
Corporation a written joinder agreement (a “Joinder Agreement”) executed by such Transferee
pursuant to which such Transferee shall have agreed to hold the Equity Securities that are the
subject of such Transfer subject to and be bound by all the restrictions and covenants set forth in
this Agreement that are applicable to the Transferor, and (ii) either (A) the Transfer is
pursuant to an effective registration statement under the Securities Act and in compliance with any
other applicable federal securities laws and state securities or “blue sky” laws (collectively,
“Securities Laws”), or (B) the Joinder Agreement furnished by the Transferee, if any, shall
contain appropriate representations, reasonably



14









 




acceptable to the Corporation, to evidence that an exemption from such registration is
available with respect to such Transfer and, if reasonably requested by the Corporation, the
Transferor shall have furnished the Corporation with an opinion of counsel, which opinion and
counsel must be reasonably satisfactory to the Corporation, to the effect that no such registration
is required because of the availability of an exemption from registration under the Securities Laws
and that the Transfer otherwise complies with this Agreement and the Securities Laws, provided that
no such opinion of counsel will be required if the Transferee is a member of the Group of the
Transferor. Any Transfer of Equity Securities by any Stockholder not in accordance with this
paragraph shall be void. Notwithstanding anything in this Agreement to the contrary, in no event
shall a Stockholder Transfer Equity Securities to any Person whom the Board of Directors of the
Corporation reasonably determines in good faith to be a direct or indirect competitor of either Kos
or the Corporation.




               (f) The Corporation shall not record upon its books any Transfer of Equity Securities held or
owned by any of the Stockholders to any other Person except Transfers made in accordance with this
Section 5.2.



          5.3 Right of First Refusal.



               (a) If any Stockholder (the “First Offeror”) proposes to Transfer any Equity
Securities that are subject to the restrictions of Sections 5.2(a) through 5.2(d) to any Person
other than to a member of the Group of such Stockholder, the First Offeror shall, before such
Transfer, deliver to the Right Holders an offer (the “First Offer”) to Transfer such Equity
Securities upon the terms set forth in this Section 5.3(a), including (A) the number or amount of
Equity Securities to which the First Offer relates (the “Offered Shares”) and the name of
the First Offeror, (B) the name and address of the proposed offeree (the “First Offeree”),
(C) the proposed amount and type of consideration (including, if the consideration consists in
whole or in part of non-cash consideration, such information available to the First Offeror as may
be reasonably necessary for the Right Holders to properly analyze the economic value and investment
risk of such non-cash consideration) and the terms and conditions of payment offered by the First
Offeror. The First Offer shall remain open and irrevocable for a period of 30 days (the
“Acceptance Period”) from the date of its receipt by the Right Holders.



               (b) Any Right Holder may accept the First Offer and purchase his, her or its Pro Rata Amount
of the Offered Shares (with respect to each Right Holder, its “Full Allotment”) by
delivering to the First Offeror a notice (the “Acceptance Notice”) in writing within the
Acceptance Period. Each Right Holder purchasing its Full Allotment may also accept the First Offer
and purchase his, her or its Pro Rata Amount of any remaining shares not so purchased by the other
Right Holders.



               (c) The First Offeror may Transfer any or all of the Offered Shares not purchased by the Right
Holders, on terms and conditions no more favorable to the First Offeree than are described in the
First Offer, within 60 days after expiration of the Acceptance Period. If such Transfer is not
made within such 60-day period, the restrictions provided for in this Section 5.3 shall again
become effective.



15









 





               (d) For purposes of this Section 5.3, each Right Holder may aggregate his, her or its Pro Rata
Amount among other Right Holders in his, her or its Group to the extent that such other Right
Holders in his, her or its Group do not elect to purchase their respective Full Allotments.



               (e) The provisions of this Section 5.3 shall not apply to a Transfer pursuant to Section
5.2(b)(ii).



          5.4 Co-Sale/Tag-Along Rights.



               (a) If a Stockholder (the “Co-Sale Offeree”) receives an offer to Transfer any Equity
Securities to any Third Party (the “Co-Sale Offeror”), the Co-Sale Offeree shall, at least
30 days before such Transfer, deliver a notice (the “Co-Sale Notice”) to the Right Holders
that sets forth substantially the same information as the First Offer in Section 5.3(a) hereof;
provided, however, that such Co-Sale Notice shall indicate that the Co-Sale Offeror has been
informed of the co-sale rights provided for in this Section 5.4 and has agreed to purchase Equity
Securities in accordance with the terms hereof.



               (b) The Co-Sale Offeree shall not Transfer any Equity Securities to the Co-Sale Offeror unless
the Right Holders are permitted to Transfer their respective Pro Rata Amounts of the aggregate
number of Equity Securities to which the Co-Sale Offer relates.



               (c) The Co-Sale Offeree shall, in addition to complying with the provisions of this Section
5.4, comply with the other provisions of this Section 5 (it being understood that the notice
contemplated by Section 5.3 and the Co-Sale Notice contemplated by this Section 5.4 may be included
in a single notice).



               (d) Within 30 days after delivery of the Co-Sale Notice, each Right Holder may elect to
participate in the proposed Transfer by delivering to such Co-Sale Offeree a notice (the
“Tag-Along Notice”) specifying the number of Equity Securities, up to his, her or its Pro
Rata Amount (based upon the aggregate number of Equity Securities of the Corporation outstanding at
such time), with respect to which the Right Holder shall exercise his, her or its rights under this
Section 5.4. For purposes of this Section 5.4, each Right Holder may aggregate his, her or its Pro
Rata Amount among other Stockholders in his, her or its Group to the extent that such other
Stockholders in its Group do not elect to sell their respective Pro Rata Amounts.



               (e) Any Equity Securities requested to be included in any Co-Sale Notice shall be Transferred
on terms no less favorable to the Transferor than those set forth in the Co-Sale Notice.



               (f) The provisions of this Section 5.4 shall not apply to a Transfer pursuant to Section
5.2(b)(ii).



     6. Termination. Except as otherwise provided herein, this Agreement, and the
respective rights and obligations of the parties hereunder, shall terminate upon the Termination
Date. Notwithstanding the foregoing, Kos’ rights under Sections 3.2 and 3.3 shall survive the
consummation of a Qualified IPO in order to permit Kos to comply with its reporting obligations
under the Exchange Act.



16









 





     7. Legend. In addition to any other legends that may be required by law, there shall
be endorsed on each certificate for Equity Securities issued by the Corporation to the Stockholders
a legend substantially to the following effect:




“The securities represented by this certificate are subject to
restrictions on transfer and to other limitations set forth in a
Stockholders’ Agreement dated February 1, 2005 among the Corporation
and its stockholders, a copy of which is available at the office of
the Corporation. No transfer of any interest in such securities is
effective unless made in compliance with the terms of such
Agreement.”




“The securities represented by this certificate have been acquired
for investment and have not been registered under the Securities Act
of 1933, as amended, or any state securities or blue sky laws.
These securities may not be sold or transferred in the absence of
such registration or an exemption therefrom under said Act or laws.”



     8. Notices. All notices, requests, consents and other communications hereunder to a
party shall be deemed to be sufficiently given if contained in a written instrument delivered in
person, sent via a reputable nationwide overnight courier services guaranteeing next business day
delivery, or duly sent by first class registered or certified mail, postage prepaid, addressed in
each case to such party at the address set forth below or such other address as may hereafter be
designated in writing by such party to all other parties:



          8.1 if to the Corporation, to the address set forth in Section 7 of the Series F Stock
Purchase Agreement (with a copy to be sent as indicated therein);



          8.2 if to a Purchaser, to the address set forth in Section 7 of the Series F Stock Purchase
Agreement (with a copy to be sent as indicated therein); and



          8.3 if to any other Stockholder, to the address of Stockholder as reflected in the books and
records of the Corporation.



     9. Entire Agreement. This Agreement constitutes the entire agreement among the
parties concerning the subject matter hereof, and supersedes all prior agreements, written or oral,
between or among them concerning such subject matter in their entirety, including, without
limitation, the Voting Agreement, the Stock Restriction Agreement and the provisions of Sections 8
and 9 of the Series A Stock Purchase Agreement, as amended (such Voting Agreement, Stock
Restriction Agreement and the provisions of Sections 8 and 9 of the Series A Stock Purchase
Agreement being hereby terminated and of no further force or effect); provided, however, that the
Stock Issuance Agreement, dated September 8, 1999, between the Corporation and Tufts shall not be
superseded hereby and shall remain in full force and effect.



     10. Remedies; Further Agreements.



17









 





          10.1 In addition to any other remedies provided by law, it is acknowledged that it will be
impossible to measure in money the damages that would be suffered if the parties hereto fail to
comply with any of the obligations herein imposed on them and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at
law. Any such aggrieved person shall, therefore, be entitled to injunctive relief, including
specific performance, to enforce such obligations, and if any action should be brought in equity to
enforce any of the provisions of this Agreement, none of the parties hereto shall, to the fullest
extent permitted by applicable law, raise the defense that there is an adequate remedy at law.



          10.2 Each of the parties hereto agrees to execute all such further instruments and documents,
and to take all such further actions, as any other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.



     11. Amendments, Waivers. Except as otherwise provided herein, this Agreement may be
amended, and compliance with any provision of this Agreement may be omitted or waived, only by the
written agreement of the Corporation, and the holders of a majority of the then outstanding shares
of Common Stock issued or issuable on conversion of all outstanding shares of Preferred Stock. In
addition, (i) any amendment to Section 2 of this Agreement shall also require the prior written
consent of Bachovchin, Kos and Oikos but in each case only to the extent that such amendment is
materially adverse to Bachovchin, Kos or Oikos, as the case may be (it being understood that an
increase in the size of the Board or the addition of a Board designation right(s) to a Future
Stockholder shall not be deemed adverse to Bachovchin, Kos and Oikos), provided that an amendment
to Section 2 relating solely to the right to designate an Observer shall only require the
additional consent of Oikos and Stone Life but in each case only to the extent that such amendment
is materially adverse to Stone Life or Oikos, as the case may be, (ii) any amendment to Sections
3.2(a), 3.2(b) and Section 3.3 shall also require the prior written consent of each of Bachovchin,
Kos and Oikos, (iii) any amendment to Section 4 shall also require the written consent of Kos
unless such amendment applies in the same fashion to Oikos and the members of Oikos’ Group as it
does to Kos, (iv) any amendment to Section 5.2(c) or the related definition of Group as it relates
to Bachovchin shall also require the prior written consent of Bachovchin, (v) any amendment to
Section 5.2(b) or the related definition of Group as it relates to Oikos shall also require the
prior written consent of each of Bachovchin and Kos, (vi) any amendment to Section 5.2(d) or the
related definition of Group as it relates to Kiritsy shall also require the prior written consent
of Kiritsy, and (vii) any amendment to the definition of Group insofar as such amendment relates to
Kos shall also require the prior written consent of Kos. Notwithstanding the foregoing, no
provision of this Agreement may be amended or terminated, and the observance of any term hereunder
may not be waived, with respect to any Stockholder without the written consent of such Stockholder
unless such amendment, termination or waiver applies in the same fashion to all Stockholders with
like rights and obligations pursuant to such provision or term. A waiver or omission on one
occasion shall not constitute a waiver or omission on any further occasion.



     12. Assignment; Successors and Assigns; Designees.



          12.1 The rights and obligations of any Stockholder under this Agreement (with the exception of
the right to designate one or more directors or an Observer pursuant to Section



18









 




2, provided that the foregoing shall not apply to Oikos) may and, unless the terms of such
Transfer or this Agreement provide to the contrary, will be transferred to any Transferee acquiring
not less than 25,000 shares of Common Stock (including for such purpose shares of Common Stock
issuable upon conversion of Preferred Stock acquired by such assignee) appropriately adjusted to
take account of any stock split, stock dividend, combination of shares, or the like, who acquired
such shares in a transaction otherwise in accordance with Section 5.2 hereof and, with respect to
the rights provided by Sections 4 and 5, who is an “accredited investor,” as that term is used in
Regulation D promulgated under the Securities Act (an “Accredited Investor”). In the event
that any Transferee will, pursuant to the terms of the Transfer, receive less than all the rights
of the Transferor that are transferable hereunder, the Transferor shall deliver to the Corporation
and to the Right Holders notice of the rights that will be bestowed on the Transferee prior to the
consummation of such Transfer.




     Except as may be expressly provided otherwise herein, this Agreement shall be binding on, and
shall inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns and transferees. In addition, for the avoidance
of doubt, in connection with a Transfer(s) permitted by Section 5.2(b), Oikos (or Oikos’ designee
pursuant to Section 12.3) may, by giving written notice to the Corporation setting forth the rights
bestowed, assign (i) one or more of Oikos’ director designation rights pursuant to Section 2, (ii)
Oikos’ right to an Observer pursuant to Section 2, or (iii) all or a portion of Oikos’ rights
pursuant to Section 4, 5.3 or 5.4, to the Transferee(s) in such Transfer(s), it being understood
that such rights may not be further assigned by the Transferee unless reassigned to a member of
Oikos’ Group.



          12.2 Notwithstanding anything in this Agreement to the contrary, with respect to any Transfer
by Oikos to a member of Oikos’ Group, unless the terms of such Transfer provide to the contrary,
Oikos (or Oikos’ designee who shall initially be Steven K. Aronoff) (i) shall retain all rights
under this Agreement to vote the shares of Common Stock or Preferred Stock so Transferred
(including, without limitation, to consent to the amendment to or waiver of any provision of this
Agreement and to designate directors and an Observer pursuant to Section 2, and (ii) may amend or
revoke the rights granted to such member of its Group pursuant to such Transfer at any time by
prior written notice to the affected member of the Group, to the Corporation and to the other Right
Holders. In the event of the dissolution of Oikos prior to any designation pursuant to Section
12.3, the rights detailed in clause (i) above shall be automatically transferred to the members of
Oikos’ Group, to be exercised as specified in Section 12.3. In connection with Transfers by Oikos
to members of Oikos’ Group pursuant to Section 5.2(b), only those Transferees designated by Oikos
(or Oikos’ designee pursuant to Section 12.3) in writing to the Corporation shall obtain the rights
set forth in Section 3.1 and such rights may be amended or revoked at any time by Oikos or such
designee by written notice to the affected Transferee and the Corporation.



          12.3 Oikos shall have the right to appoint a designee to exercise the Oikos rights hereunder
to vote any shares of Common Stock or Preferred Stock held by it or any member of its Group, to
designate directors of the Corporation and an Observer pursuant to Section 2 and to appoint future
designees pursuant to this Section 12.3. Oikos shall have the power to revoke any such designation
and to appoint a substitute designee pursuant to this Section 12.3 by delivery of written notice to
the then-current designee, the Corporation and each



19









 




other Right Holder. The rights of a designee hereunder shall survive the dissolution of
Oikos. In the event of the dissolution of Oikos prior to making any such designation, the rights
of Oikos to vote any Equity Securities pursuant to this Agreement and to appoint directors and an
Observer pursuant to Section 2 shall be exercised by the holders of a majority of Equity Securities
then held by members of Oikos’ Group. In the event of the dissolution of Oikos, the then designee
of Oikos, if any, shall have full power of substitution and resubstitution.




     13. Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     14. Counterparts, Facsimiles. This Agreement may be executed in any number of
counterparts (including, in the case of the Purchasers, Purchaser Signature Pages (as defined in
the Series F Purchase Agreement)), each such counterpart shall be deemed to be an original
instrument, and all such counterparts shall together constitute but one agreement. Signature pages
to this Agreement may be delivered by facsimile and shall have the same force and effect as an
original.



     15. Certain Matters of Construction. A reference to a Section shall mean a Section in
this Agreement unless otherwise expressly stated. The titles and headings herein are for reference
purposes only and shall not in any manner limit the construction of this Agreement which shall be
considered as a whole. The words “include,” “includes” and “including” when used herein shall be
deemed in each case to be followed by the words “without limitation.” Whenever the context may
require, any pronouns used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of names and pronouns shall include the plural and vice-versa. The
headings contained in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.



     16. Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial. This
Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws
of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws. Any
litigation arising from or relating to this Agreement shall be filed and prosecuted in any court of
competent subject matter jurisdiction located in the state of New York. The parties stipulate to
the jurisdiction, convenience and efficiency of proceeding in such courts and hereby waive and
covenant not to assert any objections to proceeding in such courts based on any grounds other than
a lack of subject matter jurisdiction.



[Remainder of this page intentionally left blank.]




20









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	

Triad Pharmaceuticals, Inc.

 	 
	 	By:  	/s/William W. Bachovchin
 	 
	 	 	Name:  	William W. Bachovchin 	 
	 	 	Title:  	President 	 
	 





 









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	 	 
	 	                                                     /s/William W. Bachovchin
 	 
	 	William W. Bachovchin, in his personal 	 
	 	capacity 	 
	 





 









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	Stone Life Sciences Holdings, Ltd.

 	 
	 	By:  	/s/Gerd Petrik
 	 
	 	 	Name:  	Gerd Petrik                           	 
	 	 	Title:  	President of Stone Management, Inc.	 
	 	 	 	General Partner 	 
	 





 









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	Tufts University

 	 
	 	By:  	/s/Steven S. Manos
 	 
	 	 	Name:  	Steven S. Manos       	 
	 	 	Title:  	Executive Vice President 	 
	 





 









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	 	 
	 	     /s/Christopher Kiritsy
 	 
	 	Christopher Kiritsy 	 
	 	 	 
	 





 









 





Stockholders Agreement




     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	2004 Oikos Investment Partners, LP

 	 
	 	By:  	/s/Steven K. Aronoff
 	 
	 	 	Name:  	Steven K. Aronoff 	 
	 	 	 	Manager of 500 East General	 
	 	 	 	Partners LLC, General Partner 	 
	 





 









 





     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year
first above written.


	 	 	 	 	 
	 	Kos Pharmaceuticals, Inc.

 	 
	 	By:  	/s/Adrian Adams
 	 
	 	 	Name:  	Adrian Adams 	 
	 	 	Title:  	President and CEO