EXHIBIT 4.2**ARTES MEDICAL, INC.****AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT**     THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made andentered into as of June 23, 2006, by and among Artes Medical, Inc., a Delaware corporation (the“Company”), and each of the individuals or entities whose names are set forth onSchedule A hereto (each, a “Stockholder” and collectively, the“Stockholders”).**RECITALS**:     WHEREAS, the Company and the holders of the Company’s Series A Preferred Stock, par value$0.001 per share (the “Series A Preferred” and such holders, the “Series AInvestors”), have previously entered into an Investors’ Rights Agreement dated as of June 30,2000 (the “Series A Agreement”).     WHEREAS, the Company and the holders of the Company’s Series B Preferred Stock, par value$0.001 per share (the “Series B Preferred” and such holders, the “Series BInvestors”), have previously entered into an Investors’ Rights Agreement dated as of December15, 2000 (the “Series B Agreement”).     WHEREAS, the Company and the holders of the Company’s Series C-1 Preferred Stock, par value$0.001 per share (the “Series C-1 Preferred” and such holders, the “Series C-1Investors”), have previously entered into an Investors’ Rights Agreement dated as of April 10,2003 (the “Series C-1 Agreement”).     WHEREAS, the Company and the holders of the Company’s Series D Preferred Stock, par value$0.001 per share (the “Series D Preferred” and such holders, the “Series DInvestors”), have previously entered into an Investors’ Rights Agreement dated as of May 1,2005 (the “Series D Agreement”).     WHEREAS, the Company and the holders of the Company’s Series E Preferred Stock, par value$0.001 per share (the “Series E Preferred” and such holders, the “Series EInvestors”) (together with the Series A Investors, the Series B Investors, the Series C-1Investors and the Series D Investors, the “Prior Investors”), have previously entered into(a) an Investors’ Rights Agreement dated as of December 22, 2005, (b) an Investors’ RightsAgreement dated as of December 30, 2005 and/or (c) an Investors’ Rights Agreement dated as ofFebruary 3, 2006 (collectively, the “Series E Agreements”) (together with the Series AAgreement, the Series B Agreement, the Series C-1 Agreement and the Series D Agreement, the“Prior Agreements”).     WHEREAS, the Company and the Prior Investors desire to enter into this Agreement in order toamend, restate and replace their rights and obligations under the Prior Agreements with the rightsand obligations set forth in this Agreement.
 

 
     WHEREAS, the Series A Agreement may be amended by agreement of the Company and Series AInvestors holding at least a majority of the “Registrable Securities” (as defined in the Series AAgreement) then outstanding, calculated on an as-converted basis.     WHEREAS, the Series B Agreement may be amended by agreement of the Company and Series BInvestors holding at least a majority of the “Registrable Securities” (as defined in the Series BAgreement) then outstanding, calculated on an as-converted basis.     WHEREAS, the Series C-1 Agreement may be amended by agreement of the Company and Series C-1Investors holding at least a majority of the “Registrable Securities” (as defined in the Series C-1Agreement) then outstanding, calculated on an as-converted basis.     WHEREAS, the Series D Agreement may be amended by agreement of the Company and Series DInvestors holding at least a majority of the “Registrable Securities” (as defined in the Series DAgreement) then outstanding, calculated on an as-converted basis.     WHEREAS, each of the Series E Agreements may be amended by agreement of the Company and SeriesE Investors holding at least a majority of the “Registrable Securities” (as defined in theapplicable Series E Agreement) then outstanding, calculated on an as-converted basis.     WHEREAS, the Company has executed this Agreement, and the Prior Investors who are signatoriesto this Agreement hold at least that number of shares necessary to amend and restate each of thePrior Agreements.**AGREEMENT**     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in thisAgreement and for other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Company and the Prior Investors who are parties to the Prior Agreementshereby agree that each of the Prior Agreements is superseded and replaced in its entirety by thisAgreement, including with respect to those Prior Investors who are not signatories to thisAgreement, and the parties hereto further agree as follows:     1. **Restatement and Termination of Prior Agreements**. Effective and contingent uponexecution of this Agreement by the Company and the holders of at least a majority of the“Registrable Securities,” as that term is defined in each of the Prior Agreements, each of thePrior Agreements is hereby amended and restated in its entirety to read as set forth in thisAgreement and are hereafter terminated and of no further force or effect, and the Company and theInvestors hereby agree to be bound by the provisions hereof as the sole agreement of the Companyand the Investors with respect to registration rights of the Company’s securities and certain otherrights, as set forth herein.     2. **Registration Rights****.**The Company and the Investors covenant and agree as follows:
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          2.1 **Definitions****.**For purposes of this Section 2:               (a) “Affiliated Fund” means, with respect to a Holder that is a limited liabilitycompany or a limited liability partnership, a fund or entity managed by the same manager ormanaging member or general partner or management company or by an entity controlling, controlledby, or under common control with such manager or managing member or general partner or managementcompany.               (b) “Exchange Act” means the Securities Exchange Act of 1934, as amended (and anysuccessor thereto) and the rules and regulations promulgated thereunder.               (c) “Excluded Registration” means a registration statement relating solely to the saleof securities of participants in a Company stock plan, a registration relating to a corporatereorganization or transaction under Rule 145 of the Securities Act, or a registration in which theonly common stock being registered is common stock issuable upon conversion of debt securitieswhich are also being registered.               (d) “Form S-3” means such form under the Securities Act as in effect on the datehereof or any successor form under the Securities Act that permits significant incorporation byreference of the Company’s subsequent public filings under the Exchange Act.               (e) “Holder” means any Investor owning or having the right to acquire RegistrableSecurities or any assignee thereof in accordance with Section 2.12 of this Agreement.               (f) “IPO” means a firm commitment underwritten public offering by the Company ofshares of its Common Stock prior to or in connection with which all the then-outstanding shares ofPreferred Stock are converted into shares of Common Stock pursuant to the Company’s Amended andRestated Certificate of Incorporation, as such Amended and Restated Certificate of Incorporationmay be amended from time to time.               (g) “Major Investor” means any Investor that holds at least 100,000 shares of thePreferred Stock or the Common Stock issued upon conversion thereof (subject to adjustment for stocksplits, stock dividends, combinations, reclassifications or the like with respect to such shares).A Major Investor includes any general partners, managing members and affiliates of a MajorInvestor, including Affiliated Funds.               (h) “Register,” “registered,” and “registration” refer to aregistration effected by preparing and filing a registration statement or similar document incompliance with the Securities Act, and the declaration or ordering of effectiveness of suchregistration statement or document.               (i) “Registrable Securities” means (i)  shares of Common Stock issuable or issued uponconversion of the Series A Preferred, (ii) shares of Common Stock issuable or issued uponconversion of the Series B Preferred, (iii) shares of Common Stock issuable or issued uponconversion of the Series C-1 Preferred (including shares of Series C-1 Preferred issuable upon theexercise of warrants to purchase shares of Series C-1 Preferred), (iv)
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shares of Common Stock issuable or issued upon conversion of the Series D Preferred (includingshares of Series D Preferred issuable upon the exercise of warrants to purchase shares of Series DPreferred), (v) shares of Common Stock issuable or issued upon conversion of the Series E Preferred(including shares of Series E Preferred issuable upon the exercise of warrants to purchase Series EPreferred), (vi) shares of Common Stock issued or issuable upon the exercise of (x) warrants topurchase an aggregate of 2,694,571 shares of Common Stock issued in a bridge financing transactioncompleted in June 2004 and (y) warrants to purchase an aggregate of 842,969 shares of Common Stockissued in the Company’s Series D Preferred Stock financing completed in May through June 2005, heldby the Holders and any assignee thereof in accordance with Section 2.12 of this Agreement and anyother shares of Common Stock of the Company issued as (or issuable upon the conversion or exerciseof any warrant, right or other security which is issued as) a dividend or other distribution withrespect to, or in exchange for or in replacement of, the shares listed in (i) through (vi);excluding, however, in all cases any Registrable Securities sold in a transactionin which the rights under this Agreement are not assigned, or any shares for which registrationrights have terminated pursuant to Section 2.15 of this Agreement.               (j) The number of shares of “Registrable Securities then outstanding” shall bedetermined by the number of shares of Common Stock outstanding which are, and the number of sharesof Common Stock issuable pursuant to then exercisable or convertible securities which are,Registrable Securities.               (k) “SEC” means the Securities and Exchange Commission.               (l) “Securities Act” means the Securities Act of 1933, as amended, (and any successorthereto) and the rules and regulations promulgated thereunder.          2.2 **Request for Registration****.**               (a) If the Company shall receive at any time after the earlier of (i) January 1, 2008, or(ii) 180 days after the effective date of registration statement pertaining to an IPO, a writtenrequest from the Holders of a majority of the Registrable Securities then outstanding, votingtogether as a single class on an as-converted to Common Stock basis (the “InitiatingHolders”), that the Company file a registration statement under the Securities Act covering theregistration of Registrable Securities with an anticipated aggregate offering price of at least$25,000,000, then the Company shall, within 20 days after receiving such request, give writtennotice of such request to all Holders and shall, subject to the limitations of subsection 2.2(b),use all commercially reasonable efforts to cause to be registered under the Securities Act all ofthe Registrable Securities that each such Holder has requested to be registered within 20 daysafter the mailing of such notice by the Company.               (b) If the Initiating Holders intend to distribute the Registrable Securities covered by theirrequest by means of an underwriting, they shall so advise the Company as a part of their requestand the Company shall include such information in the written notice referred to in subsection2.2(a). The underwriter will be selected by the Company, which underwriter shall be reasonablyacceptable to a majority in interest of the Holders whose Registrable Securities are to be includedin the underwriting. In such event, the right of anyHolder to include Registrable Securities in such registration shall be conditioned upon such
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Holder’s participation in such underwriting and the inclusion of such Holder’s RegistrableSecurities in the underwriting (unless otherwise mutually agreed by a majority in interest of theInitiating Holders and such Holder) to the extent provided herein. The Company and all Holdersproposing to distribute their securities through such underwriting shall enter into an underwritingagreement in customary form with the underwriter or underwriters selected for such underwriting.Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Company ingood faith that marketing factors require a limitation of the number of shares to be underwritten,then the Company shall so advise all Holders of Registrable Securities which would otherwise beunderwritten pursuant hereto, and the number of shares of Registrable Securities that may beincluded in the underwriting shall be allocated among all participating Holders thereof, includingthe Initiating Holders, in proportion (as nearly as practicable) to the amount of RegistrableSecurities of the Company owned by each participating Holder. In no event shall any RegistrableSecurities be excluded from such underwriting unless all other securities are first excluded fromsuch offering. Any Registrable Securities excluded from or withdrawn from such underwriting shallbe withdrawn from registration.               (c) Notwithstanding the foregoing, if the Company shall furnish to the Initiating Holders acertificate signed by the President of the Company stating that in the good faith judgment of theBoard of Directors of the Company (the “Board of Directors”) it would be seriouslydetrimental to the Company and its stockholders for such registration statement to be filed, theCompany shall have the right to defer such filing for a period of not more than 120 days afterreceipt of the request of the Initiating Holders; provided, however, that theCompany may not utilize this right or the similar right set forth in Section 2.4(b)(iii) more thanonce in any 12-month period, and provided, further, that the Company shall not register anysecurities for the account of itself or any other stockholder during such 120-day period (otherthan in an IPO or an Excluded Registration).               (d) In addition, the Company shall not be obligated to effect, or to take any action toeffect, any registration pursuant to this Section 2.2:                    (i) After the Company has effected two (2) registrations pursuant to this Section 2.2 and suchregistrations have been declared or ordered effective, provided, however, that suchregistrations have been declared or ordered effective and that either (A) the conditions of Section2.5(a) have been satisfied or (B) the registration statements remain effective and there are nostop orders in effect to such registration statements;                    (ii) During the period starting with the date 90 days prior to the Company’s good faithestimate of the date of filing of, and ending on a date 180 days after the effective date of, aregistration subject to Section 2.3 hereof, unless such offering is not the initial public offeringof the Company’s securities, in which case, ending on a date 90 days after the effective date ofsuch registration subject to Section 2.3 hereof; provided that the Company is actively employing ingood faith all commercially reasonable efforts to cause such registration statement to becomeeffective; or                    (iii) If the Initiating Holders propose to dispose of shares of Registrable Securities thatmay be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below.
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          2.3 **Company Registration****.**               (a) If (but without any obligation to do so) at any time after the earlier of (i) January 1,2008 or (ii) 180 days after the effective date of the registration statement pertaining to an IPO,the Company proposes to register (including for this purpose a registration effected by the Companyfor stockholders other than the Holders) any of its stock under the Securities Act in connectionwith the public offering of such securities solely for cash (other than an Excluded Registration orany registration on any form which does not include substantially the same information as would berequired to be included in a registration statement covering the sale of the RegistrableSecurities), the Company shall, at such time, promptly give each Holder written notice of suchregistration. Upon the written request of each Holder given within 20 days after mailing of suchnotice by the Company in accordance with Section 4.5, the Company shall, subject to the provisionsof Section 2.8, use all commercially reasonable efforts to cause to be registered under theSecurities Act all of the Registrable Securities that each such Holder has requested to beregistered if any stock of the Company is registered.               (b) The Company shall have the right to terminate or withdraw any registration initiated by itunder this Section 2.3 prior to the effectiveness of such registration whether or not any Holderhas elected to include securities in such registration. The expenses of such registration shall beborne by the Company, in accordance with Section 2.7 hereof.          2.4 **Form S-3 Registration****.**In case the Company shall receive from any Holder orHolders of not less than 30% of the Registrable Securities then outstanding, voting together as asingle class on an as-converted to Common Stock basis, a written request or requests that theCompany effect a registration on Form S-3 with respect to all or a part of the RegistrableSecurities owned by such Holder or Holders, the Company will:               (a) promptly give written notice of the proposed registration, and any related qualificationor compliance, to all other Holders; and               (b) use all commercially reasonable efforts to effect, as soon as practicable, suchregistration and all such qualifications and compliances as may be so requested and as would permitor facilitate the sale and distribution of all or such portion of such Holder’s or Holders’Registrable Securities as are specified in such request, together with all or such portion of theRegistrable Securities of any other Holder or Holders joining in such request as are specified in awritten request given within 15 days after receipt of such written notice from the Company;provided, however, that the Company shall not be obligated to effect any suchregistration, qualification or compliance, pursuant to this Section 2.4: (i) if Form S-3 is notavailable for such offering by the Holders; (ii) if the Holders, together with the holders of anyother securities of the Company entitled to inclusion in such registration, propose to sellRegistrable Securities and such other securities (if any) at an aggregate price to the public ofless than $1,000,000; (iii) if the Company shall furnish to the Holders a certificate signed by thePresident of the Company stating that in the good faith judgment of the Board of Directors, itwould be seriously detrimental to the Company and its stockholders for such registration statementto be filed, in the Company shall have the right to defer such filing for a period of not more than120 days after receipt of the request of the Holder or Holders under this Section 2.4;provided, however, that the Company shall not utilize this right or the similarright set forth in
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Section 2.2(c) more than once in any 12-month period; (iv) if the Company has,within the 12-month period preceding the date of such request, already effected two registrationson Form S-3 for the Holders pursuant to this Section 2.4; (v) in any jurisdiction in which theCompany would be required to qualify to do business or to execute a general consent to service ofprocess in effecting such registration, qualification or compliance unless the Company is alreadyqualified to do business or subject to service of process in that jurisdiction; or (vi) during theperiod ending 180 days after the effective date of a registration statement subject to Section 2.3.               (c) Subject to the foregoing, the Company shall file a registration statement covering theRegistrable Securities and other securities so requested to be registered as soon as practicableafter receipt of the request or requests of the Holders. Registrations effected pursuant to thisSection 2.4 shall not be counted as demands for registration or registrations effected pursuant toSections 2.2 or 2.3, respectively.          2.5 **Obligations of the Company****.**Whenever required under this Section 2 to effect theregistration of any Registrable Securities, the Company shall, as expeditiously as reasonablypossible:               (a) Prepare and file with the SEC a registration statement with respect to such RegistrableSecurities and use all commercially reasonable efforts to cause such registration statement tobecome effective, and, upon the request of the Holders of a majority of the Registrable Securitiesregistered thereunder, keep such registration statement effective for up to 120 days, or until thedistribution described in such registration statement is completed, if earlier.               (b) Prepare and file with the SEC such amendments and supplements to such registrationstatement and the prospectus used in connection with such registration statement as may benecessary to comply with the provisions of the Securities Act with respect to the disposition ofall securities covered by such registration statement for up to 120 days, or until the distributiondescribed in such registration statement is completed, if earlier.               (c) Promptly notify the Holders of the effectiveness of such registration statement, andfurnish to the Holders such numbers of copies of a prospectus, including any supplement to theprospectus, in conformity with the requirements of the Securities Act, and such other documents asthey may reasonably request in order to facilitate the disposition of Registrable Securities ownedby them.               (d) Following the effective date of such registration statement, notify the Holders of anyrequest by the SEC that the Company amend or supplement such registration statement, or theassociated prospectus.               (e) Use all commercially reasonable efforts to register and qualify the securities covered bysuch registration statement under such other securities or Blue Sky laws of such jurisdictions asshall be reasonably requested by the Holders, provided that the Company shall not berequired in connection therewith or as a condition thereto to qualify to do business or to file ageneral consent to service of process in any such states or jurisdiction unless the Company isalready qualified to do business or subject to service of process in that jurisdiction.
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               (f) In the event of any underwritten public offering, enter into and perform its obligationsunder an underwriting agreement, in usual and customary form, with the managing underwriter of suchoffering. Each Holder and other security holder participating in such underwriting shall alsoenter into and perform its obligations under such an agreement.               (g) Notify each Holder of Registrable Securities covered by such registration statement at anytime when a prospectus relating thereto is required to be delivered under the Securities Act of thehappening of any event as a result of which the prospectus included in such registration statement,as then in effect, includes an untrue statement of a material fact or omits to state a materialfact required to be stated therein or necessary to make the statements therein not misleading inthe light of the circumstances then existing, such obligation to continue for 120 days or until thedistribution described in such registration statement is completed, if earlier.               (h) Cause all such Registrable Securities registered pursuant to this Section 2 to be listedon each national securities exchange or trading system on which similar securities issued by theCompany are then listed.               (i) Provide a transfer agent and registrar for all Registrable Securities registered pursuanthereunder and a CUSIP number for all such Registrable Securities, in each case not later than theeffective date of such registration.               (j) Make generally available to its security holders, and to deliver to each Holderparticipating in the registration statement, an earnings statement of the Company that will satisfythe provisions of Section 11(a) of the Securities Act covering a period of 12 months beginningafter the effective date of such registration statement as soon as reasonably practicable after thetermination of such 12-month period.          2.6 **Information From Holders****.**It shall be a condition precedent to the obligations ofthe Company to take any action pursuant to this Section 2 with respect to the RegistrableSecurities of any selling Holder that such Holder shall furnish to the Company such informationregarding such Holder, the Registrable Securities held by it, and the intended method ofdisposition of such securities as shall be required to effect the registration of such Holder’sRegistrable Securities. The Company shall have no obligation with respect to any registrationrequested pursuant to Section 2.2 or Section 2.4 of this Agreement if, as a result of theapplication of the preceding sentence, or the anticipated aggregate offering price of theRegistrable Securities to be included in the registration does not equal or exceed the anticipatedaggregate offering price required to originally trigger the Company’s obligation to initiate suchregistration as specified in subsection 2.2(a) or subsection 2.4(b)(ii), whichever is applicable.          2.7 **Expenses of Registration****.**All expenses other than underwriting discounts andcommissions incurred in connection with registrations, filings or qualifications pursuant toSections 2.2, 2.3 and 2.4 including (without limitation) all registration, filing and qualificationfees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and thereasonable fees and disbursements of one counsel for the selling Holders selected by them with theapproval of the Company, which approval shall not be unreasonably withheld, shall be borne by theCompany; provided, however, that the Company shall not be required to pay for any
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expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4 if the registrationrequest is subsequently withdrawn at the request of the Holders of a majority of the RegistrableSecurities to be registered (in which case all participating Holders shall bear such expenses),unless the Holders of a majority of the Registrable Securities agree to forfeit their right to onedemand registration pursuant to Section 2.2 or one right to a Form S-3 registration under Section2.4, as the case may be.          2.8 **Underwriting Requirements****.**In connection with any offering involving anunderwriting of shares of the Company’s capital stock, the Company shall not be required underSection 2.3 to include any of the Holders’ securities in such underwriting unless they accept theterms of the underwriting as agreed upon between the Company and the underwriters selected by theCompany (or by other persons entitled to select the underwriters), and then only in such quantityas the underwriters determine in their sole discretion will not jeopardize the success of theoffering by the Company. If the total amount of securities, including Registrable Securities,requested by stockholders to be included in such offering exceeds the amount of securities soldother than by the Company that the underwriters determine in their sole discretion is compatiblewith the success of the offering, then the Company shall be required to include in the offeringonly that number of such securities, including Registrable Securities, which the underwritersdetermine in their sole discretion will not jeopardize the success of the offering (the securitiesso included to be apportioned pro rata among the selling stockholders according to the total amountof securities entitled to be included therein owned by each selling stockholder or in such otherproportions as shall mutually be agreed to by such selling stockholders). For purposes of thepreceding parenthetical concerning apportionment, for any selling stockholder which is a holder ofRegistrable Securities and which is a venture capital fund, or a partnership or corporation, theAffiliated Funds, members, partners, retired partners and stockholders of such holder, or theestates and family members of any such partners and retired partners and any trusts for the benefitof any of the foregoing persons shall be deemed to be a single “selling stockholder,” andany pro-rata reduction with respect to such “selling stockholder” shall be based upon the aggregateamount of shares carrying registration rights owned by all entities and individuals included insuch “selling stockholder,” as defined in this sentence.          2.9 **Delay of Registration****.**No Holder shall have any right to obtain or seek aninjunction restraining or otherwise delaying any such registration as the result of any controversythat might arise with respect to the interpretation or implementation of this Section 2.          2.10 **Indemnification****.**In the event any Registrable Securities are included in aregistration statement under this Section 2:               (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,any underwriter (as defined in the Securities Act) for such Holder and each person, if any, whocontrols such Holder or underwriter within the meaning of the Securities Act or the Exchange Act,against any losses, claims, damages, or liabilities (joint or several) to which they may becomesubject under the Securities Act, the Exchange Act or other federal or state law, insofar as suchlosses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are basedupon any of the following statements, omissions or violations (collectively a “Violation”):(i) any untrue statement or alleged untrue statement of a material
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fact contained in suchregistration statement, including any preliminary prospectus or final prospectus contained thereinor any amendments or supplements thereto, (ii) the omission or alleged omission to state therein amaterial fact required to be stated therein, or necessary to make the statements therein notmisleading, or (iii) any violation or alleged violation by the Company of the Securities Act, theExchange Act, any state securities law or any rule or regulation promulgated under the SecuritiesAct, the Exchange Act or any state securities law; and the Company will pay to each such Holder,underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred bythem in connection with investigating or defending any such loss, claim, damage, liability, oraction; provided, however, that the indemnity agreement contained in thissubsection 2.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage,liability, or action if such settlement is effected without the consent of the Company (whichconsent shall not be unreasonably withheld), nor shall the Company be liable to any Holder,underwriter or controlling person for any such loss, claim, damage, liability, or action to theextent that it arises out of or is based upon a Violation which occurs in reliance upon and inconformity with written information furnished expressly for use in connection with suchregistration by any such Holder, underwriter or controlling person.               (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless theCompany, each of its directors, each of its officers who has signed the registration statement,each person, if any, who controls the Company within the meaning of the Securities Act, anyunderwriter, any other Holder selling securities in such registration statement and any controllingperson of any such underwriter or other Holder, against any losses, claims, damages, or liabilities(joint or several) to which any of the foregoing persons may become subject, under the SecuritiesAct, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, orliabilities (or actions in respect thereto) arise out of or are based upon any Violation, in eachcase to the extent (and only to the extent) that such Violation occurs in reliance upon and inconformity with written information furnished by such Holder expressly for use in connection withsuch registration; and each such Holder will pay, as incurred, any legal or other expensesreasonably incurred by any person intended to be indemnified pursuant to this subsection 2.10(b),in connection with investigating or defending any such loss, claim, damage, liability, or action;provided, however, that the indemnity agreement contained in thissubsection 2.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage,liability or action if such settlement is effected without the consent of the Holder, which consentshall not be unreasonably withheld; provided, that in no event shall any indemnity underthis subsection 2.10(b) exceed the net proceeds from the offering received by such Holder, exceptin the case of willful fraud by such Holder.               (c) Promptly after receipt by an indemnified party under this Section 2.10 of notice of thecommencement of any action (including any governmental action),such indemnified party will, if a claim in respect thereof is to be made against anyindemnifying party under this Section 2.10, deliver to the indemnifying party a written notice ofthe commencement thereof and the indemnifying party shall have the right to participate in, and, tothe extent the indemnifying party so desires, jointly with any other indemnifying party similarlynoticed, to assume the defense thereof with counsel mutually satisfactory to the parties;provided, however, that an indemnified party (together with all other indemnifiedparties which may be represented without conflict by one counsel) shall have the right to retainone separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party,if
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representation of such indemnified party by the counsel retained by the indemnifying party wouldbe inappropriate due to actual or potential differing interests between such indemnified party andany other party represented by such counsel in such proceeding. The failure to deliver writtennotice to the indemnifying party within a reasonable time of the commencement of any such action,if prejudicial to its ability to defend such action, shall relieve such indemnifying party of anyliability to the indemnified party under this Section 2.10, but the omission so to deliver writtennotice to the indemnifying party will not relieve it of any liability that it may have to anyindemnified party otherwise than under this Section 2.10.               (d) If the indemnification provided for in this Section 2.10 is held by a court of competentjurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim,damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying suchindemnified party hereunder, shall contribute to the amount paid or payable by such indemnifiedparty as a result of such loss, liability, claim, damage, or expense in such proportion as isappropriate to reflect the relative fault of the indemnifying party on the one hand and of theindemnified party on the other in connection with the statements or omissions that resulted in suchloss, liability, claim, damage or expense as well as any other relevant equitable considerations;provided, that in no event shall any contribution by a Holder under this Subsection 2.10(d)exceed the net proceeds from the offering received by such Holder, except in the case of willfulfraud by such Holder. The relative fault of the indemnifying party and of the indemnified partyshall be determined by reference to, among other things, whether the untrue or alleged untruestatement of a material fact or the omission or alleged omission to state a material fact relatesto information supplied by the indemnifying party or by the indemnified party and the parties’relative intent, knowledge, access to information, and opportunity to correct or prevent suchstatement or omission.               (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification andcontribution contained in the underwriting agreement entered into in connection with theunderwritten public offering are in conflict with the foregoing provisions, the provisions in theunderwriting agreement shall control.               (f) The obligations of the Company and Holders under this Section 2.10 shall survive thecompletion of any offering of Registrable Securities in a registration statement under thisSection 2, and otherwise.          2.11 **Reports Under the Exchange Act****.**With a view to making available to the Holdersthe benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation ofthe SEC that may at anytime permit a Holder to sell securities of the Company to the public without registration orpursuant to a registration on Form S-3, the Company agrees to:               (a) make and keep public information available, as those terms are understood and defined inSEC Rule 144, at all times after 90 days after the effective date of an IPO so long as the Companyremains subject to the periodic reporting requirements under Sections 13 or 15(d) of the ExchangeAct;               (b) take such action, including the voluntary registration of its Common Stock underSection 12 of the Exchange Act, as is necessary to enable the Holders to
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utilize Form S-3 for thesale of their Registrable Securities, such action to be taken as soon as practicable after the endof the fiscal year in which the first registration statement filed by the Company for the offeringof its securities to the general public is declared effective;               (c) file with the SEC in a timely manner all reports and other documents required of theCompany under the Securities Act and the Exchange Act; and               (d) furnish to any Holder upon request, so long as the Holder owns any Registrable Securities,(i) a written statement by the Company that it has complied with the reporting requirements of SECRule 144 (at any time after 90 days after the effective date of an IPO), the Securities Act andthe Exchange Act (at any time after it has become subject to such reporting requirements), or thatit qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time afterit so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and suchother reports and documents so filed by the Company, and (iii) such other information as may bereasonably requested in availing any Holder of any rule or regulation of the SEC which permits theselling of any such securities without registration or pursuant to such form.          2.12 **Assignment of Registration Rights****.**The rights to cause the Company to registerRegistrable Securities pursuant to this Section 2 may be assigned (but only with all relatedobligations) by a Holder to a transferee or assignee (a) of at least 25,000 shares of suchsecurities (subject to adjustment for stock splits, stock dividends, reclassification or the likewith respect to such shares) (or if the transferring Holder owns less than 25,000 shares of suchsecurities, then all Registrable Securities held by the transferring Holder), (b) that is asubsidiary, parent, partner, limited partner, retired partner, member, retired member orstockholder of a Holder, (c) that is an Affiliated Fund, (d) who is a Holder’s child, stepchild,grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,son-in-law, daughter-in-law, brother-in-law, or sister-in-law (such a relation, a Holder’s“Immediate Family Member”, which term shall include adoptive relationships), or (e) that isa trust for the benefit of an individual Holder or such Holder’s Immediate Family Member,provided the Company is, within a reasonable time after such transfer, furnished withwritten notice of the name and address of such transferee or assignee and the securities withrespect to which such registration rights are being assigned; and provided,further, that such assignment shall be effective only if the transferee agrees in writingto be bound by this Agreement and immediately following such transfer the further disposition ofsuch securities by the transferee or assignee is restricted under the Securities Act. For thepurposes of determining the number of shares of Registrable Securities held by a transferee orassignee, the holdings of transferees and assignees of (x) a partnership who are partners orretired partners of such partnership or (y) a limited liability company who are members or retiredmembers of such limited liability company (including Immediate Family Members of such partners ormembers who acquire Registrable Securities by gift, will or intestate succession) shall beaggregated together and with the partnership or limited liability company; provided that allassignees and transferees who would not qualify individually for assignment of registration rightsshall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices ortaking any action under Section 2.          2.13 **Limitations on Subsequent Registration Rights**. From and after the date of thisAgreement, the Company shall not, without the prior written consent of the Holders
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of a majority ofthe outstanding Registrable Securities, enter into any agreement with any holder or prospectiveholder of any securities of the Company which would allow such holder or prospective holder (a) toinclude any of such securities in any registration filed under Section 2.2 hereof, unless under theterms of such agreement, such holder or prospective holder may include such securities in any suchregistration only to the extent that the inclusion of his securities will not reduce the amount ofthe Registrable Securities of the Holders which is included or (b) to make a demand registrationwhich could result in such registration statement being declared effective prior to the earlier ofeither of the dates set forth in subsection 2.2(a) or within 120 days of the effective date of anyregistration effected pursuant to Section 2.2.          2.14 **Lock-Up Agreement****.**               **(a) ****Lock-Up Period; Agreement****.**In connection with the initial public offering of theCompany’s securities and upon request of the Company or the underwriters managing such offering ofthe Company’s securities, each Holder shall not sell, make any short sale of, loan, grant anyoption for the purchase of, or otherwise dispose of any securities of the Company, however orwhenever acquired (other than those included in the registration) without the prior written consentof the Company or such underwriters, as the case may be, for such period of time (not to exceed 180days, but subject to such extension or extensions as may be required by the underwriters in orderto publish research reports while complying with the Rule 2711 of the National Association ofSecurities Dealers, Inc.) from the effective date of such registration as may be requested by theCompany or such managing underwriters, and shall execute an agreement reflecting the foregoing asmay be requested by the underwriters at the time of the Company’s initial public offering.               **(b) ****Limitations****.**The obligations described in Section 2.14(a) shall apply only if allofficers and directors of the Company and all greater than 5% stockholders enter into similaragreements, and shall not apply to a registration relating solely to employee benefit plans, or toa registration relating solely to a transaction pursuant to Rule 145 under the Securities Act.               **(c) ****Stop-Transfer Instructions****.**In order to enforce the foregoing covenants, theCompany may impose stop-transfer instructions with respect to the securities of each Holder (andthe securities of every other person subject to the restrictions in Section 2.14(a)).               **(d) ****Transferees Bound****.**Each Holder agrees that prior to the Company’s initial publicoffering it will not transfer securities of the Company unless each transferee agrees in writing tobe bound by all of the provisions of this Section 2.14.               (e) Each Holder agrees that a legend reading substantially as follows shall be placed on allcertificates representing all Registrable Securities of each Holder (and the shares or securitiesof every other person subject to the restriction contained in this Section 2.14):THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIODOF UP TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE ISSUER’S REGISTRATIONSTATEMENT
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FILED UNDER THE ACT, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEENTHE COMPANY AND THE ORIGINAL HOLDER OF THESE SECURITIES, A COPY OF WHICH MAY BEOBTAINED AT THE ISSUER’S PRINCIPAL OFFICE. SUCH LOCK-UP PERIOD IS BINDING ONTRANSFEREES OF THESE SHARES.          2.15 **Termination of Registration Rights****.**No Holder shall be entitled to exercise anyright provided for in this Section 2 after the earlier of (a) five (5) years following theconsummation of an IPO, (b) with respect to any Holder, at such time after the IPO as Rule 144 oranother similar exemption under the Securities Act is available for the sale of all of suchHolder’s shares during a three-month period without registration, or (c) upon termination of theAgreement, as provided in Section 4.2.     3. **Covenants of the Company****.**          3.1 **Delivery of Financial Statements****.**The Company shall deliver to each MajorInvestor (other than a Major Investor reasonably deemed by the Company to be a competitor of theCompany):               (a) as soon as practicable, but in any event within 120 days after the end of each fiscal yearof the Company (or such longer period of time as may be required by the Company’s independentpublic accountants), an income statement for such fiscal year, a balance sheet of the Company andstatement of stockholder’s equity as of the end of such year, and a statement of cash flows forsuch year, such year-end financial reports to be in reasonable detail, prepared in accordance withU.S. generally accepted accounting principles (“GAAP”), and audited and certified by anindependent public accounting firm of nationally recognized standing selected by the Company;               (b) as soon as practicable, but in any event within 45 days after the end of each of the firstthree quarters of each fiscal year of the Company, an unaudited profit or loss statement, astatement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end ofsuch fiscal quarter;               (c) within 30 days of the end of each month, an unaudited income statement and a statement ofcash flows and balance sheet for and as of the end of such month, in reasonable detail;               (d) as soon as practicable, but in any event prior to the end of each fiscal year, a budgetand business plan for the next fiscal year, prepared on a monthly basis, and, as soon as prepared,any other updated or revised budgets for such fiscal year prepared by the Company; and               (e) with respect to the financial statements called for in subsections (b) and (c) of thisSection 3.1, an instrument executed by the Chief Financial Officer or President of the Company andcertifying on behalf of the Company that such financials were prepared in accordance with GAAPconsistently applied with prior practice for earlier periods (with the exception of footnotes thatmay be required by GAAP) and fairly present the financial condition
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of the Company and its resultsof operation for the period specified, subject to year-end audit adjustment, provided that theforegoing shall not restrict the right of the Company to change its accounting principlesconsistent with GAAP, if the Board of Directors or a committee thereof determines that it is in thebest interest of the Company to do so.          3.2 **Inspection****.**The Company shall permit each Major Investor (except for a MajorInvestor reasonably deemed by the Company to be a competitor of the Company), at such MajorInvestor’s expense, to visit and inspect the Company’s properties, to examine its books of accountand records and to discuss the Company’s affairs, finances and accounts with its officers, all atsuch reasonable times as may be requested by the Major Investor; provided, however,that the Company shall not be obligated pursuant to this Section 3.2 to provide access to anyinformation which it reasonably considers to be a trade secret or similar confidential information.          3.3 **Termination of Covenants****.**The covenants set forth in Sections 3.1 and 3.2 shallterminate as to each Holder and be of no further force or effect (a) immediately prior to theconsummation of an IPO, (b) when the Company first becomes subject to the periodic reportingrequirements of Sections 13 or 15(d) of the Exchange Act or (c) upon termination of this Agreement,as provided in Section 4.2, whichever is the earliest to occur.     4. **Miscellaneous****.**          4.1 **Waiver of Registration Rights****.**Effective and contingent upon execution of thisAgreement by the Company and the holders of at least a majority of the “Registrable Securities,” asthat term is defined in each of the Prior Agreements, any and all rights of the holders ofRegistrable Securities under the Prior Agreements to register and sell their Registrable Securitiesor any other securities of the Company held by such holders as part of or in connection with theproposed initial public offering of the Company’s Common Stock pursuant to that certainRegistration Statement on Form S-1 (File No. 333-134086), filed with the Securities and ExchangeCommission on May 12, 2006, are hereby waived.          4.2 **Termination****.**This Agreement shall terminate, and have no further force andeffect, (a) upon the closing of a Sale of the Company (as defined below) or (b) upon the writtenagreement of the Company and the holders of a majority of the Registrable Securities thenoutstanding, voting together as a single class on an as-converted to Common Stock basis. Forpurposes of this Section 4.2, a “Sale of the Company” shall include a sale, lease, or otherdisposition of all or substantially all of the Company’s assets or business or the Company’s mergerinto or consolidation with any other corporation or other entity, or any other corporatereorganization, in which the holders of the Company’s outstanding voting stock immediately prior tosuch transaction own, immediately after such transaction, securities representing less than fiftypercent (50%) of the voting power of the corporation or other entity surviving such transaction,provided that a Sale of the Company shall not include a merger effected exclusively for the purposeof changing the domicile of the Company or a sale of shares by the Company for primarily equityfinancing purposes.          4.3 **Entire Agreement**. This Agreement constitutes the entire agreement between theparties hereto pertaining to the subject matter hereof, and any and all other written
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or oralagreements relating to the subject matter hereof existing between the parties hereto, includingwithout limitation, the Prior Agreements, are expressly terminated and canceled.          4.4 **Successors and Assigns****.**Except as otherwise provided in this Agreement, the termsand conditions of this Agreement shall inure to the benefit of and be binding upon the respectivepermitted successors and assigns of the parties (including transferees of any Preferred Stock orany Common Stock issued upon conversion thereof). Nothing in this Agreement, express or implied,is intended to confer upon any party other than the parties hereto or their respective successorsand assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,except as expressly provided in this Agreement.          4.5 **Amendments and Waivers****.**Any term of this Agreement may be amended or waived onlywith the written consent of the Company and the Investors holding a majority of the RegistrableSecurities then outstanding. Notwithstanding the foregoing, this Agreement may be amended withonly the written consent of the Company for the sole purpose of including additional purchasers ofPreferred Stock as “Investors” and “Holders.” Any amendment or waiver effected in accordance withthis paragraph shall be binding upon each party to the Agreement, whether or not such party hassigned such amendment or waiver, each future holder of all such Registrable Securities, and theCompany.          4.6 **Notices****.**Unless otherwise provided, any notice required or permitted by thisAgreement shall be in writing and shall be deemed sufficient upon delivery, when deliveredpersonally or by overnight courier or sent by facsimile, or 48 hours after being deposited in theU.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to benotified at such party’s address or facsimile number as set forth on Exhibit A hereto or assubsequently modified by written notice.          4.7 **Severability****.**If one or more provisions of this Agreement are held to beunenforceable under applicable law, such provision shall be excluded from this Agreement, and thebalance of the Agreement shall be interpreted as if such provision were so excluded and shall beenforceable in accordance with its terms.          4.8 **Governing Law****.**This Agreement and all acts and transactions pursuant hereto shallbe governed, construed and interpreted in accordance with the laws of the State of California,without giving effect to principles of conflicts of laws.          4.9 **Counterparts****.**This Agreement may be executed in two or more counterparts,including facsimiles, each of which shall be deemed an original, but all of which together shallconstitute one and the same instrument.          4.10 **Titles and Subtitles****.**The titles and subtitles used in this Agreement are usedfor convenience only and are not to be considered in construing or interpreting this Agreement.          4.11 **Aggregation of Stock****.**All shares of the Preferred Stock held or acquired byaffiliated entities or persons shall be aggregated together for the purpose of determining theavailability of any rights under this Agreement.
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[Signature Pages Follow]
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     IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Investors’Rights Agreement as of the day and year first above written.         Artes Medical, Inc.           By: /s/ Stefan M. Lemperle, M.D.             Stefan M. Lemperle, M.D.      Chief Executive Officer         **INVESTOR:** By:             Name:             Title:               (if applicable)  [COUNTERPART SIGNATURE PAGE TO