EXHIBIT 4.2


 


DIGIRAD CORPORATION


 


AMENDED AND RESTATED INVESTORS’ RIGHTS
AGREEMENT


 


April 23, 2002


 

















 


AMENDED AND RESTATED INVESTORS’ RIGHTS
AGREEMENT


 


This AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of the 23rd day of
April, 2002, by and between Digirad Corporation, a Delaware corporation (the
“Company”), holders of a majority of the Preferred Stock of the Company
identified on Schedule B attached hereto under the heading
“Existing Investors” and Silicon Valley Bank (collectively, the “Existing
Investors”) and each of the purchasers of the Series H Preferred Stock of the
Company identified on Schedule C attached hereto under the heading
“New Investors” (collectively, the “New Investors”).  The Existing Investors and the New Investors are referred to
herein, each individually as, an “Investor” and collectively as, the
“Investors.”


 


RECITALS


 


A.                                   The
Company has previously sold and issued certain shares of its Common Stock,
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and/or Series F Preferred
Stock to the Existing Investors pursuant to which the Existing Investors have
become parties to that certain Investors’ Rights Agreement dated August 23,
2001, as amended from time to time (the “Investors’ Rights Agreement”);


 


B.                                     The
Company desires to sell and issue shares of its Series H Preferred Stock to the
New Investors pursuant to that certain Series G Preferred Stock and Series H
Preferred Stock Purchase and Exchange Agreement of even date herewith (the
“Purchase Agreement”);


 


C.                                     The
New Investors purchasing shares of Series H Preferred Stock pursuant to the
Purchase Agreement may be entitled, subject to certain limitations set forth
therein, to exchange a certain number of shares of the Company’s Preferred
Stock held by them for shares of Series G Preferred Stock to be authorized and
issued in connection therewith; and


 


D.                                    As
an inducement to the New Investors to purchase shares of its Series H Preferred
Stock, the Company and the Existing Investors all desire to completely amend
and restate the Investors’ Rights Agreement pursuant to Section 5.7 with
respect to the matters set forth herein.


 


E.                                      The
provisions of Section 1.2 of the Investors’ Rights Agreement have been
restated in their entirety in Section 1.2 of this Agreement, and the
parties identified on Schedule A attached hereto under the heading
“Founders” shall become party to Section 1.2 of this Agreement for all
purposes.


 


NOW, THEREFORE, in
consideration of the foregoing and of the mutual promises and covenants
contained herein it is hereby agreed:


 


1.                                      COVENANTS
OF THE COMPANY.


 


1.1                               Board
Expenses.  The Company shall
reimburse the Board members for all reasonable out-of-pocket travel and expenses
incurred by such directors in attending the meetings of the Board and
committees of the Board of which any such director is a member.


 

















 


1.2                               Right
of First Offer.  Subject to the
terms and conditions specified in this Section 1.2, the Company hereby
grants to Existing Investors and to Jack F. Butler, Sr. and Clinton L. Lingren
(and their respective transferees) (collectively, the “Founders” and each an
“Offeree”), a right of first offer with respect to future sales by the Company
of its Shares (as hereinafter defined). 
Existing Investors shall be entitled to apportion the right of the first
offer hereby granted among themselves and their partners and affiliates in such
proportions as they deem appropriate.


 


Each time the Company
proposes to offer any shares of, or securities convertible into or exercisable
for, any class of its capital stock (the “Shares”), the Company shall first
make an offering of such Shares to each Offeree in accordance with the
following provisions:


 


(a)                                  The
Company shall deliver a notice by certified mail (“Notice”) to the Offeree
stating (i) its bona fide intention to offer or issue such Shares,
(ii) the number of such Shares to be offered, and (iii) the price, if
any, for which it proposes to offer such Shares.


 


(b)                                 Within
20 calendar days after receipt of the Notice, the Offeree may elect to purchase
or obtain, at the price and on the terms specified in the Notice, up to that
portion of such Shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred
Stock then held, by such Offeree bears to the total number of shares of
outstanding Common Stock and Common Stock issuable upon conversion of the
shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series
F Preferred (collectively, the “Existing Preferred Stock”) then
outstanding.  The Company shall promptly
in writing, inform each Offeree which purchases all the shares available to it
(a “Fully Exercising Offeree”) of any other Offeree’s failure to do
likewise.  During the 10-day period
commencing after receipt of such information, each Fully Exercising Offeree
shall be entitled to obtain that portion of the shares subject to such right of
first refusal and not subscribed for by the Offerees which is equal to the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Existing Preferred Stock then held, by such Fully
Exercising Offeree bears to the total number of shares of Common Stock issued
and held, or issuable upon conversion of the Existing Preferred Stock then
held, by all Fully Exercising Offerees who wish to purchase some of the
unsubscribed shares.


 


(c)                                  If
all such Shares referred to in the Notice are not elected to be obtained as
provided in subsection 1.2(b) hereof, the Company may, during the 60-day
period following the expiration of the period provided in
subsection 1.2(b) hereof, offer the remaining unsubscribed Shares to any
person or persons at a price not less than that, and upon terms no more
favorable to the offeree than those, specified in the Notice.  If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement
is not consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Offerees in accordance herewith.


 


(d)                                 The
right of first offer granted in this Section 1.2 shall not be applicable
(i) to the issuance or sale of shares of Common Stock, or  options
granted to employees, directors, consultants or advisors of the Company under
stock option and restricted stock purchase agreements approved by the Board of
Directors commencing as of May 1994 (each, an “Option,


 


2

















 


and collectively, “Options”) or warrants therefor, to employees,
directors, consultants or advisors of the Company, provided each such person
executes an agreement relating to such issuance or sale in substantially the
form as approved by the Company’s Board of Directors, (ii) to the issuance
and sale of the Company’s securities to a corporation, partnership, educational
institution or other entity in connection with a research and development
partnership or licensing or other collaborative arrangement between the Company
and such institution or entity, (iii) to or after consummation of a bona
fide, firmly underwritten public offering of shares of the Company’s Common
Stock registered under the Securities Act of 1933, as amended (the “Securities
Act”), which results in gross proceeds of at least $15,000,000 at a price per
share of at least $7.50 (adjusted for any subsequent stock splits, stock
dividends or other recapitalizations), (iv) to the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities, (v) to the issuance of securities in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, and (vi)
to the issuance of securities in connection with credit agreements with
equipment lessors or commercial lenders.


 


(e)                                  Any
term of this Section 1.2 may be amended and the observance of any term of
this Section 1.2 may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of (i) the Company, (ii) the holders of a majority of the
shares held by the Founders, and (iii) the Investors holding of a majority
of the Common Stock issued or issuable upon conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock, voting as a
single class.  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities of the Company at the time outstanding (including securities
into which such securities are convertible) with rights under this
Section 1.2, each future holder of all such securities, and the Company.


 


1.3                               Parallel
Right of First Offer.  Subject to
the terms and conditions specified in this Section 1.3, and provided that
nothing in this Section 1.3 shall affect the provisions of
Section 1.2 of this Agreement, the Company hereby grants to Investors
holding shares of Series G Preferred Stock and Series H Preferred Stock and
their respective transferees (each a “New Offeree”), a right of first offer
with respect to future sales by the Company of its Shares (as previously
defined).  Investors shall be entitled
to apportion the right of the first offer hereby granted among themselves and
their partners and affiliates in such proportions as they deem appropriate.


 


Each time the Company
proposes to offer any Shares, the Company shall, simultaneously with any right
of first offer which the Company may be obliged to make pursuant to
Section 1.2 of this Agreement, make an offering of such Shares to each New
Offeree in accordance with the following provisions:


 


(a)                                  The
Company shall deliver Notice (as previously defined) to the New Offeree stating
(i) its bona fide intention to offer or issue such Shares, (ii) the number
of such Shares to be offered, and (iii) the price, if any, for which it
proposes to offer such Shares.


 


(b)                                 Within
20 calendar days after receipt of the Notice, the New Offeree may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up
to that 


 


3

















 


portion of such Shares which equals the proportion that the number of
shares of Common Stock issued and held, or issuable upon conversion of the
shares of Series G Preferred Stock and Series H Preferred Stock then held, by
such New Offeree bears to the total number of shares of outstanding Common
Stock and Common Stock issuable upon conversion of the shares of Series G
Preferred Stock and Series H Preferred Stock then outstanding.  The Company shall promptly in writing,
inform each New Offeree which purchases all the shares available to it (a
“Fully Exercising New Offeree”) of any other New Offeree’s failure to do
likewise.  During the 10-day period
commencing after receipt of such information, each Fully Exercising New Offeree
shall be entitled to obtain that portion of the shares subject to such right of
first refusal and not subscribed for by the New Offerees which is equal to the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the shares of Series G Preferred Stock and Series H
Preferred Stock then held, by such Fully Exercising New Offeree bears to the
total number of shares of Common Stock issued and held, or issuable upon conversion
of the Series G Preferred Stock and Series H Preferred Stock then held, by all
Fully Exercising New Offerees who wish to purchase some of the unsubscribed
shares.


 


(c)                                  If
all such Shares referred to in the Notice are not elected to be obtained as
provided in subsection 1.3(b) hereof, the Company may, during the 60-day
period following the expiration of the period provided in
subsection 1.3(b) hereof, offer the remaining unsubscribed Shares to any
person or persons at a price not less than that, and upon terms no more
favorable to the offeree than those, specified in the Notice.  If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement
is not consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the New Offerees in accordance herewith.


 


(d)                                 The
number of such Shares referred to in the Notice may be reduced by an amount equal
to the number of Shares subscribed pursuant to the provisions of
Section 1.2 of this Agreement, in which case the number of Shares which
any New Offeree may elect to purchase or obtain pursuant to this
Section 1.3 shall be amended such that each New Offeree may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up
to that portion of such Shares which equals the proportion that the number of
shares of Common Stock issued and held, or issuable upon conversion of the
shares of Series G Preferred Stock and Series H Preferred Stock then held, by
such New Offeree bears to (I) the total number of shares of outstanding Common
Stock and Common Stock issuable upon conversion of the shares of Series G
Preferred Stock and Series H Preferred Stock then outstanding less (II) such
number of Shares by which the number of Shares referred to in the Notice shall
have been reduced pursuant to this subsection 1.3(d).


 


(e)                                  The
right of first offer granted in this Section 1.3 shall not be applicable
(i) to the issuance or sale of shares of Common Stock, or Options (as
previously defined) or warrants therefor, to employees, directors, consultants
or advisors of the Company, provided each such person executes an agreement
relating to such issuance or sale in substantially the form as approved by the
Company’s Board of Directors, (ii) to the issuance and sale of the
Company’s securities to a corporation, partnership, educational institution or
other entity in connection with a research and development partnership or
licensing or other collaborative arrangement between the Company and such
institution or entity, (iii) to or after consummation 


 


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of a bona fide, firmly underwritten public offering of shares of the
Company’s Common Stock registered under the Securities Act, which results in
gross proceeds of at least $25,000,000 at a price per share of at least $1.36
(adjusted for any subsequent stock splits, stock dividends or other
recapitalizations), (iv) to the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (v) to
the issuance of securities in connection with a bona fide business acquisition
of or by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (vi) to the issuance of securities in
connection with credit agreements with equipment lessors or commercial lenders,
and (vii) to the issuance or sale of shares of Common Stock pursuant to
Section 1.2 of this Agreement.


 


(f)                                    This
Section 1.3 shall not apply to, and the rights granted hereunder shall be
deemed not to have arisen for any purposes in the event of, any offer by the
Company of shares in connection with any Acquisition (as defined in the Voting
Agreement of even date herewith made between the Company and the Stockholders
and Investors named therein) which shall have been approved by at least half in
number of the Major Investors (as defined in the Purchase Agreement).


 


(g)                                 This
Section 1.3 shall not apply to, and the rights granted hereunder shall not
be deemed to have arisen for any purposes in the event of, the issuance by the
Company of any shares of Series G Preferred Stock or Series H Preferred Stock
pursuant to the Second Closing or, if applicable, the Third Closing pursuant to
the Purchase Agreement (with each term as defined in the Purchase Agreement).


 


(h)                                 Any
term of this Section 1.3 may be amended and the observance of any term of
this Section 1.3 may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of (i) the Company and (ii) Investors holding of a majority
of the Common Stock issued or issuable upon conversion of the Series G
Preferred Stock and Series H Preferred Stock, voting as a single class.  Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities of the Company at the time outstanding (including securities into
which such securities are convertible) with rights under this Section 1.3,
each future holder of all such securities, and the Company.


 


2.                                      REGISTRATION
RIGHTS.


 


The Company covenants and
agrees as follows:


 


2.1                               Definitions.  For purposes of this Section 2:


 


(a)                                  The
terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document;


 


(b)                                 The
term “Registrable Securities” means (i) the Common Stock issuable or
issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock and (ii) any Common Stock of the 


 


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Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock, Series H Preferred Stock or Common Stock, excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which such person’s registration rights are not assigned;


 


(c)                                  The
number of shares of “Registrable Securities then outstanding” shall be
determined by the number of shares of Common Stock outstanding which are, and
the number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are exercisable or convertible into, Registrable
Securities;


 


(d)                                 The
term “Holder” means any person owning or having the right to acquire
Registrable Securities or any assignee thereof in accordance with
Section 2.13 hereof; and


 


(e)                                  The
term “Form S-3” means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the SEC in lieu of Form S-3 which permits inclusion or incorporation
of substantial information by reference to other documents filed by the Company
with the SEC.


 


2.2                               Request
for Registration.


 


(a)                                  If
the Company shall receive at any time after the earlier of
(i) January 1, 2004 or (ii) one year after the effective date of
the first registration statement for a public offering of securities of the
Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction), a written request from
the Holders of at least 30% of the Registrable Securities then outstanding (or
at least 25% of the Registrable Securities then outstanding if such request is
made following any Closing of the offering referred to in subsection (ii)
of this Section 2.2(a)) that the Company file a registration statement
under the Securities Act covering the registration of at least 20% of the
Registrable Securities then outstanding (or a lesser percent if the anticipated
aggregate offering price, net of underwriting discounts and commissions, would
exceed $25,000,000), then the Company shall, within 10 days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations of subsection 2.2(b), file as soon as practicable, and
in any event within 60 days of the receipt of such request, a registration
statement under the Securities Act covering all Registrable Securities which
the Holders request to be registered within 20 days of the mailing of such
notice by the Company in accordance with Section 5.5.


 


(b)                                 If
the Holders initiating the registration request hereunder (the “Initiating
Holders”) intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part
of their request made pursuant to this Section 2.2 and the Company shall
include such information in the written notice referred to in
subsection 2.2(a).  In such event,
the right of any Holder to include such Holder’s Registrable Securities in such
registration shall be conditioned upon such Holder’s participation in such 


 


6

















 


underwriting and the inclusion of such Holder’s Registrable Securities
in the underwriting (unless otherwise mutually agreed by a majority in interest
of the Initiating Holders and such Holder) to the extent provided herein.  All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 2.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company and consented to by a majority in interest of the
Holders proposing to distribute securities through such underwriting (which
consent shall not be unreasonably withheld). 
Notwithstanding any other provision of this Section 2.2, if the
underwriter advises the Company and the Initiating Holders in writing 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 be underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated as follows: 
(i) first, among Holders of Common Stock issuable or issued upon
conversion of the Series H Preferred Stock or Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Series H Preferred Stock, and, to
the extent that such number of shares of Registrable Securities shall not have
been exhausted thereby, (ii) second, among Holders of Common Stock issuable or
issued upon conversion of the Series G Preferred Stock or Common Stock issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Series G Preferred Stock, and to
the extent that such number of shares of Registrable Securities shall not have
been exhausted thereby, (iii) among all other Holders thereof, in proportion
(as nearly as practicable) to the number of Registrable Securities of the
Company owned by each such other Holder including securities in the
underwriting.


 


(c)                                  The
Company is obligated to effect only two such registrations pursuant to this
Section 2.2; provided, however, that the Company shall not be obligated to
effect a registration pursuant to this Section 2.2 if within the 12 months
immediately preceding a request hereunder the Company has effected a demand
registration under this Section 2.2.


 


(d)                                 Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2 a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more than
90 days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than twice in the
aggregate and not more than once in any 12-month period.


 


2.3                               Company
Registration.  If (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for stockholders other than the
Holders) any of its stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration relating solely to the sale of securities to participants
in a Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to 


 


7

















 


be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. 
Upon the written request of each Holder given within 20 days after
mailing of such notice by the Company in accordance with Section 5.5, the
Company shall, subject to the provisions of Section 2.8, cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered.


 


2.4                               Obligations
of the Company.  Whenever required
under this Section 2 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:


 


(a)                                  Prepare
and file with the Securities and Exchange Commission (the “SEC”) a registration
statement with respect to such Registrable Securities and use its reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to 120 days.


 


(b)                                 Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.


 


(c)                                  Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.


 


(d)                                 Use
its reasonable efforts to register and qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.


 


(e)                                  In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. 
Each Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.


 


(f)                                    Notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening 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 material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.


 


(g)                                 Furnish,
at the request of any Holder requesting registration of Registrable Securities
pursuant to this Section 2, on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 2, if such 


 


8

















 


securities are being sold through underwriters, or, if such securities
are not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.


 


2.5                               Furnish
Information.


 


(a)                                  It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 2 that the selling Holders shall furnish
to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of the Registrable
Securities.


 


(b)                                 The
Company shall have no obligation with respect to any registration requested
pursuant to Section 2.2 or Section 2.12 if, due to the operation of
subsection 2.5(a), the number of shares or the anticipated aggregate
offering price of the Registrable Securities to be included in the registration
does not equal or exceed the number of shares or the anticipated aggregate
offering price required to originally trigger the Company’s obligation to
initiate such registration as specified in subsection 2.2(a) or
subsection 2.12(b)(ii), whichever is applicable.


 


2.6                               Expenses
of Demand Registration.  The Company
shall bear and pay all expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 2.2, including (without limitation) all
registration, filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for the Company and the reasonable fees and
expenses of one counsel for the selling Holders selected by them; provided,
however, that the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating
Holders shall bear such expenses), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 2.2; provided further, however, that if at the time of
such withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant to Section 2.2.


 


2.7                               Expenses
of Company Registration.  The
Company shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 2.3 for each Holder (which right may
be assigned as provided in Section 2.13), including (without limitation)
all registration, filing and qualification fees, printers’ and accounting fees
relating or apportionable thereto and 


 


9

















 


the reasonable fees and expenses of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.


 


2.8                               Underwriting
Requirements.  In connection with
any offering involving an underwriting of shares being issued by the Company,
the Company shall not be required under Section 2.3 to include any of the
Holders’ securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company.  If the total number of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the number of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned among the selling stockholders as
follows:  (i) first, among Holders of
Common Stock issuable or issued upon conversion of the Series H Preferred Stock
or Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Series H Preferred Stock, and, to the extent that such number of shares of the
securities so included to be apportioned shall not have been exhausted thereby,
(ii) second, among Holders of Common Stock issuable or issued upon conversion
of the Series G Preferred Stock or Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such Series G Preferred Stock, and, to the extent that the
securities so included to be apportioned shall not have been exhausted thereby,
(iii) according to the total number of securities entitled to be included therein
owned by each other selling stockholder or in such other proportions as shall
mutually be agreed to by such other selling stockholders) but in no event
shall the number of securities of the selling Holders included in the
offering be reduced below 30% of the total number of securities included in
such offering, unless such offering is the initial public offering of the
Company’s securities in which case the selling stockholders may be excluded if
the underwriters make the determination described above and no other
stockholder’s securities are included.


 


2.9                               Delay
of Registration.  No Holder shall
have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this
Section 2.


 


2.10                        Indemnification.  In the event any Registrable Securities are
included in a registration statement under this Section 2:


 


(a)                                  To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder, the officers and directors of each Holder, any underwriter (as defined
in the Securities Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect 


 


10

















 


thereof) arise out of or are based upon any of the following
statements, omissions or violations (each, a “Violation”):  (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will
reimburse each such Holder, officer or director, underwriter or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 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 (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, director, underwriter or
controlling person.


 


(b)                                 To
the extent permitted by law, each selling Holder will severally and not jointly
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities in such registration statement or any
of its directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or controlling
person may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter or
controlling person, other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 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 consent shall not be
unreasonably withheld; provided, that, in no event shall any indemnity under
this subsection 2.10(b) exceed the net proceeds (after deducting any
discounts or commissions received by an underwriter in connection with such
registration) from the offering received by such Holder.


 


(c)                                  Promptly
after receipt by an indemnified party under this Section 2.10 of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.10, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the 


 


11

















 


indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of its obligations under this Agreement, except
to the extent, but only to the extent, that the indemnifying party’s ability to
defend against such action is actually and materially impaired as a result of
the failure to give such notice.  The
omission to so deliver written notice to the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than under this Section 2.10.


 


(d)                                 If
the indemnification provided for in Sections 2.10(a), (b) and (c) is
unavailable to an indemnified party under such Sections (other than by reason
of exceptions provided in those Sections) in respect of any claims referred to
in such Sections, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such claims in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of the Holders of Registrable Securities on the other in connection with
the statements or omissions which resulted in such claims as well as any other
relevant equitable considerations.  The
amount paid or payable by a party as a result of the claims referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.  The relative fault of the
Company on the one hand and of the Holders of Registrable Securities on the
other shall be determined by reference to, among other things, whether the
applicable misstatement or alleged misstatement relates to information supplied
by the Company or by the applicable Holder of Registrable Securities and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such misstatement or alleged misstatement.  The Company and each Holder of Registrable
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 2.10(d) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to above. 
Notwithstanding the provisions of this Section 2.10(d), no Holder
shall be required to contribute any amount in excess of the net proceeds (after
deducting any discounts or commissions received by an underwriter in connection
with such registration) from the offering received by such Holder.  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution hereunder from any person who was not guilty of such
fraudulent misrepresentation.


 


(e)                                  The
obligations of the Company and Holders under this Section 2.10 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Section 2, and otherwise.


 


2.11                        Reports
Under Securities Exchange Act of 1934. 
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the 


 


12

















 


Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:


 


(a)                                  make
and keep public information available, as those terms are understood and
defined in SEC Rule 144, at all times after 90 days after the effective date of
the first registration statement filed by the Company for the offering of its
securities to the general public;


 


(b)                                 take
such action, including the voluntary registration of its Common Stock under
section 12 of the Exchange Act, as is necessary to enable the Holders to
utilize Form S-3 for the sale of their Registrable Securities, such action to
be taken as soon as practicable after the end of the fiscal year in which the
first registration statement filed by the Company for the offering of its
securities to the general public is declared effective;


 


(c)                                  file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and


 


(d)                                 furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a written statement by the Company that it has compiled
with the reporting requirements of SEC Rule 144 (at any time after 90 days
after the effective date of the first registration statement filed by the
Company), the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.


 


2.12                        Form
S-3 Registration.  In case the
Company shall receive from any Holder or Holders a written request or requests
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company will:


 


(a)                                  promptly
give written notice of the proposed registration, and any related qualification
or compliance, to all other Holders; and


 


(b)                                 as
soon as practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder’s or Holders’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.12: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters’ discounts or commissions) of less than
$1,000,000; (iii) if the Company shall furnish to the Holders a
certificate signed by the 


 


13

















 


President of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company and stockholders for such Form S-3 Registration to be effected at such
time, in which event the Company shall have the right to defer the filing of
the Form S-3 Registration Statement for a period of not more than 90 days after
receipt of the request of the Holder or Holders under this Section 2.12;
provided, however, that the Company shall not utilize this right 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 registrations
on Form S-3 for the Holders pursuant to this Section 2.12 and other
similar provisions granting rights to registration on Form S-3; (v) if in
any particular jurisdiction in which the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance; or (vi) if the
Holders hold in the aggregate less than 1% of the outstanding shares of the
Company’s capital stock.


 


(c)                                  Subject
to the foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the
Holders.  All expenses incurred in
connection with a registration requested pursuant to Section 2.12,
including (without limitation) all registration, filing, qualification,
printer’s and accounting fees and the reasonable fees and disbursements of
counsel for the selling Holder or Holders and counsel for the Company (with the
payment of fees and disbursements of counsel for the Company dependent upon the
Company’s including securities in such registration), shall be borne pro rata by
the Holder or Holders participating in the Form S-3 Registration; provided,
however, that the Company shall bear and pay all such expenses, including
(without limitation) all registration, filing and qualification fees, printer’s
and accounting fees and the fees and disbursements of one counsel for the
selling Holders, but excluding underwriting discounts and commission relative
to the Registrable Securities, with respect to the first three such
registration pursuant to this Section 2.12.  Registrations effected pursuant to this Section 2.12 shall
not be counted as demands for registration effected pursuant to
Section 2.2.


 


2.13                        Assignment
of Registration Rights.  The rights
to cause the Company to register Registrable Securities pursuant to this
Section 2 may be assigned by a Holder to (i) a transferee or assignee
of such Holder’s shares of Registrable Securities, (ii) another Holder,
(iii) in the case of a partnership, to a partner or retired partner of
such partnership or (iv) an affiliated entity controlling, controlled by, or
under common control with, such Holder; provided, in each case, the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act.


 


2.14                        Limitations
on Subsequent Registration Rights. 
From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any
registration filed under Sections 2.2 or 2.3 hereof, unless under the terms of
such agreement, such holder or prospective holder may include 


 


14

















 


such securities in any such registration only to the extent that the
inclusion of such holder’s securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subsection 2.2(a) or within 120 days of the effective date of any
registration effected pursuant to Section 2.2.


 


2.15                        Market
Stand-Off Agreement.  Each Investor
hereby agrees that it shall not, to the extent requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, sell or
otherwise transfer or dispose (other than to those donees who agree to be
similarly bound) of any Registrable Securities during a reasonable and
customary period of time, as agreed to by the Company and the underwriters, not
to exceed 180 days, following the effective date of a registration statement of
the Company filed under the Securities Act (the “Lock-Up Period”); provided,
however, that:


 


(a)                                  such
agreement shall be applicable only to the first such registration statement of
the Company which covers shares (or securities) to be sold on its behalf to the
public in an underwritten offering; and


 


(b)                                 all
officers and directors of the Company, all holders of at least one percent (1%)
of the issued and outstanding securities of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements.


 


In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of each Investor (and the shares or
securities of every other person subject to the foregoing restriction) until
the end of such reasonable and customary period.


 


Neither the Company nor
the underwriters in a public offering shall reduce or eliminate the Lock-Up
Period for any security holder of the Company without similarly reducing or
eliminating the Lock-Up Period for each Investor.


 


2.16                        Termination
of Registration Rights.  The
Company’s obligations pursuant to this Section 2 shall terminate as to any
Holder of Registrable Securities on the earlier of (i) when the Holder can
sell all of such Holder’s shares pursuant to Rule 144 under the Securities Act
during any 90-day period or (ii) on the seventh anniversary of any Closing
of the Company’s sale of its Common Stock in a bona fide, firm commitment
underwritten public offering registered under the Securities Act which results
in gross offering proceeds of at least $25,000,000, at a public offering price
of not less than $1.36 per share (adjusted to reflect stock dividends, stock
splits or recapitalizations); provided, however, in no event shall such
obligations terminate earlier than the first anniversary of any Closing of the
offering described in subsection (ii) of this Section 2.16.


 


3.                                      COVENANTS.


 


3.1                               Delivery
of Financial Statements.  The
Company shall deliver to each Investor and assignee holding that certain number
of shares of Series H Preferred Stock (adjusted for stock splits, reverse stock
splits and similar changes in capitalization as designated below), and 


 


15

















 


any such Investor or assignee may redistribute to any other Investor or
assignee the information specified in paragraphs (a) through (f) below:


 


(a)                                  to
holders of at least ten percent (10%) of the outstanding shares of Series H
Preferred Stock and to each Major Investor (as defined in the Purchase
Agreement), as soon as practicable, but in any event within 90 days after the
end of each fiscal year of the Company, a statement of operations for such
fiscal year, a balance sheet of the Company as of the end of such year, and a
statement of cash flows for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles (“GAAP”), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company;


 


(b)                                 to
holders of at least ten percent (10%) of the outstanding shares of Series H
Preferred Stock and to each Major Investor, within 30 days of the end of each
calendar quarter, an unaudited statement of operations, statement of cash flows
and balance sheet for and as of the end of such quarter, in reasonable detail;
such quarterly statements shall also contain the foregoing information on a
year-to-date basis and shall also compare actual performance to budget;


 


(c)                                  to
holders of at least seventeen and a half percent (17-1/2%) of the outstanding
shares of Series H Preferred Stock and to each Major Investor, within 30 days
of the end of each month, an unaudited statement of operations, statement of
cash flows and balance sheet for and as of the end of such month, in reasonable
detail; such monthly statements shall also contain the foregoing information on
a year-to-date basis and shall also compare actual performance to budget;


 


(d)                                 to
holders of at least seventeen and a half percent (17-1/2%) of the outstanding
shares of Series H Preferred Stock and to each Major Investor, not less than 30
days prior to the close of each fiscal year, a comprehensive operating budget
for the next fiscal year forecasting the Company’s revenues, expenses and cash
positions, prepare on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company;


 


(e)                                  to
holders of at least seventeen and a half percent (17-1/2%) of the outstanding
shares of Series H Preferred Stock and to each Major Investor, such other
information relating to the financial condition, business, prospects or
corporate affairs of the Company as Investor may from time to time request,
provided, however, that the Company shall not be obligated to provide
information which it deems in good faith to be proprietary; and


 


(f)                                    with
respect to the financial statements called for in subsection (a) of this
Section 3.1, an instrument executed by the Chief Financial Officer or the
President of the Company and certifying that such financials were prepared in
accordance with internally consistent accounting methods consistently applied
with prior practice for earlier periods and fairly present the financial
condition of the Company and its results of operation for the period specified,
subject to year-end audit adjustment.


 


16

















 


3.2                               Inspection.  The Company shall permit each Investor
holding shares of Series H Preferred Stock, at such Investor’s expense and with
reasonable prior notice, to visit and inspect the Company’s properties, to
examine its books of account and records and to discuss the Company’s affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 3.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.


 


3.3                               Required
Approvals.  In addition to any
approvals required by law, so long as shares of Series H Preferred Stock are
outstanding, neither the Company nor any of its Subsidiaries shall, without
first obtaining the approval (by vote or written consent, as provided by law)
of both (a) at least half in number of the Major Investors and (b) the holders
of a majority of the then outstanding voting power of the Series H Preferred
Stock, voting as a single class:


 


(a)                                  amend,
restate, alter, modify or repeal (directly or indirectly by merger or
otherwise) the Company’s Certificate of Incorporation or Bylaws (including,
without limitation, (I) amending, restating, modifying or repealing (directly
or indirectly by merger or otherwise) any certificate of designation or
preferences (as in effect from time to time) relating to the Preferred Stock and
(II) authorizing any new class or series of stock);


 


(b)                                 reclassify
Common Stock or Preferred Stock;


 


(c)                                  declare
or pay any dividend (whether in cash or otherwise) on the Common Stock or the
Preferred Stock;


 


(d)                                 except
as otherwise provided in the Amended and Restated Certificate of Incorporation
of the Company redeem, purchase or otherwise acquire or make any distribution
with respect to any outstanding securities of the Company or its Subsidiaries
(including, without limitation, warrants, options and other rights to acquire
any of its capital stock or other equity securities directly or indirectly) or
redeem, repurchase or make any distribution with respect to any stock
appreciation rights, phantom stock plans or similar rights or plans relating to
the Company or its Subsidiaries; provided, however, that the foregoing shall
not impose any condition on the Company repurchasing at cost shares of its
Common Stock pursuant to the Company’s stock option/stock issuance plans;


 


(e)                                  (I)
sell, convey, or otherwise dispose of all or substantially all of the assets of
the Company or any Subsidiary (as defined below) of the Company (provided,
however, that this restriction shall not apply to any mortgage, deed of trust,
pledge or other encumbrance or hypothecation of the Company’s or any
Subsidiary’s assets for the purpose of securing indebtedness of the Company or
such Subsidiary which existed prior to the Series H Initial Purchase Date (as
defined in the Amended and Restated Certificate of Incorporation of the Company))
or grant any exclusive license to the assets of the Company or any Subsidiary
of the Company; (II) effect any merger, consolidation, acquisition or similar
transaction of the Company with one or more other corporations or series of
such transactions in which the stockholders of the Company prior to such
transaction, or series of transactions, would hold stock representing less than
a majority of the voting power of the outstanding stock of the 


 


17

















 


surviving corporation immediately after such transaction, or series of
transactions; or (III) authorize, effect or consummate any Liquidation Event
(including without limitation any Deemed Liquidation Event, each as defined in
the Amended and Restated Certificate of Incorporation of the Company) or
Products Business Sale (as defined in the Amended and Restated Certificate of
Incorporation of the Company), regardless of whether such Liquidation Event or
Products Business Sale would constitute a transaction described in clauses (I)
or (II) above;


 


(f)                                    create
or suffer to exist any Subsidiary of the Company that is not wholly-owned by
the Company; or effect the liquidation, bankruptcy or dissolution of any
Subsidiary of the Company;


 


(g)                                 create,
incur, guarantee, assume or be directly or indirectly liable with respect to
any indebtedness (other than indebtedness which existed prior to the Series H
Initial Purchase Date), or permit any Subsidiary to do so, except with respect
to trade debts incurred in the ordinary course of the business of the Company
or its applicable Subsidiary, as the case may be; provided, however, that the
foregoing shall not impose any condition on the Company or any Subsidiary (A)
creating or incurring indebtedness under credit facilities existing as of the
Series H Initial Purchase Date up to amounts authorized by any of such
facilities prior the Series H Initial Purchase Date; or (B) creating, incurring
or authorizing indebtedness under master equipment lease agreements, provided
that (I) in the case of the Company such new indebtedness shall be limited to a
maximum of Five Hundred Thousand Dollars ($500,000) per year in each of the
years 2002, 2003 and 2004, and (II) in the case of all of the Subsidiaries of
the Company, considered together, such new indebtedness shall be limited to a
maximum of One Million Five Hundred Thousand Dollars ($1,500,000) per year in
each of the years 2003 and 2004, and provided further that none of the
indebtedness referred to in Subsection 3.3(g)(B) shall be subject to any
negative covenants with respect to, or prohibitions on, the Company’s ability
to effect any distribution or redemption of shares of its capital stock; or


 


(h)                                 agree
or otherwise commit to take any actions set forth in the foregoing
subparagraphs (i) through (vii).


 


3.4                               Request
for Redemption.  On or at any time
after July 31, 2004, upon the receipt by the Company from at least half in
number of the Major Investors (as defined below) of a written request for
redemption hereunder of their shares of Series H Preferred Stock, the Company
shall, subject to and in accordance with the provisions of Article IV,
Division B, Section 4 of the Amended and Restated Certificate of
Incorporation of the Company, redeem all of the outstanding shares of Preferred
Stock.


 


3.5                               Automatic
Conversion.  The Company shall take
such actions and do such things as may be necessary to cause each outstanding
share of Preferred Stock to be automatically converted (in accordance with the
provisions of Article IV, Division B, Section 5 of the Amended and
Restated Certificate of Incorporation of the Company) into shares of Common
Stock immediately upon the approval of both (i) at least half in number of the
Major Investors and (ii) the holders of a majority of the then outstanding voting
power of the Series H Preferred Stock, voting as a single class; provided,
however, that if such approval is in connection with an underwritten offer of
securities registered pursuant to the Securities Act, the 


 


18

















 


conversion may be conditioned upon the closing of the sale of
securities pursuant to such offering, in which event each outstanding share of
Preferred Stock shall not be deemed to have converted until immediately after
the closing of such sale of securities.


 


3.6                               Termination
of Covenants.  The covenants set
forth in Sections 3.1 and 3.2 hereof shall terminate and be of no further force
or effect when the sale of securities pursuant to a registration statement
filed by the Company under the Securities Act in connection with the firm
commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of section 13(a) or 15(d) of the Exchange Act, whichever
event shall first occur; provided that the Company shall furnish, for five
years following the termination of such covenants, to Investor copies of its
reports on Forms 10-K and 10-Q within 10 days after filing with the SEC.


 


3.7                               Proprietary
Information Agreements.  The Company
shall use its best efforts to cause that all employees of and consultants to
the Company having access to the Company’s proprietary and confidential
information shall execute proprietary information agreements with the Company
approved by the Company’s Board of Directors.


 


3.8                               Option
Vesting.  All options or warrants
hereafter granted by the Company to its employees, officers, directors,
consultants or advisors (“Restricted Parties”), all Options previously granted
to Restricted Parties by the Company’s Board of Directors but not yet evidenced
by an Option grant, and all restricted stock purchase agreements hereafter
entered into by the Company with Restricted Parties, will be subject to a
vesting schedule providing for twenty-five percent (25%) vesting after the
first twelve (12) months of employment and daily vesting as to the remaining
seventy-five percent (75%) of the shares over the following thirty six (36)
months after the first anniversary of the employment commencement date, or such
other vesting schedule as is approved by the Company’s Board of Directors
or Compensation Committee of the Board of Directors.


 


3.9                               Compliance
with Law.


 


(a)                                  The
operations of the Company and its Subsidiaries will be conducted in compliance
with all Applicable Laws promulgated by any Governmental Authority, including,
without limitation, all Applicable Laws relating to consumer protection, equal
opportunity, health, health care industry regulation, third party reimbursement
(including Medicare, Medicaid, and workers compensation), environmental
protection, fire, zoning and building and occupational safety matters, except
for noncompliance that individually or in the aggregate would not and, insofar
as may reasonably be foreseen, in the future will not, have a material adverse
effect on the Company or any Subsidiary.


 


(b)                                 In
addition to and without limiting the generality of the foregoing, the Company
shall adopt and implement a compliance plan adequate to assure such
compliance.  The compliance plan shall
include all material elements of an effective program to prevent and detect
violations of law as identified in Commentary 3(k) to Section 8A1.2 of the
federal Sentencing Guidelines.


 


(c)                                  Definitions.                                For
the purposes of this Section 3.9:


 


19

















 


(i)                                     “Applicable
Law” means, with respect to any person or entity, any federal, state or local
statute, law, ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, judgment, decree or other requirement of
any governmental authority applicable to such person or entity or any of its
Subsidiaries or any of their respective properties, assets, officers,
directors, employees, consultants or agents.


 


(ii)                                  “Governmental
Authority” means any branch, component, agency or instrumentality of federal,
state or local government.


 


(iii)                               “Subsidiary”
means any entity which is wholly-owned by the Company or in which the Company
has a beneficial ownership interest, including any partnership or joint venture
entity.


 


3.10                        Insurance.  The Company and each of the Subsidiaries
will maintain in full force and effect with insurers insurance in such amounts
and against such losses and risks as is sufficient and reasonable given the
nature of their respective businesses.


 


4.                                      SALES
BY INVESTORS.


 


4.1                               Right
of First Refusal.  The parties agree
that before there can be a valid sale, assignment or transfer by any Investor
of shares of the Company’s Series G Preferred Stock or Series H Preferred Stock
(other than (i) a transfer not involving a change in beneficial ownership,
(ii) transactions involving the distribution of such shares by any of the
Investors to any of their partners or stockholders, (iii) pursuant to a
transfer without consideration to the spouse or lineal descendants of the
transferring Investor, or a trust for the benefit of the transferring Investor,
his spouse and/or lineal descendants, (iv) a transfer to any other individual,
corporation, trust, partnership, joint venture, unincorporated organization,
limited liability company, government agency or any agency or political
subdivision thereof, or other entity (each, a “Person”) that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such specified Investor (including without
limitation any other Person over which such Investor has management rights) or
(v) in connection with any Acquisition (as defined in the Voting Agreement of
even date herewith made between the Company and the Stockholders and Investors
named therein) which shall have been approved by at least half in number of the
Major Investors (as defined in the Purchase Agreement)), the Investor intending
to transfer (the “Selling Investor”) shall first give notice in writing (the
“Notice of Sale”) to the Company of his, her or its intention to sell such
shares (the “Noticed Shares”).  Such
Notice of Sale shall specify the number of Noticed Shares to be sold, the name
of the proposed purchaser (the “Proposed Purchaser”), the price per Noticed
Share and the terms and conditions upon which the Selling Investor intends to
make such sale.  Promptly upon the
Company’s receipt of such Notice of Sale, the Secretary of the Company shall
mail or deliver a copy of such Notice of Sale to all Investors owning Common
Stock Equivalents (as hereafter defined) (such stockholders being hereinafter
referred to as the “Optionee Investors”). 
Within thirty (30) days thereafter, any such Optionee Investor desiring
to acquire any part or all of the Noticed Shares (the “Offering Investor”)
shall deliver by mail or otherwise to the Secretary of the Company a written
offer or offers, to purchase a specified number of such Noticed Shares at the
price and upon the terms and conditions stated in such Notice of Sale,
accompanied by the stated consideration therefor with authorization to transfer
such consideration against delivery of 


 


20

















 


such shares, which offers, subject to Section 4.2, shall be
accepted by the Selling Investor.  As
used herein, “Common Stock Equivalents” shall mean outstanding shares of Common
Stock and shares of Common Stock issuable upon conversion of outstanding Series
G Preferred Stock or Series H Preferred Stock.


 


If the total number of
shares specified in said offers to the Secretary exceeds the number of the
Noticed Shares, each Offering Investor shall be entitled to purchase that
number of shares which is equal to the lesser of:


 


(i)                                     the
number of shares specified in said offer, or


 


(ii)                                  such
proportion of the Noticed Shares as the number of shares of Common Stock issued
and issuable upon conversion of Series G Preferred Stock and Series H Preferred
Stock held by such Offering Investor bears to the total number of shares of
Common Stock issued and issuable upon conversion of shares of Series G
Preferred Stock and Series H Preferred Stock held by all the Offering
Investors.


 


If all of the Noticed
Shares are not disposed of under the apportionment pursuant to this Section 4.1,
those shares remaining undisposed of shall be apportioned among those Offering
Investors whose number of Shares specified in their respective offers under
Section 4.1 exceed the number of shares allocated to them, which excess
shares shall be apportioned on the basis of the apportionment formula set forth
in this Section, and said apportionment process shall be repeated with respect
to any excess shares after each apportionment until all Noticed Shares are
allocated.


 


4.2                               Failure
to Exercise Options and Make Offers for All Shares.  If options are not exercised and/or offers
made in the aggregate for all of the Noticed Shares within the thirty (30) day
period referred to herein, the Selling Investors shall not be obligated to sell
the Noticed Shares or any fraction thereof to the Optionee Investors, and may
dispose of all of the Noticed Shares to the Proposed Purchaser named in said
Notice of Sale, provided, however, that the Selling Investor shall not sell
less than all of said Noticed Shares nor shall it sell such shares at a lower
price or on terms or conditions more favorable to the Proposed Purchaser than
those specified in said Notice of Sale without first offering the new price,
terms and conditions to Optionee Investors as hereinabove set forth.  If the Selling Investor does not so sell the
Noticed Shares to such Proposed Purchaser within one hundred twenty (120) days
after it first gave notice to the Company pursuant to Section 4.1, it
shall again first offer such shares to the Optionee Investors prior to selling
them to any Proposed Purchaser.


 


4.3                               Nonmonetary
Consideration.


 


(a)                                  If
part or all of the purchase consideration specified in a Notice of Sale is
other than money or purchaser’s promissory note or other evidence of
indebtedness, such Notice of Sale shall also specify the fair market value in
cash of such other consideration.  The
Optionee Investors shall have the right to exercise their respective options to
purchase the Noticed Shares by delivery of a written offer or offers specifying
a cash purchase price equal to the total of the monetary consideration and the
fair market value of the nonmonetary consideration specified in the Notice of
Sale.


 


21

















 


(b)                                 If
any Optionee Investor objects to the amount specified in the Notice of Sale as
the fair market value of any nonmonetary consideration, such Optionee Investor
shall, within twenty (20) days of the receipt of the Notice of Sale, submit a
written request to the Company that the matter be submitted to the Board of
Directors for determination.  Pending
such determination, or a determination pursuant to subsection (c) below,
the time for exercising options to purchase shares shall be stayed as of the
date of such notice.  Promptly upon the
Company’s receipt of such notice from the objecting Optionee Investor, the
Secretary of the Company shall notice and call a special meeting of the Board
of Directors, to be held within fifteen (15) days of the Company’s receipt of
notice from the objecting Optionee Investor, for the purpose of determining in
good faith the fair market value of the nonmonetary consideration specified in
the Notice of Sale.  Any decision of the
Board of Directors made in good faith shall be final and binding upon all
parties.  The Board of Directors shall
promptly give written notice of its decision and the resulting calculation of
the purchase price to the parties.


 


(c)                                  If
the Board of Directors fails or refuses to make a determination of the fair
market value of such nonmonetary consideration within such fifteen (15) day
period from the date of the Company’s receipt of notice from the objecting
Optionee Investor, the objecting Optionee Investor and the Selling Investor
shall select and agree upon a single appraiser.  If the parties are unable to agree upon a single appraiser within
ten (10) days after the end of the fifteen (15) day period specified above,
then either party may apply to the San Diego Superior Court (pursuant to a
petition to compel arbitration) for the appointment of a single appraiser in
accordance with Section 1280 et  seq. of the California Code
of Civil Procedure.  Such appraiser
shall thereupon promptly determine the fair market value of the nonmonetary
consideration specified in the Notice of Sale, and shall promptly give written
notice of such appraiser’s decision and the resulting calculation of the
purchase price to the parties and to the Company.


 


(d)                                 All
expenses of the determination by the Board of Directors or the appraisal and
proceedings to appoint an appraiser, as the case may be, shall be borne
one-half by the Optionee Investors who exercise their options to purchase the
Noticed Shares (who shall share such expenses among themselves in proportion to
the number of shares each elects to purchase) and one-half by the Selling
Investor, unless the Optionee Investors thereafter fail to exercise their
respective options, in which case the objecting Optionee Investor shall bear
all such expenses.


 


4.4                               Termination.  Notwithstanding the foregoing, the rights of
first refusal set forth in this Section 4 shall terminate upon any Closing
of the Company’s first firmly underwritten public offering of its Common Stock
registered under the Securities Act of 1933.


 


5.                                      MISCELLANEOUS.


 


5.1                               Successors
and Assigns.  Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any shares of Registrable Securities).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


 


22

















 


5.2                               Governing
Law; Jury Trial Waiver.  This
Agreement shall be governed by and construed under the laws of the State of
California as applied to agreements among California residents entered into and
to be performed entirely within California. 
THE
PARTIES HERETO IRREVOCABLY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST THE PARTY IN RESPECT OF ITS
OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


5.3                               Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


5.4                               Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.


 


5.5                               Notices.  Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by registered or certified
mail, postage prepaid, and telecopier, and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days’ advance
written notice to the other parties.


 


5.6                               Expenses.  If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.


 


5.7                               Amendments
and Waivers.  Any term of this
Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and a majority of the Major Investors (as defined in the Purchase
Agreement).  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.


 


Notwithstanding the
foregoing, the parties recognize that pursuant to the Purchase Agreement, the
Company may issue additional shares of Series G Preferred Stock and Series H
Preferred Stock to additional individuals or entities (such parties,
“Additional Investors”) pursuant to the Second Closing or the Third Closing
(each as defined in the Purchase Agreement). 
Each of the Additional Investors shall be entitled to become party to this
Agreement, and the addition of such parties to this Agreement and any required
amendment to Schedule C of this Agreement, shall not be considered
an amendment requiring the consent of the parties to this Agreement.  Therefore, upon execution of a counterpart
signature page to this Agreement by any of such Additional Investors, such
Additional Investors shall become parties to this Agreement to the same extent
as if they had executed this Agreement as of the date hereof and shall be
included in the definition of New Investors under this Agreement for all
purposes.  Schedule C to
this Agreement shall be automatically amended as appropriate to reflect the
addition of such individuals and/or entities as New Investors under this
Agreement.


 


23

















 


5.8                               Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.


 


5.9                               Aggregation
of Stock.  All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any rights
under this Agreement.


 


5.10                        Entire
Agreement.  This Agreement and the
documents referred to herein constitute the entire agreement among the parties
hereto and no party shall be liable or bound to any other party in any manner
by any warranties, representations, or covenants except as specifically set
forth herein or therein.


 


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LEFT BLANK]


 


24

















 


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


 


	
  COMPANY:

  	
  DIGIRAD CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Dahldorf

  
	
   

  	
   

  	
  John Dahldorf

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  FOUNDERS:

  	
  JACK F. BUTLER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jack F. Butler

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  16650 Las Cuestas

  
	
   

  	
  Rancho Santa Fe, CA  92067

  
					



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 


25

















 


	
  INVESTORS:

  	
  KINGSBURY CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kingsbury Associates, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy J. Wollaeger

  
	
   

  	
   

  	
  Timothy J. Wollaeger,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KINGSBURY CAPITAL PARTNERS, L.P., II

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kingsbury Associates, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy J. Wollaeger

  
	
   

  	
   

  	
  Timothy J. Wollaeger,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KINGSBURY CAPITAL PARTNERS, L.P., III

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kingsbury Associates, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy J. Wollaeger

  
	
   

  	
   

  	
  Timothy J. Wollaeger,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KINGSBURY CAPITAL PARTNERS, L.P., IV

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kingsbury Associates, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy J. Wollaeger

  
	
   

  	
   

  	
  Timothy J. Wollaeger,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  3655 Nobel Drive, Suite 490

  
	
   

  	
   

  	
  San Diego, CA  92122

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
  INVESTORS:

  	
  SORRENTO GROWTH PARTNERS I, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Equity Growth Partners I, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Growth, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jaffe

  
	
   

  	
   

  	
  Robert M. Jaffe, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SORRENTO VENTURES II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Equity Partners, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Associates, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jaffe

  
	
   

  	
   

  	
  Robert M. Jaffe, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4370 La Jolla Village Drive, Suite 1040

  
	
   

  	
   

  	
  San Diego, CA  92122

  



 


 


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  INVESTORS:

  	
  SORRENTO VENTURES, III L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Equity Partners III, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Associates, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jaffe

  
	
   

  	
   

  	
  Robert M. Jaffe, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SORRENTO VENTURES CE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Equity Partners III, L.P.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sorrento Associates, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jaffe

  
	
   

  	
   

  	
  Robert M. Jaffe, President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4370 La Jolla Village Drive, Suite 1040

  
	
   

  	
   

  	
  San Diego, CA  92122

  



 


 


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  INVESTORS:

  	
  VECTOR LATER-STAGE EQUITY FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Vector Fund Management II, L.L.C.

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Reed, M.D.

  
	
   

  	
   

  	
  Douglas Reed, M.D.

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VECTOR LATER-STAGE EQUITY FUND II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Vector Fund Management II, L.L.C.

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Reed, M.D.

  
	
   

  	
   

  	
  Douglas Reed, M.D.

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VECTOR LATER-STAGE EQUITY FUND II (Q.P.), L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Vector Fund Management II, L.L.C.

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Reed, M.D.

  
	
   

  	
   

  	
  Douglas Reed, M.D.

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1751 Lake Cook Road, Suite 350

  
	
   

  	
   

  	
  Deerfield, IL  60015

  



 


 


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  INVESTORS:

  	
  PALAVACINNI PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Reed, M.D.

  
	
   

  	
   

  	
  Douglas Reed, M.D.

  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1751 Lake Cook Road, Suite 350

  Deerfield, IL  60015

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  D. THEODORE BERGHORST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Theodore Berghorst

  
	
   

  	
   

  	
  D. Theodore Berghorst

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  12 Kent Road

  Winnetka, IL 60093

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BERGHORST 1998 DYNASTIC TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Theodore Berghorst

  
	
   

  	
   

  	
  D. Theodore Berghorst as Financial Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  12 Kent Road

  Winnetka, IL  60093

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PETER F. DRAKE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter F. Drake

  
	
   

  	
   

  	
  Peter F. Drake

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  255 Mayflower Road

  Lake Forest, IL 60045

  
	
   

  	
   

  	
   

  



 


 


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  INVESTORS:

  	
  MERRILL LYNCH VENTURES, L.P. 2001

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Merrill Lynch Ventures LLC

  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward J. Higgins

  
	
   

  	
   

  	
  Edward J. Higgins

  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4 World Financial Center, 22nd Floor

  New York, NY 10080

  Attn:  Jean Kim

  
	
   

  	
   

  	
   

  
	
   

  	
  All Notices:

  	
  Merrill Lynch Ventures L.P. 2001

  95 Greene Street

  Jersey City, NJ 07302-3815

  Attn:  Robert F. Tully

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
  INVESTORS:

  	
  GE CAPITAL EQUITY INVESTMENTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Gibbs

  
	
   

  	
   

  	
  David Gibbs

  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  120 Long Ridge Road

  Stamford, CT  06927

  
				



 


 


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  INVESTORS:

  	
  KENNETH E. OLSON TRUST DATED 3/16/89

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth E. Olson

  
	
   

  	
   

  	
  Kenneth E. Olson

  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  404 Torrey Point Road

  Del Mar, CA  92014

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
  INVESTORS:

  	
  TAH & H INVESTORS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Investment Committee

  Brickyard Holdings. Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Rosen

  
	
   

  	
   

  	
  Michael A. Rosen 

  Investment Committee Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KKH & C INVESTORS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Investment Committee

  Brickyard Holdings. Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Rosen

  
	
   

  	
   

  	
  Michael A. Rosen 

  Investment Committee Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WAH & M INVESTORS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Investment Committee

  Brickyard Holdings. Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Rosen

  
	
   

  	
   

  	
  Michael A. Rosen 

  Investment Committee Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  700 S.R. 46E

  Batesville, IN  47006

  
				



 


 


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  INVESTORS:

  	
  MLH & T INVESTORS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Investment Committee

  Brickyard Holdings. Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Rosen

  
	
   

  	
   

  	
  Michael A. Rosen 

  Investment Committee Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RDH & S INVESTORS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Investment Committee

  Brickyard Holdings. Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Rosen

  
	
   

  	
   

  	
  Michael A. Rosen 

  Investment Committee Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  700 S.R. 46E

  Batesville, IN  47006

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  W. AUGUST HILLENBRAND

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ W. August Hillenbrand

  
	
   

  	
   

  	
  W. August Hillenbrand

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  700 S.R. 46E

  Batesville, IN  47006

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
  INVESTORS:

  	
  FURMAN SELZ SBIC, L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L. Luikart

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  James L. Luikart

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  EVP of G.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Jeffries & Co.

  520 Madison Avenue, 8th Floor

  New York, NY 10022

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  ACADIA INVESTORS, LLC

  
	
   

  	
   

  
	
   

  	
  By:  Rockefeller & Co.,
  Inc., as Attorney-in-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tamar Manuelian

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Tamar Manuelian

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Rockefeller & Co., Inc.

  Room 5400, 30 Rockefeller Plaza

  New York, NY  10112

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
   

  	
  AKINYELE ALUKO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Akinyele Aluko

  
	
   

  	
   

  	
  Akinyele Aluko

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


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  ANACAPA INVESTORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Raede

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Raede

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  112 El Paseo

  Santa Barbara, CA

  93101

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  ARTHUR E. NICHOLAS

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Arthur E. Nicholas

  
	
   

  	
  Arthur E. Nicholas

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 2169

  Del Mar, CA  92014

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  ARTHUR & SOPHIE BRODY REVOCABLE 

  TRUST DATED 3/16/89

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Arthur Brody

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Arthur Brody

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  990 Highland Dr., Ste 100

  Solana Beach, CA  92075

  
				



 


 


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  ARTICLE THIRD C. TRUST U/W WILLIAM L. CARY

  
	
   

  	
   

  
	
   

  	
  SPEARS GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears Grisanti & Brown LLC

  45 Rockefeller Plaza, Suite 1709

  New York, NY  10111

  Attn:  Dorothy Buthom

  
				



 


 


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  AUREUS DIGIRAD, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Averick

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Averick

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Aureus Digirad, LLC

  c/o Richard L. Scott Investments, LLC

  100 First Stamford Place

  Stamford, CT  06902

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  CHRISTIE C. SALOMON

  
	
   

  	
   

  
	
   

  	
  SPEARS GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears Grisanti & Brown LLC

  45 Rockefeller Plaza, Suite 1709

  New York, NY  10111

  Attn:  Dorothy Buthom

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ Christina Salomon-Tripp

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Christina Salomon-Tripp

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY  10019

  Attn:  Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  The Christina Salomon Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY  10019

  Attn:  Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  CLEMENT C. MOORE

  
	
   

  	
   

  
	
   

  	
  SPEARS GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  Clement C. Moore

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears Grisanti & Brown LLC

  45 Rockefeller Plaza, Suite 1709

  New York, NY  10111

  Attn:  Dorothy Buthom

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  DAVID ROCKEFELLER

  
	
   

  	
   

  
	
   

  	
  By:  Rockefeller & Co.,
  Inc., as Attorney-in-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tamar Manuelian

  
	
   

  	
   

  	
  David Rockefeller

  Tamar Manuelian, Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Rockefeller & Co., Inc.

  Room 5400, 30 Rockefeller Plaza

  New York, NY  10112

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  The David Salomon Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY  10019

  Attn:  Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]

















 


	
   

  	
  DERBES FAMILY TRUST U/D/T DATED

  4/25/86

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel W. Derbes

  
	
   

  	
  Name:

  	
  Daniel W. Derbes

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 8184

  Rancho Santa Fe

  CA  92067

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  ELLIOT FEUERSTEIN TRUST DATED 5/14/82

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elliot Feuerstein Trustee

  
	
   

  	
  Name:

  	
  Elliot Feuerstein

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  8294 Mira Mesa Blvd.

  San Diego, CA  92126

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  The Evanne S. Gargiulo Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY 10019

  Attn: Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ Evanne S. Gargiulo

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Evanne S. Gargiulo

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY 10019

  Attn: Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  EVVIE GOLDING

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Evvie Golding

  
	
   

  	
  Evvie Golding

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  572 Farmington Road

  Montgomery, AL 36109-4610

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  FISK VENTURES LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Rose

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Stephen Rose

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4041 N. Main St.

  Racine, WI

  53402

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  FORREST M. AND PATRICIA K. SHUMWAY

  MARITAL TRUST DTD 4/26/94

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Forrest M. Shumway Trustee

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  9171 Towne Centre Dr.

  San Diego, CA  92122

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  GEORGE WEISSMAN

  
	
   

  	
   

  
	
   

  	
  SPEARS GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  George Weissman

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears Grisanti & Brown LLC

  45 Rockefeller Plaza, Suite 1709

  New York, NY  10111

  Attn:  Dorothy Buthom

  
				



 


 


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  UNITED STATES TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  GERALD G. LOEHR TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Scott Kirkpatrick

  
	
   

  	
  Name:

  	
  Steven Scott Kirkpatrick

  
	
   

  	
  Its:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  114 West 47th Street

  New York, NY 10036

  
				



 


 


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  HARVEY FAMILY LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Harvey

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John Harvey

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  2305 NW Grand

  Oklahoma City, OK

  73116

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  HEALTH CARE INDEMNITY, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James T. Glasscock

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  James T. Glasscock

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  V.P., Investments

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  One Park Plaza

  Nashville, TN 37069

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  INGLEWOOD VENTURES, L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel C. Wood

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Daniel C. Wood

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  12526 High Bluff Dr. #300

  San Diego, CA 92130

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JACK F. BUTLER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jack F. Butler

  
	
   

  	
  Jack F. Butler

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1850 Viking Way

  La Jolla, CA 92037

  
				



 


 


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  JAFCO CO., LTD

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Tomio Kezuka

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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  JAFCO G-6 (A) INVESTMENT ENTERPRISE

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JAFCO G-6 (B) INVESTMENT ENTERPRISE

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JAFCO G-7 (A) INVESTMENT ENTERPRISE

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JAFCO G-7 (B) INVESTMENT ENTERPRISE

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  
	
   

  	
   

  	
  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JAFCO JS3 INVESTMENT ENTERPRISE

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JAFCO R-3 INVESTMENT ENTERPRISE 

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JAFCO Co. Ltd.

  Its Executive Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tomio Kezuka          

  
	
   

  	
   

  	
  Tomio Kezuka

  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Tekko Bldg., 1-8-2, Marunouchi,

  Chiyoda-ku, Tokyo 100-0005,

  JAPAN

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ Jennifer Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jennifer Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY 10019

  Attn: Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  The Jennifer Salomon Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG Associates, LLC

  75 Rockefeller Plaza, 9th Floor

  New York, NY 10019

  Attn: Angela Socha

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JEROME WILLIAMS, Jr.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jerome Williams, Jr.

  
	
   

  	
  Jerome Williams, Jr.

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  JOHNSON & JOHNSON DEVELOPMENT

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Onopchenko

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John Onopchenko

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  31 Technology Drive

  Irvine, CA  92618

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
  INVESTORS:

  	
  KENNETH E. OLSON TRUST DATED 3/16/89

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth E. Olson

  
	
   

  	
   

  	
  Kenneth E. Olson

  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  404 Torrey Point Road

  Del Mar, CA  92014

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  KNOWLES FAMILY TRUST

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Raymond V. Knowles

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Raymond V. Knowles

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 2633

  La Jolla, CA  92138

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  NATHAN P.. DUNN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nathan P. Dunn

  
	
   

  	
  Nathan P. Dunn

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  2 Bryant St. #240

  San Francisco, CA  94105

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  LAURA E. DUNN, TRUSTEE OF THE LAURA E. DUNN REVOCABLE TRUST U/D/T
  dated 9/28/01

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laura E. Dunn

  
	
   

  	
  Name:

  	
  Laura E. Dunn, TTEE

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  13095 Skyline Blvd.

  Oakland, CA

  94619

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  LINDA J. LOEHR, MARITAL TRUST, LOEHR FAMILY TRUST DATED 2/3/89

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda J. Loehr Trustee

  
	
   

  	
  Name:

  	
  Linda J. Loehr, Marital Trust

  
	
   

  	
  Its:

  	
  Loehr Family Trust dated 2-3-89

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 675207

  RSF, CA  92067

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  LINDA J. LOEHR, SURVIVORS TRUST, LOEHR FAMILY TRUST DATED 2/3/89

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda J. Loehr Trustee

  
	
   

  	
  Name:

  	
  Linda J. Loehr, Survivors Trust

  
	
   

  	
  Its:

  	
  Loehr Family Trust dated 2-3-89

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 675207

  RSF, CA  92067

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  LINDA K. OLSON

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Linda K. Olson

  
	
   

  	
  Linda K. Olson

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  LOUISE
  GRUNWALD

  
	
   

  	
   

  
	
   

  	
  SPEARS
  GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  Louise
  Grunwald

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears
  Grisanti & Brown LLC

  
	
   

  	
  45
  Rockefeller Plaza, Suite 1709

  
	
   

  	
  New York,
  NY  10111

  
	
   

  	
  Attn:  Dorothy Buthom

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  MALIN
  BURNHAM

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Malin Burnham

  
	
   

  	
  Malin
  Burnham

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  610 W. Ash
  St.

  
	
   

  	
  San Diego,
  CA

  
	
   

  	
  92101

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  MARGARETTA
  F. ROCKEFELLER

  
	
   

  	
  By:
  Rockefeller & Co., Inc., as Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jane Lilienthal

  
	
   

  	
   

  	
  Margaretta F. Rockefeller

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Jane
  Lilienthal, Authorized Signatory

  
	
   

  	
  Rockefeller
  & Co., Inc.

  
	
   

  	
  Room 5400,
  30 Rockefeller Plaza

  
	
   

  	
  New York, NY
  10112

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  MILDRED
  WEISSMAN

  
	
   

  	
   

  
	
   

  	
  SPEARS
  GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  Mildred
  Weissman

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears
  Grisanti & Brown LLC

  
	
   

  	
  45
  Rockefeller Plaza, Suite 1709

  
	
   

  	
  New York,
  NY  10111

  
	
   

  	
  Attn:  Dorothy Buthom

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  MCC
  INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark S. Kremer

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mark S. Kremer, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1718 E. 4th
  St.

  
	
   

  	
  Suite 501

  
	
   

  	
  Charlotte
  NC  28204

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  MVC GLOBAL
  JAPAN FUND I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kaoru Hatakeyama

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  General Partner Kaoru Hatakeyama

  
	
   

  	
   

  	
  President & C.E.O.

  
	
   

  	
   

  	
  MVC Corporation

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  5th
  Floor, Funato Bldg.

  
	
   

  	
  1-2-3
  Kudan-Kita Chiyoda-ku,

  
	
   

  	
  Tokyo
  102-0073 Japan

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  OCEAN AVENUE
  INVESTORS, LLC – THE

  SPECIAL SECURITIES FUND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael H. Browne

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael H. Browne

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  100 Wilshire
  Boulevard

  
	
   

  	
  Suite 1850

  
	
   

  	
  Santa
  Monica, CA  90401

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  PAGE TRUST
  DATED 3/3/89

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas A. Page

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas A. Page

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1904 Hidden
  Crest Dr.

  
	
   

  	
  El Cajon,
  Cal  92019

  
				



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  PETER T.
  DUNN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Peter T. Dunn

  
	
   

  	
  Peter T.
  Dunn

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  2 Bryant St.
  #240

  
	
   

  	
  SF, CA  94105

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ 

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  RE Salomon Family LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG
  Associates, LLC

  
	
   

  	
   

  	
  75
  Rockefeller Plaza, 9th Floor

  
	
   

  	
   

  	
  New York,
  NY  10019

  
	
   

  	
   

  	
  Attn:  Angela Socha

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ Ralph Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ralph Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG
  Associates, LLC

  
	
   

  	
   

  	
  75
  Rockefeller Plaza, 9th Floor

  
	
   

  	
   

  	
  New York,
  NY  10019

  
	
   

  	
   

  	
  Attn:  Angela Socha

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  REES JONES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Rees Jones

  
	
   

  	
  Rees Jones

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  55 South
  Park St.

  
	
   

  	
  Montclair,
  NJ  07042

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ Robert Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Salomon

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG
  Associates, LLC

  
	
   

  	
   

  	
  75
  Rockefeller Plaza, 9th Floor

  
	
   

  	
   

  	
  New York,
  NY  10019

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  By:

  	
  /s/ 

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Salbros, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o TAG
  Associates, LLC

  
	
   

  	
   

  	
  75
  Rockefeller Plaza, 9th Floor

  
	
   

  	
   

  	
  New York,
  NY  10019

  
	
   

  	
   

  	
  Attn:  Angela Socha

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  SBSF
  BIOTECHNOLOGY FUND, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa B. Tuckerman

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Lisa B. Tuckerman

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Member of the General Partner

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  101 East
  Main St.

  
	
   

  	
   

  	
  Suite G

  
	
   

  	
  Bozeman,
  MT  59715

  
	
   

  
	
   

  	
  NOTE:
  INVESTING ON BEHALF OF SBSF BIOTECHNOLOGY FUND, L.P. WILL BE RIVERBANK
  PARTNERS, LLC THE GENERAL PARTNER OF THE FUND

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LBT          

  	
   

  
						



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  SBSF
  BIOTECHNOLOGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa B. Tuckerman

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Lisa B. Tuckerman

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Member of the General Partner

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  101 East
  Main St.

  
	
   

  	
   

  	
  Suite G

  
	
   

  	
  Bozeman,
  MT  59715

  
	
   

  
	
   

  	
  NOTE:
  INVESTING ON BEHALF OF SBSF BIOTECHNOLOGY FUND, L.P. WILL BE RIVERBANK
  PARTNERS, LLC THE GENERAL PARTNER OF THE FUND

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LBT          

  	
   

  
						



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  STANLEY
  & MAXINE FIRESTONE TRUST DATED 12/02/88

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stanley Firestone

  
	
   

  	
  Name:

  	
  Stanley Firestone

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  259 South
  Beverly Drive

  
	
   

  	
   

  	
  Beverly
  Hills, CA  90212

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  STEPHEN A.
  AND LOU ANN MCADAMS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Stephen A. McAdams

  
	
   

  	
  Stephen A.
  McAdams

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Lou Ann McAdams

  
	
   

  	
  Lou Ann
  McAdams

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4901 Old
  Course Dr.

  
	
   

  	
  Charlotte,
  NC  28277

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  STEPHEN A.
  MCADAMS ROLLOVER IRA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen McAdams

  
	
   

  	
  Name:

  	
  Stephen McAdams

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4901 Old
  Course Dr. 

  
	
   

  	
   

  	
  Charlotte,
  NC  28277

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  SUTRO GROUP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas E. Bertelsen

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas E. Bertelsen, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Advisor

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  RBC Dain
  Rauscher

  
	
   

  	
   

  	
  201
  California St.

  
	
   

  	
  San
  Francisco, CA  94111

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  TRUST UA
  12/7/67 F/B/O KATHERINE FC CARY 

  
	
   

  	
   

  
	
   

  	
  SPEARS
  GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears
  Grisanti & Brown LLC

  
	
   

  	
   

  	
  45
  Rockefeller Plaza, Suite 1709

  
	
   

  	
   

  	
  New York,
  NY  10111

  
	
   

  	
  Attn:  Dorothy Buthom

  



 


 


[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  THE
  UNIVERSITY OF NORTH CAROLINA AT 

  CHAPEL HILL FOUNDATION

  INVESTMENT FUND, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Yusko

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mark W. Yusko

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  300 South
  Building, CB# 1000

  
	
   

  	
   

  	
  Chapel Hill,
  NC  27599-1000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All
  correspondence should be sent to:

  
	
   

  	
  308 West Rosemary Street, Suite 203

  Chapel Hill, NC  27516

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  TIMOTHY J.
  WOLLAEGER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Timothy J. Wollaeger

  
	
   

  	
  Timothy J. Wollaeger

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4401
  Eastgate Mall

  
	
   

  	
  San Diego,
  CA 92121

  
			



 


 


[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  VON
  RAUTENKRANZ NACHFOLGER GBR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Dieter Feddersen

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Dieter Feddersen

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  An Der
  Favorite 02

  
	
   

  	
   

  	
  D-55030   Dainz

  
	
   

  	
   

  	
  Germany

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Series H
  Preferred Stock

  maximum principal

  amount of US$7,334.11.

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  WILLIAM G.
  SPEARS

  
	
   

  	
   

  
	
   

  	
  SPEARS
  GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  William G.
  Spears

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears
  Grisanti & Brown LLC

  
	
   

  	
   

  	
  45
  Rockefeller Plaza, Suite 1709

  
	
   

  	
   

  	
  New York,
  NY  10111

  
	
   

  	
  Attn:  Dorothy Buthom

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  WILLIAM L.
  ASHBURN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ William L. Ashburn

  
	
   

  	
  William L.
  Ashburn

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  2744
  Inverness Dr.

  
	
   

  	
   

  	
  La Jolla,
  CA  92037

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  WILLIAM W.
  MCGUIRE

  
	
   

  	
   

  
	
   

  	
  SPEARS
  GRISANTI & BROWN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dorothy A. Buthom

  
	
   

  	
  William W.
  McGuire

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Spears
  Grisanti & Brown LLC

  
	
   

  	
   

  	
  45
  Rockefeller Plaza, Suite 1709

  
	
   

  	
   

  	
  New York,
  NY  10111

  
	
   

  	
  Attn:  Dorothy Buthom

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  SANDERLING
  VENTURE PARTNERS V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:  Middleton, McNeil & Mills Associates
  V, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred A. Middleton

  
	
   

  	
   

  	
  Fred A. Middleton

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  400 South El
  Camino Real, Suite 1200

  
	
   

  	
   

  	
  San Mateo,
  CA  94402-1708

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SANDERLING V
  BIOMEDICAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By:  Middleton, McNeil & Mills Associates
  V, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred A. Middleton

  
	
   

  	
   

  	
  Fred A. Middleton

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  400 South El
  Camino Real, Suite 1200

  
	
   

  	
   

  	
  San Mateo,
  CA  94402-1708

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SANDERLING V
  LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:  Middleton, McNeil & Mills Associates
  V, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred A. Middleton

  
	
   

  	
   

  	
  Fred A. Middleton

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  400 South El
  Camino Real, Suite 1200

  
	
   

  	
   

  	
  San Mateo,
  CA  94402-1708

  



 


 


[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  SANDERLING V
  BETEILIGUNGS GMBH & CO. KG

  
	
   

  	
   

  
	
   

  	
  By:  Middleton, McNeil & Mills Associates
  V, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred A. Middleton

  
	
   

  	
   

  	
  Fred A. Middleton

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  400 South El
  Camino Real, Suite 1200

  
	
   

  	
   

  	
  San Mateo,
  CA  94402-1708

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SANDERLING V
  VENTURES MANAGEMENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred A. Middleton

  
	
   

  	
   

  	
  Fred A. Middleton

  
	
   

  	
   

  	
  Owner

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  400 South El
  Camino Real, Suite 1200

  
	
   

  	
   

  	
  San Mateo,
  CA  94402-1708

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  HENRY
  GOODWIN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Henry Goodwin

  
	
   

  	
  Henry
  Goodwin

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1221
  McKinney 

  
	
   

  	
  Suite 3900

  
	
   

  	
  Houston,
  TX  77010

  
			



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


	
   

  	
  ALLEN FAMILY
  TRUST DATED 10/12/81

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dick Allen

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4199 Campus
  Drive, Suite 830

  
	
   

  	
   

  	
  Irvine,
  CA  92612

  



 


 


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INVESTORS’ RIGHTS AGREEMENT]


 

















 


SCHEDULE A


 


FOUNDERS


 


Jack Butler, Sr.


Jack Butler, Jr.


Alice Butler


Michael Butler


Patricia Butler


Clinton Lingren


Leslie Lingren


David Lingren


Corinne Avayo


Wallace Goodson


LaVerne Clark


Marcia McChesney


Vera Williams


Marilyn Sargent


Grant Heileson


Carma Farley


Darlene Logan


Kathleen Ipsen


Terry Tervort


Michelle Belnap


Alison Komm


 


A-1

















 


SCHEDULE B


 


EXISTING INVESTORS


 


 


Vector Later-Stage Equity Fund, L.P.


Vector Later-Stage Equity Fund II, L.P.


Vector Later-Stage Equity Fund II (Q.P.), L.P.


Furman Selz SBIC L.P.


Sorrento Growth Partners I, L.P.


Sorrento Ventures II, L.P.


Sorrento Ventures III, L.P.


Sorrento Ventures CE, L.P.


Kingsbury Capital Partners, L.P.


Kingsbury Capital Partners, L.P., II


Kingsbury Capital Partners, L.P., III


Kingsbury Capital Partners L.P., IV


Jack F. Butler, Sr.


Gerald G. Loehr Trust


William L. Ashburn


Karen A. Klause


Kenneth E. Olson Trust


Peter T. Dunn

Dunn Family Trust


Nathan P. Dunn


Kyla E. Dunn


The Arthur
& Sophie Brody Revocable Trust DTD 04/13/89


Malin Burnham


Philip L. Elkus Trust DTD 09/09/74


Elliot Feuerstein Trust DTD 05/14/82


Stanley and Maxine Firestone Trust DTD 12/02/88


Ira R. and Joan P. Katz Qualified Marital Trust


Knowles Family Trust


The SDL Trust


Arthur E. Nicholas


The Stanley E. and Pauline M. Foster Trust DTD  07/31/81


Page Trust DTD 03/03/89


Forrest N. Shumway & Patricia K. Shumway Trust DTD 04/26/94


Derbes Family Trust U/D/T 04/25/86


Sutro Investment Partners V., LLC


SBSF Biotechnology Fund, L.P.


SBSF Biotechnology Partners Fund, L.P.


ABS Employees’ Venture Fund Limited Partnership


JAFCO Co., Ltd.


JAFCO R-3 Investment Enterprise Partnership


JAFCO JS3 Investment Enterprise Partnership


JAFCO G-6 (A) Investment Enterprise Partnership


JAFCO G-6 (B) Investment Enterprise Partnership


 


B-1

















 


JAFCO G-7 (A) Investment Enterprise Partnership


JAFCO G-7 (B) Investment
Enterprise Partnership


Johnson & Johnson
Development Corporation


Health Care Indemnity, Inc.


Mitsui & Co., Ltd.


MVC Global Japan Fund I


Ocean Avenue Investors, LLC –
Founders Fund


Ocean Avenue Investors, LLC –
Redstone Fund


Aureus Digirad, LLC


Merrill Lynch Ventures, L.P.
2001


Mid-Carolina Cardiology, PA


Stephen A. McAdams and Lou Ann
McAdams, as Joint Tenants


Akinyele Aluko, M.D.


Harvey Family LLC

GFP Digirad

Dr. Jerome Williams, Jr.

Dwayne A. Schmidt

Richard N. and Judy F. Linder


Fisk Ventures LLC


IngleWood Ventures, L.P.


The University of North Carolina at Chapel
Hill Foundation Investment Fund, Inc.


Palavaccini Partners, LP


Anacapa Investors, LLC —Anacapa I


GE Capital Equity Investments, Inc.


D. Theodore Berghorst


Imperial Ventures, Inc.


W August Hillenbrand


TAH & H Investors, LP


KKH & C Investors, LP


WAH & M Investors, LP


MLH & T Investors, LP


RDH & S Investors, LP


Peter F. Drake


Silicon Valley Bank


Stephen A. McAdams Rollover IRA


 


B-2

















 


SCHEDULE C


 


NEW INVESTORS


 


Kingsbury Capital Partners, L.P.


Kingsbury Capital Partners, L.P., II


Kingsbury Capital Partners, L.P., III


Kingsbury Capital Partners L.P., IV


Sorrento Growth Partners I, L.P.


Sorrento Ventures II, L.P.


Sorrento Ventures III, L.P.


Sorrento Ventures CE, L.P.


Vector Later-Stage Equity Fund, L.P.


Vector Later-Stage Equity Fund II, L.P.


Vector Later-Stage Equity Fund II (Q.P.), L.P.


Palivacinni Partners, LLC

D. Theodore Berghorst

Berghorst 1998 Dynastic Trust

Peter F. Drake


Merrill Lynch Ventures, L.P.
2001


GE Capital Equity Investments, Inc.


Kenneth E. Olson Trust dated 3/16/89


TAH & H Investors, LP


KKH & C Investors, LP


WAH & M Investors, LP


MLH & T Investors, LP


RDH & S Investors, LP


W August Hillenbrand


Furman Selz SBIC, L.P.


Acadia Investors, LLC


Akinyele Aluko


Anacapa Investors, LLC


Arthur E. Nicholas


Arthur & Sophie Brody Revocable Trust dated 3/16/89


Article Third C. Trust U/W William L. Cary


Aureus Digirad, LLC


Christie C. Salomon


Christina Salomon


Christine Salomon Trust


Clement C. Moore


Comerica Ventures Incorporated


David Rockefeller


David Salomon 12/20/70 Trust


Derbes Family Trust U/D/T dated 4/25/86


Elliot Feuerstein Trust dated 5/14/82


Evanne S. Garguilo Trust


Evanne S. Garguilo


 


C-1

















 


Evvie Golding


Fisk Ventures LLC


Forrest M. and Patricia K. Shumway Marital Trust DTD 4/26/94


George Weissman


Gerald G. Loehr Trust


Harvey Family LLC


Health Care Indemnity, Inc.


Inglewood Ventures, L.P.


Jack F. Butler


JAFCO Co., LTD


JAFCO G-6 (A) Investment Enterprise Partnership


JAFCO G-6 (B) Investment Enterprise Partnership


JAFCO G-7 (A) Investment Enterprise Partnership


JAFCO G-7 (B) Investment Enterprise Partnership


JAFCO JS3 Investment Enterprise Partnership


JAFCO R-3 Investment Enterprise Partnership


Jennifer Salomon


Jennifer Salomon Trust


Jerome Williams, Jr.


Johnson & Johnson Development Corporation


Kenneth E. Olson Trust dated 3/16/89


Knowles Family Trust


Kyla E. Dunn


Laura E. Dunn, Trustee of the Laura E. Dunn Revocable Trust U/D/T dated
9/28/01


Linda J. Loehr, Marital Trust, Loehr Family Trust dated 2/3/89


Linda J. Loehr, Survivors Trust, Loehr Family Trust dated 2/3/89


Linda K. Olson


Louise Grunwald


Malin Burnham


Margaretta F. Rockefeller


Mildred Weissman


Mitsui & Co., Ltd.


MMC Investments, LLC


MVC Global Japan Fund I


Nathan P. Dunn


Ocean Avenue Investors, LLC – The Special Securities Fund


Page Trust dated 3/3/89


Peter T. Dunn


R.E. Salomon Family, LLC


Ralph Salomon


Rees Jones


Robert Salomons


Salbros LLC


SBSF Biotechnology Fund, L.P.


SBSF Biotechnology Partners, L.P.


Stanley & Maxine Firestone Trust dated 12/02/88


 


C-2

















 


Stephen A. and Lou Ann McAdams


Stephen A. McAdams Rollover IRA


Sutro Group


The University of North Carolina at Chapel Hill Foundation on
Investment Fund, Inc.


Timothy J. Wollaeger


Trust UA 12/7/67 F/B/O Katherine FC Cary


von Rautenkranz Nachfolger GbR


William G. Spears


William L. Ashburn


William W. McGuire


Sanderling Venture Partners V, L.P.


Sanderling V Biomedical, L.P.


Sanderling V Limited Partnership


Sanderling V Beteiligungs GMBH & Co. KG


Sanderling V Ventures Management


Henry Goodwin


Allen Family Trust Dated 10/12/81


 


C-3

















AMENDMENT TO



SERIES G PREFERRED STOCK AND SERIES H PREFERRED STOCK PURCHASE AND EXCHANGE
AGREEMENT AND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT


 


This Amendment to SERIES G PREFERRED STOCK
AND SERIES H PREFERRED STOCK PURCHASE AND EXCHANGE AGREEMENT AND AMENDED AND
RESTATED INVESTORS’ RIGHTS AGREEMENT (this  “Amendment”)  is made as of March 11, 2004
by and among Digirad Corporation, a Delaware corporation (the “Company”) and the other parties (collectively, the “Stockholders”) to the Purchase Agreement and the Rights
Agreement (each as defined below, and collectively referred to herein as the “Series H Agreements”).


 


RECITALS


 


WHEREAS, the Company and certain of the
Stockholders are parties to the Company’s Series G Preferred Stock and Series H
Preferred Stock Purchase and Exchange Agreement, dated as of April 23,
2002 (the “Purchase
Agreement”), pursuant to which any amendment thereto requires
the written consent of (i) the Company and (ii) at least half in number of the
Major Investors (as defined in Section 1.2(d)(i) of the Purchase
Agreement),


 


WHEREAS, the Company and certain of the
Stockholders are parties to the Company’s Amended and Restated Investors’
Rights Agreement, dated as of April 23, 2002 (the “Rights Agreement”),
pursuant to which any amendment thereto requires:


 


(i)                                     with
respect to Section 1.2, the written consent of (a) the Company, (b) the
holders of a majority of the shares held by the Founders (as defined in the
Rights Agreement), and (c) the Investors (as defined in the Rights Agreement)
holding a majority of the Common Stock issued or issuable upon conversion of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock, voting as a single class;


 


(ii)                                  with
respect to Section 1.3, the written consent of (a) the Company and (b)
Investors holding a majority of the Common Stock issued or issuable upon
conversion of the Series G Preferred Stock and Series H Preferred Stock, voting
as a single class; and


 


(iii)                               with
respect to Sections 2.16 and 3.5, the written consent of (a) the Company and
(b) a majority of the Major Investors (as defined in the Purchase Agreement).


 


WHEREAS, in anticipation of the initial
public offering of the Common Stock of the Company, the Company and the
Stockholders believe that it is in the best interests of the Company and the
Stockholders to amend the Series H Agreements to, among other things, conform the
definition of a “qualifying public offering” to the definition set forth in the
Company’s Amended and Restated Certificate of Incorporation, as amended from
time to time.


 


1

















 


NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants and conditions set forth below, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties to this Amendment hereby agree as follows:


 


AMENDMENT


 


1.                                      Section 8.3
of the Purchase Agreement hereby is amended and restated in its entirety to
read as follows:


 


Section 8.3.  Survival of
Warranties.  The
warranties, representations, and covenants of the Company and the Investors
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the First Closing; provided, however, that
Sections 8.2 (Additional Debt), 8.15 (Publicity) and 8.17 (Directors’ and
Officers’ Insurance) shall terminate upon the closing of the Company’s sale of
its Common Stock in a bona fide, firm commitment underwritten public offering
registered under the Securities Act of 1933, as amended (the “Securities Act”),
which results in a closing of the Company’s sale of its Common Stock in a
Qualifying Public Offering (as defined in the Company’s Amended and Restated
Certificate of Incorporation, as amended from time to time).


 


2.                                      Section 1.2(d)(iii)
of the Rights Agreement hereby is amended and restated in its entirety as
follows:


 


(iii) to the issuance or sale of shares of equity
securities on and after a closing of the Company’s sale of its Common Stock in
a Qualifying Public Offering (as defined in the Company’s Amended and Restated
Certificate of Incorporation, as amended from time to time).


 


3.                                      Section 1.3(e)(iii)
of the Rights Agreement hereby is amended and restated in its entirety as
follows:


 


(iii) to the issuance or sale of shares of equity
securities on and after a closing of the Company’s sale of its Common Stock in
a Qualifying Public Offering.


 


4.                                      Section 2.16(ii)
of the Rights Agreement hereby is amended and restated in its entirety as
follows:


 


(ii) on the seventh anniversary of the Closing of the
Company’s sale of its Common Stock in a Qualifying Public Offering.


 


5.                                      Section 3.5
of the Rights Agreement hereby is amended and restated in its entirety to read
as follows:


 


The Company shall take such actions and do such things
as may be necessary to cause each outstanding share of Preferred Stock to be
automatically converted (in accordance with the provisions of Article IV,
Division B, Section 5 of the Amended and Restated Certificate of
Incorporation of the Company) into shares of Common Stock immediately upon the
approval of both (i) at least half in number of the Major Investors and (ii)
the


 


2

















 


holders of a majority of the then outstanding voting
power of the Series H Preferred Stock, voting as a single class; provided,
however, that if such approval is in connection with an underwritten offer of
securities registered pursuant to the Securities Act, the conversion may be
conditioned upon the closing of the sale of securities pursuant to such
offering, in which event each outstanding share of Preferred Stock shall not be
deemed to have converted until immediately prior to the closing of such sale of
securities.


 


6.                                      Section 3.11
of the Rights Agreement hereby is added to read as follows:


 


3.11  Termination of Covenants.  Sections 3.3 (Required
Approvals), 3.4 (Request for Redemption), 3.5 (Automatic Conversion), 3.7
(Proprietary Information Agreements), 3.8 (Option Vesting), 3.9 (Compliance
with Law) and 3.10 (Insurance), shall terminate and be of no further force and
effect upon the closing of the Company’s sale of its Common Stock in a
Qualifying Public Offering.


 


7.                                      Except as
modified by this Amendment, each of the Series H Agreements shall remain in
full force and effect in accordance with its respective terms.  This Amendment shall be deemed an amendment
to:


 


(A)          the Purchase Agreement, pursuant to which
any amendment thereto requires the written consent of (i) the Company and (ii)
at least half in number of the Major Investors;


 


(B)           Section 1.2 of the Rights
Agreement, pursuant to which any amendment thereto requires the written consent
of (a) the Company, (b) the holders of a majority of the shares held by the
Founders (as defined in the Rights Agreement), and (c) the Investors (as
defined in the Rights Agreement) holding a majority of the Common Stock issued
or issuable upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock and Series F Preferred Stock, voting as a single class;


 


(C)           Section 1.3 of the Rights
Agreement, pursuant to which any amendment thereto requires the written consent
of (a) the Company and (b) Investors holding a majority of the Common Stock
issued or issuable upon conversion of the Series G Preferred Stock and Series H
Preferred Stock, voting as a single class; and


 


(D)          Sections 2.16 and 3.5 of the Rights
Agreement, pursuant to which any amendment thereto requires the written consent
of (a) the Company and (b) a majority of the Major Investors (as defined in the
Purchase Agreement).


 


8.                                      This Amendment
may be executed by facsimile and in any number of counterparts by the parties
hereto, all of which together shall constitute one instrument.


 


3

















 


IN WITNESS WHEREOF,
the parties hereto have executed this AMENDMENT as of the date set forth in the
first paragraph hereof.


 


 


	
  COMPANY:

  	
   

  
	
   

  	
   

  
	
  DIGIRAD CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David M. Sheehan

  	
   

  
	
  David M. Sheehan

  	
   

  
	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  Address:

  	
  13950 Stowe Drive

  	
   

  
	
   

  	
  Poway, California 92064

  	
   

  
					



 


4

















 


COUNTERPART
SIGNATURE PAGE TO AMENDMENT TO


SERIES G PREFERRED STOCK AND SERIES H
PREFERRED STOCK PURCHASE AND EXCHANGE AGREEMENT AND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT


 


By its signature below, the undersigned does hereby become a party to
and agrees to be bound by the provisions of the Amendment to the Series G
Preferred Stock and Series H Preferred Stock Purchase and Exchange Agreement
and Amended and Restated Investors’ Rights Agreement (the “Amendment”), to which this signature page is appended, and
the undersigned hereby authorizes the Company to append this signature page as
a counterpart to the Amendment as
evidence thereof.


 


	
  [Signature Block
  for Individuals]

  	
   

  	
   

  	
  [Signature Block
  for Entities]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
   

  	
  *

  
	
  Signature

  	
   

  	
   

  	
  Name of Entity

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  Printed Name

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
							



 


*  See
attached Schedule of Stockholders


 


5

















 


SCHEDULE OF
STOCKHOLDERS


 


 


	
  Individuals

  	
   

  	
  Entities

  
	
   

  	
   

  	
   

  
	
  Jack F. Butler

  	
   

  	
  GE Capital Equity Investments, Inc.

  
	
  Clinton L. Lingren

  	
   

  	
  JAFCO CO., Ltd.

  
	
  Timothy J. Wollaeger

  	
   

  	
  JAFCO G-6(A) Investment Enterprise Partnership

  
	
   

  	
   

  	
  JAFCO G-6(B) Investment Enterprise Partnership

  
	
   

  	
   

  	
  JAFCO G-7(A) Investment Enterprise Partnership

  
	
   

  	
   

  	
  JAFCO G-7(B) Investment Enterprise Partnership

  
	
   

  	
   

  	
  JAFCO JS3 Investment Enterprise Partnership

  
	
   

  	
   

  	
  JAFCO R-3 Investment Enterprise Partnership

  
	
   

  	
   

  	
  Kingsbury Capital Partners LP

  
	
   

  	
   

  	
  Kingsbury Capital Partners LP II

  
	
   

  	
   

  	
  Kingsbury Capital Partners LP III

  
	
   

  	
   

  	
  Kingsbury Capital Partners LP IV

  
	
   

  	
   

  	
  Merrill Lynch Ventures L.P. 2001

  
	
   

  	
   

  	
  Mitsui & Co., Ltd.

  
	
   

  	
   

  	
  MVC Global Japan Fund I

  
	
   

  	
   

  	
  Ocean Avenue Investors, LLC – the Special Securities Fund

  
	
   

  	
   

  	
  Palivacinni Partners, LLC

  
	
   

  	
   

  	
  Sanderling V Beteiligungs GmbH & Co. KG

  
	
   

  	
   

  	
  Sanderling V Biomedical, L.P.

  
	
   

  	
   

  	
  Sanderling V Limited Partnership

  
	
   

  	
   

  	
  Sanderling V Ventures Management

  
	
   

  	
   

  	
  Sanderling Venture Partners V, L.P.

  
	
   

  	
   

  	
  Sorrento Growth Partners I, L.P.

  
	
   

  	
   

  	
  Sorrento Ventures II, L.P.

  
	
   

  	
   

  	
  Sorrento Ventures, III L.P.

  
	
   

  	
   

  	
  Sorrento Ventures CE, L.P.

  
	
   

  	
   

  	
  Vector Later-Stage Equity Fund, L.P.

  
	
   

  	
   

  	
  Vector Later-Stage Equity Fund II, L.P.

  
	
   

  	
   

  	
  Vector Later-Stage Equity Fund II (QP), LP

  
	
   

  	
   

  	
  Von Rautenkranz Nachfolger GbR

  
	
   

  	
   

  	
  Kenneth E. Olson Trust

  
	
   

  	
   

  	
  Knowles Family Trust