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  Exhibit 10.1    
    

 EPOCRATES, INC.

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT  

 
 

  Table of Contents    
    

 

 

							
	 
	 	 
	 	Page 
	 SECTION 1
	 	 GENERAL
	 	1
	 	 	 1.1
	 	 Definitions
	 	1
	 SECTION 2.
	 	 REGISTRATION; RESTRICTIONS ON TRANSFER
	 	

2
	 	 	 2.1
	 	 Restrictions on Transfer
	 	2
	 	 	 2.2
	 	 Demand Registration
	 	3
	 	 	 2.3
	 	 Piggyback Registrations
	 	5
	 	 	 2.4
	 	 Form S-3 Registration
	 	6
	 	 	 2.5
	 	 Expenses of Registration
	 	7
	 	 	 2.6
	 	 Obligations of the Company
	 	7
	 	 	 2.7
	 	 Termination of Registration Rights
	 	10
	 	 	 2.8
	 	 Delay of Registration; Furnishing Information
	 	10
	 	 	 2.9
	 	 Indemnification
	 	10
	 	 	 2.10
	 	 Assignment of Registration Rights
	 	12
	 	 	 2.11
	 	 Amendment of Registration Rights
	 	12
	 	 	 2.12
	 	 Limitation on Subsequent Registration Rights
	 	12
	 	 	 2.13
	 	 "Market Stand-Off" Agreement; Agreement to Furnish Information
	 	12
	 	 	 2.14
	 	 Other Agreements
	 	13
	 	 	 2.15
	 	 Rule 144 Reporting
	 	13
	 SECTION 3.
	 	 COVENANTS OF THE COMPANY
	 	

13
	 	 	 3.1
	 	 Basic Financial Information and Reporting
	 	13
	 	 	 3.2
	 	 Inspection Rights
	 	14
	 	 	 3.3
	 	 Confidentiality of Records
	 	14
	 	 	 3.4
	 	 Exchange of Shares
	 	14
	 	 	 3.5
	 	 Reservation of Common Stock
	 	15
	 	 	 3.6
	 	 Stock Vesting
	 	15
	 	 	 3.7
	 	 Proprietary Information and Inventions Agreement
	 	16
	 	 	 3.8
	 	 Directors' Liability and Indemnification
	 	16
	 	 	 3.9
	 	 Board Observer Rights
	 	16
	 	 	 3.10
	 	 Termination of Covenants
	 	16
	 SECTION 4.
	 	 RIGHTS OF FIRST REFUSAL
	 	

17
	 	 	 4.1
	 	 Subsequent Offerings
	 	17
	 	 	 4.2
	 	 Exercise of Rights
	 	17
	 	 	 4.3
	 	 Issuance of Equity Securities to Other Persons
	 	17
	 	 	 4.4
	 	 Termination and Waiver of Rights of First Refusal
	 	17
	 	 	 4.5
	 	 Transfer of Rights of First Refusal
	 	18
	 	 	 4.6
	 	 Excluded Securities
	 	18
	 SECTION 5.
	 	 MISCELLANEOUS
	 	

18
	 	 	 5.1
	 	 Governing Law
	 	18
	 	 	 5.2
	 	 Survival
	 	18
	 	 	 5.3
	 	 Successors and Assigns
	 	19
	 	 	 5.4
	 	 Amendment of Charter to Effect Common Stock Issuance
	 	19
	 	 	 5.5
	 	 Amendment of Charter to Effect Common Stock Exchange
	 	19
	 	 	 5.6
	 	 Entire Agreement
	 	20
	 	 	 5.7
	 	 Severability
	 	20
	 	 	 5.8
	 	 Amendment and Waiver
	 	21
	 	 	 5.9
	 	 Delays or Omissions
	 	21
	 	 	 5.10
	 	 Notices
	 	21
	 	 	 5.11
	 	 Attorneys' Fees
	 	21
	 	 	 5.12
	 	 Titles and Subtitles
	 	21
	 	 	 5.13
	 	 Additional Investors
	 	21
	 	 	 5.14
	 	 Counterparts
	 	22
	 	 	 5.15
	 	 Termination of Prior Agreement
	 	22

 

 

 

  EPOCRATES, INC.  

 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT  

        THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into
as of the 2nd day of October 2007, by and among EPOCRATES, INC., a Delaware corporation (the "Company") and the investors
listed on Exhibit A hereto, referred to hereinafter as the "Investors" and each individually as an "Investor." 

RECITALS

        WHEREAS, certain of the Investors are purchasing shares of the
Company's Common Stock (the "Subject Common Shares"), pursuant to that certain Common Stock Purchase Agreement (the "Purchase Agreement") of even date herewith (the "Financing"); 

        WHEREAS, the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement; 

        WHEREAS, certain of the Investors (the "Prior Investors") are holders of the Company's Series A Preferred
Stock (the "Series A Stock,"), Series B Preferred Stock (the "Series B Stock,"), and the Series C Preferred Stock (the "Series C Stock"); 

        WHEREAS, the Prior Investors and the Company are parties to an Amended and Restated Investor Rights Agreement
dated July l, 2002 (the "Prior Agreement"); 

        WHEREAS, the parties to the Prior Agreement desire to terminate the Prior Agreement and accept the rights and
covenants hereof in lieu of their rights and covenants under the Prior Agreement; and 

        WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the
registration rights, information rights, and other rights as set forth below. 

        NOW, THEREFORE, in consideration of these premises and for other good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

SECTION 1.    GENERAL.    

        1.1    Definitions.    As used in this Agreement the following terms
shall have the following respective meanings: 

        "Charter"
means the Company's Amended and Restated Certificate of Incorporation as in effect on the date hereof and as be amended from time to time. 

        Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

        "Form S-3"
means such form under the Securities Act as in effect on the date hereof or any successor similar registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. 

        "Holder"
means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with
Section 2.10 hereof. 

        "Initial
Offering" means the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act. 

        "Preferred
Shares" shall mean the shares of Series A Stock, Series B Stock, and Series C Stock held by the Investors, the Series B Stock issued pursuant to
outstanding warrants, the Series A Stock held by the Investors listed on Exhibit A hereto and their permitted assigns and the 

1

 

Series D
Stock (as defined herein), if and when issued pursuant to the Common Stock Exchange (as defined herein). 

        "Register,"
"registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration
or ordering of effectiveness of such registration statement or document. 

        "Registrable
Securities" means (a) Common Stock of the Company issued or issuable upon conversion of the Preferred Shares; (b) any Common Stock of the 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
above-described securities, and (c) the Subject Common Shares. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public either
pursuant to a registration statement or Rule 144 or sold in a private transaction in which the transferor's rights under Section 2 of this Agreement are not assigned. 

        "Registrable
Securities then outstanding" shall be the number of shares determined by calculating the total number of shares of the Company's Common Stock that are Registrable Securities
and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities. 

        "Registration
Expenses" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed twenty-five thousand dollars ($25,000.00) of a single
special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the Company). 

        "SEC"
or "Commission" means the Securities and Exchange Commission. 

        "Securities
Act" shall mean the Securities Act of 1933, as amended. 

        "Selling
Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale. 

        "Special
Registration Statement" shall mean a registration statement relating to any employee benefit plan or with respect to any corporate reorganization or other transaction under
Rule 145 of the Securities Act. 

SECTION 2.    REGISTRATION; RESTRICTIONS ON TRANSFER.    

        2.1    Restrictions on Transfer.    

        (a)   Each Holder agrees not to make any disposition of all or any portion of the Subject Common Shares, Preferred Shares or
Registrable Securities unless and until: 

        (i)    There is then in effect a registration statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or 

        (ii)   (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have
notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested
by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares
under the Securities Act. It is 

2

 

agreed
that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. 

        (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by a Holder to a Permitted Transferee or by a Holder which is (A) a partnership to its partners or former partners in accordance with
partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in
accordance with their interest in the limited liability company, (D) to the Holder's family member or trust for the benefit of an individual Holder or (E) a venture fund to affiliated
venture funds; provided that in each case the transferee will be subject to the terms of this Agreement to the same extent as if he were an original
Holder hereunder. For purposes hereof, a "Permitted Transferee" means, with respect to a Holder, (1) any
affiliate of a Holder. (2) any person or entity that acquires substantially all of the assets of such Holder, so long as such Holder has, immediately prior to such acquisition, material assets
and/or operations other than Registrable Securities, and (3) any person or entity who, through a merger, consolidation, recapitalization, sale of equity interests or other transaction or series
of transactions involving such Holder, owns in the surviving entity after the closing a majority of the outstanding equity interests when it did not own a majority of the equity interests in such
Holder immediately prior to such transaction, so long as such Holder or the other affiliates of such Holder involved in such transactions and which such person or entity controls after the closing had
material assets and/or operations other than the Registrable Securities immediately prior to such closing. 

        (b)   Each certificate representing Common Shares, Preferred Shares or Registrable Securities shall (unless otherwise permitted
by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws): 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. 

        (c)   The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the
holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend. 

        (d)   Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer
instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 

        2.2    Demand Registration.    

        (a)   Subject to the conditions of this Section 2.2, if the Company shall receive a written request from the Holders of
at least forty percent (40%) of the Registrable Securities (the "Initiating Holders") that the Company file a registration statement under the Securities Act covering the registration of
Registrable Securities with an anticipated aggregate offering price, net of underwriting discounts and commissions, of at least one million dollars ($1.000,000.00) (a 

3

 

"Qualified
Public Offering"), then the Company shall, within thirty (30) days after the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of
this Section 2.2, use its best efforts to effect, as expeditiously as reasonably possible, the registration under the Securities Act of all Registrable Securities that the Holders request to be
registered. 

        (b)   If 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 or any request pursuant to Section 2.4 hereof and the Company shall include
such information in the written notice referred to in Section 2.2(a) or Section 2.4(a) hereof, as applicable. In such event, the right of any Holder to include its Registrable Securities
in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form (subject to the last two sentences of this
paragraph) with the underwriter or underwriters selected for such underwriting by the Initiating Holders holding at least a majority of the Registrable Securities then outstanding held by the
Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.2 or Section 2.4 hereof, if
the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders);  provided, however, that the number of shares of Registrable Securities to be included in such
underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration. All of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of
the underwriters included in each such underwriting agreement shall also be made to and for the benefit of such Holders and any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement shall be conditions precedent to the obligations of such Holders. The Company shall use its reasonable efforts to ensure that no Holder shall be required
in any such underwriting agreement to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such
Holder, such Holder's Registrable Securities, such Holder's intended method of distribution and any other representations required by law or reasonably required by the underwriters. 

	(c)
	The Company shall not be required to effect a registration pursuant to this Section 2.2: 

        (i)    prior to the earlier of (A) the fourth anniversary of the date of this Agreement or (B) one hundred eighty
(180) days following the effective date of the registration statement pertaining to the Initial Offering; 

        (ii)   after the Company has effected two (2) registrations pursuant to this Section 2.2, and such registrations
have been declared or ordered effective; 

        (iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days
following the effective date of the registration statement pertaining to the Initial Offering; provided that the Company makes reasonable good faith
efforts to cause such registration statement to become effective; 

4

 

        (iv)  if within thirty (30) days of receipt of a written request from Initiating Holders pursuant to
Section 2.2(a) hereof, the Company gives notice to the Holders of the Company's intention to make its Initial Offering within ninety (90) days; 

        (v)   if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a
certificate signed by the Chairman of the Board 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 shareholders
for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days
after receipt of the request of the Initiating Holders; provided that such right to delay a request shall be exercised by the Company not more than once
in any twelve (12) month period; or 

        (vi)  if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on
Form S-3 pursuant to a request made pursuant to Section 2.4 below. 

        2.3    Piggyback Registrations.    The Company shall notify all
Holders of Registrable Securities in writing at least thirty (30) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities
of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration Statements) and will afford each
such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter
filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. 

        (a)    Underwriting.    If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be
included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement (subject to the
last two sentences of this paragraph) in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of the Agreement, if the
underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be
allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata basis. No such reduction shall (i) reduce the securities being
offered by the Company for its own account to be included in the registration and underwriting, or (ii) reduce the amount of securities of the selling Holders included in the registration below
twenty-five percent (25%) of the total amount of securities included in such registration, unless such offering is the Initial Offering and such registration does not include shares of any
other selling shareholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to withdraw 

5

 

therefrom
by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership or corporation, the partners, retired partners, shareholders
and affiliates of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing person shall be deemed to be a single
Holder, and any pro rata reduction with respect to such Holder shall be based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such Holder. All of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of the underwriters
included in each such underwriting agreement shall also be made to and for the benefit of such Holders and any or all of the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of
such Holders. The Company shall use its reasonable efforts to ensure that no Holder shall be required in any such underwriting agreement to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities, such Holder's intended method of distribution and any
other representations required by law or reasonably required by the underwriters. 

        (b)    Right to Terminate Registration.    The Company shall have the
right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include
securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof. 

        2.4    Form S-3 Registration.    In case the
Company shall receive from any Holder or Holders of Registrable Securities a written request or requests that the Company effect a registration on Form S-3 (or any successor to
Form S-3) or any similar short-form registration statement 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 of Registrable Securities; 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 fifteen (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 2.4: 

        (i)    if Form S-3 is not available for such offering by the Holders, or 

        (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 of less than one million dollars ($1,000,000.00), or 

        (iii) if within thirty (30) days of receipt of a written request from any Holder or Holders pursuant to this
Section 2.4, the Company gives notice to such Holder or Holders of the Company's intention to make a public offering within ninety (90) days, other than pursuant to a Special
Registration Statement, or 

6

 

        (iv)  if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors 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 shareholders 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
ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12) month period, or 

        (v)   if the Company has, within the twelve (12) month period preceding the date of such request, already effected two
(2) registrations on Form S-3 for the Holders pursuant to this Section 2.4, or 

        (vi)  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. 

        (c)   Subject to the foregoing, the Company shall file a Form S-3 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. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 2.2 or 2.3 hereof, respectively. All such Registration Expenses incurred in
connection with registrations requested pursuant to this Section 2.4 after the first two (2) registrations shall be paid by the selling Holders pro
rata in proportion to the number of shares sold by each. 

        2.5    Expenses of Registration.    Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2 hereof or any registration under Section 2.3 or
Section 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered  pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or 2.4 hereof, the request of which has been subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is based upon material
adverse information concerning the Company of which the Initiating Holders were not aware at the time of such request, (b) such withdrawal is caused by a material adverse change in the business
or operations of the Company after such request for registration, (c) the registration is interfered with by any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court for any reason other than a misrepresentation or omission by any Initiating Holder, or (d) the Holders of at least a majority of the Registrable Securities then
outstanding agree to forfeit their right to one requested registration
pursuant to Section 2.2 or Section 2.4 hereof, as applicable, in which event such right shall be forfeited by all Holders). If the Holders are required to pay the Registration Expenses,
such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If
the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to Section 2.2 or
Section 2.4 hereof to a demand registration. 

        2.6    Obligations of the Company.    Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)   Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the request of the Holders of at least a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) days or, if earlier, until 

7

 

the
Holder or Holders have completed the distribution related thereto. The Company shall not be required to file, cause to become effective or maintain the effectiveness of any registration statement
that contemplates a distribution of securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. 

        (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 for the period set forth in paragraph (a) above. 

        (c)   As far in advance as practicable but at least five (5) business days prior to filing a registration statement or
prospectus (or any amendment or supplement thereto), furnish to each Holder selling Registrable Securities in the offering, for its review, copies of such registration statement or prospectus (or
amendment or supplement) as proposed to be filed (including, upon the request of such Holder, documents to be incorporated by reference therein); and comply with each reasonable request made by a
Holder for changes to such registration statement or prospectus (or amendment or supplement) (i) if such Holder reasonably believes that the provisions in question would have an impact or
effect on such Holder or (ii) solely to the extent necessary, if at all, to lawfully complete the filing or maintain the effectiveness thereof. 

        (d)   Furnish to the Holders such number 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. 

        (e)   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. 

        (f)    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 underwriters) of such offering. Each Holder participating in such underwriting shall, subject to the last two sentences of Section 2.3(a), also
enter into and perform its obligations under such an agreement. 

        (g)   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. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or
omit 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. 

        (h)   Use its reasonable efforts to furnish to each Holder and to any underwriter of such Registrable Securities, on the date
that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters (or if such offering is not underwritten, on the effective date of
the registration statement), (i) an opinion, dated as of 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 each Holder and (ii) a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily 

8

 

given
by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters and each Holder. 

        (i)    Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed. 

        (j)    Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number
for all such Registrable Securities, in each case not later than the effective date of such registration. 

        (k)   Give the Holders and the underwriters, if any, and their respective counsel and accountants such reasonable and customary
access to the Company's books, records and properties and such opportunities to discuss the business and affairs of the Company with its officers and the independent public accountants who have
certified the financial statements of the Company as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act; provided, that such Holders and the underwriters and their respective counsel and accountants shall use their
reasonable best efforts to coordinate any such investigation of the books, records and properties of the Company; and provided,  further, that if requested
by a Holder the Company shall (x) enter into a customary non-disclosure agreement with such Holder,
(y) not provide material non-public information to the Holder in connection with diligence and/or (z) adopt other reasonable procedures and measures reasonably acceptable to
the Holder designed to ensure compliance with applicable securities laws. 

9

 

  
        2.7    Termination of Registration Rights.    All
registration rights
granted under this Section 2 shall terminate and be of no further force and effect three (3) years after the date of the Company's Initial Offering. In addition, a Holder's registration
rights shall expire if (a) the Company has completed its Initial Offering and is subject to the provisions of the Exchange Act, (b) such Holder (together with its affiliates, partners
and former partners) holds less than one percent (1%) of the Company's outstanding Common Stock (treating all shares of convertible Preferred Shares on an as converted basis) and (c) all
Registrable Securities held by and issuable to such holder (and its affiliates, partners, former partners, members and former members) may be sold under Rule 144 during any ninety
(90) day period. 

        2.8    Delay of Registration; Furnishing Information.    

        (a)   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. 

        (b)   It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2,
2.3 or 2.4 hereof 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 their Registrable Securities. 

        (c)   The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or
Section 2.4 hereof if, due to the operation of subsection 2.2(b), 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 Section 2.2 or Section 2.4 hereof, whichever is applicable. 

        2.9    Indemnification.    In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4 hereof: 

        (a)   To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, 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 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 thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a
"Violation") by the Company: (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 in connection with the offering covered by such registration
statement; and the Company will pay as incurred to each such Holder, partner, officer, 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 Section 2.9(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 

10

 

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
such Holder or a partner, officer, director, underwriter or controlling person of such Holder. 

        (b)   To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such registration, qualifications or compliance is/are being effected, indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder's partners,
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, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder 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 under an instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was
such a Violation; provided, however, that the indemnity agreement contained in this
Section 2.9(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 further, that in no event shall any indemnity under this Section 2.9 exceed the net proceeds from
the offering received by such Holder. 

        (c)   Promptly after receipt by an indemnified party under this Section 2.9 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 2.9, 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 indemnifying panty 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, if
materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.9, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party, otherwise than under this Section 2.9. 

        (d)   If the indemnification provided for in this Section 2.9 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall, to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such 

11

 

loss,
claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of
law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission;  provided, that in no event shall
any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder. 

        (e)   The obligations of the Company and Holders under this Section 2.9 shall survive completion of any offering of
Registrable Securities in a registration statement and the termination of this agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or litigation. 

        2.10    Assignment of Registration Rights.    The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be assigned by a 1-folder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member, retired member or Permitted Transferee of a Holder, (b) is a Holder's family member or trust for the benefit of an
individual Holder, or (c) acquires at least fifty thousand (50.000) shares of Registrable Securities (as adjusted for stock splits and combinations);  provided, however, (i) the transferor shall, within ten (10) days after such transfer,
furnish to the Company 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 (ii) such
transferee shall agree to be subject to all restrictions set forth in this Agreement. 

        2.11    Amendment of Registration Rights.    Any provision of this
Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the
Company and the Holders of at least a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section 2.11 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder. 

        2.12    Limitation on Subsequent Registration Rights.    Other than as
provided in Section 5.11 hereof, after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities
then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights (a) senior to those granted to
the Holders hereunder; 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(c)(i) hereof or within one hundred twenty (120) days of the effective date of any registration effected pursuant to Section 2.2 hereof, 

        2.13    "Market Stand-Off" Agreement; Agreement to Furnish
Information.    Each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any Registrable Securities of the Company held by such Holder (other than those included in the registration) for a period
specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (184) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided that: 

        (i)    such agreement shall apply only to the Company's Initial Offering; and 

12

 

        (ii)   all officers and directors of the Company enter into similar agreements. 

        2.14    Other Agreements.    Each Holder agrees to execute and deliver
such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if
requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten (10) days of such request, such
information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities pursuant to a registration statement tiled
under the Securities Act. The obligations described in this Section 2.14 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or
Form S-8 or similar farms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or
similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said one hundred eighty (180) day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by
Section 2.13 and 2.14 hereof. The underwriters of the Company's stock are intended third party beneficiaries of Section 2.13 and 2.14 hereof and shall have the right, power and authority
to enforce the provisions hereof as though they were a party hereto. 

        2.15    Rule 144 Reporting.    With a view to making available
to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to use its best efforts to: 

        (a)   Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any
similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general
public; 

        (b)   File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; 

        (c)   So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement
by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of 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); a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such
securities without registration; and 

        (d)   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. 

SECTION 3.    COVENANTS OF THE COMPANY.    

        3.1    Basic Financial Information and Reporting.    

        (a)   The Company will maintain true books and records of account in which full and correct entries will be made of all its
business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied, and will set aside on its books
all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied. 

13

 

        (b)   So long as an Investor (with its affiliates) holds Registrable Securities with an initial aggregate purchase price of at
least one million dollars (1,000,000.00) (a "Major Investor") and as soon as practicable after the end of each fiscal year of the Company, and in any event within ninety (90) days thereafter,
the Company will furnish each Investor a balance sheet of the Company, as of the end of such fiscal year, and a statement of income and a statement of cash flows of the Company, for such year, all
prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Company's Board of Directors. 

        (c)   The Company will furnish each Major Investor (i) at least thirty (30) days prior to the beginning of each
fiscal year an annual budget and operating plans for such fiscal year (and as soon as available, any subsequent revisions thereto); and (ii) as soon as practicable after the end of each month,
and in any event within twenty (20) days thereafter, a balance sheet of the Company as of the end of each such
month, and a statement of income and a statement of cash flows of the Company for such month and for the current fiscal year to date, including a comparison to plan figures for such period, prepared
in accordance with generally accepted accounting principles consistently applied, with the exception that no notes need be attached to such statements and year-end audit adjustments may
not have been made. 

        3.2    Inspection Rights.    Each Major Investor shall have the right
to visit and inspect any of the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and
to review such information as is reasonably requested all at such reasonable times and as often as may be reasonably requested; provided,  however, that the
Company shall not be obligated under this Section 3.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is confidential and should not, therefore, be disclosed. 

        3.3    Confidentiality of Records.    Each Investor agrees to use, and
to use its best efforts to insure that its authorized representatives use, the same degree of care as such Investor uses to protect its own confidential information to keep confidential any
information furnished to it which the Company identifies as being confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of such Investor for the purpose of evaluating its investment in the Company as long as such partner, subsidiary or parent
is advised of the confidentiality provisions of this Section 3.3. 

        3.4    Exchange of Shares.    

        (a)   If (x) the closing of the Company's Initial Offering does not occur on or before April 15, 2009,
(y) the Board of Directors of the Company determines not to proceed with the Company's Initial Offering; or (z) the Board of Directors of the Company determines to delay the closing of
the Company's Initial Offering past April 15, 2009 (the earliest of such dates, the "IPO Deadline Date"), each Holder of Subject Common Shares shall have the right, at its option, to exchange
such Subject Common Shares for shares of the Company's Series D Preferred Stock (the "Series D Stock") such that one Subject Common Share shall become one share of Series D Stock
(the "Common Share Exchange"). Such a Holder may exercise this right at any time after the IPO Deadline Date by delivering written notice to the Company of such exercise and surrendering the
certificate or certificates for the Subject Common Shares being exchanged, duly endorsed, at the office of the Company or any transfer agent for the Common Stock. Such notice shall state the number of
Subject Common Shares being exchanged. Thereupon, the Company shall promptly issue and deliver at such office to such Holder a certificate or certificates for the number of shares of Series D
Stock to which such Holder is entitled. Such exchange shall be deemed to have been 

14

 

made
at the close of business on the date of such surrender of the certificates representing the Subject Common Shares to be exchanged, and the Holder entitled to receive the shares of Series D
Stock
issuable upon such exchange shall be treated for all purposes as the record holder of such shares of Series D Stock on such date. 

        (b)   The Company shall ensure that the Series D Stock is on parity with, equivalent to, and have the same rights as,
the Series C Stock with the following exceptions: 

        (i)    The Original Issue Price (as such term is used in the Charter) of the Series D Stock shall be the Purchase Price
Per Share (as defined in the Purchase Agreement). 

        (ii)   For so long as at least 25% of the Series D Stock are outstanding, (A) the Series D Stock will vote
together with the Series A Stock and the Series C Stock with respect to the items set forth in Section D.2(b) of Article IV of the Charter and (B) the vote of the
Series Preferred (as defined in the Charter), voting together as a class, will be required with respect to the items set forth in Section D.2(d) of Article IV of the Charter. The
Series D will always vote together as a class with the Series A Stock and the Series C Stock or with the Series Preferred, as applicable, and will not vote as a separate series. 

        (iii) In the event of any liquidation (including all events of liquidation deemed to be such in the Charter), dissolution, or
winding up of the Company, whether voluntary or involuntary (each, a "Liquidation Event") holders of such Series D Stock shall be entitled to receive an amount per share equal to the greater of
(A) the Purchase Price Per Share plus all declared and unpaid dividends (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares)
on a pari passu basis with the holders of the Series C Stock in accordance with the terms of the Charter and (B) the amount that would be
payable upon such Liquidation Event to the holder of that number of shares of the Company's Common Stock into which each such share of Series D Stock would then be convertible if such share of
Series D Stock were converted into such Common Stock immediately prior to such Liquidation Event. 

        (iv)  The Series Preferred Conversion Price (as defined in the Charter) for the Series D Stock shall be the Original
Issue Price of the Series D Stock as set forth above; provided, that if any event occurs prior to the IPO Deadline Date that would, pursuant to
the Charter, result in an adjustment to the Series Preferred Conversion Price if the Series D were then outstanding, then the Series Preferred Conversion Price for the Series D Stock
will be adjusted accordingly. 

        (c)   Prior to the IPO Deadline Date, the Company shall not take any action that would adversely affect its ability to issue
the Series D Stock. 

        3.5    Reservation of Common Stock.    The Company will at all times
reserve and keep available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common Stock issuable from time to time upon such conversion. 

        3.6    Stock Vesting.    Unless otherwise approved by the Board of
Directors, all stock options and other stock equivalents ("Options") issued after the date of the Prior Agreement to employees, directors, consultants and other service providers shall be subject to
vesting and become exerciseable as follows: (a) twenty-five percent (25%) of such stock subject to the each Option shall vest and become exerciseable at the first annual anniversary
of the vesting commencement date as stated in the relevant grant for such Option; and thereafter (b) two and eight hundred thirty-three ten-thousandths percent (2.0833%) shall vest
and become exerciseable one each monthly anniversary of such first year anniversary each month thereafter over the remaining three (3) years. Unless otherwise approved by the Board of
Directors, with respect to shares issued to employees, directors, consultants and other service providers with a Company right of repurchase ("Restricted Agreement") issued after the date of 

15

 

the
Prior Agreement shall be subject to the lapse of the Company's right to repurchase unvested shares as follows: (a) twenty-five percent (25%) of such stock subject to the
repurchase right of the Company shall be released at the first annual anniversary of the vesting commencement date as stated in the relevant Restricted Agreement; and thereafter (b) two and
eight hundred thirty-three ten-thousandths percent (2.0833%) of the stock subject to the Company's right of repurchase shall be released from the Company's right to repurchase on each
monthly anniversary of such first annual anniversary date over the remaining three (3) years. With respect to any shares of stock purchased by any such person, the Company's repurchase option
shall provide that upon such person's termination of employment or service with the Company, with or without cause, the Company or its assignee (to the extent permissible under applicable securities
laws and other laws) shall have the option to purchase at cost any unvested shares of stock held by such person. 

        3.7    Proprietary Information and Inventions Agreement.    The
Company shall require all employees to execute and deliver a Proprietary Information and Inventions Agreement in the forms provided or made available to Investors pursuant to the Purchase Agreement.
The Company shall require all consultants to execute and deliver a consulting agreement or other agreement which contains substantially similar terms to the proprietary information and inventions
agreement in favor of the Company. 

        3.8    Directors' Liability and Indemnification.    The Company's
Certificate of Incorporation and Bylaws shall provide (a) for elimination of the liability of directors to the maximum extent permitted by law and (b) for indemnification of directors
for acts on behalf of the Company to the maximum extent permitted by law. In addition, the Company shall enter into and use its best efforts to at all times maintain indemnification contracts with
each of its directors to indemnify such directors to the maximum extent permissible under Delaware law. 

        3.9    Board Observer Rights.    Prior to the completion of the
Initial Offering, for so long as The Goldman Sachs Group, Inc. ("Goldman Sachs"), together with its affiliates, holds (and continues to hold) at least 25% of the Subject Common Shares (or
Series D Stock of the Company into or for which such Subject Common Shares are convertible or exchangeable or shares of Common Stock into which the Series D Stock are converted) that
Goldman Sachs acquires pursuant to the Purchase Agreement (as adjusted
for stock splits, subdivisions and combinations, reclassifications and similar corporate actions), the Company shall permit a designee of Goldman Sachs or its affiliates (the "Observer") to attend all
meetings of its Board of Directors (whether in person; telephonic or other) (other than meetings of a committee of the Board of Directors, unless other board observers are permitted to attend such
meetings) in a nonvoting observer capacity and. in this respect, shall provide the Observer, concurrently with the members of the Board of Directors, with copies of all notices, minutes, consents, and
other materials that it provided to such members (other than in meetings of a committee of the Board of Directors, unless other board observers are provided such materials);  provided, however, that the Observer agrees to hold in confidence and trust all information so provided
to it or learned by it in connection with its rights hereunder; it being understood and agreed that, notwithstanding the foregoing, the Observer shall be permitted to use or disclose such information
to Goldman Sachs and its affiliates in connection with managing its investment in the Company; and provided,  further, that the Company reserves the right
to withhold any information or to exclude the Observer from any meeting or portion thereof if
(i) access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel; (ii) access to such information or
attendance at such meeting could result in disclosure of trade secrets to Goldman Sachs or its representative; or (iii) access to such information or attendance at such meeting could result in
a conflict of interest between Goldman Sachs or its representative and the Company. 

        3.10    Termination of Covenants.    All covenants of the Company
contained in Section 3 of this Agreement shall expire and terminate as to each Investor upon the earlier of (i) the effective date of 

16

 

the
registration statement pertaining to the Initial Offering, which results in the Preferred Stock being converted into Common Stock or (ii) upon (a) the sale, lease or other
disposition of all or substantially all of the assets of the Company or (b) an acquisition of the Company by another corporation or entity by consolidation, merger or other reorganization in
which the holders of the Company's outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing less than fifty percent (50%) of the
voting power of the corporation or other entity surviving such transaction, provided that this Section 3.10(ii)(b) shall not apply to a merger
effected exclusively for the purpose of changing the state of incorporation of the Company (a "Change in Control"). 

SECTION 4.    RIGHTS OF FIRST REFUSAL.    

        4.1    Subsequent Offerings.    Each Investor (with its affiliates)
which holds Registrable Securities with an initial aggregate purchase price of at least five hundred thousand dollars ($500.000.00) (a "Significant Investor") shall have a right of first refusal to
purchase its pro rata share of all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the
date of this Agreement, other than the Equity Securities excluded by Section 4.6 hereof. Each Significant Investor's pro rata share is equal to
the ratio of (a) the number of shares of the Company's Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Preferred Shares) which such Investor is
deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of shares of the Company's outstanding Common Stock (including all shares of Common
Stock issued or issuable upon conversion of the Preferred Shares or upon the exercise of any outstanding warrants or options) immediately prior to the issuance of the Equity
Securities. The term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock (as defined in the Charier) or other security of the
Company, (ii) any security convertible, with or without consideration, into any Common Stock, Preferred Stock or other security (including any option to purchase such a convertible security),
(iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant or right. 

        4.2    Exercise of Rights.    If the Company proposes to issue any
Equity Securities, it shall give each Significant Investor written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to
issue the same. Each such Significant Investor shall have fifteen (15) days from the giving of such notice to agree to purchase its pro rata
share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to
be purchased. Notwithstanding the foregoing, the Company shall not be required to offer or sell such Equity Securities to any such Significant Investor who would cause the Company to be in violation
of applicable federal securities laws by virtue of such offer or sale. 

        4.3    Issuance of Equity Securities to Other Persons.    If a
Significant Investor fails to exercise in full the rights of first refusal, the Company shall have ninety (90) days thereafter to sell the Equity Securities in respect of which the Significant
Investor's rights were not exercised, at a price and upon general terms and conditions materially no more favorable to the purchasers thereof than specified in the Company's notice to the Significant
Investors pursuant to Section 4.2 hereof. If the Company has not sold such Equity Securities within ninety (90) days of the notice provided pursuant to Section 4.2 hereof, the
Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Investors in the manner provided above. 

        4.4    Termination and Waiver of Rights of First Refusal.    The
rights of first refusal established by this Section 4 shall not apply to, and shall terminate upon the earlier of (i) effective date of the registration statement pertaining to the
Company's Initial Offering or (ii) a Change in Control. The rights of first refusal established by this Section 4 may be amended, or any provision waived with the written consent of
Significant Investors holding at least a majority o f the Registrable Securities then outstanding held by all such Significant Investors, or as permitted by Section 5.6 hereof. 

17

 

        4.5    Transfer of Rights of First Refusal.    The rights of first
refusal of each Significant Investor under this Section 4 may be transferred to any party provided that, as a result of such transfer, such transferee become a Significant Investor, subject to
the same restrictions as any transfer of registration rights pursuant to Section 2.10 hereof. 

        4.6    Excluded Securities.    The rights of first refusal established
by this Section 4 shall have no application to any of the following Equity Securities: 

        (a)   the Subject Common Shares; 

        (b)   shares of Common Stock issued upon conversion of the Preferred Shares: 

        (c)   shares of Series D Stock issued upon the Common Share Exchange; 

        (d)   shares of Common Stock and/or options, warrants or other Common Stock purchase rights and the Common Stock issued
pursuant to such options, warrants or other rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like) after the date that the first share of Series C
Stock was issued (the "Series C Original Issue Date") to employees, officers or directors of or consultants or advisors to the Company or any subsidiary pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors; 

        (e)   shares of Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding as of
the Series C Original Issue Date; 

        (f)    any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or
similar business combination approved by the Board of Directors (including the representatives of the Series Preferred); 

        (g)   shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization by the Company; 

        (h)   any Equity Securities issued pursuant to any equipment leasing arrangement, or debt financing from a bank approved by the
Board of Directors; 

        (i)    any Equity Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act;
and 

        (j)    any Equity Securities issued in connection with strategic transactions involving the Company and other entities.
including (i) joint ventures, manufacturing, marketing or distribution arrangements or
(ii) technology transfer or development arrangements; provided that such strategic transactions and the issuance of shares therein, has been
approved by the Company's Board of Directors, including in such approval the affirmative vote of at least one Director designated by the holders of the Registrable Securities. 

SECTION 5.    MISCELLANEOUS.    

        5.1    Governing Law.    This Agreement shall be governed by and construed under the laws of
the State of Delaware as applied to agreements among Delaware residents entered into and to be performed entirely within Delaware. 

        5.2    Survival.    The representations, warranties, covenants, and agreements made herein
shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument. 

18

 

  
        5.3    Successors and Assigns.    Except as otherwise
expressly
provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided,  however, that prior to the
receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and
address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the
payment of dividends or any redemption price. 

        5.4    Amendment of Charter to Effect Common Stock Issuance.    Each
of the Prior investors hereby consents to the amendment of the Charter to increase the number of authorized shares of Common Stock of the Company as is necessary to enable the Company to consummate
the issuance and sale of the Subject Common Shares. 

        5.5    Amendment of Charter to Effect Common Stock Exchange.    

        (a)   In the event that the Company's Initial Offering does not occur on or before the IPO Deadline Date, the Company and its
Board of Directors shall promptly amend the Charter effective as of the day following the IPO Deadline Date as necessary to effect the Common Stock Exchange for the maximum number of Series D
Stock into which the Subject Common Shares can then be exchanged to (i) increase the number of shares of Preferred Stock that the Company is authorized to issue, (ii) designate an
adequate number of shares of Preferred Stock as Series D Stock and (iii) set forth the rights, preferences and privileges of the Series D Stock consistent with Section 3.4
above. The Company agrees to delivery any notices required to Section 228 of the Delaware General Corporation Law to its stockholders within the time required pursuant to Section 228. 

        (b)   Each of the Prior Investors hereby irrevocably consents to the foregoing amendments to the Charter as are deemed
necessary by the Company's Board of Directors to meet the requirements of this
Section 5.5 and waives any right to challenge at any time hereafter such amendments, and agrees that the passage of time shall not constitute a basis for the invalidation of such consent. Each
of the Prior Investors acknowledges and agrees that its consent pursuant to this Section 5.5(b) shall constitute a consent with respect to each and every provision of the Charter that would
require its consent to effect the amendments contemplated by Section 5.5(a) and the Common Stock Exchange, and that the purchasers of the Subject Common Shares are purchasing such Subject
Common Shares in reliance on the agreements of the Company and the Prior Investors pursuant to this Section 5.5. If requested by the Company, each of the Prior Investors hereby agrees to
execute any documents or instruments and take any actions necessary, advisable or appropriate at such time in order to effectuate, confirm and provide for the consents to the amendments to the Charter
described in Sections 5.5(a) and 5.5(b). In addition, each of the Prior Investors hereby grants to the Company and the Chief Executive Officer of the Company, or any successor designated by the
Company from time to time in writing by notice to each of the Prior Investors, with full power of substitution, as each of the Prior Investor's attorney and proxy, with respect to all Registrable
Securities now or hereafter held by such Prior Investor, an irrevocable proxy to attend meetings, vote, give consents, execute documents and in all other ways to act in each of the Prior Investor's
stead with respect to the authorization of the amendments to the Charter described in Sections 5.5(a) and 5.5(b). 

        (c)   The Company shall not issue, other than pursuant to the exercise of options issued pursuant to the Company's equity
incentive plans, any new shares of Common Stock or Preferred Stock without the purchaser thereof irrevocably agreeing in writing to the provisions of this Section 5.5 (including such purchaser
(i) consenting to the amendments contemplated by this Section 5.5 and (ii) in the event so requested by the Company, agreeing to execute any documents 

19

 

or
instruments and take any actions necessary, advisable or appropriate at such time in order to effectuate, confirm and provide for the consents to the amendments to the Charter described in
Sections 5.5(a) and 5.5(b)). It shall be a condition precedent to any such issuance that each purchaser grants to the Company and the Chief Executive Officer of the Company, or any successor
thereto designated by the Company from time to time in writing by notice to such purchaser, with full power of substitution, as such purchaser's attorney and proxy, with respect to all Common Shares
and Preferred Shares now or hereafter held by such purchaser, an irrevocable proxy to attend meetings, vote, give consents, execute documents and in all other ways to act in such purchaser's stead
with respect to the authorization of the amendments to the Charter described in Sections 5.5(a) and 5.5(b). 

        (d)   Notwithstanding anything to the contrary herein, each Prior Investor agrees that it will not make any transfer, sale or
other disposition of Registrable Securities held by it to any other person or entity unless such transferee agrees in writing to the provisions of this Section 5.5 (including
(i) consenting to the amendments contemplated by this Section 5.5), and (ii) in the event so requested by the Company, agreeing to execute any documents or instruments and take
any actions necessary, advisable or appropriate at such time in order to effectuate, confirm and provide for the consents to the amendments to the Charter described in Sections 5.5(a) and
5.5(b)). It shall be a condition precedent to any such issuance that each transferee grants to the Company and the Chief Executive Officer of the Company, or any successor thereto designated by the
Company from time to time in writing by notice to such transferee, with full power of substitution, as such transferee's attorney and proxy, with respect to all Common Shares and Preferred Shares now
or hereafter held by such transferee, an irrevocable proxy to attend meetings, vote, give consents, execute documents and in all other ways to act in such
transferee's stead with respect to the authorization of the amendments to the Charter described in Sections 5.5(a) and 5.5(b). 

        (e)   The foregoing consents and proxies constitute a material inducement to Goldman Sachs' agreement to enter into the
Purchase Agreement and purchase the Subject Common Shares, and Goldman Sachs would not agree to so enter into the Purchase Agreement and to purchase the Subject Common Shares absent the foregoing
consents and proxies. All proxies referred to in this Section 5.5 are irrevocable and coupled with an interest. 

        (f)    The Company shall not, until the earlier of the first issuance of shares of Series D Stock and thirty
(30) days after the IPO Deadline Date, without the consent of a majority of the holders of Subject Common Shares, amend or alter the rights, preferences or privileges of any Preferred Shares or
create any new class of Preferred Stock that would materially and adversely affect the rights, preferences or privileges contemplated hereby for the Series O Stock. 1 or purposes hereof, the
amendment of the rights, preferences or privileges of the Series C Stock in a manner that reduces any such rights, preferences or privileges and the creation of a class or series of stock that
would rank senior to the Series D Preferred Stock in any respect shall each be deemed to materially and adversely affect the rights, preferences and privileges contemplated hereby for the
Series D Stock. 

        5.6    Entire Agreement.    This Agreement, the Exhibits and Schedules
hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and
no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 

        5.7    Severability.    In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or 

20

 

unenforceability
shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 

        5.8    Amendment and Waiver.    

        (a)   Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of the
Company and the holders of at least a majority of the Registrable Securities then outstanding; provided,  however, that Sections 3.4, 5.4, 5.5 and 5.8
may not be amended without the written consent of the holders of at least a majority of the Subject
Common Shares. 

        (b)   Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement
may be waived only with the written consent of the holders of at least a majority of the Registrable Securities then outstanding. 

        (c)   For the purposes of determining the number of Holder or Investors entitled to vote or exercise any rights hereunder, the
Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company. 

        5.9    Delays or Omissions.    It is agreed that no delay or omission
to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall
it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any
provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not alternative. 

        5.10    Notices.    All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other address as such party may designate by ten (10) days
advance written notice to the other parties hereto. 

        5.11    Attorneys' Fees.    In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party; under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals. 

        5.12    Titles and Subtitles.    The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 

        5.13    Additional Investors.    Notwithstanding anything to the
contrary contained herein, if the Company shall issue Equity Securities in accordance with Section 4.6(e), (h) or (j) of this Agreement, any purchaser
of such Equity Securities may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an "investor" hereunder. 

21

 

        5.14    Counterparts.    This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 

        5.15    Termination of Prior Agreement.    Effective as of the closing
of the Purchase Agreement, (i) the Prior Agreement is hereby terminated in its entirety and restated herein and (ii) all provisions of, rights granted and covenants made in the Prior
Agreement are hereby waived, released and terminated in their entirety and shall have no further force and effect; provided, that notwithstanding the
foregoing, Section 5.4 shall be effective as of the date hereof. 

[THIS
SPACE INTENTIONALLY LEFT BLANK] 

22

  
        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

 

							
	 COMPANY:	 	PURCHASER(S):
	
EPOCRATES, INC.	
 	
 THE GOLDMAN SACHS GROUP, INC.
	
 Signature:	
 	
/s/ KIRK LOEVNER  	
 	
Signature:	
 	
 
	 	 	

  	 	 	 	

  
	Print Name:	 	Kirk Loevner	 	Print Name:	 	 
	 	 	

  	 	 	 	

  
	Title:	 	Chairman & CEO	 	Title:	 	 
	 	 	

  	 	 	 	

  
	Address:	 	1100 Park Place, Suite 300

San Mateo, CA 94403	 	Address:	 	85 Broad Street, 4th Floor

New York, NY 10004
	 	 	 	 	Attn:	 	Thomas F. Jessop,
	 	 	Facsimile: 650-227-2770	 	 	 	Principal Strategic Investments

Facsimile: 646-835-8885

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

							
	 COMPANY:	 	PURCHASER(S):
	
EPOCRATES, INC.	
 	
 THE GOLDMAN SACHS GROUP, INC.
	
 Signature:	
 	
 	
 	
Signature:	
 	
/s/ DAVID B. HELLER  
	 	 	

  	 	 	 	

  
	Print Name:	 	 	 	Print Name:	 	David B. Heller
	 	 	

  	 	 	 	

  
	Title:	 	 	 	Title:	 	Managing Director
	 	 	

  	 	 	 	

  
	Address:	 	1100 Park Place, Suite 300

San Mateo, CA 94403	 	Address:	 	85 Broad Street, 4th Floor

New York, NY 10004
	 	 	 	 	Attn:	 	Thomas F. Jessop,
	 	 	Facsimile: 650-227-2770	 	 	 	Principal Strategic Investments

Facsimile: 646-835-8885

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
 THE BAY CITY CAPITAL FUND II, L.P.
	

 	
 	
Signature:	
 	
/s/ CARL GOLDFISCHER  
	 	 	 	 	

  
	 	 	Print Name:	 	Carl Goldfischer
	 	 	 	 	

  
	 	 	Title:	 	Manager and Manager Director of BAY

CITY CAPITAL MANAGEMENT II, LLC,

its General Partner
	

 	
 	
 THE BAY CITY CAPITAL FUND II CO-INVESTMENT FUND, L.P.
	

 	
 	
Signature:	
 	
/s/ CARL GOLDFISCHER  
	 	 	 	 	

  
	 	 	Print Name:	 	Carl Goldfischer
	 	 	 	 	

  
	 	 	Title:	 	Manager and Manager Director of BAY

CITY CAPITAL MANAGEMENT II, LLC,

its General Partner

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

			
	 	 	 INVESTORS:
	

 	
 	
 DLJ CAPITAL CORPORATION
	

 	
 	
/s/ PHILIPPE CHAMBON

 
	 	 	Print Name: Philippe Chambon

Its: Attorney-in-Fact
	

 	
 	
 DLJ ESC II, L.P.

By: DLJ LBO Plans Management Corporation

Its: General Partner
	

 	
 	
/s/ PHILIPPE CHAMBON

  By: Philippe Chambon

Its: Attorney in Fact
	

 	
 	
 SPROUT ENTREPRENEURS FUND, L.P.

By: DLJ Capital Corp.

Its: General Partner
	

 	
 	
/s/ PHILIPPE CHAMBON

  By: Philippe Chambon

Its: Attorney in Fact
	

 	
 	
 SPROUT CAPITAL IX, L.P.

By: DLJ Capital Corp.

Its: Managing General Partner
	

 	
 	
  

  By: Philippe Chambon

Its: Attorney in Fact

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
INTERWEST PARTNERS VII, L.P.
	

 	
 	
Signature:	
 	
/s/ GILBERT H. KLIMAN

 
	 	 	Print Name:	 	Gilbert H. Kliman

 
	 	 	Title:	 	 Managing Director

 
	

 	
 	
INTERWEST INVESTORS VII, L.P.
	

 	
 	
Signature:	
 	
/s/ GILBERT H. KLIMAN

 
	 	 	Print Name:	 	Gilbert H. Kliman

 
	 	 	Title:	 	Managing Director

 

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
DRAPER FISHER JURVETSON FUND V, L.P.
	

 	
 	
By:	
 	
/s/ JOHN FISHER

 
	 	 	Print Name:	 	John Fisher

 
	 	 	Title:	 	Managing Director

 
	

 	
 	
 DRAPER FISHER JURVETSON PARTNERS V, LLC
	

 	
 	
By:	
 	
/s/ JOHN FISHER

 
	 	 	Print Name:	 	John Fisher

 
	 	 	Title:	 	Managing Member

 

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
 THREE ARCH PARTNERS II, L.P.

By Three Arch Management II, L.L.C,

Its General Partner
	 	 	By:	 	/s/ MARK WAN

 
	 	 	 	 	Mark Wan, Managing Member

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
 NORMA FIEDOTIN AND GREGG ROTENBERG
	

 	
 	
Signature:	
 	
/s/ NORMA FIEDOTIN

 
	 	 	Printed Name:	 	Norma Fiedotin

 
	

 	
 	
Signature:	
 	
/s/ GREGG ROTENBERG

 
	 	 	Printed Name:	 	Gregg Rotenberg

 

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
 ARNOLDO FIEDOTIN
	

 	
 	
Signature:	
 	

 
	 	 	 	 	

  
	 	 	Printed Name:	 	Arnoldo Fiedotin

 

 

 

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof. 

 

					
	 	 	 INVESTORS:
	

 	
 	
  DIANA FIEDOTIN AND ROGER FISHMAN
	

 	
 	
Signature:	
 	

 
	 	 	 	 	

  
	 	 	Printed Name:	 	Diana Fiedotin

 
	

 	
 	
Signature:	
 	

 
	 	 	 	 	

  
	 	 	Printed Name:	 	Roger Fishman

 

 

 

 

  SCHEDULE OF INVESTORS  

Goldman
Sachs

85 Broad. Street, 4th Floor

New York, NY 10004

Attn:
Thomas F. Jessop

         Principal Strategic Investments 

Hudson
Street 

DLJ
Capital Corporation

c/o New Leaf Venture Partners

Times Square. Tower

7 Times Square, Suite 1603

New York, NY 10036

DLJ
ESC II, L.P.

c/o New Leaf' Venture Partners

Times Square Tower

7 Times Square, Suite 1603

New York, NY 10036 

Sprout
Entrepreneurs Fund, L.P.

c/o New Leaf Venture Partners

Times Square Tower

7 Times Square, Suite 1603

New York, NY 10036 

Sprout
Capital IX, L.P.

c/o New Leaf Venture Partners

Times Square Tower

7 Times Square, Suite 1603

New York, NY 10036 

The
Bay City Capital Fund II, L.P.

750 Battery Street, Suite 400

San Francisco, CA 94111 

The
Bay City Capital Fund II Co-Investment Fund, L.P.

750 Battery Street, Suite 400

San Francisco, CA 94111 

Three
Arch Partners II, L.P.

3200 Alpine Road

Portola Valley, CA 94028 

InterWest
Partners VII, L.P.

3000 Sand Hill Road

Building 3, Suite 255

Menlo Park, CA 94025 

InterWest
investors VII, L.P.

3000 Sand Hill Road

Building 3, Suite 255

Menlo Park, CA 94025 

A-1

 

Draper
Fisher Jurvetson Fund V, L.P.

2882 Sand Hill Road, Suite 150

Menlo Park, CA 94025 

Draper
Fisher Jurvetson Partners V, LLC

2882 Sand Hill Road, Suite 150

Menlo Park, CA 94025 

Arnoldo
Fiedotin 

Diana
Fiedotin and Roger Fishman 

Norma
Fiedotin and Gregg Rotenberg 

A-2

QuickLinks

Exhibit 10.1

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 Exhibit 10.3  

 
 

EPOCRATES, INC.    
    
    1999 STOCK OPTION PLAN    
    

Adopted August 2, 1999

Approved By Shareholders August 2, 1999

Amended By Board of Directors August 1, 2000

Approved by Stockholders August 1, 2000

Amended by Board of Directors January 16, 2003

Amended by Board of Directors July 16, 2003

Approved by Stockholders January 15, 2004

Amended by Board of Directors June 28, 2004

Approved by Stockholders September 9, 2004

Amended by Board of Directors July 21, 2004

Approved by Stockholders September 9, 2004

Amended by Board of Directors July 20, 2005

Amended by Board of Directors November 29, 2005

Approved by Stockholders January 21, 2006

Amended by Board of Directors October 18, 2006

Amended by Board of Directors April 13, 2007

Amended by Board of Directors July 18, 2007

Amended by Stockholders October 15, 2007

Amended by Board of Directors January 31, 2008

Amended by Board of Directors March 19, 2008

Termination Date: August 2, 2009

1.    PURPOSES.    

        (a)    Eligible Option Recipients.    The persons eligible to receive
Options are the Employees, Directors and Consultants of the Company and its Affiliates. 

        (b)    Available Options.    The purpose of the Plan is to provide a
means by which eligible recipients of Options may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Options: (i) Incentive
Stock Options and (ii) Nonstatutory Stock Options. 

        (c)    General Purpose.    The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Options, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates. 

2.    DEFINITIONS.    

        (a)   "Affiliate" means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 

        (b)   "Board" means the Board of Directors of the Company. 

        (c)   "Code" means the Internal Revenue Code of 1986, as amended. 

        (d)   "Committee" means a Committee appointed by the Board in accordance with
subsection 3(c). 

        (e)   "Common Stock" means the common stock of the Company. 

1

 

        (f)    "Company" means Epocrates, Inc., a Delaware corporation. 

        (g)   "Consultant" means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the Board of Directors of an Affiliate. However, the
term "Consultant" shall not include either Directors of the Company who are not compensated by the Company for their services as Directors or Directors of the Company who are merely paid a director's
fee by the Company for their services as Directors. 

        (h)   "Continuous Service" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Optionholder's Continuous Service shall not be deemed to have terminated merely because
of a change in the capacity in which the Optionholder renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Optionholder renders
such service, provided that there is no interruption or termination of the Optionholder's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an
Affiliate or a Director of the Company will not constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. 

        (i)    "Covered Employee" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of
Section 162(m) of the Code. 

        (j)    "Director" means a member of the Board of Directors of the Company. 

        (k)   "Disability" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of that person's position with the Company or an Affiliate of the Company because of the sickness
or injury of the person and (ii) after the Listing Date, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. 

        (l)    "Employee" means any person employed by the Company or an Affiliate. Mere
service as a Director or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 

        (m)  "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (n)   "Fair Market Value" means, as of any date, the value of the Common Stock
determined as follows: 

        (i)    If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable. 

        (ii)   In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the
Board. 

        (iii)  Prior to the Listing Date, the value of the Common Stock shall be determined in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations. 

        (o)   "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 

2

 

        (p)   "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an
interdealer quotation system if such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968. 

        (q)   "Non-Employee Director" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a
subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 

        (r)   "Nonstatutory Stock Option" means an Option not intended to qualify as an
Incentive Stock Option. 

        (s)   "Officer" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder. 

        (t)    "Option" means an Incentive Stock Option or a Nonstatutory Stock Option
granted pursuant to the Plan. 

        (u)   "Option Agreement" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 

        (v)   "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option. 

        (w)  "Outside Director" means a Director of the Company who either
(i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a
Director or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. 

        (x)   "Plan" means this Epocrates, Inc. 1999 Stock Option Plan. 

        (y)   "Rule 16b-3" means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. 

        (z)   "Securities Act" means the Securities Act of 1933, as amended. 

        (aa) "Ten Percent Shareholder" means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. 

3.    ADMINISTRATION.    

        (a)    Administration by Board.    The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided in subsection 3(c). 

3

 

        (b)    Powers of Board.    The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan: 

        (i)    To determine from time to time which of the persons eligible under the Plan shall be granted Options; when and how each
Option shall be granted; what type of Option shall be granted; the provisions of each Option granted (which need not be identical), including the time or times when a person shall be permitted to
receive stock pursuant to an Option; and the number of shares with respect to which an Option shall be granted to each such person. 

        (ii)   To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective. 

        (iii)  To amend the Plan or an Option as provided in Section 11. 

        (iv)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the
best interests of the Company which are not in conflict with the provisions of the Plan. 

        (c)    Delegation to Committee.    

        (i)    General.    The Board may delegate administration of the Plan
to a Committee or Committees of one or more members of the Board, and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee
any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. 

        (ii)    Committee Composition when Common Stock is Publicly
Traded.    At such time as the Common Stock is publicly traded, in the discretion of the Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Options to eligible persons who
are either (1) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Option or (2) not persons with respect to
whom the Company wishes to comply with Section 162(m) of the Code and/or) (ii) delegate to a committee of one or more members of the Board who are not Non-Employee Directors
the authority to grant Options to eligible persons who are not then subject to Section 16 of the Exchange Act. 

4.    SHARES SUBJECT TO THE PLAN.    

        (a)    Share Reserve.    Subject to the provisions of
Section 10 relating to adjustments upon changes in stock, the stock that may be issued pursuant to Options shall not exceed in the aggregate twelve million one hundred seventy-nine thousand two
hundred eighty-five (12,179,285) shares of Common Stock. 

        (b)    Reversion of Shares to the Share Reserve.    If any Option
shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Option shall revert to and again become available for
issuance under the Plan. If any 

4

 

Common
Stock acquired pursuant to the exercise of an Option shall for any reason be repurchased by the Company under an unvested share repurchase option provided under the Plan, the stock repurchased
by the Company under such repurchase option shall not revert to and again become available for issuance under the Plan. 

        (c)    Source of Shares.    The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise. 

        (d)    Share Reserve Limitation.    Prior to the Listing Date, at no
time shall the total number of shares issuable upon exercise of all outstanding Options and the total number of shares provided for under any stock bonus or similar plan of the Company exceed the
applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations, based on the shares of the Company
which are outstanding at the time the calculation is made. 

5.    ELIGIBILITY.    

        (a)    Eligibility for Specific Options.    Incentive Stock Options
may be granted only to Employees. Nonstatutory Stock Options may be granted to Employees, Directors and Consultants. 

        (b)    Ten Percent Shareholders.    No Ten Percent Shareholder shall
be eligible for the grant of an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years from the date of grant. 

        Prior
to the Listing Date, no Ten Percent Shareholder shall be eligible for the grant of a Nonstatutory Stock Option unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock at the date of grant. 

        (c)    Section 162(m) Limitation.    Subject to the provisions
of Section 10 relating to adjustments upon changes in stock, no employee shall be eligible to be granted Options covering more than Five Hundred Thousand (500,000) shares of the Common Stock
during any calendar year. This subsection
5(c) shall not apply prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall not apply until (i) the earliest of: (1) the first material modification of the
Plan (including any increase in the number of shares reserved for issuance under the Plan in accordance with Section 4); (2) the issuance of all of the shares of Common Stock reserved
for issuance under the Plan; (3) the expiration of the Plan; or (4) the first meeting of shareholders at which Directors of the Company are to be elected that occurs after the close of
the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such other date required
by Section 162(m) of the Code and the rules and regulations promulgated thereunder. 

6.    OPTION PROVISIONS.    

        Each
Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: 

        (a)    Term.    Subject to the provisions of subsection 5(b) regarding
Ten Percent Shareholders, no Option shall be exercisable after the expiration of ten (10) years from the date it was granted. 

        (b)    Exercise Price of an Incentive Stock Option.    Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise price of each Incentive Stock Option shall be not less 

5

 

than
one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions
of Section 424(a) of the Code. 

        (c)    Exercise Price of a Nonstatutory Stock Option.    Subject to
the provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise price of each Nonstatutory Stock Option granted prior to the Listing Date shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option granted on or
after the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. 

        (d)    Consideration.    The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board
at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option) by (1) delivery to the Company of other Common Stock, (2) according to a deferred
payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other Common Stock) with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment. 

        In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 

        (e)    Transferability of an Incentive Stock Option.    An Incentive
Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(e), the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 

        (f)    Transferability of a Nonstatutory Stock Option.    A
Nonstatutory Stock Option granted prior to the Listing Date shall not be transferable except (i) by will, (ii) by the laws of descent and distribution, and (iii) if provided for
in the Option Agreement, then to the extent permitted by Section 260.140.41(d) of Title 10 of the California Code of Regulations at the time of the grant of the Option, and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock Option granted on or after the Listing Date shall be transferable to the extent provided in the Option Agreement.
If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing provisions of this subsection 6(f), the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 

        (g)    Vesting Generally.    The total number of shares of Common
Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments which may, but need not, 

6

 

be
equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option provisions governing the minimum number of shares as to which an
Option may be exercised. 

        (h)    Minimum Vesting Prior to the Listing Date.    Notwithstanding
the foregoing subsection 6(g), Options granted prior to the Listing Date shall provide for vesting of the total number of shares at a rate of at least twenty percent (20%) per year over five
(5) years from the date the Option was granted, subject to reasonable conditions such as continued employment. However, in the case of such Options granted to Officers, Directors or
Consultants, the Option may become fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company; for example, the
vesting provision of the Option may provide for vesting of less than twenty percent (20%) per year of the total number of shares subject to the Option. 

        (i)    Termination of Continuous Service.    In the event an
Optionholder's Continuous Service terminates (other than upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled
to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option Agreement, which, for Options granted prior to the Listing Date, shall not be less than thirty (30) days, unless
such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall terminate. 

        (j)    Extension of Termination Date.    An Optionholder's Option
Agreement may also provide that if the exercise of the Option following the termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be
prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service
during which the exercise of the Option would not be in violation of such registration requirements. 

        (k)    Disability of Optionholder.    In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise it as of the
date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified
in the Option Agreement, which, for Options granted prior to the
Listing Date, shall not be less than six (6) months) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option shall terminate. 

        (l)    Death of Optionholder.    In the event (i) an
Optionholder's Continuous Service terminates as a result of the Optionholder's death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the
termination of the Optionholder's Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise the Option as of the date
of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's
death pursuant to subsection 6(e) or 6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement, which, for Options granted prior to the Listing Date, shall not be less than six (6) months) or (2) the expiration of the term of such Option as
set forth in 

7

 

the
Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate. 

        (m)    Early Exercise.    The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares subject to the Option prior
to the full vesting of the Option. Subject to the "Repurchase Limitation" in subsection 9(h), any unvested shares so purchased may be subject to an unvested share repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate. 

        (n)    Right of Repurchase.    Subject to the "Repurchase Limitation"
in subsection 9(h), the Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares acquired by the
Optionholder pursuant to the exercise of the Option. 

        (o)    Right of First Refusal.    The Option may, but need not,
include a provision whereby the Company may elect, prior to the Listing Date, to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or
any part of the shares exercised pursuant to the Option. Except as expressly provided in this subsection 6(o), such right of first refusal shall otherwise comply with any applicable provisions of the
Bylaws of the Company. 

        (p)    Re-Load Options.    Without in any way limiting the
authority of the Board to make or not to make grants of Options hereunder, the Board shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling
the Optionholder to a further Option (a "Re-Load Option") in the event the Optionholder exercises the Option evidenced by the
Option Agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the Option Agreement. Any such Re-Load
Option shall (i) provide for a number of shares equal to the number of shares surrendered as part or all of the exercise price of such Option; (ii) have an expiration date which is the
same as the expiration date of the Option the exercise of which gave rise to such Re-Load Option; and (iii) have an exercise price which is equal to one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Re-Load Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option shall be
subject to the same exercise price and term provisions heretofore described for Options under the Plan. 

        Any
such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board may designate at the time of the grant of the original Option; provided,
however, that the designation of any Re-Load Option as an Incentive Stock Option shall be subject to the one hundred thousand dollars ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 9(d) and in Section 422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any such
Re-Load Option shall be subject to the availability of sufficient shares under subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options under subsection 5(c) and
shall be subject to such other terms and conditions as the Board may determine which are not inconsistent with the express provisions of the Plan regarding the terms of Options. 

7.    COVENANTS OF THE COMPANY.    

        (a)    Availability of Shares.    During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock required to satisfy such Options. 

        (b)    Securities Law Compliance.    The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Options and to issue and sell shares of Common Stock upon exercise of the
Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Option or any stock issued or issuable pursuant to any such Option.
If, after reasonable 

8

 

efforts,
the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Options unless and until such authority is obtained. 

8.    USE OF PROCEEDS FROM STOCK.    

        Proceeds
from the sale of stock pursuant to Options shall constitute general funds of the Company. 

9.    MISCELLANEOUS.    

        (a)    Acceleration of Exercisability and Vesting.    The Board shall
have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Option stating the time at which it may first be exercised or the time during which it will vest. 

        (b)    Shareholder Rights.    No Optionholder shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Option unless and until such Optionholder has satisfied all requirements for exercise of the Option
pursuant to its terms. 

        (c)    No Employment or other Service Rights.    Nothing in the Plan
or any instrument executed or Option granted pursuant thereto shall confer upon any Optionholder any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the
Option was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 

        (d)    Incentive Stock Option $100,000 Limitation.    To the extent
that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options. 

        (e)    Investment Assurances.    The Company may require an
Optionholder, as a condition of exercising or acquiring stock under any Option, (i) to give written assurances satisfactory to the Company as to the Optionholder's knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (ii) to give written assurances satisfactory to the Company
stating that the Optionholder is acquiring the stock subject to the Option for the Optionholder's own account and not with any present intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (iii) the issuance of the shares upon the exercise or acquisition of stock under the
Option has been registered under a then currently effective registration statement under the Securities Act or (iv) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of
the stock. 

9

 

        (f)    Withholding Obligations.    To the extent provided by the terms
of an Option Agreement, the Optionholder may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under an Option by any of the following
means (in addition to the Company's right to withhold from any compensation paid to the Optionholder by the Company) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares from the shares of the Common Stock otherwise issuable to the Optionholder as a result of the exercise or acquisition of stock under the Option;
or (iii) delivering to the Company owned and unencumbered shares of the Common Stock. 

        (g)    Information Obligation.    Prior to the Listing Date, to the
extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Optionholders at least annually. This subsection 9(g)
shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information. 

        (h)    Repurchase Limitation.    The terms of any repurchase option
shall be specified in the Option and may be either at Fair Market Value at the time of repurchase or at not less than the original purchase price. To the extent required by Section 260.140.41
and Section 260.140.42 of Title 10 of the California Code of Regulations, any repurchase option contained in an Option granted prior to the Listing Date to a person who is not an Officer,
Director or Consultant shall be upon the terms described below: 

        (i)    Fair Market Value.    If the repurchase option gives the
Company the right to repurchase the shares upon termination of employment at not less than the Fair Market Value of the shares to be purchased on the date of termination of Continuous Service, then
(i) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days of termination of Continuous Service (or in
the case of shares issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the
Company and the Optionholder (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small business stock") and (ii) the right
terminates when the shares become publicly traded. 

        (ii)    Original Purchase Price.    If the repurchase option gives the
Company the right to repurchase the shares upon termination of Continuous Service at the original purchase price, then (i) the right to
repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares per year over five (5) years from the date the Option is granted (without
respect to the date the Option was exercised or became exercisable) and (ii) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of Continuous Service (or in the case of shares issued upon exercise of Options after such date of termination, within ninety (90) days after the
date of the exercise) or such longer period as may be agreed to by the Company and the Optionholder (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code
regarding "qualified small business stock"). 

10.    ADJUSTMENTS UPON CHANGES IN STOCK.    

        (a)    Capitalization Adjustments.    If any change is made in the
stock subject to the Plan, or subject to any Option, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to subsection
4(a), (ii) the maximum number of securities subject to award to any person pursuant to subsection 5(c), and (iii) the class(es) and number of 

10

 

securities
and price per share of stock subject to the outstanding Options. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction "without the receipt of consideration" by the Company.) 

        (b)    Change in Control—Dissolution or Liquidation.    In
the event of a dissolution or liquidation of the Company, then such Options shall be terminated if not exercised (if applicable) prior to such event. 

        (c)    Change in Control—Asset Sale, Merger, Consolidation or Reverse
Merger.    In the event of (i) a sale of substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities, cash or otherwise, then any surviving corporation or acquiring corporation shall assume any Options outstanding under the
Plan or shall substitute similar Options (including an option to acquire the same consideration paid to the shareholders in the transaction described in this subsection 10(c) for those outstanding
under the Plan. In the event any surviving corporation or acquiring corporation refuses to assume such Options or to substitute similar Options for those outstanding under the Plan, then with respect
to Options held by Optionholders whose Continuous Service has not terminated, the vesting of such Options shall be accelerated in full, and the Options shall terminate if not exercised at or prior to
such event. With respect to any other Options outstanding under the Plan, such Options shall terminate if not exercised prior to such event. 

11.    AMENDMENT OF THE PLAN AND OPTIONS.    

        (a)    Amendment of Plan.    The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the shareholders of the
Company to the extent shareholder approval is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements. 

        (b)    Shareholder Approval.    The Board may, in its sole discretion,
submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. 

        (c)    Contemplated Amendments.    It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 

        (d)    No Impairment of Rights.    Rights under any Option granted
before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Optionholder and (ii) the Optionholder consents in
writing. 

        (e)    Amendment of Options.    The Board at any time, and from time
to time, may amend the terms of any one or more Options; provided, however, that the rights under any Option shall not be impaired by any such amendment unless (i) the Company requests the
consent of the Optionholder and (ii) the Optionholder consents in writing. 

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12.    TERMINATION OR SUSPENSION OF THE PLAN.    

        (a)    Plan Term.    The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the shareholders of the Company,
whichever is earlier. No Options may be granted under the Plan while the Plan is suspended or after it is terminated. 

        (b)    No Impairment of Rights.    Suspension or termination of the
Plan shall not impair rights and obligations under any Option granted while the Plan is in effect except with the written consent of the Optionholder. 

13.    EFFECTIVE DATE OF PLAN.    

        The
Plan shall become effective as determined by the Board, but no Option shall be exercised unless and until the Plan has been approved by the shareholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 

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QuickLinks

EPOCRATES, INC. 1999 STOCK OPTION PLAN

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