Document:

Exhibit 4.2

 

AMENDED AND RESTATED

INVESTOR RIGHTS AGREEMENT

 

This Amended and Restated Investor Rights Agreement (this “Agreement”) is entered into as of the 28th day of March, 2012 (the “Effective Date”), by and among Sientra, Inc., a Delaware corporation (the “Company”), the investors listed on Exhibit A attached hereto (referred to hereinafter as the “Investors” and each individually as an “Investor”), the stockholders listed on Exhibit B attached hereto (referred to hereinafter as the “Common  Holders”) and each other Person (as defined herein) who shall, subsequent to the date hereof, join in and become a party to this Agreement by executing and delivering to the Company an instrument of accession substantially in the form of Exhibit C attached hereto (an “Instrument of Accession”).

 

RECITALS

 

WHEREAS, the Company, the Common Holders and certain of the Investors previously entered into that certain Investor Rights Agreement dated as of April 4, 2007 (the “Prior Agreement”) in connection with the purchase of shares of Series B Preferred Stock of the Company;

 

WHEREAS, pursuant to the terms of the Prior Agreement, any amendment thereto requires the written consent of the Company and the holders of at least 63% of the then outstanding shares of Series A Stock and Series B Stock (as defined below);

 

WHEREAS, the Company and certain of the Investors are parties to the Series C Preferred Stock Purchase Agreement dated as of October 21, 2011 (the “Purchase Agreement”); and

 

WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce certain of the Investors to invest funds in the Company pursuant to the Purchase Agreement, the Company and the holders of at least 63% of the then outstanding shares of Series A Stock and Series B Stock hereby desire to amend and restate the Prior Agreement to include the Investors under the Purchase Agreement as parties to this Agreement and make certain other changes as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and in the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.       GENERAL.

 

1.1                            Definitions. Unless otherwise defined herein, as used in this Agreement the following terms shall have the following respective meanings:

 

(a)                               “Affiliate(s)” means any Person directly or indirectly controlling, controlled by or under common control with another Person.

 

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(b)                              “Common Stock” means the Common Stock, $0.01 par value per share, of the Company.

 

(c)                               “Corporate Reorganization” has the meaning set forth in the Restated Charter.

 

(d)                             “Equity Securities” means (i) any Common Stock, Preferred Stock or other capital stock of the Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any Common Stock, Preferred Stock or other capital stock of the Company (including any option to purchase such a convertible security), (iii) any debt security or capitalized lease having an equity feature with respect to the Company, or (iv) any warrant, option or right to subscribe to or purchase any Common Stock, Preferred Stock or other capital stock of the Company.

 

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

 

(f)                                “Excluded Securities” shall mean (i) any shares of Series C Stock issued pursuant to the terms of the Purchase Agreement; (ii) Equity Securities issued or issuable as a dividend or other distribution on Common Stock or Preferred Stock, (iii) shares of Common Stock issued or issuable upon conversion of shares of Preferred Stock, (iv) Equity Securities or options or restricted stock awards or other rights therefor issued or issuable to employees, officers, directors, consultants, contractors, or advisors of the Company pursuant to any compensatory or incentive plan or arrangement adopted, approved or ratified by the Board of Directors, including a majority of the Preferred Directors, (v) Equity Securities issued or issuable directly or pursuant to the exercise of warrants, options or other rights granted in connection with any loan, equipment lease, technology license, vendor or purveyor or customer relationship or similar non-equity financing transaction approved by the Board of Directors, (vi) shares of Common Stock issued to the public in a firm commitment underwritten public offering pursuant to an effective registration statement filed under the Securities Act, (vii) Equity Securities issued pursuant to the acquisition by the Company of another corporation or entity by consolidation, corporate reorganization, or merger, or purchase of all or substantially all of the assets of such corporation or entity as approved by the Board of Directors, including a majority of the Preferred Directors, (viii) any Equity Securities excluded by the holders of at least a Super Investor Majority, and (ix) any Equity Securities issued or issuable upon conversion, exercise or exchange of any Equity Securities issued after the date hereof, so long as the preemptive rights established by Section 4.2 were complied with, waived, or were inapplicable pursuant to any provision of Section 4.2 with respect to the initial sale or grant by the Company of such Equity Securities.

 

(g)                              “Form S-3” means such form under the Securities Act as in effect on the Effective Date or any successor or 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.

 

(h)                              “Holder” means any person owning of record, or having the right to acquire, Registrable Securities or any assignee of record of such Registrable Securities in accordance with Section 2.9.

 

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(i)                                  “Initial Offering” means the Company’s first public offering of its Common Stock registered under the Securities Act.

 

(j)                                  “Initiating Holders” means the Holders of at least 65% of the Registrable Securities.

 

(k)                              “Person” means any individual, firm, company, corporation, unincorporated association, partnership, limited liability company, trust, syndicate, estate, joint venture or other entity; and shall include any successor(by merger or otherwise) of such entity.

 

(l)                                  “Preferred Directors” has the meaning set forth in the Company’s Restated Charter.

 

(m)                          “Preferred Stock” means the Company’s Series A Stock, Series B Stock and Series C Stock.

 

(n)                              “Qualified IPO” has the meaning set forth in the Restated Charter.

 

(o)                              “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.

 

(p)                              “Registrable Securities” means (i) Common Stock issuable or issued upon conversion of any shares of the Preferred Stock, (ii) any shares of Common Stock issued as (or issuable upon conversion or exercise of any warrant, right or other security which is issued as) a dividend with respect to, or in exchange for or in replacement of, the shares of Preferred Stock, and (iii) up to 250,001 shares of Common Stock owned by Affiliates of OrbiMed Advisors LLC. Notwithstanding the foregoing, Registrable Securities shall not include any securities (A) sold by a Person to the public either pursuant to a registration statement or Rule 144, (B) sold in a private transaction in which the transferor’s rights under Section 2 of this Agreement are not assigned, or (C) that may be sold in any three-month period without registration in compliance with Rule 144.

 

(q)                              “Registrable Securities Then Outstanding” shall be the number of shares of the Common Stock that are Registrable Securities and either (i) are then issued and outstanding or (ii) are issuable pursuant to then exercisable or convertible securities.

 

(r)                                 “Registration Expenses” means all expenses incurred by the Company in complying with Sections 2.1, 2.2 and 2.3 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 $50,000 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).

 

(s)                                “Restated Charter” means that certain Fourth Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 27, 2012, as may be amended from time to time.

 

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(t)                                 “Rule 144” means Rule 144 of the rules and regulations promulgated under the Securities Act or any similar or analogous rule promulgated under the Securities Act.

 

(u)                              “SEC” means the Securities and Exchange Commission.

 

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

 

(w)                          “Selling Expenses” means all underwriting discounts and selling commissions applicable to the sale, fees and disbursements of legal counsel for the Holders in excess of $50,000.

 

(x)                              “Series A Stock” means the Company’s Series A Preferred Stock, par value $0.01 per share.

 

(y)                              “Series B Stock” means the Company’s Series B Preferred Stock, par value $0.01 per share.

 

(z)                               “Series C Purchase Price” means with regard to each share of Series C Stock, $5.335.

 

(aa)                        “Series C Stock” means the Company’s Series C Preferred Stock, par value $0.01 per share.

 

(bb)                      “Shares” means the Common Stock and Preferred Stock held by the Common Holders and the Investors and their permitted assigns.

 

(cc)                        “Special Registration Statement” means a registration statement (i) relating to any employee benefit plan, (ii) with respect to any corporate reorganization or transaction under Rule 145 of the Securities Act, including any registration statements related to the issuance or resale of securities issued in such a transaction, (iii) related to stock issued upon conversion of debt securities or (iv) on a form that does not permit secondary sales.

 

(dd)                    “Super Investor Majority” has the meaning set forth in the Restated Charter.

 

(ee)                        “Voting Agreement” means the Voting Agreement, dated as of the Effective Date.

 

SECTION 2.       REGISTRATION; RESTRICTIONS ON TRANSFER.

 

2.1                            Demand Registration.

 

(a)                               Subject to the conditions of this Section 2.1, if the Company shall receive a written request from the Initiating Holders that the Company file a registration statement under the Securities Act covering the registration of the Registrable Securities resulting in net offering proceeds of at least $35,000,000, then the Company will (x) promptly give written notice of the requested registration to all Holders and (y) as soon as practicable, file and use its reasonable best efforts to effect such registration under the Securities Act (including, without limitation,

 

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filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within thirty (30) days after such written notice from the Company is mailed or delivered. Such written request may specify all or a part of a Holder’s Registrable Securities.

 

(b)                              If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, then the Initiating Holders shall so advise the Company as a part of their written request made pursuant to this Section 2.1 or any request pursuant to Section 2.3, and the Company shall include such information in the written notice referred to in Section 2.1(a) or Section 2.3(a), 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. The Company shall (together with all Holders proposing to distribute their Registrable Securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be reasonably acceptable to a majority in interest of the Initiating Holders). Notwithstanding any other provision of this Section 2.1 or Section 2.3, 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 that 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), or in such other proportions as mutually agreed to by such selling 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.

 

(c)                               The Company shall not be required to effect a registration pursuant to this Section 2.1:

 

(i)                                  prior to the earlier of June 30, 2014, or six months after the Initial Offering;

 

(ii)                              after the Company has effected three registrations pursuant to this Section 2.1 and either (A) such registrations have been declared or ordered effective or (B) the request for such Registration Statements has been subsequently withdrawn by the Initiating Holders and the Initiating Holders has not paid the Registration Expenses of such withdrawn registration;

 

(iii)                          during the period starting with the date of filing of, and ending on the date 180 days following, the effective date of the registration statement pertaining to the

 

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Initial Offering; provided that the Company makes reasonable efforts to cause the registration statement for the Initial Offering to become effective;

 

(iv)                          if within 30 days of receipt of a written request from the Initiating Holders pursuant to Section 2.1(a), the Company gives notice to the Holders of the Company’s intention to file a registration statement for its Initial Offering within 90 days;

 

(v)                              if the Company shall furnish to the Holders requesting a registration statement pursuant to this Section 2.1, a certificate signed by the Chairman of the Board of Directors of the Company (the “Board”) stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders 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 90 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 twice in any 12 month period;

 

(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 2.3 below; or

 

(vii)                      if the Company has, within the six month period preceding the date of such request, already effected a demand registration for the Holders pursuant to this Section 2.1 and such registration has been declared or ordered effective.

 

2.2                            Piggyback Registrations. The Company shall promptly notify in writing (the “Piggyback Notice”) all Holders of Registrable Securities the proposed 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 registrations pursuant to Sections 2.1 and 2.3) (a “Piggyback Registration”) and will afford each such Holder a reasonable opportunity to include in such registration statement all or part of such Registrable Securities requested to be registered 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 10 days after receipt of the Piggyback Notice, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities requested to be registered 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 a Piggyback Registration relates to an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to have its Registrable Securities included in such Piggyback 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 Registrable Securities through such

 

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Underwriting (together with the Company) shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter or underwriters of a Piggyback Registration or a registration on Form S-3 made pursuant to Section 2.3 below determine 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 as follows: (i) first, to the securities the Company proposes to sell; (ii) second, to the Registrable Securities requested to be included in such registration by the Holders seeking registration under this Section 2.2 on a pro rata basis based on the total number of Registrable Securities held by such Holders; (iii) third, to the Registrable Securities held by Holders other than Holders who requested that their Registrable Securities be included in such registration under this Section 2.2, pro rata based on the total number of Registrable Securities held by such Holders; and (iv) fourth, to the securities of any other stockholder of the Company (other than a Holder) on a pro rata basis, or in such other proportions as mutually agreed to by such selling Holders; provided, however, that in no event shall the amount of securities of the participating Holders included in the Piggyback Registration be reduced below 25% of the total amount of securities included in such offering, unless such offering is the Initial Offering of the Company’s securities, in which case the participating Holders may be entirely excluded if the managing underwriter makes the determination described above and no other stockholder’s securities are included. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least 10 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 that is a partnership, limited liability company or corporation, the partners, former partners, members, former members and stockholders of such Holder, or the estates and family members of any such partners, former partners, members, former members or stockholders and any trusts for the benefit of any of the foregoing persons 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,” as defined in this sentence.

 

(b)                              Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder or any stockholder 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 2.4.

 

2.3                            Form S-3 Registration. From and after the first anniversary of the Company’s Initial Offering, if any Holder or Holders of Registrable Securities 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 for a public offering of Registrable Securities, the Company shall use its reasonable best efforts to:

 

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

 

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(b)                              as soon as practicable effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.3;

 

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

 

(ii)                              if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public, of less than $1,000,000;

 

(iii)                          if within 30 days of receipt of a written request from any Holder or Holders pursuant to this Section 2.3, the Company gives notice to such Holder or Holders of the Company’s intention to make a public offering within 90 days, other than pursuant to a Special Registration Statement;

 

(iv)                          if the Company shall furnish to the Holders requesting a registration statement pursuant to this Section 2.3 a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 90 days after receipt of the request of the Holder or Holders under this Section 2.3; provided, that such right to delay a request under this Section 2.3(b)(iv) shall be exercised by the Company not more than twice in any 12 month period; or

 

(v)                              if the Company has, within the 12 month period preceding the date of such request, already effected two registrations on Form S-3 for the Holders pursuant to this Section 2.3 and both such registrations have been declared or ordered effective.

 

(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 2.3 shall not be counted as demands for registration or registrations effected pursuant to Section 2.1.

 

2.4                            Expenses of Registration.  Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.1 or any registration under Section 2.2 or Section 2.3 herein shall be borne by the Company. The Company shall not, however, be required to pay the Registration Expenses of any registration proceeding begun pursuant to Section 2.1 or 2.3, as applicable, 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

 

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Holders were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities agree to forfeit their right to one requested registration pursuant to Section 2.1 Section 2.3, 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 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 2.1 or Section 2.3, as applicable, to a demand registration. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders (or sellers) of the securities so registered pro rata on the basis of the number of shares so registered.

 

2.5                            Obligations of the Company. Whenever required to effect the registration of any Registrable Securities pursuant to this Section 2, the Company shall use its best efforts to:

 

(a)                               prepare and file with the SEC a registration statement with respect to such Registrable Securities, provided that before filing a registration statement or any amendments or supplements thereto, the Company shall furnish to one counsel selected by the holders of at least 50% of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel and shall use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to six months or, if earlier, until the Holder or Holders have completed the distribution related thereto; provided, however, that at any time, upon written notice to the participating Holders and for a period not to exceed six months thereafter (the “Suspension Period”), the Company may delay the filing or effectiveness of any registration statement or suspend the use or effectiveness of any registration statement (and the Initiating Holders hereby agree not to offer or sell any Registrable Securities pursuant to such registration statement during the Suspension Period) if the Company reasonably believes that there is or may be in existence material nonpublic information or events involving the Company, the failure of which to be disclosed in the prospectus included in the registration statement could result in a Violation (as defined below). In the event that the Company shall exercise its right to delay or suspend the filing or effectiveness of a registration hereunder, the applicable time period during which the registration statement is to remain effective shall be extended by a period of time equal to the duration of the Suspension Period. If so directed by the Company, all Holders registering shares under such registration statement shall (i) not offer to sell any Registrable Securities pursuant to the registration statement during the period in which the delay or suspension is in effect after receiving notice of such delay or suspension; and (ii) use their best efforts to deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holders’ possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. Notwithstanding the foregoing, the Company shall not be required to file, cause to become effective or maintain the effectiveness of any registration statement other than a registration statement on Form S-3 that contemplates a distribution of securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act;

 

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(b)                              provide notice in accordance with Section 6.9 hereof to each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and 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 Section 2.5(a) above;

 

(c)                               furnish to the Holders such number of copies of such registration statement; each amendment and supplement thereto, the prospectus included in such registration statement, including each 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 that are included in such registration; provided, however, that any of such documents set forth in this Section 2.5(c) that are available on the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall be deemed to be furnished to the Holders;

 

(d)                             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, except for those jurisdictions in which the Company is already qualified to do business or subject to consent to service of process and except as may be required by the Securities Act;

 

(e)                               in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement (and in the event such nonperforming Holder, after notice from the Company in a reasonably timely manner, does not perform its obligations, such Holder may be excluded from the registration);

 

(f)                                notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 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 tot be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

 

(g)                              to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (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 (ii) a letter, dated as of such date, from the independent

 

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certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters;

 

(h)                              otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(i)                                  cause all such Registrable Securities registered pursuant to such registration statement to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to secure NASDAQ authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with FINRA;

 

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

 

(k)                              permit any holder of Registrable Securities which holder, in its judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; and

 

(l)                                  in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any common stock included in such registration statement for sale in any jurisdiction, the Company shall use its commercially reasonable best efforts promptly to obtain the withdrawal of such order.

 

2.6                            Termination of Registration Rights. All registration rights granted under this Section 2 shall terminate and be of no further force and effect (a) five years after a Qualified IPO or (b) as to any Holder, such time at which all Registrable Securities held by such holder can be sold in any three-month period without registration in compliance with Rule 144 without volume limitations and without reliance on Rule 144(k).

 

2.7                            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 2.1, 2.2 or 2.3, that the selling Holders shall furnish to the

 

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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 2.1 or Section 2.3 if 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 2.1 or Section 2.3, whichever is applicable.

 

2.8                            Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 2.1, 2.2 or 2.3:

 

(a)                               By the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, management company, members, managers, officers and directors of each Holder, any underwriter (as defined in the Securities Act), and each person, if any, who controls such Holder or any underwriter within the meaning of the Securities Act or the Exchange Act (each, a “Company Indemnified Party” and collectively the “Company Indemnified Parties”), against any losses, claims, damages or liabilities (collectively, “Losses”) (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such Losses (or actions in respect of such Losses) arise out of or are based upon any of the following statements, omissions or violations (any of the following, a “Violation”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated by reference therein, including any preliminary prospectus or final prospectus, contained therein or any amendments or supplements thereto, or (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 reimburse each such Company Indemnified Party for any legal or other expenses reasonably incurred by them (including reasonable attorneys’ fees) in connection with investigating or defending any such Loss; provided however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such Loss 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 to the extent (and only to the extent) that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished for use in connection with such registration by such Company Indemnified Party.

 

(b)                              By Holders. To the extent permitted by law, each Holder will, if Registrable Securities requested to be registered by such Holder are included in the securities as to which such registration, qualifications or compliance is 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

 

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selling securities under such registration statement or any of such other Holder’s partners, management company, members, managers, directors or officers or any person who controls such other Holder (each, a “Holder Indemnified Party” and collectively, the “Holder Indemnified Parties”), against any Losses (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 (or actions in respect to such Losses) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement or incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (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 (collectively, a “Holder Violation”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder (or its authorized agent) for use in connection with such registration; and each such Holder will reimburse any legal or other expenses (including reasonable attorneys’ fees) reasonably incurred by such Holder Indemnified Parties in connection with investigating or defending any such Loss if it is judicially determined that there was such a Holder Violation; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such Loss 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 the aggregate of any indemnity under this Section 2.8(b) and any contribution under Section 2.8(d) below exceed the proceeds from the offering giving rise to the Violation received by such Holder.

 

(c)                               Notice. Promptly after receipt by an indemnified party under this Section 2.8 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 2.8, 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 party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, 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 2.8 to the extent, and only to the extent, that such failure is prejudicial to such indemnifying party’s ability to defend such action, but the omission to so 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 2.8.

 

(d)                             Contribution.  If the indemnification provided for in this Section 2.8 is held by court of competent jurisdiction to be unavailable to an indemnified party with respect to any Loss referred to herein, the indemnifying party, in lieu of indemnifying such indemnified

 

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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 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) or Holder Violation(s) that resulted in such Loss, 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 no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person or entity not guilty of such fraudulent misrepresentation; further provided, that in no event shall the aggregate of any contribution by a Holder hereunder under this Section 2.8(d) and indemnity under Section 2.8(b) above exceed the proceeds from the offering giving rise to the Violation received by such Holder.

 

(e)                               The obligations and rights of the Company and Holders under this Section 2.8 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 party settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a full release from all liability in respect to such claim or litigation.

 

2.9                            Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee acquiring at least 100,000 of a Holder’s Registrable Securities (as adjusted for any Stock splits, subdivisions, stock dividends, changes, combinations or the like); provided that (a) the Company must receive written notice prior to the time of said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such rights are being assigned, (b) the transferee or assignee of such rights must not be person deemed by the Board, in its reasonable judgment, to be a competitor or potential competitor of the Company, and (c) such transferee or assignee must agree to be bound by the terms of this Agreement. Notwithstanding the foregoing, any Holder that (i) is a partnership, limited liability company or corporation may transfer such Holder’s registration rights to (A) entities affiliated directly or indirectly with such partnership or its manager, limited liability company or corporation, (B) any partner (or retired partner or incoming partner), member (or retired member) or stockholder of such partnership, limited liability company or corporation, (C) the spouse, siblings, descendants or ancestors of party such partner (or retired partner), member (or retired member) or stockholder, (D) the estate of any such partner (or retired partner), member (or retired member) or stockholder and (E) any custodian or trustee for the benefit of any such partner (or retired partner), member (or retired member) or stockholder or the spouse, siblings, lineal descendants or ancestors of any such partner (or retired partner), member (or retired member) or stockholder, as the case may be, or (ii) holds shares in its capacity as trustee, manager or custodian of a trust, may transfer such Holder’s Registration rights to a replacement trustee, manager or custodian of

 

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the relevant trust, in each case, without restriction as to the number or percentage of shares acquired by any such transferee.

 

2.10                    Amendment of Registration Rights. Any provision of this Section 2 may be amended or modified, and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the prior written consent of the Company and the Holders of at least 51% of the Registrable Securities Then Outstanding. Any amendment or waiver effected in accordance with this Section 2.10 shall be binding upon each Holder and the Company and their respective successors and permitted assigns. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder.

 

2.11                    Limitation on Subsequent Registration Rights. Other than as provided in Section 6.12, the Company shall not enter into any agreement with any Holder or prospective Holder of any securities of the Company that would grant such Holder rights to demand the registration of shares of the Company’s capital stock, or to include such shares in a registration statement that would reduce the number of shares includable by the Holders.

 

2.12                    “Market Stand-Off” Agreement. Each Holder hereby agrees that, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, 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 Common Stock (or other securities) of the Company held by such Holder (other than those included for sale in the registration) for a period specified by the Company and the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed 180 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

 

(ii)                              all officers and directors of the Company and holders of at least 1 % of the Company’s voting securities enter into and remain bound by similar agreements; and

 

(iii)                          unless waived by the holders of a majority of the members of the Board, any release by the Company or an underwriter of any party mentioned in clause (ii) above from the above restrictions shall have no effect unless each Holder of Registrable Securities is released from such restrictions to the same extent.

 

2.13                    Agreement to Furnish Information. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter that are consistent with the Holder’s obligations under Section 2.12 or that 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 10 days after receipt 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 filed under the Securities Act. The

 

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obligations described in Section 2.12 and this Section 2.13 shall not apply to a Special Registration Statement. 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 180 day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by Sections 2.12 and 2.13. The underwriters of the Company’s stock are intended third party beneficiaries of Sections 2.12 and 2.13 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

2.14                    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, the Company agrees to use its commercially reasonable best efforts to:

 

(a)                               Make and keep public information available, as those terms are understood and defined in Rule 144, 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; and

 

(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 Rule 144, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company filed with the SEC; and such other reports and documents as a Holder may reasonably request in connection with availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.

 

SECTION 3.       COVENANTS OF THE PARTIES.

 

3.1                            Basic Financial Information and Reporting.

 

(a)                               The Company will maintain accurate and 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 (except as noted therein), and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied.

 

(b)                              The Company will deliver to each Investor that, together with its Affiliates, holds at least 500,000 shares of Preferred Stock (as adjusted for stock splits, stock dividends, reverse stock splits and the like) (such Investors, collectively, the “Major Investors”): (i) as soon as practicable, but in any event within 180 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company as of the end of such fiscal year and consolidated statements of income, stockholders equity and cash flows for such year, which year-end financial reports shall be prepared in accordance with generally accepted accounting principles and shall be audited by independent public accountants of nationally recognized

 

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standing selected by the Company and (ii) as soon as practicable, but in any event within 30 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited income statement for such quarter statement of cash flows for such quarter and an unaudited balance sheet as of the end of such quarter, prepared in accordance with generally accepted accounting principles (other than accompanying notes). In addition, the Company will deliver to each Investor that, together with its Affiliates, holds at least 1,000,000 shares of Preferred Stock (as adjusted for stock splits, stock dividends, reverse stock splits and the like): (x) as soon as practicable following submission to and approval by the Board, but in any event no later than 30 days prior to the beginning of each fiscal year of the Company, an operating budget and business plan (the “Plan”) respecting the next fiscal year and a summary of such Plan together with any update of the Plan as such update is prepared, (y) at such time as the Company delivers quarterly or annual financial statements pursuant to clause (i) and (ii) above, a comparison of such financial statements, against the Plan and (z) at such time as the Company delivers quarterly or annual financial statements pursuant to clause (i) and (ii) above, a detailed capitalization table of the Company.

 

(c)                               Notwithstanding the information requirements set forth in this Section 3.1, the company shall not be obligated to provide information that the Board deems in good faith to be a trade secret, proprietary or similar confidential information to any holder of Preferred Stock unless each such holder agrees to execute a non-disclosure agreement reasonably acceptable to the Company with respect to the receipt and use of such information, and provided, further that the Company shall not be obligated to provide such proprietary or confidential information to a holder of Preferred Stock if the Board determines in good faith that the holder of Preferred Stock is a competitor of the Company.

 

3.2                            Confidentiality of Records. Furthermore, each holder of Preferred Stock agrees to use, and to use best efforts to ensure that its authorized representatives use, the same degree of care as such holder of Preferred Stock uses to protect its own confidential information to keep confidential any information furnished to it that the Company identifies as being confidential or proprietary (so long as such information is not in the public domain), except that such holder of Preferred Stock may disclose such proprietary or confidential information (a) to any partner, member, manager, subsidiary, parent or affiliate of such holder of Preferred Stock to the extent necessary for the evaluation of its investment in the Company as long as such partner, member, manager, subsidiary, parent or affiliate is subject to confidentiality restrictions with respect to such information consistent with the provisions of this Section 3.2; (b) at such time as it enters the public domain through no fault of such holder of Preferred Stock; (c) that is communicated to it free of any obligation of confidentiality; or (d) that is developed by Investor or its agents independently of and without reference to any confidential information communicated by the Company.

 

3.3                            Visitation Rights. Upon receiving at least 48 hours prior written notice from an Investor that, together with its Affiliates, holds at least 1,000,000 shares of Preferred Stock (as adjusted for stock splits, stock dividends, reverse stock splits and the like), the Company shall permit such Investor to visit and inspect any of the properties of the Company, including its books of account and other records (and make copies of and take extracts from such books and records), and to discuss its affairs, finances, and accounts with the Company’s officers and its

 

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independent public accountants, all at such reasonable times and as often as any such person may reasonably request for a valid business purpose; provided that the Company shall not be obligated to provide any information that it reasonably considers to be a trade secret or similar confidential information. Each Investor who represents to the Company that it is a “venture capital operating company” for purposes of Department of Labor Regulation Section 2510.3-101 shall in addition have the right to consult with and advise the officers of the Company as to the management of the Company.

 

3.4                            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 commercially reasonable efforts to at all times maintain indemnification agreements in form and substance approved by the Board with each of its directors to indemnify such directors to the maximum extent permissible under applicable law. The Company shall use commercially reasonable efforts to obtain and maintain directors and officers liability insurance in an amount deemed to be appropriate by the Board.

 

3.5                            Termination of Covenants. All covenants of the Company contained in Section 3 of this Agreement (other than the provisions of Sections 3.2 and 3.4) shall expire and terminate as to each Investor upon the earlier of (a) immediately prior to the closing of a Qualified IPO or (b) upon the closing of a Corporation Reorganization.

 

3.6                            Notice of Designees; Director Expenses.

 

(a)                               Upon receipt of a notice of an election of directors as set forth in the Bylaws, each Holder with a right to appoint a member of the Board pursuant to the term of the Voting Agreement shall give written notice to the Company and the other Holders of such Holder’s designee to the Board.

 

(b)                              The Company shall reimburse all non-employee directors for their actual and reasonable out-of-pocket travel and other expenses incurred in attending meetings of the Board and all committees of the Board, and other business expenses incurred at the request of the Company.

 

SECTION 4.       TRANSFER RESTRICTIONS AND LIMITATIONS.

 

4.1                            Restrictions on Transfer.

 

(a)                               Each Investor agrees not to make any disposition of all or any portion of the 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

 

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(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 containing a reasonably detailed description of the material terms or the proposed transfer, the name and address of the transferee, the purchase price and terms of payment, the date of the proposed transfer, and the number and description of the shares of Preferred Stock or Common Stock to be transferred, 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.

 

(b)                              Notwithstanding the provisions of Section 4.1(a) above, no such restriction shall apply to a transfer by a Holder that is (A) a partnership transferring to its partners or former partners in accordance with the corresponding partnership agreement or partnership interests, (B) a corporation transferring to an Affiliate, (C) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company, (D) an individual Holder transferring to such Holder’s family member or trust for the benefit of such individual Holder; provided that in each case the transferee will agree in writing to be subject to the terms of this Agreement to the same extent as if such transferee were an original Holder hereunder.

 

(c)                               Each certificate representing Shares or Registrable Securities shall be stamped or otherwise imprinted with legends 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, AS AMENDED (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.

 

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE COMPANY. A COPY OF SUCH INVESTOR RIGHTS AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A VOTING AGREEMENT, AS MAY BE AMENDED FROM TIME TO TIME, WHICH PLACES CERTAIN RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY. ANY

 

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PERSON ACCEPTING ANY INTEREST IN SUCH SECURITIES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH VOTING AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

(d)                             The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if (i) the Holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company engaged by such Holder at such Holder’s expense) 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 and legend, (ii) after the securities are sold pursuant to an effective registration statement, or (iii) as soon as such shares are qualified for resale under Rule 144.

 

(e)                               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.

 

4.2                            Subsequent Offerings.

 

(a)                               Subject to applicable securities laws, each Major Investor shall have a right of first offer to purchase such Major Investor’s pro rata share of all Equity Securities issued by the Company in connection with an equity financing, other than with respect to Equity Securities that are Excluded Securities. For purposes of this Section 4.2(a)-(b), each Major Investor’s pro rata share is equal to the Major Investor’s percentage of the Company’s outstanding shares of Common Stock, calculated on an as-if converted fully-diluted basis (for this purpose, including shares of Common Stock that were issued, or are issuable, upon conversion of outstanding Preferred Stock but excluding any issued but unvested or unexercised rights, options or warrants to subscribe for, purchase or otherwise acquire shares of Common Stock).

 

(b)                              If the Company proposes to issue any Equity Securities, it shall give each Major 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 Major Investor shall have 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 Major Investor who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale.

 

(c)                               If any Major Investor fails to so agree in writing within the 15 day period specified in 4.2(b) to purchase such Major Investor’s pro rata share of an offering of Equity Securities (each a “Nonpurchasing Investor”), then promptly after the expiration of such 15 day period, the Company shall notify in writing each Major Investor who has timely agreed to

 

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purchase its pro rata share of such offering of Equity Securities (each a “Purchasing Investor”) of the number of the Nonpurchasing Investor’s unpurchased pro rata share of such Equity Securities (the “Unpurchased Shares”). Each Purchasing Investor shall have the right to purchase such Purchasing Investor’s pro rata share (or any other share agreed to by each Purchasing Investor) of the Unpurchased Shares at any time within 10 days after receiving such notice by giving written notice to the Company. The Company shall have 90 days from the expiration of the periods set forth above to sell all or any Equity Securities that were not agreed to be purchased by the Major Investors, upon general terms and conditions not materially more favorable to the purchasers thereof than specified in the Company’s notice to the Major Investors pursuant to Section 4.2(b). If the Company has not sold such Equity Securities within such 90 day period, the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Major Investors in the manner provided above. A Purchasing Investor’s pro rata share of the Unpurchased Shares is equal to the proportion that the outstanding shares of Common Stock held by such Purchasing Investor bears to the total number of shares of Common Stock held by all Purchasing Investors who wish to purchase any or all of the Unpurchased Shares (for this purpose, including shares of Common Stock that were issued, or are issuable, upon conversion of outstanding Preferred Stock but excluding any issued but unvested or unexcercised rights, options or warrants to subscribe for, purchase or otherwise acquire shares of Common Stock).

 

4.3                            Termination and Waiver of Rights. The rights established by this Section 4 shall not apply to, and shall terminate upon the earlier of (a) immediately prior to the closing of the Initial Offering or (b) the closing of a Corporate Reorganization. The rights established by this Section 4 may be amended or modified, and the observance thereof may be waived only with the prior written consent of the holders of a Super Investor Majority. Any amendment or waiver effected in accordance with this Section 4.3 shall be binding upon each Investor and the Company and their respective successors and permitted assigns.

 

4.4                            Transfer of Rights of First Refusal. The rights of each Investor under this Section 4 may be transferred to the same parties, and subject to the same restrictions, as any transfer of registration rights pursuant to Section 2.9.

 

4.5                            Additional Stockholder Parties. The Company shall ensure that, prior to the termination of this Agreement, each Person who becomes a holder of the Company’s capital stock enters into and joins this Agreement as a party hereto by executing an Instrument of Accession, thereby agreeing to be bound by all of the terms of this Agreement that are applicable to such transferee.

 

SECTION 5.       RIGHTS OF FIRST REFUSAL AND CO-SALE.

 

5.1                            Notice of Transfer. If a Common Holder (a “Selling Stockholder”) proposes to transfer any shares of its, his or her Shares (the “Selling Stockholder Shares”) then such Selling Stockholder shall promptly give written notice (the “Notice”) simultaneously to the Company and to each of the Investors at least 45 days prior to the closing of such transfer; provided, however, that, notwithstanding such 45-day period, no such transfer shall be effected until the terms of this Section 5 have been fully complied with. The Notice shall describe in reasonable detail the proposed transfer including, without limitation, the number of Selling Stockholder

 

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Shares to be transferred, the nature of such transfer, the consideration to be paid, and the name and address of each prospective transferee. In the event that the transfer is being made pursuant to the provisions of Section 5.5, the Notice shall state under which clause of Section 5.5 the transfer is being made.

 

5.2                            Company Right of First Refusal. For a period of ten days following receipt of any Notice described in Section 5. 1, the Company shall have the right to purchase all or a portion of the Selling Stockholder Shares subject to such Notice on the same terms and conditions as set forth therein. The Company’s purchase right shall be exercised by written notice signed by an officer of the Company (the “Company Notice”) and delivered to the Selling Stockholder within such ten day period. The Company shall effect the purchase of the Selling Stockholder Shares, including payment of the purchase price, not more than five business days after delivery of the Company’s Notice, and at such time the Selling Stockholder shall deliver to the Company the certificate(s) representing the Selling Stockholder Shares to be purchased by the Company, each certificate to be properly endorsed for transfer. The Selling Stockholder Shares so purchased shall thereupon be cancelled and cease to be issued and outstanding shares of the Company’s Common Stock.

 

5.3                            Investor Right of First Refusal.

 

(a)                               In the event that the Company does not elect to purchase all of the Selling Stockholder Shares available pursuant to its rights under Section 5.2 within the period set forth therein, the Selling Stockholder shall promptly give written notice (the “Second Notice”) to each of the Investors, which shall set forth the number of shares of Selling Stockholder Shares not purchased by the Company and which shall include the terms of Notice set forth in Section 5.1. Each Investor shall then have the right, exercisable upon written notice to the Selling Stockholder (the “Investor Notice”) within ten days after the receipt of the Second Notice, to purchase its pro rata share of the Selling Stockholder Shares subject to the Second Notice and on the same terms and conditions as set forth therein. Except as set forth in Section 5.3(c), the Investors who so exercise their rights (the “Participating Investors”) shall effect the purchase of the Selling Stockholder Shares, including payment of the purchase price, not more than five days after delivery of the Investor Notice, and at such time the Selling Stockholder shall deliver to the Participating Investors the certificate(s) representing the Selling Stockholder Shares to be purchased by the Participating Investors, each certificate to be properly endorsed for transfer.

 

(b)                              For the purposes of this section, each Investor’s pro rata share shall be equal to the product obtained by multiplying (i) the aggregate number of shares of Selling Stockholder Shares covered by the Second Notice and (ii) a fraction, the numerator of which is the number of shares of Common Stock issued or issuable upon the conversion or exercise of Preferred Stock or other rights to acquire shares of Common Stock held by the Participating Investor at the time of the First Notice, and the denominator of which is the total number of shares of Common Stock issued or issuable upon the conversion or exercise of Preferred Stock or other rights to acquire shares of Common Stock held by all Investors at the time of the First Notice.

 

(c)                               In the event that not all of the Investors elect to purchase their pro rata share of the Selling Stockholder Shares available pursuant to their rights under Section 5.3(a)

 

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within the time period set forth therein, then the Selling Stockholder shall promptly give written notice to each of the Participating Investors (the “Overallotment Notice”), which shall set forth the number of shares of Selling Stockholder Shares not purchased by the other Investors, and shall offer such Participating Investors the right to acquire such unsubscribed shares. Each Participating Investor shall have five days after receipt of the Overallotment Notice to deliver a written notice to the Selling Stockholder (the “Participating Investors Overallotment Notice”) indicating the number of unsubscribed shares that such Participating Investor desires to purchase, and each such Participating Investor shall be entitled to purchase such number of unsubscribed shares on the same terms and conditions as set forth in the Second Notice. In the event that the Participating Investors desire, in the aggregate, to purchase in excess of the total number of available unsubscribed shares, then the number of unsubscribed shares that each Participating Investor may purchase shall be reduced on a pro rata basis. For purposes of this Section 5.3(c) the denominator described in clause (ii) of subsection 5.3(b) above shall be the total number of shares of Common Stock issued or issuable upon the conversion or exercise of Preferred Stock or other rights to acquire shares of Common Stock held by all Participating Investors at the time of the First Notice. The Participating Investors shall then effect the purchase of the Selling Stockholder Shares, including payment of the purchase price, not more than five days after delivery of the Participating Investors Overallotment Notice, and at such time, the Selling Stockholder shall deliver to the Investors the certificates representing the Selling Stockholder Shares to be purchased by the Participating Investors, each certificate to be properly endorsed for transfer.

 

5.4                            Right of Co-Sale.

 

(a)                               In the event the Company and the Investors fail to exercise their respective rights to purchase all of the Selling Stockholder Shares subject to Sections 5.2 and 5.3 hereof, following the exercise or expiration of the rights of purchase set forth in Section 5.2 and 5.3, then the Selling Stockholder shall deliver to the Company and each Investor written notice (the “Co-Sale Notice”) that each Investor shall have the right, exercisable upon written notice to such Selling Stockholder with a copy to the Company within 15 days after receipt of the Co-Sale Notice, to participate in such transfer of Selling Stockholder Shares on the same terms and conditions. Such notice shall indicate the number of shares of Investor Stock up to that number of shares determined under Section 5.4(b) such Investor wishes to sell under his, her or its right to participate. To the extent one or more of the Investors exercise such right of participation in accordance with the terms and conditions set forth below, the number of shares of Selling Stockholder Shares that such Selling Stockholder may sell in the transaction shall be correspondingly reduced.

 

(b)                              Each Investor may sell all or any part of that number of shares equal to the product obtained by multiplying (x) the aggregate number of shares of Selling Stockholder Shares covered by the Co-Sale Notice and not purchased by the Company or its assignees or Investors pursuant to Section 5.2 or 5.3 by (y) a fraction the numerator of which is the number of shares of Common Stock issued or issuable upon the conversion or exercise of Preferred Stock or other rights to acquire shares of Common Stock held by such Investor at the time of the First Notice and the denominator of which is the total number of shares of Common Stock held by such Selling Stockholder (excluding shares purchased by the Company and/or Investors pursuant

 

- 23 -

 

to Section 5.2 or 5.3) plus the number of shares of Common Stock issued or issuable upon the conversion or exercise of Preferred Stock or other rights to acquire shares of Common Stock held by all Investors at the time of the First Notice.

 

(c)                               Each Investor who elects to participate in the transfer pursuant to this Section 5 (a “Co-Sale Participant”) shall effect its participation in the transfer by promptly delivering to such Selling Stockholder for transfer to the prospective transferee one or more certificates, properly endorsed for transfer, which represent:

 

(i)                                  the number of shares of Common Stock which such Co-Sale Participant elects to sell; or

 

(ii)                              that number of shares of Preferred Stock which is at such time convertible into the number of shares of Common Stock which such Co-Sale Participant elects to sell; provided, however, that if the prospective purchaser objects to the delivery of Preferred Stock in lieu of Common Stock, such Co-Sale Participant shall convert such Preferred Stock into Common Stock and deliver Common Stock as provided in Section 5.4(c)(i) above. The Company agrees to make any such conversion concurrent with and contingent upon the actual transfer of such shares to the transferee.

 

(d)                             The stock certificate or certificates that the Co-Sale Participant delivers to such Selling Stockholder pursuant to Section 5.4(c) shall be transferred to the prospective purchaser in consummation of the sale of the Common Stock pursuant to the terms and conditions specified in the Co-Sale Notice, and the Selling Stockholder shall concurrently therewith remit to such Co-Sale Participant that portion of the sale proceeds to which such Co-Sale Participant is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from a Co-Sale Participant exercising its rights of co-sale hereunder, such Selling Stockholder shall not sell to such prospective purchaser or purchasers any Selling Stockholder Shares unless and until, simultaneously with such sale, such Selling Stockholder shall purchase such shares or other securities from such Co-Sale Participant on the same terms and conditions specified in the Co-Sale Notice.

 

(e)                               The exercise or non-exercise of the rights of any Investor hereunder to participate in one or more transfers of Selling Stockholder Shares made by any Selling Stockholder shall not adversely affect its right to participate in subsequent transfers of Selling Stockholder Shares subject to Section 5.

 

(f)                                To the extent that the Investors do not elect to participate in the sale of the Selling Stockholder Shares subject to the Co-Sale Notice, such Selling Stockholder may, not later than 60 days following delivery to the Company of the Co-Sale Notice, enter into an agreement providing for the closing of the transfer of such Selling Stockholder Shares covered by the Co-Sale Notice within 30 days of such agreement on terms and conditions not materially more favorable to the transferor than those described in the Co-Sale Notice. Any proposed transfer on terms and conditions materially more favorable than those described in the Co-Sale Notice, as well as any subsequent proposed transfer of any of the Selling Stockholder Shares by a Selling Stockholder, shall again be subject to the first refusal and co-sale rights of the

 

- 24 -

 

Company and/or Investors and shall require compliance by a Selling Stockholder with the procedures described in this Section 5.

 

5.5                            Exempt Transfers.

 

(a)                               Notwithstanding the foregoing, the right of first refusal and co-sale rights of the Company and/or the Investors set forth in Section 5 above shall not apply to (i) any transfer without consideration to the Selling Stockholder’s ancestors, descendants or spouse or to trusts for the benefit of such persons or the Selling Stockholder, (ii) any transfer or transfers by a Selling Stockholder to another Selling Stockholder (the “Transferee-Selling Stockholder”) so long as the Transferee-Selling Stockholder is, at the time of the Transfer, employed by or acting as a consultant or director of the Company, (iii) any pledge of Selling Stockholder Shares made pursuant to a bona fide loan transaction that creates a mere security interest, (iv) any bona fide gift, or (v) any transfer to an Affiliate of such Selling Stockholder; provided that in the event of any transfer made pursuant to one of the exemptions provided by clauses (i), (ii), (iii), (iv) and (v), (A) the Selling Stockholder shall inform the Investors of such transfer prior to effecting it and (B) the transferee shall enter into a written agreement to be bound by and comply with all provisions of this Agreement, as if it were an original Selling Stockholder hereunder. Such transferred Selling Stockholder Shares shall remain “Selling Stockholder Shares” hereunder, and such transferee shall be treated as the “Selling Stockholders” for purposes of this Agreement, except that such transferee may not transfer shares pursuant to Section 4.4 hereof.

 

(b)                              Notwithstanding the foregoing, the provisions of this Section 5 shall not apply to the sale of any Selling Stockholder Shares to the public pursuant to a registration statement filed with, and declared effective by, the Commission under the Securities Act.

 

(c)                               This Agreement is subject to, and shall in no manner limit the right which the Company may have to repurchase securities from the Selling Stockholder pursuant to a stock restriction agreement or other agreement between the Company and the Selling Stockholder.

 

5.6                            Term. All rights of first refusal and co-sale rights granted under this Section 5 shall terminate and be of no further force and effect upon the earlier to occur of (i) a Qualified IPO; (ii) the date the Company registers securities under the Exchange Act; or (iii) the date of the closing of a Corporate Reorganization.

 

SECTION 6.       MISCELLANEOUS.

 

6.1                            Governing Law. This Agreement shall be governed by, and construed under, the substantive laws of the State of California, without regard to principles of conflict of laws rules or principles that would result in the application of the substantive law of any other jurisdiction.

 

6.2                            Jurisdiction; Venue. With respect to any disputes arising out of or related to this Agreement, the parties consent to the exclusive jurisdiction of, and venue in, the state courts in Santa Barbara, California (or in the event of exclusive federal jurisdiction, the federal court located in Los Angeles, California).

 

- 25 -

 

6.3                            Further Assurances. The parties agree to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Agreement.

 

6.4                            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 Holder or Investor, as applicable, and each permitted transferee of the Shares or Registrable Securities who shall be assigned rights under this Agreement in accordance with the requirements of this Agreement; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities and/or Shares 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. Except as otherwise expressly provided in this Agreement, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any third party any rights or remedies under or by reason of this Agreement.

 

6.5                            Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) constitutes the full and entire understanding and agreement among the parties with regard to the subject matter hereof and supersedes all prior and contemporaneous arrangements or understandings with respect thereto.

 

6.6                            Severability. Any invalidity, illegality or limitation of the enforceability with respect to any party to this Agreement of any one or more of the provisions of this Agreement, or any part thereof, whether arising by reason of the law of any such person’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to any other party to this Agreement, as applicable. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the parties and the business agreement represented by such invalidated term, and the validity, legality and enforceability of the remaining provisions shall not in any wiry be affected or impaired thereby.

 

6.7                            Amendment and Waiver.

 

(a)                               Except as otherwise expressly provided, any provision of this Agreement may be amended, modified or terminated, and the observance of any provision of this Agreement may be waived (either generally or in a particular instance and either retrospectively or prospectively), with, but only with the written consent of the Company and the holders of at least 65% of the votes attributable to the then outstanding shares of Preferred Stock as of the date of the proposed amendment or waiver; provided, however, that (i) if any amendment, modification, waiver, or termination operates in a manner that treats any Holder in a manner that is different than any other Holder, the consent of such Holder shall also be required for such amendment, waiver, discharge or termination and (ii) Sections 1.1(f) and 4.2 may be amended only with the written consent of the Super Investor Majority. Any amendment effected in accordance with this

 

- 26 -

 

Section 6.7 shall be binding upon each Investor and the Company and their respective successors and permitted assigns.

 

(b)                              For the purposes of determining the number of Holders 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.

 

6.8                            Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any Holder, Common Holder or Investor, as applicable, 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, Common Holder’s or Investor’s, as applicable, part of any breach, default or noncompliance under this Agreement or any waiver on such Holder’s or Investor’s, as applicable, part of any provisions or conditions of this Agreement must be in writing and meet the requirements of Section 6.7 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 the Holders, Common Holders and Investors shall be cumulative and not alternative.

 

6.9                            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 received during normal business hours of the recipient; if not, then on the next business day, (c) five days after deposit with the United States Post Office, by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with 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 at such other address as such party may designate by 10 days advance written notice to the other parties hereto.

 

6.10                    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.

 

6.11                    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.

 

6.12                    Additional Investors and Common Holders. Notwithstanding anything to the contrary contained herein, if the Company shall issue additional shares of its Series C Stock pursuant to the Purchase Agreement, any purchaser of such shares of Series C Stock shall become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an “Investor” and/or a “Holder,” and a party hereunder. The Company shall use commercially reasonable best efforts to ensure that each Person who holds more than 25,000 shares of the Company’s Common Stock after the date

 

- 27 -

 

hereof enters into and joins this Agreement as a Common Holder by executing an Instrument of Accession.

 

6.13                    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. Facsimile copies hereof may be executed as counterpart originals.

 

6.14                    Telecopy Execution and Delivery. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.

 

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

 

6.16                    Pronouns. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

 

6.17                    Signatures. By his, her or its signature below, each of the parties to this Agreement intends to be bound with respect to all shares of Preferred Stock and Common Stock he, she or it holds or may acquire in the future.

 

[Remainder of Page Intentionally Left Blank]

 

- 28 -

 

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

 

	
COMPANY:
    
	
 
    
	
SIENTRA, INC.
    
	
 
    
	
By:
    	
  /s/   Hani Zeini
    	
 
    
	
 
    	
Name:
    	
Hani   Zeini
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    
	
Address:
    	
6769   Hollister Avenue, Suite 201
    
	
 
    	
Santa   Barbara, CA 93117
    
	
Fax:
    	
805-679-8855
    
	
Email:
    	
hani   @ sientra.com
    
				

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

	
COMMON HOLDERS:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Robert   Adelman
    	
 
    	
 
    
	
Robert   Adelman
    	
 
    
	
 
    	
 
    
	
Address:
    	
c/o   Venbio
    	
 
    
	
 
    	
1700   Owens Street, Suite 595
    	
 
    
	
 
    	
San   Francisco, CA 94158
    	
 
    
	
Fax:
    	
 
    	
 
    	
 
    
	
Email:
    	
radelman@venbio.com
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Hani Zeini
    	
 
    	
 
    
	
Hani   Zeini
    	
 
    
	
 
    	
 
    
	
Address:
    	
1109   Camino Del Rio
    	
 
    
	
 
    	
Santa   Barbara, California 93110
    	
 
    
	
Fax:
    	
 
    	
 
    	
 
    
	
Email:
    	
 
    	
 
    	
 
    
						

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

	
INVESTORS:
    	
 
    
	
 
    	
 
    
	
Abingworth Bioventures V LP
    	
 
    
	
acting by its manager Abingworth LLP
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   James Abell
    	
 
    
	
Name:
    	
James   Abell
    	
 
    
	
Title:
    	
Partner
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Abingworth Bioventures V Co-Invest Growth Equity   Fund LP
    
	
acting by its manager Abingworth LLP
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   James Abell
    	
 
    
	
 
    	
Name:
    	
James   Abell
    	
 
    
	
 
    	
Title:
    	
Partner
    	
 
    
	
 
    	
 
    
	
Address:
    	
38   Jermyn Street
    	
 
    
	
 
    	
London   SW1Y 6DN
    	
 
    
	
 
    	
United   Kingdom
    	
 
    
	
 
    	
 
    	
 
    
	
Fax:
    	
+44   207534 1539
    	
 
    
	
Email:
    	
legal@   abingworth.com
    	
 
    
							

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

	
INVESTORS:
    
	
 
    
	
ORBIMED PRIVATE INVESTMENTS III, LP
    
	
 
    
	
BY:
    	
ORBIMED   CAPITAL GP III LLC,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
BY:
    	
ORBIMED   ADVISORS LLC,
    
	
 
    	
ITS   MANAGING MEMBER
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Michael Sheffery
    	
 
    
	
 
    	
Name:
    	
Michael   Sheffery
    
	
 
    	
Title:
    	
Manager
    
	
 
    
	
 
    
	
ORBIMED   ASSOCIATES III, LP
    
	
 
    
	
BY:   ORBIMED ADVISORS LLC, ITS GENERAL PARTNER
    
	
 
    
	
 
    
	
By:
    	
/s/   Michael Sheffery
    	
 
    
	
 
    	
Name:
    	
Michael   Sheffery
    
	
 
    	
Title:
    	
Member
    
	
 
    
	
Address:
    	
601   Lexington Ave., 54th Floor
    
	
 
    	
New   York, NY 10022
    
	
Fax:
    	
212-739-6444
    
	
Email:
    	
Rishi   Gupta, rgupta@orbimed.com
    
	
 
    
	
 
    
	
CLARUS LIFESCIENCES I, L.P.
    
	
 
    
	
BY:
    	
CLARUS   VENTURES I MANAGEMENT, L.P.,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    
	
BY:
    	
CLARUS   VENTURES I, LLC
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    
	
 
    
	
By:
    	
/s/   Nicholas J. Simon
    	
 
    
	
 
    	
Name:
    	
Nicholas   J. Simon
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    
	
Address:
    	
101   Main Street, 12th Floor
    
	
 
    	
Cambridge,   MA 02142
    
	
Fax:
    	
(617) 949-2201
    
	
Email:
    	
nsimn@clarusventurees.com
    
				

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

 

	
GS PRIVATE EQUITY PARTNERS 2000-DIRECT   INVESTMENT FUND, L.P.
    
	
 
    
	
BY:
    	
GS   PEP 2000 DIRECT INVESTMENT ADVISORS, L.L.C.,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
BY:
    	
GSAM   GEN PAR, L.L.C., ITS MANAGING MEMBER
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    
	
GS PRIVATE EQUITY PARTNERS 2000, L.P.
    
	
 
    	
 
    
	
BY:
    	
GS   PEP 2000 ADVISORS, L.L.C., ITS GENERAL PARTNER
    
	
 
    	
 
    
	
BY:
    	
GSAM   GEN-PAR, L.L.C., ITS MANAGING MEMBER
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    
	
GS PRIVATE EQUITY PARTNERS 2000 OFFSHORE   HOLDINGS, L.P.
    
	
 
    	
 
    
	
BY:
    	
GS   PEP 2000 OFFSHORE HOLDINGS ADVISORS, INC.,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    
	
GS PRIVATE EQUITY PARTNERS 2002 OFFSHORE   HOLDINGS, L.P.
    
	
 
    	
 
    
	
BY:
    	
GS   PEP 2002 OFFSHORE HOLDINGS ADVISORS, INC.,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
BY:
    	
GSAM   GEN-PAR, L.L.C.,
    
	
 
    	
ITS   DIRECTOR
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
				

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

	
GS PRIVATE EQUITY PARTNERS 2002-DIRECT   INVESTMENT FUND, L.P.
    
	
 
    	
 
    
	
BY:
    	
GS   PEP 2002 DIRECT INVESTMENT ADVISORS, L.L.C.,
    
	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
BY:
    	
GSAM   GEN-PAR, L.L.C.
    
	
 
    	
ITS   MANAGING MEMBER
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    
	
GOLDMAN SACHS PRIVATE EQUITY CONCENTRATED
    
	
HEALTHCARE FUNDS OFFSHORE HOLDINGS, L.P.
    
	
 
    	
 
    
	
BY:
    	
GOLDMAN SACHS PRIVATE   EQUITY CONCENTRATED HEALTHCARE OFFSHORE HOLDINGS   ADVISORS, INC., ITS GENERAL PARTNERS
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Jonathan Snider
    	
 
    
	
 
    	
Name:
    	
Jonathan   Snider
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    
	
Address:
    	
200   West Street
    
	
 
    	
New   York, NY 10282
    
	
Fax:
    	
 
    	
 
    
	
Email:
    	
 
    	
 
    
					

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

	
TEACHERS INSURANCE AND ANNUITY
    
	
ASSOCIATION OF AMERICA
    
	
 
    
	
 
    
	
By:
    	
/s/   Doug Bollermann
    	
 
    
	
 
    	
Name:
    	
Doug   Bollermann
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    
	
Address:   
    	
8500   Andrew Carnegie Blvd.
    
	
 
    	
Charlotte,   NC 28262
    
	
Name:
    	
Matthew   Cianella
    
	
Fax:
    	
704-988-4916
    
	
Email:
    	
mcianella@tiaa-cref.org
    
	
 
    
	
 
    
	
With   a copy to
    
	
Keith   Atkinson
    
	
Address:
    	
8500   Andrew Carnegie Blvd., Mail Stop C2-07
    
	
 
    	
Charlotte,   North Carolina 28262
    
	
Fax:
    	
704-988-0102
    
	
Email:
    	
katkinson@tiaa-cref.org
    
				

 

[Signature Page to the Amended and Restated Investor Rights Agreement]

 

 

EXHIBIT A

 

LIST OF INVESTORS

 

	
Investors:
    	
Preferred   Stock Held
    	
 
    
	
Abingworth   Bioventures V LP
    	
2,343,017

 
    	
 
    
	
Abingworth   Bioventures V Co-Invest Growth Equity Fund LP
    	
2,343,018

 
    	
 
    
	
OrbiMed   Private Investments III, LP
    	
8,429,328

 
    	
 
    
	
OrbiMed   Associates III, LP
    	
80,280

 
    	
 
    
	
Clarus   Lifesciences I L.P.
    	
7,509,608

 
    	
 
    
	
Goldman   Sachs Private Equity Concentrated Healthcare Funds Offshore Holdings, L.P.
    	
281,358

 
    	
 
    
	
GS   Private Equity Partners 2000-Direct Investment Fund, L.P.
    	
353,329

 
    	
 
    
	
GS   Private Equity Partners 2000, L.P.
    	
611,279

 
    	
 
    
	
GS   Private Equity Partners 2000 Offshore Holdings, L.P.
    	
345,041

 
    	
 
    
	
GS   Private Equity Partners 2002-Direct investment Fund, L.P.
    	
103,521

 
    	
 
    
	
GS   Private Equity Partners 2002 Offshore Holdings, L.P.
    	
458,749

 
    	
 
    
	
Teachers   Insurance and Annuity Association of America
    	
1,734,559

 
    	
 
    

 

 

EXHIBIT B

 

LIST OF COMMON HOLDERS

 

 

	
Common   Holders:
    	
Common
   Stock Held
    
	
Robert   Adelman
    	
250,000
    
	
Hani   Zeini
    	
250,000
    

 

 

EXHIBIT C

 

INSTRUMENT OF ACCESSION

 

 

Reference is made to that certain Amended and Restated Investor Rights Agreement dated as of [____________], 201 [_], a copy of which is attached hereto (as amended and in effect from time to time, the “Restated Rights Agreement”), among Sientra, Inc., a Delaware corporation (the “Corporation”), and certain other parties thereto. Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in the Restated Rights Agreement.

 

The undersigned, [____________], in order to become the owner or holder of shares (the “Acquired Shares”) of Common Stock hereby agrees that, from and after the date hereof, the undersigned has become a “Common Holder” under the Restated Rights Agreement and is entitled to all of the benefits under, and is subject to all of the obligations, restrictions and limitations of a Common Holder set forth in the Restated Rights Agreement. This Instrument of Accession shall take effect and shall become a part of the Restated Rights Agreement immediately upon execution.

 

Executed as of the date set forth below under the domestic substantive laws of California without giving effect to any choice or conflict of law provision or rule that would cause the application of the domestic substantive laws of any other state.

 

	
 
    	
[NAME]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
Accepted:
    	
 
    
	
 
    	
 
    
	
Sientra, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
Date:Exhibit 4.3

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

	
Company: 
    	
SIENTRA, INC., a Delaware corporation
    
	
Number of Shares: 
    	
19,681
    
	
Type/Series of Stock: 
    	
common stock, par value $0.01 per share
    
	
Warrant Price: 
    	
$5,335 per share
    
	
Issue Date:
    	
January 17, 2013
    
	
Expiration 
    	
Date:  January 17, 2020 See   also Section 5.1(b).
    
	
Credit Facility:
    	
This Warrant to   Purchase Stock (“Warrant”) is   issued in connection with that certain Loan and Security Agreement of even   date herewith among Oxford Finance LLC, as Lender and Collateral Agent, the   Lenders from time to time party thereto, and the Company (as modified,   amended and/or restated from time to time, the “Loan   Agreement”).
    

 

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE LLC (“Oxford” and, together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

 

SECTION 1.                            EXERCISE.

 

1.1                               Method of Exercise.  Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

1.2                               Cashless Exercise.  On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

X = Y(A-B)/A

 

where:

 

X =                             the number of Shares to be issued to the Holder;

 

Y =                             the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

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A =                             the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

B =                             the Warrant Price.

 

1.3                               Fair Market Value.  if the Company’s common stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”) and the Class is common stock, the fair market value of a Share shall be the closing price or last sale price of a share of common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If the Company’s common stock is then traded in a Trading Market and the Class is a series of the Company’s convertible preferred stock, the fair market value of a Share shall be the closing price or last sale price of a share of the Company’s common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company multiplied by the number of shares of the Company’s common stock into which a Share is then convertible.  If the Company’s common stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4                               Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5                               Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6                               Treatment of Warrant Upon Acquisition of Company.

 

(a)                                 Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving:  (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

(b)                                 Treatment of Warrant at Acquisition.  In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), either (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.

 

(c)                                  The Company shall provide Holder with written notice of its request relating to the Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition.  In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date,

 

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then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof.

 

(d)                                 Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(e)                                  As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements:  (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) Holder would be able to publicly re-sell, within six (6) months following the closing of such Acquisition, all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition.

 

1.7                               Adjustment to Number of Shares; Warrant Price; Adjustments Cumulative. In the event of a stock equity financing by the Company after the Issue Date the gross proceeds of which equal at least Ten Million Dollars ($10,000,000) (the “Next Round”), if the price per share (the “Next Round Price”) at which shares of the Company’s stock are sold in such stock equity financing is less than the Warrant Price, Holder shall have the right, in Holder’s sole discretion, to elect to treat all of this Warrant as exercisable for Shares of the common stock at the Next Round Price (with the number of such shares subject of this Warrant automatically adjusted to equal (i) the aggregate Number of Shares for which this Warrant is then exercisable (as adjusted hereunder, but before giving effect to this Section 1.7) multiplied by (ii) the quotient of (x) the Warrant Price divided by (y) the Next Round Price) (the “Next Round Election”).  Company shall provide Holder no less than fifteen (15) Business Days’ written notice prior to the consummation of any Next Round (the “Next Round Notice”).  Holder shall make the Next Round Election by providing the Company with written notice within ten (10) Business Days’ of its receipt of the Next Round Notice (the “Next Round Election Period”) and Holder shall be deemed to waive its right to make such Next Round Election if it fails to deliver its Next Round Election within the Next Round Election Period.  If Holder makes the Next Round Election within the Next Round Election Period, then the Next Round Election shall be effective immediately following the initial closing of the Next Round.  The right of Holder to make a Next Round Election (and the corresponding adjustment provided for in this Section 1.7) shall (i) only apply to the first Next Round that occurs after the Issue Date and shall not apply to any other financing and (ii) shall terminate (x), in the case of the occurrence of an Acquisition, then upon the satisfaction of the provisions of Section 1.6 hereof and (y) upon the occurrence of an IPO (defined below).  Any adjustment to the Class of Shares, Number of Shares and/or Warrant Price made as a result of this Article 1.7 shall be in addition to any adjustment(s) to be made in accordance with Article 2 hereof.

 

SECTION 2.                            ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1                               Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser

 

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number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2                               Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

 

2.3                               No Fractional Share.  No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share, If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.4                               Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

 

SECTION 3.                            REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1                               Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:

 

(a)                                 The initial Warrant Price referenced on the first page of this Warrant is not greater than the price per share at which shares of the Company’s Series C Preferred Stock were last sold and issued prior to the Issue Date hereof in an arms-length transaction in which at least $500,000 of such shares were sold (subject to any adjustment for any splits, dividends or distributions since the date of such sale).

 

(b)                                 All Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.  The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, common stock and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Shares into common stock or such other securities.

 

(c)                                  The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

 

3.2                               Notice of Certain Events.  If the Company proposes at any time to:

 

(a)                                 declare any dividend or distribution upon the outstanding shares of the Class or common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b)                                 offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

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(c)                                  effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

 

(d)                                 effect an Acquisition or to liquidate, dissolve or wind up; or

 

(e)                                  effect an IPO;

 

then, in connection with each such event, the Company shall give Holder:

 

(1)                                 at least seven (7) Business Days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above;

 

(2)                                 in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event); and

 

(3)                                 with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

 

Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if the Company does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof.  Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

SECTION 4.                            REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1                               Purchase for Own Account.  This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act.  Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

 

4.2                               Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3                               Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

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4.4                               Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5                               The Act.  Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein.  Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.  Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6                               Market Stand-off Agreement.  The Holder agrees that the Shares shall be subject to the Market Standoff provisions in Section 2.12 of the Investor Rights Agreement or similar agreement.

 

4.7                               No Stockholder Rights.  Holder, as a Holder of this Warrant, will not have any voting rights, or other rights of a stockholder of the Company until the exercise of this Warrant.

 

SECTION 5.                            MISCELLANEOUS.

 

5.1                               Term; Automatic Cashless Exercise Upon Expiration.

 

(a)                                 Term.  Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Eastern time, on the Expiration Date and shall be void thereafter.

 

(b)                                 Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.

 

5.2                               Legends. Each certificate evidencing Shares (and each certificate evidencing the securities issued upon conversion of any Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO OXFORD FINANCE LLC DATED JANUARY 17, 2013, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3                               Compliance with Securities Laws on Transfer.  This Warrant and the Shares issued upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company).  The Company shall not require Holder to provide an opinion of counsel if the transfer is an affiliate of

 

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Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.  Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

 

5.4                               Transfer Procedure.  After receipt by Oxford of the executed Warrant, Oxford may transfer all or part of this Warrant to one or more of Oxford’s affiliates (each, an “Oxford Affiliate”), by execution of an Assignment substantially in the form of Appendix 3.  Subject to the provisions of Article 5.3 and upon providing the Company with written notice, Oxford, any such Oxford Affiliate and any subsequent Holder, may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the Shares issuable directly or indirectly, upon conversion of the Shares, if any) to any other transferee, provided, however, in connection with any such transfer, the Oxford Affiliate(s) or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).  Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, or any shares or other securities issued upon any conversion of any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor.

 

5.5                               Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

Oxford Finance LLC

133 N. Fairfax Street

Alexandria, VA 22314

Attn:  Legal Department

Telephone:  (703) 519-4900

Facsimile:  (703) 519-5225

Email:  LegalDepartment@oxfordfinance.com

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

SIENTRA, INC.

6769 Hollister Avenue, Suite 201

Santa Barbara, CA 93117

Attn:  Chief Financial Officer

Fax:  (805) 562-8401

Email:  matt.pigeon@sientra.com

 

With a copy (which shall not constitute notice) to:

 

LAW FIRM

 

Sheppard Mullin Richter & Hampton LLP

1111 Chapala Street, 3rd Floor

Santa Barbara, CA 93101-3100

Attn:  C. Thomas Hopkins, Esq.

Fax:  (805) 879-1813

Email:  THopkins@sheppardmullin.com

 

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5.6                               Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

5.7                               Attorneys’ Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8                               Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9                               Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

5.10                        Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11                        Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which banks in the State of California are closed.

 

 

[Remainder of page left blank intentionally]

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

“COMPANY”

 

SIENTRA, INC.

 

 

	
By:
    	
/s/ Hani Zeini
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Hani Zeini
    	
 
    
	
 
    	
(Print)
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Founder & CEO
    	
 
    

 

 

“HOLDER”

 

OXFORD FINANCE LLC

 

 

	
By:
    	
/s/ Mark Davis
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Mark Davis
    	
 
    
	
 
    	
(Print)
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Vice President –   Finance, Secretary & Treasurer
    	
 
    

 

[Signature Page to Warrant to Purchase Stock]

 

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                      The undersigned Holder hereby exercises its right purchase _____________ shares of the common sock of SIENTRA, INC. (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

 

[   ]                               check in the amount of $________ payable to order of the Company enclosed herewith

 

[   ]                               Wire transfer of immediately available funds to the Company’s account

 

[   ]                               Cashless Exercise pursuant to Section 1.2 of the Warrant

 

[   ]                               Other [Describe] _______________________________

 

2.                                      Please issue a certificate or certificates representing the Shares in the name specified below:

 

	
 
    	
 
    	
 
    
	
 
    	
Holder’s Name
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Address)
    	
 
    

 

3.                                      By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

 

	
 
    	
HOLDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

Appendix 1

 

 

APPENDIX 2

 

ASSIGNMENT

 

For value received, Oxford Finance LLC hereby sells, assigns and transfers unto

 

	
Name:
    	
[OXFORD TRANSFEREE]
    
	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
 
    	
 
    
	
Tax ID:
    	
 
    	
]
    
				

 

that certain Warrant to Purchase Stock issued by SIENTRA, INC, (the “Company”), on January 17, 2013

 

(the “Warrant”) together with all rights, title and interest therein.

 

	
 
    	
OXFORD FINANCE LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

	
Date:
    	
 
    	
 
    

 

By its execution below, and for the benefit of the Company, [OXFORD TRANSFEREE] makes each of the representations and warranties set forth in Article 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.

 

	
 
    	
[OXFORD TRANSFEREE]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
]
    

 

Appendix 2

 

 

SCHEDULE 1

 

Company Capitalization Table

 

See attached

 

Schedule 1

 

 

Sientra, Inc. Summary Capitalization Table

 

	
 
    
	
Stockholders
    	
Shares of
   Common Stock
    	
Shares of Series
   A Preferred
   Stock
    	
Shares of Series
   B Preferred
   Stock
    	
Shares of Series
   C Preferred
   Stock
    	
Total Shares on
   an as-Converted
   to-Common
   Basis
    	
Percentage
   Ownership
   (excluding
   options)
    	
Percentage
   Ownership
   Fully-Diluted
    
	
Orbimed/Affiliates
    	
1
    	
1,000,000
    	
4,697,987
    	
2,811,621
    	
8,509,609
    	
33.56%
    	
28.37%
    
	
Clarus/Affiliates
    	
0
    	
0
    	
4,697,987
    	
2,811,621
    	
7,509,608
    	
29.62%
    	
25.04%
    
	
Abingworth/Affiliates
    	
0
    	
0
    	
0
    	
4,686,035
    	
4,686,035
    	
18.48%
    	
15.62%
    
	
Goldman Sachs/Affiliates
    	
0
    	
0
    	
1,342,282
    	
810,995
    	
2,153,277
    	
8.49%
    	
7.18%
    
	
TIAA-CREF
    	
0
    	
0
    	
671,141
    	
1,063,418
    	
1,734,559
    	
6.84%
    	
5.78%
    
	
Common Stockholders
    	
761,355
    	
0
    	
0
    	
0
    	
761,355
    	
3.00%
    	
2.54%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Issued Shares
    	
761,356
    	
1,000,000
    	
11,409,397
    	
12,183,690
    	
25,354,443
    	
100.00%
    	
84.54%
    
	
Option Pool
    	
 
    	
4,648,732
    	
 
    	
15.50%
    
	
Issued Options
    	
 
    	
 
    	
2,502,236
    	
 
    	
8.34%
    
	
Exercised Options
    	
 
    	
 
    	
11,355
    	
 
    	
0.04%
    
	
Expired Options
    	
 
    	
 
    	
18,145
    	
 
    	
 
    
	
Available Option Pool
    	
 
    	
 
    	
2,164,641
    	
 
    	
7.22%
    
	
Total Shares on a Fully Diluted Basis
    	
29,991,820
    	
 
    	
100.00%
    
	
 
    	
 
    	
Check
    	
 
    	
29,991,820

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}]]