Document:

Exhibit 4.2

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

This AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of March 28, 2013, by and among Dermira, Inc. (f/k/a Skintelligence, Inc.), a Delaware corporation (the “Company”), the parties listed on Exhibit A attached hereto (the “Investors”) and the parties listed on Exhibit B attached hereto (the “Stockholders”).

 

RECITALS

 

WHEREAS, certain of the Investors (the “Prior Investors”) have purchased from the Company shares of the Company’s Series A Preferred Stock (the “Series A Stock”), and, in connection therewith, the Company, the Prior Investors and the Stockholders entered into an Investors’ Rights Agreement, dated as of August 4, 2011 (the “Prior Agreement”).

 

WHEREAS, concurrently herewith, certain of the Investors (the “Purchasers”) are purchasing from the Company shares of the Company’s Series B Preferred Stock (the “Series B Stock” and, together with the Series A Stock, the “Purchased Shares”) on the terms and conditions set forth in that certain Series B Preferred Stock Purchase Agreement, dated as of even date herewith, between the Company and the Purchasers, as amended from time to time (the “Purchase Agreement”).

 

WHEREAS, to induce the Purchasers to purchase the Series B Stock from the Company and to enter into the Purchase Agreement, the Investors, the Stockholders and the Company desire to amend and replace the Prior Agreement in its entirety to grant the Investors certain information and registration rights and rights of first refusal, all as more fully set forth herein.

 

WHEREAS, Section 9.14(a) of the Prior Agreement provides that the Prior Agreement may be amended by (i) the Company, (ii) Investors holding at least a majority of the Registrable Securities (as defined in the Prior Agreement) then outstanding and (iii) Stockholders holding at least a majority of the issued and outstanding shares of Common Stock (as defined in the Prior Agreement) which are then held by the Stockholders, and the undersigned Prior Investors and undersigned Stockholders are holders of sufficient shares to amend the Prior Agreement in accordance with its terms.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      INFORMATION RIGHTS.

 

1.1                                  Basic Financial Information. The Company shall deliver to each Investor (or transferee of an Investor) that holds at least one million (1,000,000) Purchased Shares (or common stock of the Company (the “Common Stock”) issued upon conversion thereof, and as adjusted for subsequent stock splits, stock dividends, combinations and other recapitalizations) (such an Investor, a “Major Investor”):

 

(a)                                 Annual Reports. Within one hundred fifty (150) days after the end of each fiscal year of the Company, a consolidated Balance Sheet, a consolidated Statement of Income and a consolidated Statement of Cash Flows of the Company and its subsidiaries for such year, all prepared in accordance with United States generally accepted accounting principles (“GAAP”), consistently applied and audited and certified by independent certified public accountants of nationally recognized standing selected by the Company unless otherwise approved by the Board (as defined below); and

 

(b)                                 Quarterly Reports. Within forty five (45) days after the end of each fiscal quarter of the Company (except the last quarter of the Company’s fiscal year), quarterly unaudited

 

 

financial statements, including an unaudited Balance Sheet, an unaudited Statement of Income and an unaudited Statement of Cash Flows of the Company and its subsidiaries for such period, all prepared in accordance with GAAP, consistently applied, subject to changes resulting from normal year-end audit adjustments, compared against the annual operating plan and budget provided in Section 1.2 hereof.

 

1.2                               Annual Operating Plan and Budget Financial Information. At least twenty (20) days prior to the beginning of each fiscal year of the Company, the Company shall deliver to such Major Investor an annual operating plan and budget, prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow of the Company and its subsidiaries for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company, for the next fiscal year.

 

1.3                               Confidentiality. Each Major Investor agrees to hold all information received pursuant to this Section 1 in strict confidence and will not disclose, divulge or use for any purpose (other than to monitor its investment in the Company), and not to use or disclose any of such information to any third party, except (i) to the extent such information has previously been made publicly available (other than as a result of a breach of this Section 1.3 by such Major Investor), or (ii) is or has been made known or disclosed to the Major Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, a Major Investor may disclose confidential information (a) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (b) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Major Investor in the ordinary course of business, provided that such Major Investor informs such Person that such information is confidential and such Person is contractually required maintain the confidentiality of such information; or (c) as may otherwise be required by law, provided that, to the extent permitted by applicable law, the Major Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure; provided, further, that such Major Investor informs such Person (as defined in Section 6.14) that such information is confidential and directs such Person to maintain the confidentiality of such information.

 

1.4                               Inspection Rights. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by such Major Investor.

 

1.5                               Termination of Certain Rights. The Company’s obligations under Sections 1.1, 1.2 and 1.4 above will terminate upon the earlier of (a) the Company’s first underwritten public offering of its Common Stock (an “IPO”) and (b) a Deemed Liquidation Event (as such term is defined in the Company’s Restated Certificate of Incorporation, as amended from time to time (the “Restated Certificate”)).

 

2.                                      REGISTRATION RIGHTS.

 

2.1                                  Definitions. For purposes of this Section 2:

 

(a)                                 Affiliate. For purposes of this Agreement, an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity shall be deemed an “Affiliate” of an Investor who, directly or indirectly, controls, is controlled by or is under common control with such Investor, including, without limitation, any partner, officer, director, member, manager or employee of such Investor and any venture capital fund now or hereafter existing that is controlled by or under common control with one or more managers or general partners of or shares the same management company with such Investor, or with respect to an individual, any member of the Investor’s immediate family.

 

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

 

(c)                                  Holder. The term “Holder” means any person owning of record Registrable Securities (as defined below) or any assignee of record of such Registrable Securities to whom rights set forth herein have been duly assigned in accordance with this Agreement; provided, that, the Company shall in no event be obligated to register Purchased Shares and Holders of Registrable Securities will not be required to convert their Purchased Shares into Common Stock in order to exercise the registration rights granted hereunder until immediately before the closing of the offering to which the registration relates.

 

(d)                                 Qualified IPO. The term “Qualified IPO” shall have the meaning set forth in the Restated Certificate.

 

(e)                                  Registration. The terms “register,” “registration” and “registered” refer to a registration affected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement.

 

(f)                                   Registrable Securities. The term “Registrable Securities” means:

 

(1)                                 all shares of Common Stock of the Company originally issued by the Company to the Stockholders, including any shares that may have been transferred from the Stockholders directly or indirectly to a member of the Immediate Family (as defined in that certain Right of First Refusal and Co-Sale Agreement, dated as of even date herewith, by and among the Company and the Major Stockholders (as defined therein) (the “Co-Sale Agreement”)) of such Stockholder or the beneficial owners thereof, or any trust or other entity beneficially owned by any such person;

 

(2)                                 all the shares of Common Stock of the Company issued or issuable upon the conversion of any outstanding shares of Purchased Shares, excluding any Common Stock issued upon conversion of the Purchased Shares pursuant to the “Special Mandatory Conversion” provisions of the Restated Certificate, or any Common Stock, or Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; and

 

(3)                                 any shares of capital stock of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, all such shares of Common Stock described in clause (1) of this Section 2.1(e); excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which rights under this Section 2 are not assigned in accordance with this Agreement or any Registrable Securities with respect to which, pursuant to Section 2.11 hereof, the holders are no longer entitled to registration rights pursuant to Sections 2.2, 2.3 or 2.4 hereof.

 

(g)                                  Registrable Securities then Outstanding. The number of shares of “Registrable Securities then outstanding” shall mean the number of shares of Common Stock which are Registrable Securities that are then (1) issued and outstanding or (2) issuable pursuant to the exercise or conversion of then outstanding and then exercisable and qualifying options, warrants or convertible securities.

 

(h)                                  SEC. The term “SEC” means the U.S. Securities and Exchange Commission.

 

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(i)                                      Securities Act. The term “Securities Act” means the Securities Act of 1933, as amended.

 

2.2                               Demand Registration.

 

(a)                                 Request by Holders. If the Company shall receive at any time after the date 180 days following the effective date of a Qualified IPO, a written request from the Holders of at least sixty six and two-thirds percent (66 2/3%) of the Registrable Securities then outstanding, voting together as a single class on an as-converted basis, that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities pursuant to this Section 2.2, then the Company shall, within twenty (20) days after the receipt of such written request (except if Section 2.2 is applicable), give written notice of such request (the “Request Notice”) to all Holders, and use its reasonable best efforts to effect, the registration under the Securities Act of all Registrable Securities which Holders request to be registered and included in such registration by written notice given by such Holders to the Company within ninety (90) days after receipt of the Request Notice, subject only to the limitations of this Section 2; provided, that, the Registrable Securities requested to be registered pursuant to such request must have aggregate gross proceeds (before any underwriting discounts and commissions) that equals or exceeds ten million dollars ($10,000,000).

 

(b)                                 Underwriting. If the Holders initiating the registration request under this Section 2.2 (the “Initiating Holders”) intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this Section 2.2 and the Company shall include such information in the Request Notice. In such event, the right of any Holder to include his, her, or 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 (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement with the managing underwriter or underwriters selected for such underwriting by the Company and approved by the Investors (such approval not be unreasonably withheld). Notwithstanding any other provision of this Section 2.2, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten, then the Company shall so advise all Holders of Registrable Securities that would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated among the Holders of Registrable Securities on a pro rata basis according to the number of Registrable Securities then outstanding held by each Holder requesting registration (including the Initiating Holders); provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded and withdrawn from such underwriting shall be withdrawn from the registration. For any Holder that is a venture capital fund, partnership or corporation, the affiliated venture capital funds, partners, retired partners 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.

 

(c)                                  Maximum Number of Demand Registrations. The Company shall in no event be obligated to effect more than two (2) such registration statements pursuant to this Section 2.2.

 

(d)                                 Restrictions. The Company shall not be obligated to effect any registrations:

 

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(1)                                 during the one hundred eighty (180) day period after the effective date of a Qualified IPO;

 

(2)                                 if the Initiating Holders propose to dispose of Registrable Securities that may be registered on Form S-3 pursuant to Section 2.4 hereof;

 

(3)                                 if the Company shall furnish to the Holders a certificate signed by the President, Chief Executive Officer or Chief Financial Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company (the “Board”), it would be 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 the filing of such registration statement no more than once during any twelve (12) month period for a period of not more than 120 days after receipt of the request of the Initiating Holders;

 

(4)                                 if the Company, within thirty (30) days of receipt of the request of such Holders, gives notice of its bona fide intention to effect the filing of a registration statement with the SEC within one hundred twenty (120) days of receipt of such request (other than a registration effected solely to qualify an employee benefit plan or to effect a business combination pursuant to Rule 145); provided, that, the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective;

 

(5)                                 during the period starting with the date thirty (30) days prior to the Company’s good faith estimate of the date of the filing of and ending on a date ninety (90) days following the effective date of a Company-initiated registration subject to Section 2.3; provided, that, the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or

 

(6)                                 in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

(e)                                   Expenses. All expenses incurred in connection with a registration pursuant to this Section 2.2, including without limitation all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, such counsel’s fees and disbursements not to exceed fifty thousand dollars ($50,000), in the aggregate, who may also be counsel for the Company (but excluding underwriters’ discounts and commissions), shall be borne by the Company. Each Holder participating in a registration pursuant to this Section 2.2 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it is declared effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to this Section 2.2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered, unless the Holders of a majority of the Registrable Securities then outstanding agree to forfeit their right to one demand registration pursuant to this Section 2.2 (in which case such right shall be forfeited by all Holders of Registrable Securities).

 

2.3                               Piggyback Registrations. The Company shall notify all Holders of Registrable Securities in writing at least twenty (20) days prior to filing any registration statement under the Securities Act for purposes of effecting 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 registration statements relating to any registration under Section 2.4 of this Agreement or to any employee benefit plan or a corporate reorganization or other transaction covered by Rule 145 promulgated under the

 

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Securities Act, or a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities), and will afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by such Holder shall, within ten (10) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. 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 registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder’s Registrable Securities to be included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company and second to Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the number of Registrable Securities held by each such Holder. Notwithstanding the foregoing, however, (1) the right of the underwriters to exclude shares from the registration and underwriting as described above shall be restricted so that the number of Registrable Securities included in any such registration is not reduced in the aggregate below 30% of the shares included in the registration, except for a registration relating to an IPO, from which all Registrable Securities may be excluded, and (2) no shares held by stockholders of the Company that are not Registrable Securities shall be included in any such registration without the consent of holders of a majority of the Registrable Securities, if the requested registration of such shares would reduce the number of shares includable by the Holders of Registrable Securities. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice, given in accordance with Section 6.1 hereof, to the Company and the underwriter, delivered at least twenty (20) 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 or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing 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)                                 Expenses. All expenses incurred in connection with a registration pursuant to this Section 2.3, including without limitation all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, such counsel’s fees and disbursements not to exceed fifty thousand dollars ($50,000), in the aggregate, who may also be counsel for the Company (but excluding underwriters’ discounts and commissions), shall be borne by the Company. Each Holder participating in a registration pursuant to this Section 2.3 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such

 

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registration at the time it goes effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering.

 

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

 

2.4                               Form S-3 Registration. In case the Company shall receive from any Holder or Holders holding at least thirty percent (30%) of Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company will do the following:

 

(a)                                 Notice. Promptly give written notice of the proposed registration and the Holder’s or Holders’ request therefor, and any related qualification or compliance, to all other Holders of Registrable Securities.

 

(b)                                 Registration. 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 twenty (20) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:

 

(1)                                 if Form S-3 is not available for such offering;

 

(2)                                 if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose, at the time of filing of the registration statement, to sell Registrable Securities at an aggregate price to the public of less than five million dollars ($5,000,000);

 

(3)                                 if the Company shall furnish to the Holders a certificate signed by the President, Chief Executive Officer or Chief Financial Officer of the Company stating that in the good faith judgment of the Board, it would be 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 no more than once during any twelve (12) month period for a period of not more than one hundred twenty (120) days after receipt of the request of the Holder or Holders under this Section 2.4;

 

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

 

(5)                                 in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance;

 

(6)                                 if the Company, within thirty (30) days of receipt of the request of such Holders, gives notice of its bona fide intention to effect the filing of a registration statement with the SEC within one hundred twenty (120) days of receipt of such request (other than a registration effected solely to qualify an employee benefit plan or to effect a business combination pursuant to Rule

 

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145); provided, that, the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or

 

(7)                                 during the period starting with the date thirty (30) days prior to the Company’s good faith estimate of the date of the filing of and ending on a date ninety (90) days following the effective date of a Company-initiated registration subject to Section 2.3 above; provided, that, the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective.

 

(c)                                  Expenses. Subject to the foregoing, the Company shall file a Form S-3 covering the Registrable Securities and other securities so requested to be registered pursuant to this Section 2.4 as soon as practicable after receipt of the request or requests of the Holders for such registration. The Company shall pay all expenses incurred in connection with the first two (2) registrations requested pursuant to this Section 2.4, (excluding underwriters’ discounts and commissions), including without limitation all filing, registration and qualification, printers’ and accounting fees and the reasonable fees and disbursements of one (1) counsel for the selling Holder or Holders, such counsel’s fees and disbursements not to exceed fifty thousand dollars ($50,000), in the aggregate, and counsel for the Company, which may be the same counsel. Each Holder participating in a registration pursuant to this Section 2.4 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it goes effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering.

 

(d)                                 Not Demand Registration. Form S-3 registrations shall not be deemed to be demand registrations as described in Section 2.2 above.

 

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

 

(a)                                 Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use commercially 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 ninety (90) days.

 

(b)                                 Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement and, in connection with any registration on Form S-3 pursuant to Section 2.4 above, use reasonable, diligent efforts to timely file all reports required under the Securities Exchange Act of 1934, as amended from time to time, (the “Exchange Act”) in order to maintain the right to continue to use such Form and to maintain such registration in effect.

 

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

 

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

 

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(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 hereby agrees to also enter into and perform its obligations under such an agreement.

 

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

 

(g)                                  Use its commercially reasonable efforts to cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Company are then listed.

 

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

 

2.6                               Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities.

 

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

 

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

 

(a)                                  By the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, the “Violations” and, individually, a “Violation”):

 

(1)                                 any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, any free-writing prospectus as defined in Rule 405 promulgated under the Securities Act or any amendments or supplements thereto; or

 

(2)                                 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

 

(3)                                 any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement.

 

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The Company will reimburse each such Holder, partner, member, officer or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them, within three months after a request for reimbursement has been received by the Company, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, member, officer, director, underwriter or controlling person of such Holder.

 

(b)                                 By Selling Holders. To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors or officers or any person who controls such Holder within the meaning of the Securities Act or any rule or regulation promulgated thereunder or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, partner or director, officer, controlling person, underwriter or other such Holder, partner or director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration. Each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, member, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action within three months after a request for reimbursement has been received by the indemnifying Holder, provided, however, that the indemnity agreement contained in this subsection 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by a Holder under this Section 2.8(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

 

(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. 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 conflict of 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 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, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

 

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(d)                                 Contribution. If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by such indemnified party with respect to such loss, liability, claim, damage or expense in the proportion that is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of 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. In any such case, (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

(e)                                  Conflict with Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement will control.

 

(f)                                   Survival. The obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise.

 

2.9                               “Market Stand-Off” Agreement. Each Holder hereby agrees that upon the prior written request of the managing underwriter, it will not during the period commencing on the date of the final prospectus relating to the Company’s IPO and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; provided, however, that, if during the last 17 days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the 16-day period beginning on the last day of the restricted period, and if the Company’s securities are listed on the NASDAQ Stock Market or New York Stock Exchange and Rule 2711 or Rule 472 thereof, as applicable (or any successor provisions or amendments thereof), applies, then the restrictions imposed by this Section 2.9 shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event; provided, that all officers and directors of the Company and holders of at least two percent (2%) of the Company’s voting securities are bound by and have entered into similar agreements or arrangements. In no event will the restricted period extend beyond 215 days after the effective date of the registration statement. The foregoing provisions of this Section 2.9 shall apply only to the Company’s IPO and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. The underwriters in connection with the Company’s IPO are intended third party beneficiaries of this Section 2.9 and shall have the right, power and authority to enforce the provisions hereof as though they

 

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were a party hereto. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Registrable Securities and such other shares of stock of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. Any discretionary waiver or termination of the restrictions of any or all such agreements by the Company or the underwriters (other than discretionary waivers for requests based on financial hardship for the sale of shares having an aggregate sales price not exceeding $100,000 per Holder) shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements. In addition, upon a Demand Registration, each Holder agrees to be bound by similar restrictions, and to sign a similar agreement, in connection with such Demand Registration, provided that the duration of the lock-up period with respect to such additional registration shall not exceed 90 days (or such longer period as the underwriters of the Company shall request in order to facilitate compliance with NASD Rule 2711 (or any successor provisions or amendments thereof)) from the effective date of such additional registration statement.

 

2.10                        Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to:

 

(a)                                 Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act 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 Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

 

(c)                                  So long as a Holder owns any Registrable Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to the reporting requirements of the Exchange Act), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities without registration (at any time after the Company has become subject to the reporting requirements of the Exchange Act).

 

2.11                        Termination of the Company’s Obligations. The Company shall have no obligations pursuant to Sections 2.2 through 2.4 with respect to: (a) any request or requests for registration made by any Holder on a date (i) more than five (5) years after the closing date of a Qualified IPO or (ii) following a Deemed Liquidation Event; and (b) any Registrable Securities proposed to be sold by a Holder in a registration pursuant to Sections 2.2, 2.3 or 2.4 if (i) the Holder holds less than one percent (1%) of the outstanding voting equity securities of the Company, and (ii) all such Registrable Securities proposed to be sold by a Holder may be sold in a three (3) month period without registration under the Securities Act pursuant to Rule 144.

 

2.12                        Limitations on Subsequent Registration Rights; Most Favored Nation Terms. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities then outstanding, voting together as a single class on an as-converted basis, enter into any agreement with any holder or prospective holder

 

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of any securities of the Company which would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 2.3 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of the Holders which is included, or (b) to make a demand registration (other than on Form S-3); provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Subsection 6.9. In the event that the Company shall enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 2.3 hereof, on terms that are more favorable to such holder than the terms of this Section 2, then the Company shall so notify the Holders and shall offer to enter into an amendment to this Section 2 to provide such more favorable terms to the Holders.

 

3.                                      RIGHT OF FIRST OFFER.

 

3.1                               General. Each Investor and any party to whom such Investor’s rights under this Section 3 have been duly assigned in accordance with Section 4.1(b) (each such Investor or assignee being hereinafter referred to as a “Rights Holder”) has the right of first offer to purchase such Rights Holder’s Pro Rata Share (as defined below), of all (or any part) of any “New Securities” (as defined in Section 3.2) that the Company may from time to time issue after the date of this Agreement; provided, however, such Rights Holder shall have no right to purchase any such New Securities if such Rights Holder cannot demonstrate to the Company’s reasonable satisfaction that such Rights Holder is at the time of the proposed issuance of such New Securities an “accredited investor” as such term is defined in Regulation D under the Securities Act. Each Rights Holder shall be entitled to assign or apportion the right of first offer hereby granted it among itself and its Affiliates (as defined in Section 6.6 below) in such proportions as it deems appropriate. A Rights Holder’s “Pro Rata Share” for purposes of this right of first offer is the ratio of (a) the total number of shares of Preferred Stock and Common Stock held by such Rights Holder, on an as-converted basis, immediately prior to the issuance of New Securities to- (b) a number of shares of common stock of the Company equal to the sum of (1) the total number of shares of common stock of the Company then outstanding, including all outstanding options, warrants and other securities exercisable for or convertible into common stock, plus (2) the total number of shares of common stock of the Company into which all then outstanding shares of Preferred Stock of the Company are then convertible, including all outstanding options, warrants and other securities exercisable for or convertible into Preferred Stock.

 

3.2                               New Securities. “New Securities” shall mean any Common Stock or Preferred Stock, whether now authorized or not, and rights, options or warrants to purchase such Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible or exchangeable into such Common Stock or Preferred Stock; provided, however, that the term “New Securities” does not include any securities excluded from the definition of “Additional Shares of Common Stock” under Section 6.9(b)(i) of the Restated Certificate.

 

3.3                               Procedures. In the event that the Company proposes to undertake an issuance of New Securities, it shall give to each Rights Holder a written notice of its intention to issue New Securities (the “Notice”), describing the type of New Securities and the price and the general terms upon which the Company proposes to issue such New Securities given in accordance with Section 6.1 hereof. Each Rights Holder shall have thirty (30) days (or such shorter period as may be agreed to by holders of at least eighty percent (80%) of the then outstanding shares of Preferred Stock and Common Stock then held by the Investors, voting together as a single class on an as-converted basis) from delivery of such Notice to agree in writing to purchase such Rights Holder’s Pro Rata Share of such New Securities for the price and upon the general terms specified in the Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased (not to exceed such Rights Holder’s Pro Rata Share). If any Rights Holder fails to so agree in writing within such thirty (30) day period to purchase such Rights

 

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Holder’s full Pro Rata Share of an offering of New Securities (a “Nonpurchasing Holder”), then such Nonpurchasing Holder shall forfeit the right hereunder to purchase that part of his, her or its Pro Rata Share of such New Securities that he, she or it did not so agree to purchase and the Company shall promptly give each Rights Holder who has timely agreed to purchase his, her or its full Pro Rata Share of such offering of New Securities (a “Purchasing Holder”) written notice of the failure of any Nonpurchasing Holder to purchase such Nonpurchasing Holder’s full Pro Rata Share of such offering of New Securities (the “Overallotment Notice”). Each Purchasing Holder shall have a right of overallotment such that such Purchasing Holder may agree to purchase a portion of the Nonpurchasing Holders’ unpurchased Pro Rata Shares of such offering on a pro rata basis according to the relative Pro Rata Shares of the Purchasing Rights Holders, at any time within ten (10) days after receiving the Overallotment Notice. If the consideration for any New Securities is in a form other than cash, each Rights Holder shall be entitled to pay cash equal to the fair market value of such consideration to exercise such Rights Holders’ rights hereunder.

 

3.4                               Failure to Exercise. In the event that the Rights Holders fail to exercise in full the right of first offer within such original thirty (30) day period plus the ten (10) day period for the right of overallotment, then the Company shall have ninety (90) days thereafter to sell the New Securities with respect to which the Rights Holders’ rights of first offer hereunder were not exercised, at a price and upon general terms not materially more favorable to the purchasers thereof than specified in the Notice. In the event that the Company has not issued and sold the New Securities within such ninety (90) day period, then the Company shall not thereafter issue or sell any New Securities without again first offering such New Securities to the Rights Holders pursuant to this Section 3.

 

3.5                               Termination. This right of first offer shall terminate upon the earliest to occur of (a) the closing of an IPO or (b) a Deemed Liquidation Event.

 

4.                                      ASSIGNMENT AND AMENDMENT.

 

4.1                               Assignment. Notwithstanding anything herein to the contrary:

 

(a)                                 Information Rights; Rights of First Refusal. The rights of an Investor under Sections 1 and 3 hereof may be assigned to Affiliates of such Investor and, in the case of Investors that are natural persons, members of such Investor’s immediate family and trusts and partnerships for the benefit of members of such Investor’s immediate family.

 

(b)                                 Registration Rights. The registration rights of a Holder under Section 2 hereof may be assigned only to a party who acquires at least fifty percent (50%) of a Holder’s Registrable Securities then outstanding; provided, however that no party may be assigned any of the foregoing rights unless the Company is given written notice by the assigning party at the time of such assignment stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; provided, further, that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 4. Notwithstanding the foregoing, assignments of the rights in Section 2 hereof may be made without the Company’s consent or acquiring the minimum number of shares of Registrable Securities noted above if the assignment is to an Affiliate of the Holder.

 

4.2                               Amendment and Waiver of Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of (a) the Company, (b) Investors holding at least a majority of the Registrable Securities then outstanding and (c) Stockholders holding at least a majority of the issued and outstanding shares of Common Stock which are then held by the Stockholders; provided, however, the consent of the Stockholders shall not be required for (1) any amendment or waiver of any section to this Agreement that does not adversely affect any of the rights or obligations, or create

 

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any additional obligations, of any of the Stockholders, (2) any amendment or waiver of any section to this Agreement if such amendment or waiver treats affects all parties to this Agreement in the same fashion (in which case, such amendment or waiver need only be approved by Holders holding a majority of the Registrable Securities then outstanding) or (3) any amendment or waiver of Section 1, Section 3, Section 4.1(a) or Section 5 (other than Section 5.2). Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor or Stockholder (solely with respect to amendments and waivers that require Investor or Stockholder consent, as applicable) without the written consent of such Investor or Stockholder, unless such amendment, termination, or waiver applies to all Investors in the same fashion and Stockholders in the same fashion, respectively (it being agreed that a waiver of the provisions of Section 3 with respect to a particular transaction shall be deemed to apply to all Investors and Stockholders in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors and/or Stockholders may nonetheless, by agreement with the Company, purchase securities in such transaction, and that any change in the thresholds for rights under this agreement shall not be deemed to apply to any Investor differently by consequence of such Investor’s holdings). Any amendment or waiver affected in accordance with this Section 4.2 shall be binding upon each Investor, each Stockholder, each Holder, each permitted successor or assignee of such Investor, Stockholder or Holder and the Company. 

 

5.                                      ADDITIONAL COVENANTS OF COMPANY.

 

5.1                               Stock Option/Stock Issuances. Unless otherwise approved by the Board or the Compensation Committee of the Board, all future employees, consultants, directors, and other service providers to the Company who shall purchase, or receive options or other rights to purchase, shares of Common Stock or equivalents thereof following the date hereof shall be required to execute agreements providing for (a) vesting of shares over a four year period with the first 25% of such shares vesting following twelve (12) months of continued employment or services, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months thereafter, (b) a market stand-off provision of at least 180 days, (c) the right to repurchase unvested shares of Common Stock at cost, and (d) a right of first refusal on transfers of shares until an IPO, subject to customary exceptions.

 

5.2                               Employee Intellectual Property Protection. Unless otherwise approved by the Board, the Company shall ensure that each future key employee shall enter into an Employee Intellectual Property Protection Agreement in the form provided to special counsel to the Investors and providing, inter alia, that such key employee (a) is an at-will employee of the Company, (b) such employee will maintain all Company proprietary information in confidence, (c) such employee will assign all inventions created by him or her as an employee during his or her employment with the Company, and (d) such employee will not disclose any information related to the Company’s work force and will not solicit any employees from the Company for a period of twelve (12) months should his, her, or its employment with the Company be terminated for any reason. The Company’s standard form of consulting agreement shall contain similar provisions.

 

5.3                               Termination of Certain Rights. The Company’s obligations under this Section 5 will terminate upon the earliest to occur of (a) the closing of an IPO or (b) a Deemed Liquidation Event.

 

5.4                               Board Meetings; Reimbursement of Expenses. The Board shall use reasonable efforts to meet at least on a quarterly basis. The Company hereby agrees to reimburse each director for his or her reasonably documented out-of-pocket expenses incurred in attending the Board meetings and meetings of committees of the Board.

 

5.5                               Committee Membership. Any committee of the Board shall include at least one of the Preferred Directors (as defined in the Restated Certificate) and shall not include a majority of the Common Directors (as defined in the Restated Certificate).

 

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5.6                               Interested Party Transactions. The Company will not enter into any transaction with a “related person” as defined in Item 404 of Regulation S-K of the Securities Act, unless approved by a majority of the disinterested members of the Board.

 

5.7                               Corporate Existence; Insurance. The Company shall take all actions required to maintain its corporate existence, unless otherwise approved by the Board. The Company shall acquire from and maintain general insurance in such amounts and covering such risks as the Company reasonably deems advisable, at levels approved by the Board.

 

5.8                               Directors’ and Officers’ Insurance. The Company shall maintain directors’ and officers’ insurance with terms and policy limits satisfactory to a majority of the Board.

 

5.9                               Indemnification Matters. The Company hereby acknowledges that the Preferred Directors may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Preferred Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Preferred Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Preferred Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Preferred Director to the extent legally permitted and as required by the Restated Certificate or the Bylaws of the Company (or any agreement between the Company and such Preferred Director), without regard to any rights such Preferred Director may have against the Fund Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such Preferred Director with respect to any claim for which such Preferred Director has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Preferred Director against the Company.

 

6.                                      GENERAL PROVISIONS.

 

6.1                               Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (a) at the time of personal delivery, if delivery is in person; (b) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (c) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (d) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. All notices for delivery outside the United States will be sent by facsimile or by express courier. Notices by facsimile shall be machine verified as received. All notices not delivered personally or by facsimile will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address or facsimile number as follows, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto as follows:

 

(a)                                 if to an Investor, at such Investor’s respective address as set forth on Exhibit A hereto.

 

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(b)                                 if to the Company, marked “Attention: Chief Executive Officer,” at 2055 Woodside Rd., Redwood City, California 94061, or facsimile number: (650) 365-3410.

 

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

 

Fenwick & West LLP

Silicon Valley Center

555 California Street

12th Floor

San Francisco, CA 94104

Facsimile: (415) 281-1350

Attention: Douglas Cogen

 

(c)                                  if to a Stockholder, at such Stockholder’s address or facsimile number as set forth on Exhibit B hereto.

 

6.2                               Entire Agreement. This Agreement and the documents referred to herein, together with all the Exhibits hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof, including, without limitation, the Prior Agreement.

 

6.3                               Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to that body of laws pertaining to conflict of laws. The parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of California and the Federal courts of the United States of America located within the County of San Francisco, State of California, in respect of the interpretation and enforcement of the provisions of this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a California State or Federal court.

 

6.4                               Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

 

6.5                               Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement, except that the persons identified on Exhibit C are intended to be beneficiaries of the Company’s obligations under Section 5.2.

 

6.6                               Successors And Assigns. Subject to the provisions of Section 4.1, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.

 

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Notwithstanding anything herein to the contrary, any Investor may assign its rights and obligations hereunder to any Affiliate of such Investor.

 

6.7                               Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this Agreement.

 

6.8                               Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

 

6.9                               Costs And Attorneys’ Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

 

6.10                        Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares of common stock or Preferred Stock of the Company of any class or series, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding shares of such class or series of stock by such subdivision, combination or stock dividend.

 

6.11                        Aggregation of Stock. All shares held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

6.12                        Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

6.13                        Facsimile Signatures. This Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

6.14                        Person. “Person” shall mean an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity.

 

6.15                        Termination. This Agreement shall terminate upon the earlier of (a) there ceasing to be any obligations pursuant to Sections 1, 2, 3 and 5 and (b) the agreement of (a) the Company, (b) Investors holding at least a majority of the Registrable Securities then outstanding, and (c) Stockholders holding at least a majority of the issued and outstanding shares of common stock held by the Stockholders and Holders holding at least a majority of the Registrable Securities then outstanding.

 

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IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
DERMIRA, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
Title:
    	
Chief Executive Officer
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
BAY CITY CAPITAL FUND V, L.P.
    
	
 
    	
 
    
	
 
    	
By: Bay City Capital Management V LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By: Bay City Capital LLC,
    
	
 
    	
Its: Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Craves
    
	
 
    	
Name:
    	
Fred Craves
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BAY CITY CAPITAL FUND V CO-INVESTMENT FUND, L.P.
    
	
 
    	
By: Bay City Capital Management V LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By: Bay City Capital LLC,
    
	
 
    	
Its: Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Craves
    
	
 
    	
Name:
    	
Fred Craves
    
	
 
    	
Title:
    	
Managing Director
    
				

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
NEW ENTERPRISE ASSOCIATES 13, LIMITED
   PARTNERSHIP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louis S. Citron
    
	
 
    	
Name:
    	
Louis S. Citron
    
	
 
    	
Title:
    	
Chief Legal Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NEA VENTURES 2011, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louis S. Citron
    
	
 
    	
Name:
    	
Louis S. Citron
    
	
 
    	
Title:
    	
Vice-President
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
CANAAN VIII L.P.
    
	
 
    	
By: Canaan Partners VIII LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Wende S. Hutton
    
	
 
    	
 
    	
Wende S. Hutton
    
	
 
    	
 
    	
Member/Manager
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
MARUHO CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Koichi Takagi
    
	
 
    	
 
    	
Name: Koichi Takagi
    
	
 
    	
 
    	
Title:  President and Chief Executive Officer
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

 

	
 
    	
STOCKHOLDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THOMAS WIGGANS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WIGGANS LIVING TRUST DATED 5/14/02
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ELIZABETH WIGGANS IRREVOCABLE
   GIFTING TRUST DATED 2/24/11
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Baumgardt
    
	
 
    	
Name:
    	
James Baumgardt
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    
	
 
    	
AMANDA WIGGANS IRREVOCABLE GIFTING
   TRUST DATED 2/24/11
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Baumgardt
    
	
 
    	
Name:
    	
James Baumgardt
    
	
 
    	
Title:
    	
Trustee
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first written above.

 

 

	
 
    	
STOCKHOLDER:
    
	
 
    	
 
    
	
 
    	
BAUER FAMILY 1995 TRUST DATED JUNE 15, 1995
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Eugene A. Bauer
    
	
 
    	
Name:
    	
Eugene A. Bauer
    
	
 
    	
Title:
    	
Co-Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gloria A. Bauer
    
	
 
    	
Name:
    	
Gloria A. Bauer
    
	
 
    	
Title:
    	
Co-Trustee
    

 

[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

EXHIBIT A

 

Schedule of Investors

 

Maruho Co., Ltd.

1-5-22, Nakatsu, Kita-ku,

Osaka, 531-0071

Japan

Fax: 81-6-6371-8668

Attention: Koichi Takagi

 

Bay City Capital Fund V, L.P.

c/o Bay City Capital LLC

750 Battery Street, Suite 400

San Francisco, CA 94111

Fax: (415) 837-0503

Attention: Fred Craves

 

Bay City Capital Fund V Co-Investment Fund, L.P.

c/o Bay City Capital LLC

750 Battery Street, Suite 400

San Francisco, CA 94111

Fax: (415) 837-0503

Attention Fred Craves

 

New Enterprise Associates 13, Limited Partnership

2855 Sand Hill Road

Menlo Park, CA 94025

Fax: (650) 854-9397

Attention: Jake Nunn

 

NEA Ventures 2011, Limited Partnership

2855 Sand Hill Road

Menlo Park, CA 94025

Fax: (650) 854-9397

Attention: Jake Nunn

 

Canaan VIII L.P.

2765 Sand Hill Road

Menlo Park, CA 94025

Fax: (650) 854-8127

Attention: Wende Hutton

 

Thomas Wiggans

 

 

 

Bauer Family 1995 Trust Dated June 15, 1995

 

 

 

 

EXHIBIT B

 

Schedule of Stockholders

 

Wiggans Living Trust dated 5/14/02

 

 

Attention: Thomas Wiggans

 

Elizabeth Wiggans Irrevocable Gifting Trust dated 2/24/11

 

 

Attention: Thomas Wiggans

 

Amanda Wiggans Irrevocable Gifting Trust dated 2/24/11

 

 

Attention: Thomas Wiggans

 

Bauer Family 1995 Trust Dated June 15, 1995

 

 

 

 

JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

This Joinder and Amendment (this “Joinder”) to the Amended and Restated Investors’ Rights Agreement of Dermira, Inc., a Delaware corporation (the “Company”), dated as of March 28, 2013, by and among the Company and certain stockholders of the Company (the “Rights Agreement”), is made and entered into as of April 11, 2014, by and among the Company, UCB S.A. (“UCB”) and the undersigned Investors (as defined in the Rights Agreement). Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Rights Agreement.

 

RECITALS

 

WHEREAS, on the date hereof, UCB is purchasing shares of the Company’s Series B Preferred Stock pursuant to the Purchase Agreement, as amended by that certain Amendment No. 1 to the Series B Preferred Stock Purchase Agreement, dated of even date herewith, by and among the Company, the undersigned Investors and UCB (the “SPA Amendment”).

 

WHEREAS, the Purchase Agreement, as amended by the SPA Amendment, provides that UCB shall become a party to the Rights Agreement and the Rights Agreement must be amended in order to make UCB a party to the Rights Agreement.

 

WHEREAS, the Company, the undersigned Investors and the undersigned Stockholders desire to amend the Rights Agreement to make UCB a party to the Rights Agreement.

 

WHEREAS, pursuant to Section 4.2 of the Rights Agreement, the Rights Agreement may be amended only with the written consent of (a) the Company, (b) Investors holding at least a majority of the Registrable Securities then outstanding and (c) Stockholders holding at least a majority of the issued and outstanding shares of Common Stock which are then held by the Stockholders.

 

WHEREAS, the Company and each of the undersigned Investors and Stockholders is a party to the Rights Agreement and the consent of the Company and each of the undersigned Investors and Stockholders shall, in accordance with Section 4.2 of the Rights Agreement, bind the Company, all Investors and all Stockholders with respect to the amendments and agreements set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and for other consideration, the adequacy and sufficiency of which is hereby acknowledged, the parties hereto agree as set forth herein.

 

1.                                      Amendment of Rights Agreement. The undersigned parties to the Rights Agreement hereby agree that the Rights Agreement shall be amended to provide that UCB shall be an “Investor” for purposes of the Rights Agreement and Exhibit A shall be amended to list UCB and its mailing address.

 

2.                                      Agreement to be Bound; Acknowledgement of Rights and Benefits. UCB hereby (a) acknowledges that UCB has received and reviewed a complete copy of the Rights Agreement and (b) agrees that upon execution of this Joinder, UCB shall become a party to the Rights Agreement and shall be fully bound by, and subject to, all of the applicable covenants, terms and conditions of the Rights Agreement as though an Investor thereunder. The undersigned parties to the Rights Agreement hereby agree that UCB shall have the rights and benefits under the Rights Agreement applicable to an Investor in the same manner as if UCB were an original signatory thereto and named as an Investor thereunder.

 

 

3.                                      Authorization. The parties hereto represent that that each such party is fully authorized and empowered to enter into this Joinder and that this Joinder constitutes each such party’s valid and legally binding obligation, enforceable in accordance with its terms.

 

4.                                      Full Force and Effect. Except as specifically modified by this Joinder, all terms and conditions of the Rights Agreement shall remain in full force and effect, unmodified in any way. This Joinder shall be deemed to form an integral part of the Rights Agreement and shall be effective as of March 28, 2013 as if the provisions hereof had been incorporated into the Rights Agreement as originally executed. In the event of any inconsistency or conflict between the provisions of the Rights Agreement and this Joinder, the provisions of this Joinder will prevail and govern. All references to the “Agreement” in the Rights Agreement shall hereinafter refer to the Rights Agreement as amended by this Joinder.

 

5.                                      Governing Law. This Joinder will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to that body of laws pertaining to conflict of laws that would result in the application of the law of any other state.

 

6.                                      Counterparts. This Joinder may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

 

7.                                      Electronic Signatures. This Joinder may be executed and delivered by facsimile or electronic signature (e.g., DocuSign) and upon such delivery the facsimile or electronic signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

2

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
THE COMPANY:
    
	
 
    	
 
    
	
 
    	
DERMIRA, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
Title:
    	
Chief Executive Officer
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
BAY CITY CAPITAL FUND V, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: Bay City Capital Management V LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
By: Bay City Capital LLC,
    
	
 
    	
Its: Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Craves
    
	
 
    	
Name:
    	
Fred Craves
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BAY CITY CAPITAL FUND V CO-INVESTMENT FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By: Bay City Capital Management V LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
By: Bay City Capital LLC,
    
	
 
    	
Its: Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Craves
    
	
 
    	
Name:
    	
Fred Craves
    
	
 
    	
Title:
    	
Managing Director
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
NEW ENTERPRISE ASSOCIATES 13, LIMITED
   PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Louis S. Citron
    
	
 
    	
Name:
    	
Louis S. Citron
    
	
 
    	
Title:
    	
Chief Legal Officer
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CANAAN VIII L.P.
    
	
 
    	
By:
    	
Canaan Partners VIII LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Wende S.   Hutton
    
	
 
    	
 
    	
Wende S. Hutton
    
	
 
    	
 
    	
Member/Manager
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THOMAS WIGGANS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Thomas Wiggans
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WIGGANS LIVING TRUST DATED 5/14/02
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ELIZABETH WIGGANS IRREVOCABLE GIFTING
   TRUST DATED 2/24/11
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James Baumgardt
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AMANDA WIGGANS IRREVOCABLE GIFTING TRUST DATED   2/24/11
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James Baumgardt
    
	
 
    	
Title:
    	
Trustee
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
UCB S.A.
    
	
 
    	
 
    
	
 
    	
/s/ Detlef Thielgen
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Detlef Thielgen
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    	
Executive Vice President
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT as of the date first above written.

 

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
UCB S.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Mark McDade
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Mark McDade
    
	
 
    	
Title:
    	
Executive Vice President
    

 

[SIGNATURE PAGE TO JOINDER AND AMENDMENT TO

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]Exhibit 10.2

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

 

As Adopted on October 15, 2010

and Amended on August 3, 2011, March 22, 2013, and July 11, 2013

 

1.                                      PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through the grant of Awards covering Shares.  Capitalized terms not defined in the text are defined in Section 14 hereof.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o).  Any requirement of this Plan that is required in law only because of Section 25102(o) need not apply if the Committee so provides.

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

2.1                               Number of Shares Available.  Subject to Sections 2.2 and 11 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 10,939,356 Shares.  Subject to Sections 2.2, 4.10 and 11 hereof, Shares that are subject to issuance upon exercise of an Option for any reason other than exercise of such Option, Shares that are repurchased by the Company at the original purchase price or forfeited, and shares subject to Awards that are otherwise cancelled, forfeited, settled in cash or that expire by their terms will again be available for grant and issuance in connection with other Awards.  At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted and outstanding under this Plan.

 

2.2                               Adjustment of Shares.  In the event that the number of outstanding shares of the Company’s Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARS, and (c) the Purchase Prices of and/or number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee; and provided, further, that the Exercise Price of any Option or SAR may not be decreased to below the par value of the Shares.

 

3.                                      PLAN FOR BENEFIT OF SERVICE PROVIDERS

 

3.1                               Eligibility.  The Committee will have the authority to select persons to receive Awards. ISOs (as defined in Section 4 hereof) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company.  NQSOs (as defined in Section 4 hereof) and all other types of Awards may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company; provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction when Rule 701 is to apply to the Award granted for such services.  A person may be granted more than one Award under this Plan.

 

3.2                               No Obligation to Employ.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to

 

1

 

continue any other relationship with, the Company or any Parent or Subsidiary or limit in any way the right of the Company or any Parent or Subsidiary to terminate Participant’s employment or other relationship at any time, with or without Cause.

 

4.                                      OPTIONS.  The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following.

 

4.1                               Form of Option Grant.  Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.

 

4.2                               Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise specified by the Committee.  The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

 

4.3                               Exercise Period.  Options may be exercisable immediately but subject to repurchase pursuant to Section 10 hereof or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that (a) no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and (b) no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Shareholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

 

4.4                               Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per Share unless expressly determined in writing by the Committee on the Option’s date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent Shareholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased must be made in accordance with Section 8 hereof.

 

4.5                               Method of Exercise.  Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant).  The Exercise Agreement will state (a) the number of Shares being purchased, (b) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (c) such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws.  Each Participant’s Exercise Agreement may be modified by (i) agreement of Participant and the Company or (ii) substitution by the Company, upon becoming a public company, in order to add the payment terms set forth in Section 8.1 that apply to a public company and such other terms as shall be necessary or advisable in order to exercise a public company option.  Upon exercise of an Option, Participant shall execute and deliver to the Company the Exercise Agreement then in effect, together with payment in full of the Exercise Price for the number of Shares being purchased and payment of any applicable taxes.

 

2

 

4.6                               Termination.  Subject to earlier termination pursuant to Sections 11 and 13.1 hereof and notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following terms and conditions.

 

4.6.1                     Other than Death or Disability or for Cause.  If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date or as otherwise determined by the Committee.  Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO) but in any event, no later than the expiration date of the Options.

 

4.6.2                     Death or Disability.  If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares by Participant on the Termination Date or as otherwise determined by the Committee.  Such options must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no later than the expiration date of the Options.

 

4.6.3                     For Cause.  If the Participant is terminated for Cause, the Participant may exercise such Participant’s Options, but not to an extent greater than such Options are exercisable as to Vested Shares upon the Termination Date and Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

4.7                               Limitations on Exercise.  The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.

 

4.8                               Limitations on ISOs.  The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars ($100,000).  If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable in that calendar year will be NQSOs.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 13.1 hereof) to provide for a different limit on the Fair Market Value of Shares permitted to be

 

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subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

 

4.9                               Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 4.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 4.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price; provided, further, that the Exercise Price will not be reduced below the par value of the Shares, if any.

 

4.10                        No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code.  In no event shall the total number of Shares issued (counting each reissuance of a Share that was previously issued and then forfeited or repurchased by the Company as a separate issuance) under the Plan upon exercise of ISOs exceed 109,393,560 Shares (adjusted in proportion to any adjustments under Section 2.2 hereof) over the term of the Plan.

 

5.                                      RESTRICTED STOCK.  A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified restrictions.  The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following terms and conditions.

 

5.1                               Form of Restricted Stock Award.  All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.  The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person.  If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.

 

5.2                               Purchase Price.  The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock Award is granted or at the time the purchase is consummated.  Payment of the Purchase Price must be made in accordance with Section 8 hereof.

 

5.3                               Restrictions.  Restricted Stock Awards may be subject to the restrictions set forth in Sections 9 and 10 hereof or, with respect to a Restricted Stock Award to which Section 25102(o) is to apply, such other restrictions not inconsistent with Section 25102(o).

 

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6.                                      RESTRICTED STOCK UNITS.

 

6.1                               Awards of Restricted Stock Units.  A Restricted Stock Unit (“RSU”) is an Award covering a number of Shares that may be settled in cash, or by issuance of those Shares at a date in the future.  No Purchase Price shall apply to an RSU settled in Shares other than the payment of the aggregate par value of all Shares issuable upon such settlement. All grants of Restricted Stock Units will be evidenced by an Award Agreement that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

 

6.2                               Form and Timing of Settlement.  To the extent permissible under applicable law, the Committee may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code (or any successor) and any regulations or rulings promulgated thereunder.  Payment may be made in the form of cash or whole Shares or a combination thereof, all as the Committee determines.

 

7.                                      STOCK APPRECIATION RIGHTS.

 

7.1                               Awards of SARs.  Stock Appreciation Rights (“SARs”) may be settled in cash, or Shares (which may consist of Restricted Stock or RSUs), having a value equal to the value determined by multiplying the difference between the Fair Market Value on the date of exercise over the Exercise Price and the number of Shares with respect to which the SAR is being settled.  All grants of SARs made pursuant to this Plan will be evidenced by an Award Agreement that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

 

7.2                               Exercise Period and Expiration Date.  A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR.  The Award Agreement shall set forth the Expiration Date; provided that no SAR will be exercisable after the expiration of ten years from the date the SAR is granted.

 

7.3                               Exercise Price.  The Committee will determine the Exercise Price of the SAR when the SAR is granted, and which may not be less than the Fair Market Value on the date of grant and may be settled in cash or in Shares.

 

7.4                               Termination.  Subject to earlier termination pursuant to Sections 11 and 13.1 hereof and notwithstanding the exercise periods set forth in the Award Agreement, exercise of SARs will always be subject to the following terms and conditions.

 

7.4.1                     Other than Death or Disability or for Cause.  If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s SARs only to the extent that such SARs are exercisable as to vested Shares upon the Termination Date or as otherwise determined by the Committee.  SARs must be exercised by the Participant, if at all, as to all or some of the vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee) but in any event, no later than the expiration date of the SARs.

 

7.4.2                     Death or Disability.  If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s SARs may be exercised only to the extent that such SARs are exercisable as to vested Shares by Participant on the Termination Date or as otherwise determined by the Committee.

 

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Such SARs must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee) but in any event no later than the expiration date of the SARs.

 

7.4.3                     For Cause.  If the Participant is terminated for Cause, the Participant may exercise such Participant’s SARs, but not to an extent greater than such SARs are exercisable as to vested Shares upon the Termination Date and Participant’s SARs shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

8.                                      PAYMENT FOR PURCHASES AND EXERCISES.

 

8.1                               Payment in General.  Payment for Shares acquired pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law:

 

(a)                     by cancellation of indebtedness of the Company owed to the Participant;

 

(b)                     by surrender of shares of the Company that are clear of all liens, claims, encumbrances or security interests and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Participant in the public market;

 

(c)                      by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; provided, further, that the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the laws under which the Company is then incorporated or organized;

 

(d)                     by waiver of compensation due or accrued to the Participant from the Company for services rendered;

 

(e)                      by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;

 

(f)                       subject to compliance with applicable law and solely in the discretion of the Committee, by exercising as set forth below, provided that a public market for the Company’s Common Stock exists:

 

(i)                                     through a “same day sale” commitment from the Participant and a broker-dealer whereby the Participant irrevocably elects to exercise the Award and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price or Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company; or

 

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(ii)                                  through a “margin” commitment from the Participant and a broker-dealer whereby the Participant irrevocably elects to exercise the Award and to pledge the Shares so purchased to the broker-dealer in a margin account as security for a loan from the broker-dealer in the amount of the total Exercise Price or Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company; or

 

(g)                      by any combination of the foregoing or any other method of payment approved by the Committee.

 

8.2                               Withholding Taxes.

 

8.2.1                     Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy applicable tax withholding requirements prior to the delivery of any certificate or certificates for such Shares.  Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash by the Company, such payment will be net of an amount sufficient to satisfy applicable tax withholding requirements.

 

8.2.2                     Stock Withholding.  When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum tax withholding obligation by electing to have the Company withhold from the Shares to be issued up to the minimum number of Shares having a Fair Market Value on the date that the amount of tax to be withheld is to be determined that is not more than the minimum amount to be withheld; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company.  Any elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.

 

9.                                      RESTRICTIONS ON AWARDS.

 

9.1                               Transferability.  Except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to an inter vivos or testamentary trust in which the NQSOs are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “family member” as that term is defined in Rule 701, and may not be made subject to execution, attachment or similar process.  During the lifetime of the Participant an Award will be exercisable only by the Participant or Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal representative. The terms of an Option shall be binding upon the executor, administrator, successors and assigns of the Participant who is a party thereto.

 

9.2                               Securities Law and Other Regulatory Compliance.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o).  Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award to which Section 25102(o) will not apply.  An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect

 

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on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure so do.

 

9.3                               Exchange and Buyout of Awards.  The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards.  The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree.

 

10.                               RESTRICTIONS ON SHARES.

 

10.1                        Privileges of Stock Ownership.  No Participant will have any of the rights of a stockholder with respect to any Shares until such Shares are issued to the Participant.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock.  The Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased as described in this Section 10.

 

10.2                        Rights of First Refusal and Repurchase.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement (a) a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal terminates upon the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act and (b) a right to repurchase Unvested Shares held by a Participant for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.

 

10.3                        Escrow; Pledge of Shares. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated.  The Committee may cause a legend or legends referencing such restrictions to be placed on the certificate. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the

 

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Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

 

10.4                        Securities Law Restrictions.  All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

 

11.                               CORPORATE TRANSACTIONS.

 

11.1                        Assumption or Replacement of Awards by Successor or Acquiring Entity.  If an Acquisition or Other Combination shall occur, then any or all outstanding Awards may be assumed, converted or replaced by the successor or acquiring entity (if any) of such Acquisition or Other Combination (or by any of its Parents, if any), which assumption, conversion or replacement will be binding on all Participants.  In the alternative, any successor or acquiring entity in such Acquisition or Other Combination (or any of its Parents, if any) may substitute equivalent awards for outstanding Awards or provide substantially similar consideration to Participants in respect of their outstanding Awards as was provided to stockholders of the Company in such Acquisition or Other Combination after taking into account the existing provisions of the outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code).  Any successor or acquiring entity in such Acquisition or Other Combination (or any of its Parents, if any) may also substitute by issuing, in place of any Award of outstanding Shares of the Company held by a Participant, substantially similar shares of stock or other property subject to repurchase restrictions and other provisions no less favorable to such Participant than those that applied to such outstanding Shares immediately prior to such Acquisition or Other Combination.

 

11.2                        Awards Not Assumed or Replaced in an Acquisition.  If, in the event of an Acquisition, neither the successor or acquiring entity (if any) nor any Parent (if any) of such successor or acquiring entity assumes, converts, replaces or substitutes outstanding Awards as provided above in Section 11.1, then notwithstanding any other provision in this Plan to the contrary, and unless otherwise approved by the Committee or otherwise required by the terms of any Award Agreement or any separate written agreement governing such Award that has been approved by the Board, each such Award that has not already terminated in accordance with the Plan or the applicable Award Agreement shall terminate, without accelerating vesting, immediately prior to the consummation of such Acquisition (or if such Acquisition is an Acquisition by Sale of Assets, immediately prior to the Company’s distribution of any funds or assets to the Company’s stockholders following such Acquisition by Sale of Assets) at such times and upon such conditions as the Committee may determine.

 

11.3                        Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another entity, whether in connection with an acquisition of such other entity or otherwise, by either (a) granting an Award under this Plan in substitution of such other entity’s award or (b) assuming and/or converting such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other entity had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another entity, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code).  In the event the Company elects to grant a new Option or SAR rather than

 

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assuming an existing option or stock appreciation right, such new Option or SAR may be granted with a similarly adjusted Exercise Price.

 

12.                               ADMINISTRATION.

 

12.1                        Committee Authority.  This Plan will be administered by the Committee or the Board if no Committee is created by the Board.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan.  Without limitation, the Committee will have the authority to:

 

(a)                     construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

 

(b)                     prescribe, amend, expand, modify and rescind or terminate rules and regulations relating to this Plan;

 

(c)                      approve persons to receive Awards;

 

(d)                     determine the form and terms of Awards;

 

(e)                      determine the number of Shares or other consideration subject to Awards granted under this Plan;

 

(f)                       determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or awards under any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(g)                      grant waivers of any conditions of this Plan or any Award;

 

(h)                     determine the terms of vesting, exercisability and payment of Awards to be granted pursuant to this Plan;

 

(i)                         correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement, any Exercise Agreement or any Restricted Stock Purchase Agreement;

 

(j)                        determine whether an Award has been earned;

 

(k)                     extend the vesting period beyond a Participant’s Termination Date; and

 

(l)                         make all other determinations necessary or advisable in connection with the administration of this Plan.

 

12.2                        Committee Composition and Discretion.  The Board may delegate full administrative authority over the Plan and Awards to a Committee consisting of at least one member of the Board (or such greater number as may then be required by applicable law). Unless in contravention of any express terms of this Plan or Award, any determination made by the Committee with respect to any Award will be made in its sole discretion either (a) at the time of grant of the Award, or (b) subject to Section 4.9 hereof, at any later time.  Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan.  To the extent permitted by applicable law, the Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan, provided that each such officer is a member of the Board.

 

12.3                        Nonexclusivity of the Plan.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options

 

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and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

12.4                        Governing Law.  This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California, without giving effect to that body of laws pertaining to conflict of laws.

 

13.                               EFFECTIVENESS, AMENDMENT AND TERMINATION OF THE PLAN.

 

13.1                        Adoption and Stockholder Approval.  This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”).  This Plan will be approved by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective Date.  Upon the Effective Date, the Board may grant Awards pursuant to this Plan; provided, however, that:  (a) no Option or SAR may be exercised prior to initial stockholder approval of this Plan; (b) no Option or SAR granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time such increase has been approved by the stockholders of the Company; (c) in the event that initial stockholder approval is not obtained within the time period provided herein, all Awards for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (d) Awards (to which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board which increase is not approved by stockholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall be canceled, and any purchase of Shares subject to any such Award shall be rescinded.

 

13.2                        Term of Plan.  Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the Effective Date or, if earlier, ten (10) years from the date of stockholder approval.

 

13.3                        Amendment or Termination of Plan.  Subject to Section 4.9 hereof, the Board may at any time (a) terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan and (b) terminate any and all outstanding Options or SARs upon a dissolution or liquidation of the Company, followed by the payment of creditors and the distribution of any remaining funds to the Company’s stockholders; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to Section 25102(o) or pursuant to the Code or the regulations promulgated under the Code as such provisions apply to ISO plans.

 

14.                               DEFINITIONS.  For all purposes of this Plan, the following terms will have the following meanings.

 

“Acquisition,” for purposes of Section 11, means:

 

(a)                                 any consolidation or merger in which the Company is a constituent entity or is a party in which the voting stock and other voting securities of the Company that are outstanding immediately prior to the consummation of such consolidation or merger represent, or are converted into, securities of the surviving entity of such consolidation or merger (or of any Parent of such surviving entity) that, immediately after the consummation of such consolidation or merger, together possess less than fifty percent (50%) of the total voting power of all voting securities of such surviving entity (or of any of

 

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its Parents, if any) that are outstanding immediately after the consummation of such consolidation or merger;

 

(b)                                 a sale or other transfer by the holders thereof of outstanding voting stock and/or other voting securities of the Company possessing more than fifty percent (50%) of the total voting power of all outstanding voting securities of the Company, whether in one transaction or in a series of related transactions, pursuant to an agreement or agreements to which the Company is a party and that has been approved by the Board, and pursuant to which such outstanding voting securities are sold or transferred to a single person or entity, to one or more persons or entities who are Affiliates of each other, or to one or more persons or entities acting in concert; or

 

(c)                                  the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company and/or any Subsidiary or Subsidiaries of the Company, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole, (or, if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by one or more Subsidiaries, the sale or disposition (whether by consolidation, merger, conversion or otherwise) of such Subsidiaries of the Company), except where such sale, lease, transfer or other disposition is made to the Company or one or more wholly owned Subsidiaries of the Company (an “Acquisition by Sale of Assets”).

 

“Affiliate” of a specified person means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified (where, for purposes of this definition, the term “control” (including the terms controlling, controlled by and under common control with) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

 

“Award” means any award pursuant to the terms and conditions of this Plan, including any Option, Restricted Stock Unit, Stock Appreciation Right or Restricted Stock Award.

 

“Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award as approved by the Committee.

 

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

 

“Cause” means Termination because of (a) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by the Participant of a common law fraud, (b) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (c) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent or Subsidiary of the Company and the Participant regarding the terms of the Participant’s service as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company, including without limitation, the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an employee, officer, director or consultant of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent or Subsidiary of the Company and the Participant, (d) Participant’s disregard of the policies of the Company or any Parent or Subsidiary of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (e) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.

 

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“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.

 

“Company” means Dermira, Inc., a Delaware corporation, or any successor corporation.

 

“Disability” means a disability, whether temporary or permanent, partial or total, as determined by the Committee.

 

“Exercise Price” means the price per Share at which a holder of an Option may purchase Shares issuable upon exercise of the Option.

 

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

 

(a)                                 if such Common Stock is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

 

(b)                                 if such Common Stock is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Committee may determine); or

 

(c)                                  if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.

 

“Option” means an award of an option to purchase Shares pursuant to Section 4 of this Plan.

 

“Other Combination” for purposes of Section 11 means any (a) consolidation or merger in which the Company is a constituent entity and is not the surviving entity of such consolidation or merger or (b) any conversion of the Company into another form of entity; provided that such consolidation, merger or conversion does not constitute an Acquisition.

 

“Parent” of a specified entity means, any entity that, either directly or indirectly, owns or controls such specified entity, where for this purpose, “control” means the ownership of stock, securities or other interests that possess at least a majority of the voting power of such specified entity (including indirect ownership or control of such stock, securities or other interests).

 

“Participant” means a person who receives an Award under this Plan.

 

“Plan” means this 2010 Equity Incentive Plan, as amended from time to time.

 

“Purchase Price” means the price at which a Participant may purchase Restricted Stock pursuant to this Plan.

 

“Restricted Stock” means Shares purchased pursuant to a Restricted Stock Award under this Plan.

 

“Restricted Stock Award” means an award of Shares pursuant to Section 5 hereof.

 

“Restricted Stock Unit” or “RSU” means an award made pursuant to Section 6 hereof.

 

“Rule 701” means Rule 701 et seq promulgated by the Commission under the Securities Act.

 

13

 

“SEC” means the Securities and Exchange Commission.

 

“Section 25102(o)” means Section 25102(o) of the California Corporations Code.

 

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

 

“Shares” means shares of the Company’s Common Stock, $0.001, par value per share, reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 11 hereof, and any successor security.

 

“Stock Appreciation Right” or “SAR” means an award granted pursuant to Section 7 hereof.

 

“Subsidiary” means any entity (other than the Company) in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain owns stock or other equity securities representing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity securities in one of the other entities in such chain.

 

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company.  A Participant will not be deemed to have ceased to provide services in the case of sick leave, military leave, or any other leave of absence approved by the Committee; provided that such leave is for a period of not more than ninety (90) days (a) unless reinstatement (or, in the case of an employee with an ISO, reemployment) upon the expiration of such leave is guaranteed by contract or statute, or (b) unless provided otherwise pursuant to formal policy adopted from time to time by the Company’s Board and issued and promulgated in writing.  In the case of any Participant on sick leave, military leave or an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Stock Option Agreement.  The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

 

“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement for an Award.

 

“Vested Shares” means “Vested Shares” as defined in the Award Agreement.

 

* * * * * * * * * * *

 

14

 

Option Grant No. [  ]

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Dermira, Inc., a Delaware corporation (the “Company”), and the participant named below (the “Participant”).  Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2010 Equity Incentive Plan (the “Plan”).

 

	
Participant’s Name
    	
 
    	
Option
   Shares
    	
 
    	
Exercise
   Price
   Per Share
    	
 
    	
Date of
   Grant
    	
 
    	
First
   Vesting
   Date
    	
 
    	
Expiration
   Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Classification   of Participant
    	
 
    	
o Exempt   Employee
    	
 
    	
 
    	
 
    	
o Nonexempt   Employee
    	
 
    	
 
    	
 
    	
o Non-employee
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Type   of Stock Option:
    	
 
    	
o Incentive   Stock Option
    	
 
    	
 
    	
 
    	
o Nonqualified   Stock Option
    	
 
    	
 
    	
 
    	
 
    

 

1.                                      GRANT OF OPTION.  The Company hereby grants to Participant an option (this “Option”) to purchase the total number of shares of common stock, $0.001 par value per share, of the Company (“Common Stock”) set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan.  If designated as an Incentive Stock Option above, the Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code, except that if on the Date of Grant the Participant is not subject to U.S. income tax, then this Option shall be a NQSO.  This Option is not transferable.

 

[ALTERNATIVE #1:  ONE YEAR CLIFF THEN MONTHLY VESTING SCHEDULE]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one-fourth (1/4th)] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar month thereafter (or if there is no such day in any month, then the last day of such calendar month), an additional [one forty-eighth 1/48th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting schedule above causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

1

 

[ALTERNATIVE #2:  MONTHLY VESTING SCHEDULE(1)]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one forty-eighth 1/48th] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar month thereafter (or if there is no such day in any month, then the last day of such calendar month), an additional [one forty-eighth 1/48th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting schedule above causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

[ALTERNATIVE #3:  ANNUAL VESTING SCHEDULE]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one-fourth 1/4th] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar year thereafter, an additional [1/4th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting percentage causes a fractional share, such share shall be rounded down to the nearest whole share for each year except for the last year in such vesting period, at the end of which last year this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

3.                                      MANNER OF EXERCISE.  To exercise this Option, Participant (or in the case of exercise after Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Committee from time to time (the “Exercise Agreement”).  If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option and such person shall be subject to all of the restrictions contained herein as if such person were the Participant.  The Option may not be exercised unless such exercise is in compliance with all applicable securities laws, as they are in effect on the date of exercise.  The Option may not be exercised as to fewer than one hundred (100) Shares unless it is exercised as to all Shares as to which the Option is then exercisable.

 

(1)                                 Do not use this alternative for a non-exempt employee.  Non-exempt employees must not be able to exercise options for 6 months after grant or the value of the option must be included in base pay when calculating overtime.

 

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4.                                      TERMINATION.

 

4.1                                                   Termination for Any Reason Except Death, Disability or Cause.  If Participant is Terminated for any reason, except death, Disability or for Cause, the Option, to the extent (and only to the extent) that it would have been exercisable by Participant on the Termination Date, may be exercised by Participant no later than three (3) months after the Termination Date, but in any event no later than the Expiration Date. Any exercise beyond three (3) months after the Termination Date will be deemed the exercise of an NQSO.

 

4.2                                                   Termination Because of Death or Disability.  If Participant is Terminated because of Participant’s death or Disability (or Participant dies within three (3) months after Termination when Termination is for any reason other than Participant’s Disability or for Cause), the Option, to the extent that it is exercisable by Participant on the Termination Date, may be exercised by Participant (or Participant’s legal representative) no later than twelve (12) months after the Termination Date, but in any event no later than the Expiration Date.  Any exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (b) twelve (12) months after the Termination Date when the termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, will be deemed to be the exercise of an NQSO.

 

4.3                                                   Termination for Cause.  If the Participant is terminated for Cause, Participant’s Options shall expire on the Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

5.                                      COMPLIANCE WITH LAWS AND REGULATIONS.  Although the Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to the Plan that do not qualify for exemption under Rule 701 and Section 25102(o) of the California Corporations Code.  Any requirement of this Agreement or the Exercise Agreement that is required in law only because of Section 25102(o) need not apply if the Committee so determines.

 

6.                                      ENTIRE AGREEMENT.  The Plan is incorporated herein by reference.  This Agreement, the Exercise Agreement and the Plan constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof.

 

7.                                      ACCEPTANCE.  Participant hereby acknowledges receipt of a copy of the Plan, this Agreement and the Exercise Agreement.  Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all the terms and conditions of therein.  The Exercise Price has been determined by the Committee based upon the best evidence available to the Committee and is intended to equal the Fair Market Value of the Shares as of the date of grant, or in some cases 110% of Fair Market Value, as required by the Code.  However, the tax treatment of this Option is not guaranteed.  Neither the Company, the Committee nor any of their designees shall be liable for any taxes, penalties or other monetary amounts owed by any Participant, employee, beneficiary or other person as a result of the grant, amendment, modification, exercise and/or payment of, or under, any Award, notwithstanding any challenge made to the determination of Fair Market Value by any taxing authority.  By accepting this Option, Participant acknowledges and agrees to the foregoing.  Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Participant should consult a tax adviser prior to such exercise or disposition.

 

8.                                      EXECUTION.  This Agreement and the Exercise Agreement may be entered into in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement.  This Agreement and the Exercise Agreement may be executed and delivered by facsimile and, upon such delivery, the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

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IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to be executed by its duly authorized representative and Participant has executed this Stock Option Agreement, effective as of the Date of Grant.

 

	
DERMIRA, INC.
    	
 
    	
PARTICIPANT
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Please   print name and title)
    	
 
    	
(Please   print name)
    
				

 

4

 

EXHIBIT A

 

FORM OF STOCK OPTION EXERCISE AGREEMENT

 

1

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

STOCK OPTION EXERCISE AGREEMENT

 

This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as of                                         ,            by and between Dermira, Inc. a Delaware corporation (the “Company”), and the purchaser named below (the “Purchaser”).  Capitalized terms not defined herein shall have the meanings ascribed to them in the Company’s 2010 Equity Incentive Plan (the “Plan”).

 

	
Name of Purchaser
    	
 
    	
Social Security
   Number
    	
 
    	
Total
   Number of
   Shares
    	
 
    	
Exercise
   Price Per
   Share
    	
 
    	
Option No.
   or
   Date of 
   Grant
    	
 
    	
ISO or
   NQSO
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    
												

 

1.                            EXERCISE OF OPTION.

 

1.1                               Agreement to Exercise.  Pursuant to exercise of that certain option (the “Option”) granted to Purchaser under the Plan and subject to the terms and conditions of this Exercise Agreement, Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Total Number of Shares set forth above (the “Shares”) of the Company’s Common Stock, $0.001 par value per share, at the Exercise Price Per Share set forth above (the “Exercise Price”).  As used in this Exercise Agreement, the term “Shares” refers to the Shares purchased under this Exercise Agreement and includes all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) all securities received in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.

 

1.2                               Payment.  Purchaser hereby delivers payment of the Exercise Price in the manner permitted in the Plan, and as explicitly provided by the Committee, as follows (check and complete as appropriate):

 

o                        in cash (by check) in the amount of $                                  , receipt of which is acknowledged by the Company.

 

o                        by cancellation of indebtedness of the Company currently owed to Purchaser in the amount of $                              .

 

o                        by the waiver hereby of compensation due or accrued for services previously rendered to the Company in the amount of $                  .

 

o                        by a cashless exercise under the Company’s formal cashless exercise program adopted by the Committee in connection with the Plan.

 

o                        provided that a public market for the Company’s stock exists and subject to compliance with applicable law and solely in the discretion of the Committee: (a) through a “same day sale” commitment from Purchaser and broker-dealer whereby Purchaser irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (b) through a “margin” commitment from Purchaser and a broker-dealer whereby Purchaser irrevocably elects to exercise the Option and to

 

2

 

pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the broker-dealer in the amount of the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company.

 

o                        the following form of consideration approved by the Committee:                                                                                                                                                                                                                                                         .

 

2.                            DELIVERY.

 

2.1                               Documents and Payment to be Delivered.  Purchaser hereby delivers to the Company at its principal executive offices, Attn: President:  (a) this completed and signed Exercise Agreement, (b) two (2) copies of a blank Stock Power and Assignment Separate from Stock Certificate in the form of Exhibit 1 attached hereto (the “Stock Powers”), both executed by Purchaser and Purchaser’s spouse, if any, (c) if Purchaser is married, a Consent of Spouse in the form of Exhibit 2 attached hereto (the “Spouse Consent”) executed by Purchaser’s spouse, and (d) the Exercise Price and payment or other provision for any applicable tax obligations (if paid by check, a copy of such check shall be attached hereto as Exhibit 3).  Upon its receipt of the Exercise Price, payment or other provision for any applicable tax obligations and all the documents to be executed and delivered by Purchaser to the Company, the Company will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser, or, if applicable, Purchaser’s estate, to be placed in escrow as provided in Section 6.2 until expiration or termination of the Company’s Refusal Right described in Section 5.

 

2.2                               Tax Withholding.  Prior to the issuance of the Shares upon exercise of the Option, Purchaser must pay or provide for any applicable federal, state and local withholding obligations of the Company.  If the Committee permits, Purchaser may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain the minimum number of Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company.  In such case, the Company shall issue the net number of Shares to the Purchaser by deducting the Shares retained from the Shares issuable upon exercise.

 

3.                            REPRESENTATIONS AND WARRANTIES OF PURCHASER.  Purchaser represents and warrants to the Company as follows.

 

3.1                               Agrees to Terms of the Plan.  Purchaser has received a copy of the Plan and the Stock Option Agreement, has read and understands the terms of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to be bound by their terms and conditions.  Purchaser acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares, and that Purchaser should consult a tax adviser prior to such exercise or disposition.

 

3.2                               Shares Not Registered or Qualified.  Purchaser understands and acknowledges that the Shares have not been registered with the SEC under the Securities Act, or with any securities regulatory agency administering any state securities laws, and that, notwithstanding any other provision of the Stock Option Agreement to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws.  Purchaser agrees to cooperate with the Company to ensure compliance with such laws.

 

3.3                               No Transfer Unless Registered or Exempt.  Purchaser understands that Purchaser may not transfer any Shares unless such Shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions from such registration and qualification requirements are available.  Purchaser understands that only the

 

3

 

Company may file a registration statement with the SEC and that the Company is under no obligation to do so with respect to the Shares.  Purchaser has also been advised that exemptions from registration and qualification may not be available or may not permit Purchaser to transfer all or any of the Shares in the amounts or at the times proposed by Purchaser.

 

3.4                               SEC Rule 701.  The Shares are issued pursuant to SEC Rule 701 promulgated under the Securities Act and may become freely tradable by non-affiliates (under limited conditions regarding the method of sale) ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC, subject to the lengthier market standoff agreement contained in Section 4 of this Exercise Agreement or any other agreement entered into by Purchaser.  Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144 which permits certain limited sales of unregistered securities.  Rule 144 is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144).  Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of Rule 144.  Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

 

3.5                               Sophistication; Preexisting Relationship.  To the extent applicable, Purchaser (a) is a sophisticated investor having such knowledge and experience in financial matters that Purchaser is able to fend for him or her self in connection with an investment in the Company, is capable of evaluating the merits and risks of this investment and is financially capable of bearing a total loss of this investment or (b) has a preexisting personal or business relationship with the Company and/or certain of the Company’s officers and/or directors of a nature and duration that is sufficient to make Purchaser aware of the character, business acumen and general business and financial circumstances of the Company and/or such officers and directors.

 

3.6                               Access to Information.  To the extent applicable, Purchaser has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that Purchaser reasonably considers important in making the decision to purchase the Shares, and Purchaser has had ample opportunity to ask questions of the Company’s representatives concerning such matters and this investment.

 

3.7                               Understanding of Risks.  To the extent applicable, Purchaser is fully aware of:  (a) the highly speculative nature of the investment in the Shares; (b) the financial hazards involved; (c) the lack of liquidity of the Shares and the restrictions on transferability of the Shares (e.g., that Purchaser may not be able to sell or dispose of the Shares or use them as collateral for loans); (d) the qualifications and backgrounds of the management of the Company; and (e) the tax consequences of investment in the Shares.

 

3.8                               Purchase for Own Account for Investment.  To the extent applicable, Purchaser is purchasing the Shares for Purchaser’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act.  Purchaser has no present intention of selling or otherwise disposing of all or any portion of the Shares and no one other than Purchaser has any beneficial ownership of any of the Shares.

 

4

 

3.9                               No General Solicitation.  At no time was Purchaser presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Shares.

 

3.10                        SEC Rule 144.  To the extent applicable, in addition, Purchaser has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144).  Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of Rule 144].  Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

 

4.                            MARKET STANDOFF AGREEMENT.  Purchaser agrees in connection with any registration of the Company’s securities under the Securities Act or other public offering that, upon the request of the Company or the underwriters managing any registered public offering of the Company’s securities, Purchaser will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such managing underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Company or the managing underwriters may specify for employee-stockholders generally.  For purposes of this Section 4, the term “Company” shall include any wholly-owned subsidiary of the Company into which the Company merges or consolidates.  In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period.  Purchaser further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing and that such underwriters are express third party beneficiaries of this Section 4.

 

5.                            COMPANY’S REFUSAL RIGHT.  Before any Shares held by Purchaser or any transferee of such Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Refusal Right”).

 

5.1                               Notice of Proposed Transfer.  The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating:  (a) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (b) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (c) the number of Offered Shares to be transferred to each Proposed Transferee; (d) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (e) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Refusal Right at the Offered Price as provided for in this Exercise Agreement.

 

5.2                               Exercise of Refusal Right.  At any time within thirty (30) days after the date the Notice is effective pursuant to Section 8.2, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as specified below.

 

5

 

5.3                               Purchase Price.  The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift) the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Company’s Board of Directors.  If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Company’s Board of Directors, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.

 

5.4                               Payment.  The purchase price for the Offered Shares will be paid, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof.  The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.

 

5.5                               Holder’s Right to Transfer.  If all of the Offered Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the Offered Price or at a higher price, provided that (a) such sale or other transfer is consummated within one hundred twenty (120) days after the date of the Notice, (b) any such sale or other transfer is effected in compliance with all applicable securities laws, and (c) each Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee.  If the Offered Shares described in the Notice are not transferred to each Proposed Transferee within such one hundred twenty (120) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the right of first refusal before any Shares held by the Holder may be sold or otherwise transferred.

 

5.6                               Exempt Transfers.  Notwithstanding the foregoing, the following transfers of Shares will be exempt from the Refusal Right: (a) the transfer of any or all of the Shares during Purchaser’s lifetime by gift or on Purchaser’s death by will or intestacy to Purchaser’s “Immediate Family” (as defined below) or to a trust for the benefit of Purchaser or Purchaser’s Immediate Family, provided that each transferee agrees in a writing satisfactory to the Company that the provisions of this Section 5 will continue to apply to the transferred Shares in the hands of such transferee; (b) any transfer of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities (except that, subject to Section 5.7, unless the agreement of merger or consolidation expressly otherwise provides, the Refusal Right will continue to apply thereafter to such Shares, in which case the surviving entity of such merger or consolidation shall succeed to the rights of the Company under this Section 5); or (c) any transfer of Shares pursuant to the winding up and dissolution of the Company.  As used herein, the term “Immediate Family” will mean Purchaser’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of the Purchaser or the Purchaser’s spouse, or the spouse of any of the above, or a person registered with the state of his or her residence as a same-sex domestic partner or a person deemed to be a spousal equivalent for whom the following circumstances are true:  (a) irrespective of whether or not the Participant and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (b) they intend to remain so indefinitely, (c) neither are married to anyone else, (d) both are at least 18 years of age and mentally competent to consent to contract, (e) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (f) they are jointly responsible for each other’s common welfare and financial obligations, and (g) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.

 

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5.7                               Termination of Refusal Right.  The Refusal Right will terminate as to all Shares (a) on the effective date of the first sale of Common Stock of the Company to the public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act or, if expressly approved by the Board as terminating the Refusal Right, under the laws of any other country having substantially the same effect (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (b) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities if the common stock of the surviving entity or any direct or indirect parent entity thereof is registered under the Securities Exchange Act of 1934, as amended.

 

6                               ADDITIONAL RESTRICTIONS UPON SHARE OWNERSHIP OR TRANSFER.

 

6.1                               Rights as a Stockholder.  Subject to the terms and conditions of this Exercise Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Refusal Right.  Upon an exercise of the Refusal Right, Purchaser will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Exercise Agreement, and Purchaser will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.

 

6.2                               Escrow.  As security for Purchaser’s faithful performance of this Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Purchaser and by Purchaser’s spouse, if any (with the date, name of transferee, stock certificate number and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Exercise Agreement.  Purchaser and the Company agree that Escrow Holder will not be liable to any party to this Exercise Agreement (or to any other person or entity) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Exercise Agreement.  Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Exercise Agreement.  The Shares will be released from escrow upon termination of the Refusal Right.

 

6.3                               Encumbrances on Shares.  Purchaser may grant a lien or security interest in, or pledge, hypothecate or encumber Shares only if each party to whom such lien or security interest is granted, or to whom such pledge, hypothecation or other encumbrance is made, agrees in a writing satisfactory to the Company that:  (a) such lien, security interest, pledge, hypothecation or encumbrance will not apply to such Shares after they are acquired by the Company and/or its assignees under this Section; and (b) the provisions of this Section will continue to apply to such Shares in the hands of such party and any transferee of such party.  Purchaser may not grant a lien or security interest in, or pledge, hypothecate or encumber, any Unvested Shares.

 

6.4                           Restrictions on Transfers.  Purchaser hereby agrees that Purchaser shall make no disposition of the Shares (other than as permitted by this Exercise Agreement) unless and until:

 

(a)                                 Purchaser shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;

 

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(b)                                 Purchaser shall have complied with all requirements of this Exercise Agreement applicable to the disposition of the Shares, including but not limited to the Refusal Right and the Market Standoff; and

 

(c)                                  Purchaser shall have provided the Company with written assurances, in form and substance satisfactory to counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any state securities laws, and (ii) all appropriate actions necessary for compliance with the registration and qualification requirements of the Securities Act and any state securities laws, or of any exemption from registration or qualification, available thereunder (including Rule 144) have been taken.

 

Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in this Exercise Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Exercise Agreement and that the transferred Shares are subject to the Company’s Refusal Right granted in Section 5 and the market stand-off provisions of Section 4, to the same extent such Shares would be so subject if retained by the Purchaser.

 

6.5                               Restrictive Legends and Stop-transfer Orders.  Purchaser understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by applicable laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between Purchaser and the Company or any agreement between Purchaser and any third party:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, INCLUDING THE REFUSAL RIGHT HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AND A MARKET STANDOFF AGREEMENT, AS SET FORTH IN A STOCK OPTION EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS INCLUDING THE REFUSAL RIGHT AND THE MARKET STANDOFF ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

Purchaser agrees that, to ensure compliance with the restrictions imposed by this Exercise Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own

 

8

 

records.  The Company will not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Agreement or (b) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.

 

7.                            TAX CONSEQUENCES.  PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES.  PURCHASER REPRESENTS THAT:  (a) PURCHASER HAS CONSULTED WITH ANY TAX ADVISER WHO PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.  Set forth below is a brief summary as of the date the Plan was adopted by the Board of some of the U.S. Federal and California tax consequences of exercise of the Option and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  PURCHASER SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

7.1                               Exercise of Incentive Stock Option.  If the Option qualifies as an ISO, there will be no regular U.S. Federal income tax liability or California income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for U.S. Federal alternative minimum tax purposes and may subject Purchaser to the alternative minimum tax in the year of exercise.

 

7.2                               Exercise of Nonqualified Stock Option.  If the Option does not qualify as an ISO, there may be a regular U.S. Federal income tax liability and a California income tax liability upon the exercise of the Option.  Purchaser will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.  If Purchaser is a current or former employee of the Company, the Company may be required to withhold from Purchaser’s compensation or collect from Purchaser and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

 

7.3                               Disposition of Shares. The following tax consequences may apply upon disposition of the Shares.

 

7.3.1                     Incentive Stock Options.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for U.S. Federal and California income tax purposes.  If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates in the year of the disposition) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.

 

7.3.2                     Nonqualified Stock Options.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long term capital gain.

 

7.3.3                     Withholding.  The Company may be required to withhold from the Purchaser’s compensation or collect from the Purchaser and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income.

 

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7.4                               Notice of Disqualifying Disposition of ISO Shares.  If the Option is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (a) the date two (2) years after the Date of Grant, and (b) the date one (1) year after transfer of such Shares to Participant upon exercise of the Option, Participant shall immediately notify the Company in writing of such disposition.  Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant from the early disposition by payment in cash or out of the current wages or other compensation payable to Participant.

 

8.                            GENERAL PROVSIONS.

 

8.1                               Successors and Assigns.  The Company may assign any of its rights under this Exercise Agreement, including its rights to purchase Shares under the Refusal Right.  Neither Purchaser, nor any of Purchaser’s successors and assigns, may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Exercise Agreement, except with the prior written consent of the Company.  This Exercise Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Exercise Agreement will be binding upon Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns.

 

8.2                               Notices.  Any and all notices required or permitted to be given to a party pursuant to the provisions of this Exercise Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Exercise Agreement on the earliest of the following:  (a) at the time of personal delivery, if delivery is in person; (b) by electronic scan upon its confirmed receipt; (c) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (d) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries.  All notices for delivery outside the United States will be sent by express courier.  All notices not delivered personally or be electronic scan will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address set forth below the signature lines of this Exercise Agreement, or at such other address as such other party may designate by one of the indicated means of notice herein to the other parties hereto.  Notices to the Company will be marked “Attention:  President.”

 

8.3                               Further Assurances.  The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Exercise Agreement.

 

8.4                               Entire Agreement.  The Plan, the Stock Option Agreement and this Exercise Agreement, together with all Exhibits thereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Exercise Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

8.5                               Severability.  If any provision of this Exercise Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto.  If such clause or provision cannot be so enforced, such provision shall be stricken from this Exercise Agreement and the remainder of this Exercise Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Exercise Agreement.  Notwithstanding the forgoing, if the value of this Exercise Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or

 

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arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

 

THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT.  THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.

 

IN WITNESS WHEREOF, the Company has caused this Stock Option Exercise Agreement to be executed by its duly authorized representative, and Purchaser has executed this Stock Option Exercise Agreement, as of the date first set forth above.

 

 

	
DERMIRA, INC.
    	
 
    	
PURCHASER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Please   print name and title)
    	
 
    	
(Please   print name)
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
						

 

List of Exhibits

 

	
Exhibit 1:
    	
 
    	
Stock   Power and Assignment Separate from Stock Certificate
    
	
Exhibit 2:
    	
 
    	
Spouse   Consent
    
	
Exhibit 3:
    	
 
    	
Copy   of Purchaser’s Check
    

 

11

 

EXHIBIT 1

 

STOCK POWER AND ASSIGNMENT
  SEPARATE FROM STOCK CERTIFICATE

 

12

 

STOCK POWER AND ASSIGNMENT
  SEPARATE FROM STOCK CERTIFICATE

 

FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise Agreement No.                  dated as of                                 ,               , (the “Agreement”), the undersigned hereby sells, assigns and transfers unto                                                                                                           ,                                                                                                                                                                                                                shares of the Common Stock $0.001 par value per share, of Dermira, Inc., a Delaware corporation (the “Company”), standing in the undersigned’s name on the books of the Company represented by Certificate No(s).               delivered herewith, and does hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company.  THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

 

	
Dated:                                 ,
    	
 
    
	
 
    	
 
    
	
 
    	
PURCHASER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Please   Print Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Spouse’s   Signature, if any)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Please   Print Spouse’s Name)
    

 

Instructions to Purchaser:  Please do not fill in any blanks other than the signature line.  The purpose of this Stock Power and Assignment is to enable the Company to acquire the shares to exercise its “Refusal Right” set forth in the Exercise Agreement without requiring additional signatures on the part of the Purchaser or Purchaser’s Spouse, if any.

 

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EXHIBIT 2

 

SPOUSE CONSENT

 

1

 

SPOUSE CONSENT

 

The undersigned spouse of                                                              (the “Purchaser”) has read, understands, and hereby approves the Stock Option Exercise Agreement (the “Agreement”) between Purchaser and Dermira, Inc. (the “Company”).  In consideration of the Company granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest I may have in the Shares shall similarly be bound by the Agreement.  The undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Print   Name of Purchaser’s Spouse
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature   of Purchaser’s Spouse
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
o
    	
Check   this box, if Purchaser is not married.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature   of Purchaser
    

 

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EXHIBIT 3

 

COPY OF PURCHASER’S CHECK

 

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