Document:

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EXHIBIT 4.2

CADENCE PHARMACEUTICALS, INC.

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

February 21, 2006

 

 

CADENCE PHARMACEUTICALS, INC.

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

          This Amended and Restated Investor Rights Agreement (this “Agreement”) is made as of
February 21, 2006, by and among Cadence Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and each of the entities and persons listed on Schedule A hereto (collectively,
the “Investors”).

          This Agreement supersedes and replaces that certain Amended and Restated Investor Rights
Agreement, dated September 30, 2005 (the “Prior Agreement”), entered into by and among the Company
and the other parties thereto, contingent upon and effective as of the Closing (as defined in the
Purchase Agreement).

Recitals

     A. Certain of the Investors purchased shares of the Company’s Series A-1 Preferred Stock, par
value $0.0001 per share (the “Series A-1 Preferred Stock”), and Series A-2 Preferred Stock, par
value $0.0001 per share (the “Series A-2 Preferred Stock”), and are purchasing shares of the
Company’s Series A-3 Preferred Stock, par value $0.0001 per share (the “Series A-3 Preferred
Stock”) pursuant to that certain Series A-3 Preferred Stock Purchase Agreement of even date
herewith (the “Purchase Agreement”).

     B. Certain of the obligations in the Purchase Agreement are conditioned upon the execution and
delivery of this Agreement.

     C. The Prior Agreement provides that any amendment or waiver thereof shall be effective with
the written consent of the Company and by Persons holding at a majority of the Convertible
Securities (as such terms are defined in the Prior Agreement).

     D. The undersigned parties constitute Persons holding at least a majority of the Convertible
Securities, and, therefore, are entitled to bind all holders of Convertible Securities (as such
terms are defined in the Prior Agreement).

     The Parties Agree as Follows:

SECTION 1. CERTAIN DEFINITIONS.

          As used in this Agreement, the following terms shall have the following respective meanings:

          (a) “Affiliate” shall mean with respect to any Person, any Person which directly or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with such
Person.

          (b) “Board” shall mean the Board of Directors of the Company.

          (c) “Commission” shall mean the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act.

          (d) “Common Stock” shall mean the Company’s common stock, par value $0.0001

 

 

per share.

          (e) “Convertible Securities” shall mean the Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series A-3 Preferred Stock and, only to the extent circumstances arise which require their
creation, Series A-4 Preferred Stock and Series A-5 Preferred Stock.

          (f) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.

          (g) “Form S-3” shall mean Form S-3 issued by the Commission or any substantially similar form
then in effect.

          (h) “Holder” shall mean any Person entering into this Agreement and any holder of outstanding
Registrable Securities or an assignee or transferee of Registration rights as permitted by Section
3.8.

          (i) “Initiating Holders” shall mean Holders who in the aggregate hold at least twenty percent
(20%) of the Registrable Securities.

          (j) “Material Adverse Event” shall mean an occurrence having a consequence that either (i) is
materially adverse as to the business, properties, prospects or financial condition of the Company
and its subsidiary, taken as a whole, or (ii) is reasonably foreseeable, has a reasonable
likelihood of occurring, and if it were to occur would reasonably be expected to materially
adversely affect the business, properties, prospects or financial condition of the Company and its
subsidiary, taken as a whole.

          (k) “Person” shall mean an individual, a corporation, a partnership, a trust or unincorporated
organization or any other entity or organization.

          (l) “Preferred Directors” shall mean the members of the Board elected by the holders of the
Convertible Securities voting together as a class and to the exclusion of all other classes of
capital stock of the Company.

          (m) “Qualified Public Offering” shall mean a firmly underwritten public offering of the
Company’s Common Stock Registered under the Securities Act and involving gross proceeds to the
Company of at least Thirty Million Dollars ($30,000,000) (prior to deduction for underwriters’
discounts and other expenses relating to such public offering, including, without limitation, fees
of the Company’s counsel) and the price to the public is at least Three Dollars ($3.00) per share
(equitably adjusted for all stock splits, sub-divisions, stock dividends, combinations and the like
with respect to such shares).

          (n) The terms “Register,” “Registered” and “Registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities Act (“Registration
Statement”), and the declaration or ordering of the effectiveness of such Registration Statement.

          (o) “Registrable Securities” shall mean (i) all Common Stock not previously sold to the public
issued or issuable upon conversion of any of the Convertible Securities purchased by or issued to
the Investors, (ii) all shares of Common Stock owned by the Investors, (iii) for the purposes of
Section 3.2, the shares of Common Stock owned by Theodore R. Schroeder and David A. Socks, (iv) the
192,500 shares of Common Stock issuable upon conversion of the Convertible Securities issuable upon
exercise of

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that certain Warrant to Purchase Stock dated February 17, 2006 by and between the Corporation
and Silicon Valley Bank, (v) the 192,500 shares of Common Stock issuable upon conversion of the
Convertible Securities issuable upon exercise of that certain Warrant to Purchase Stock dated
February 17, 2006 by and between the Corporation and Oxford Finance Corporation, and (vi) any
Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, the Common Stock described in clauses (i) through (v) of this
definition.

          (p) “Registration Expenses” shall mean all expenses incurred by the Company in complying with
Sections 3.1 or 3.2 of this Agreement, including, without limitation, all federal and state
registration, qualification and filing fees, printing expenses, fees and disbursements of counsel
for the Company and fees and disbursements of not more than one (1) special counsel for the Holders
(if different from the Company) not to exceed twenty-five thousand dollars ($25,000), blue sky fees
and expenses, and the expense of any special audits incident to or required by any such
Registration.

          (q) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.

          (r) “Selling Expenses” shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities pursuant to this Agreement.

          (s) “Series A-1 Preferred Stock” shall mean the Company’s Series A-1 Preferred Stock, par
value $0.0001 per share.

          (t) “Series A-2 Preferred Stock” shall mean the Company’s Series A-2 Preferred Stock, par
value $0.0001 per share.

          (u) “Series A-3 Preferred Stock” shall mean the Company’s Series A-3 Preferred Stock, par
value $0.0001 per share.

          (v) “Series A-4 Preferred Stock” shall mean the Company’s Series A-4 Preferred Stock, par
value $0.0001 per share, if the circumstances arise which require the creation of such series.

          (w) “Series A-5 Preferred Stock” shall mean the Company’s Series A-5 Preferred Stock, par
value $0.0001 per share, if the circumstances arise which require the creation of such series.

          (x) “Special Registration Statement” shall mean (i) a registration statement relating to any
employee benefit plan, (ii) with respect to any corporate reorganization or transaction under Rule
145 of the Securities Act, including any registration statements related to the resale of
securities issued in such a transaction, or (iii) a registration related to stock issued upon
conversion of debt securities.

SECTION 2. COVENANTS OF THE COMPANY

     2.1 Financial Statements and Reports to Stockholders; Budget. (a) As soon as
practicable after the end of each fiscal year of the Company, and in any event within one hundred
twenty (120) days thereafter, the Company shall deliver to each Investor an audited consolidated
balance sheet of the Company as of the end of such year and audited consolidated statements of
income, stockholders’ equity and cash flows for such year, which year-end financial reports
shall be in reasonable detail and shall be

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accompanied by the opinion of independent public
accountants of recognized standing selected by the Company.

          (b) So long as an Investor or subsequent holder of Convertible Securities holds or is deemed
to hold at least One Hundred Fifty Thousand (150,000) shares of Registrable Securities (subject to
adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions
with respect to such shares), the Company shall deliver to such Investor:

                    (i) as soon as practicable after the end of each month, and in any event within thirty (30)
days thereafter, unaudited consolidated balance sheets of the Company and its subsidiaries, if any,
as of the end of each such month and unaudited consolidated statements of income and cash flow for
such month; and

                    (ii) within sixty (60) days prior to the end of each fiscal year, an operating budget and plan
respecting the Company’s next fiscal year in substantially the same form as that which will be
subject to the approval of the Board.

     2.2 Qualified Small Business. The Company covenants that so long as any Convertible
Securities, or the Common Stock into which such shares are converted, are held by a Holder in whose
hands such shares of Common Stock are eligible to qualify as “qualified small business stock” as
defined in Section 1202(c) of the Internal Revenue Code of 1986, as amended (the “Code”)
(“Qualified Small Business Stock”), it will (i) comply with any applicable filing or reporting
requirements imposed by the Code on issuers of Qualified Small Business Stock and (ii) execute and
deliver to each Holder, from time to time, such forms, documents, schedules and other instruments
as may be reasonably requested thereby to cause the Convertible Securities, or the Common Stock
into which such shares are converted, to qualify as Qualified Small Business Stock. The Company
shall submit to the Investors and to the Internal Revenue Service any reports that may be required
under Section 1202(d)(1)(C) of the Code and any related Treasury Regulations. In addition, within
ten (10) days after any Investor has delivered to the Company a written request therefor, the
Company shall deliver to such Investor a written statement informing the Investor whether, in the
Company’s good-faith judgment after a reasonable investigation, such Investor’s interest in the
Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code, or
would constitute “qualified small business stock,” if determination of whether stock constitutes
“qualified small business stock” were made by taking into account the modifications set forth in
Section 1045(b)(4) of the Code. The Company’s obligation to furnish a written statement pursuant
to this Section 2.2 shall continue notwithstanding the fact that a class of the Company’s stock may
be traded on an established securities market.

     2.3 Board Meeting; Compensation of Directors. The Company hereby covenants that so
long as the holders of the Convertible Securities are entitled to appoint any members of the Board
pursuant to the Company’s Restated Certificate of Incorporation, as amended, the Board shall not
meet less frequently than quarterly. All non-employee directors will be compensated by the Company
identically; provided however, that additional compensation may be provided to the Chairman of the
Board or the Chairman of any Committee of the Board; provided, that such compensation is approved
by the Board, including the approval of at least one (1) of the Preferred Directors. All
out-of-pocket and travel expenses of the directors incurred in attending Board meetings (or
meetings of committees thereof) or in connection with the performance of their duties as directors
shall be paid or reimbursed promptly by the Company. The Company shall also agree to indemnify
each of its officers and directors to the fullest extent permitted by the Delaware General
Corporation Law and enter into customary indemnification agreements with each of its officers
and directors evidencing such indemnification obligation.

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     2.4 Employee Stock. With respect to any shares issued or options or rights granted to
employees, consultants and directors after the date hereof, unless otherwise approved by the Board,
the Company shall cause each employee, consultant, and director of the Company to enter into an
agreement providing for vesting of such shares or options or rights over forty-eight (48) months,
with no shares or options or rights being vested for twelve (12) months from the date of
commencement of services in the case of stock or option grants for new hires, or the date of
issuance or grant in the case of subsequent stock or option grants, at which time 1/4th of the
shares or options or rights shall be vested and 1/48th of such shares, options or rights shall be
vested monthly thereafter. Any options providing for early exercise and any grant of restricted
stock shall provide for a repurchase option so that upon termination of the employment or
consulting relationship of the stockholder, the Company or its assignee (to the extent permissible
under applicable securities law qualification) retains the option to repurchase at cost any
unvested shares held by such stockholder.

     2.5 Board Observer Rights. For so long as an Investor or subsequent holder of
Convertible Securities holds or is deemed to hold at least One Million Five Hundred Thousand
(1,500,000) shares of Registrable Securities (subject to adjustment for stock splits, reverse stock
splits, stock dividends and other similar transactions with respect to such shares), the Company
shall allow one representative designated by such Investor (the “Observer”) to attend meetings of
the Board in a non-voting capacity; provided, however, that no Investor or subsequent holder of
Convertible Securities shall be entitled to designate an Observer if such holder or an Affiliate of
such holder is entitled to nominate a director to the Board pursuant to the Company’s Amended and
Restated Voting Agreement, dated as of the date hereof. The Company shall provide the Observer
with copies of all materials that are provided by the Company to its directors; provided, however,
that a majority of the members of the Board shall be entitled to recuse the Observer from portions
of any Board meeting and to redact portions of any Board or Board committee materials delivered to
the Observer where and to the extent that such majority determines, in good faith that (i) such
recusal is reasonably necessary, in the opinion of counsel to the Company, to preserve
attorney-client privilege with respect to a material matter, (ii) there exists, with respect to any
deliberation or Board materials, an actual or potential conflict of interest between the Investor
who has appointed such Observer and the Company or (iii) the presence of the Observer would
otherwise be materially injurious to the Company in such circumstances; provided, further, that
such Investor’s right to appoint an Observer to the Board shall automatically expire upon the
effectiveness of the registration statement for the Company’s Qualified Public Offering. Any
Observer will be subject to the confidentiality provisions set forth in Section 2.6. The Observer
shall receive no compensation from the Company for service as an Observer and shall not be
reimbursed for any expenses incurred by the Observer in connection with attendance of any meeting
of the Board.

     2.6 Confidentiality. Each Investor agrees and will cause any representative of the
Investor, including any Observer, to hold in confidence and trust and not use or disclose any
information provided to or learned by it in connection with its rights under this Section 2, except
that such Investor may disclose such information to any general partner, limited partner, member,
subsidiary or parent (and their respective representatives) of such Investor for the purpose of
evaluating its investment in the Company as long as (a) such general partner, limited partner,
member, subsidiary or parent is advised of the confidentiality
provisions of this Section 2.6 and (b) such Investor uses its commercially reasonable best
efforts to ensure that such general partner, limited partner, member, subsidiary or parent holds
such information in confidence and trust and will not use or disclose any information provided to
or learned by it except as required by law. Notwithstanding the foregoing, however, the obligation
of each Investor to hold information confidential as provided herein or any other document or
agreement relating thereto shall not prohibit such Investor from disclosing such information: (i)
to its board of directors, investment advisers, attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection with its investment in
the Company, provided that such persons agree to hold such information confidential as provided
herein; (ii) to any prospective purchaser of any shares of the

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Company owned by such Investor as
long as such prospective purchaser agrees in writing to be bound by the confidentiality provisions
as provided herein; (iii) to such Investor’s investment advisor or any investment companies managed
by such Investor’s investment advisor, provided that such persons agree to hold such information
confidential as provided herein; or (iv) as required by applicable law or regulation, regulatory
body, stock exchange, court or administrative order, or any listing or trading agreement concerning
such Investor or the Company. Furthermore, nothing in this Section 2.6 shall restrict any
Investor’s ability to disclose the existence or nature of its relationship with the Company, the
nature or amount of its investment in securities of the Company or to provide its affiliates with
quarterly, annual or other reports and such other information about the Company prepared by such
Investor in the ordinary course of its business, provided that said Investor takes commercially
reasonable measures to ensure that any such affiliates protect the confidential nature of such
confidential information.

     2.7 Termination of Covenants. The covenants of the Company set forth in this Section
2 shall be terminated and be of no further force or effect upon the earlier of (a) the effective
date of the Company’s Registration Statement filed in connection with the Company’s first Qualified
Public Offering and (b) the date of the closing of a sale, lease, or other disposition of all or
substantially all of the Company’s assets or the Company’s merger into or consolidation with any
other corporation or other entity, or any other corporate reorganization, in which the holders of
the Company’s outstanding voting stock immediately prior to such transaction own, immediately after
such transaction, securities representing less than fifty percent (50%) of the voting power of the
corporation or other entity surviving such transaction, provided that this Section 2.7 shall not
apply to a merger effected exclusively for the purpose of changing the domicile of the Company or a
sale of shares by the Company for primarily equity financing purposes.

SECTION 3. REGISTRATION RIGHTS

     3.1 Demand Registration.

          3.1.1. Request for Registration on Form other than Form S-3. Subject to the terms of
this Agreement, in the event that the Company shall receive from the Initiating Holders, at any
time after, six (6) months from the effective date of the first registration statement for a public
offering of securities of the Company (other than a Special Registration Statement), a written
request that the Company effect any Registration with respect to all or a part of the Registrable
Securities on a form other than Form S-3 for an offering of all or a part of the then outstanding
Registrable Securities, the reasonably anticipated aggregate offering price to the public of which
would exceed Five Million Dollars ($5,000,000), net of Selling Expenses, the Company shall (i)
promptly give written notice of the proposed Registration to all other Holders and shall (ii) as
soon as practicable, use its reasonable best efforts to effect Registration of the Registrable
Securities specified in such request, together with any Registrable Securities of any Holder
joining in such request as are specified in a written request given within twenty (20) days after
written notice from the Company. The
Company shall not be obligated to take any action to effect any such Registration pursuant to
this Section 3.1.1:

                    (i) in any particular jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such registration, unless the Company is already subject
to service in such jurisdiction and except as may be required under the Securities Act;

                    (ii) after the Company has effected two (2) such Registrations pursuant to this Section 3.1.1
and such Registrations have been declared effective;

                    (iii) during the period starting with the date sixty (60) days prior to the Company’s good
faith estimate of the date of filing of, and ending on the date one hundred eighty (180)

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days
following the effective date of the registration statement pertaining to any public offering, other
than pursuant to a Special Registration Statement; provided that the Company makes reasonable good
faith efforts to cause such registration statement to become effective;

                    (iv) if within thirty (30) days of receipt of a written request from the Initiating Holders
pursuant to Section 3.1.1, the Company gives notice to the Holders of the Company’s intention to
file a registration statement for a public offering, other than pursuant to a Special Registration
Statement, within one hundred twenty (120) days; or

                    (v) if the Initiating Holders propose to dispose of shares of Registrable Securities that may
be immediately registered on Form S-3 pursuant to a request made pursuant to Section 3.1.3 below.

          3.1.2. Right of Deferral of Registration on Form other Than Form S-3. If the Company
shall furnish to all such Holders who joined in the request a certificate signed by the President
of the Company stating that, in the good faith judgment of the Board, it would be seriously
detrimental to the Company for any Registration to be effected as requested under Section 3.1.1,
the Company shall have the right to defer the filing of a Registration Statement with respect to
such offering for a period of not more than one hundred twenty (120) days from delivery of the
request of the Initiating Holders; provided, however, that the Company may not utilize this right
more than once in any twelve (12)-month period.

          3.1.3. Request for Registration on Form S-3. Subject to the terms of this Agreement,
in the event that the Company receives from Holders of twenty percent (20%) or more of the then
outstanding Registrable Securities, a written request that the Company effect any Registration on
Form S-3 (or any successor form to Form S-3 regardless of its designation) at a time when the
Company is eligible to Register securities on Form S-3 (or any successor form to Form S-3
regardless of its designation) for an offering of Registrable Securities which such Holders in
their good faith discretion determine would have an anticipated offering price of at least One
Million Dollars ($1,000,000), the Company will promptly give written notice of the proposed
Registration to all the Holders and will as soon as practicable use its best efforts to effect
Registration of the Registrable Securities specified in such request, together with all or such
portion of the Registrable Securities of any Holder joining in such request as are specified in a
written request delivered to the Company within twenty (20) days after written notice from the
Company of the proposed Registration. There shall be no limit to the number of occasions on which
the Company shall be obligated to effect Registration under this Section 3.1.3, but the Company
shall not be required to effect more than two (2)
such Registrations in any twelve (12)-month period. Notwithstanding the foregoing, the
Company shall not be obligated to effect any Registration pursuant to this Section 3.1.3:

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

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

                    (iii) if within thirty (30) days of receipt of a written request from any Holder or Holders
pursuant to this Section 3.1.3, the Company gives notice to such Holder or Holders of the Company’s
intention to make a public offering within ninety (90) days, other than pursuant to a Special
Registration Statement;

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                    (iv) if the Company shall furnish to the Holders a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board, it would be seriously detrimental to
the Company for any Registration to be effected as requested under Section 3.1.3, the Company shall
have the right to defer the filing of a Registration Statement with respect to such offering for a
period of not more than ninety (90) days from delivery of the request of the Holders requesting
such Registration; provided, however, that the Company may not utilize this right more than once in
any twelve (12)-month period; or

                    (v) 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.

          3.1.4. Registration of Other Securities in Demand Registration. Any Registration
Statement filed pursuant to the request of the Initiating Holders under this Section 3 may, subject
to the provisions of Section 3.1.5, include securities of the Company other than Registrable
Securities.

          3.1.5. Underwriting in Demand Registration.

                         a. Notice of Underwriting.

                         If the Initiating Holders intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company, as a part of their request
made pursuant to Section 3.1.1, and the Company shall include such information in the written
notice referred to in Section 3.1.1 or 3.1.3. The right of any Holder to Registration pursuant to
Section 3 shall be conditioned upon such Holder’s agreement to participate in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting.

                         b. Inclusion of other Holders in
Demand Registration.

                         If the Company, officers or directors of the Company holding Common Stock other than
Registrable Securities or holders of securities issued by the Company other than Registrable
Securities, request inclusion in such Registration, the Initiating Holders, to the extent they deem
advisable and consistent with the goals of such Registration, shall, on behalf of all Holders,
offer to any or all of the Company, such officers or directors and such holders of securities other
than Registrable
Securities that such securities other than Registrable Securities be included in the
underwriting and may condition such offer on the acceptance by such persons of the terms of this
Section 3.1.

                         c. Selection of Underwriter in
Demand Registration.

                         The Company shall (together with all Holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement with the representative (“Underwriter’s
Representative”) of the underwriter or underwriters selected for such underwriting by the Holders
of a majority of the Registrable Securities being Registered by the Initiating Holders and agreed
to by the Company.

                         d. Marketing Limitation in
Demand Registration.

                         In the event the Underwriter’s Representative advises the Initiating Holders in writing that
market factors (including, without limitation, the aggregate number of shares of Common Stock
requested to be Registered, the general condition of the market, and the status of the persons
proposing to sell securities pursuant to the Registration) require a limitation of the number of

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shares to be underwritten, then (i) first the securities other than Registrable Securities and (ii)
next the securities requested to be registered by the Company, shall be excluded from such
Registration to the extent required by such limitation. If a limitation of the number of shares is
still required, the Initiating Holders shall so advise all Holders and the number of shares of
Registrable Securities that may be included in the Registration and underwriting shall be allocated
among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable
Securities entitled to inclusion in such Registration held by such Holders at the time of filing
the Registration Statement. No Registrable Securities or other securities excluded from the
underwriting by reason of this Section 3.1.5(d) shall be included in such Registration Statement.
To facilitate the allocation of shares in accordance with the above provisions, the Company or the
Underwriter’s Representative may round the number of shares allocated to any Holder to the nearest
one hundred (100) shares.

                         e. Right of Withdrawal in Demand
Registration.

                         If any Holder of Registrable Securities, or a holder of other securities entitled (upon
request) to be included in such Registration, disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the underwriter and the
Initiating Holders delivered at least seven (7) business days prior to the effective date of the
Registration Statement. The securities so withdrawn shall also be withdrawn from the Registration
Statement.

          3.1.6. Blue Sky in Demand Registration. In the event of any Registration pursuant to
Section 3.1, the Company will exercise its reasonable best efforts to Register and qualify the
securities covered by the Registration Statement under such other securities or Blue Sky laws of
such jurisdictions (not exceeding twenty (20) at the expense of the Company) as shall be reasonably
appropriate for the distribution of such securities; provided, however, that (i) the Company shall
not be required to qualify to do business or to file a general consent to service of process in any
such states or jurisdictions, and (ii) notwithstanding anything in this Agreement to the contrary,
in the event any jurisdiction in which the securities shall be qualified imposes a non-waivable
requirement that expenses incurred in connection with the qualification of the securities be borne
by selling stockholders, such expenses shall be payable pro rata by selling stockholders.

     3.2 Piggyback Registration.

          3.2.1. Notice of Piggyback Registration and Inclusion of Registrable Securities.
Subject to the terms of this Agreement, in the event the Company decides to Register any of its
Common Stock (either for its own account or the account of a security holder or holders or other
securities under the Securities Act in connection with the public offering of such securities
(other than a Special Registration Statement), the Company will: (i) promptly give each Holder
written notice thereof (which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable Blue Sky or other state
securities laws) and (ii) include in such Registration (and any related qualification under Blue
Sky laws or other compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request delivered to the Company by any Holder within fifteen
(15) days after delivery of such written notice from the Company.

          3.2.2. Underwriting in Piggyback Registration.

                         a. Notice of Underwriting in
Piggyback Registration.

                         If the Registration of which the Company gives notice pursuant to Section 3.2.1 is for a
Registered public offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 3.2.1. In such event the right of any

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Holder
to Registration shall be conditioned upon such underwriting and the inclusion of such Holder’s
Registrable Securities in such underwriting to the extent provided in this Section 3. All Holders proposing to distribute their securities through such underwriting shall (together with the Company
and the other holders distributing their securities through such underwriting) enter into an
underwriting agreement with the Underwriter’s Representative for such offering. The Holders shall
have no right to participate in the selection of the underwriters for an offering pursuant to this
Section 3.2.

                         b. Marketing Limitation in
Piggyback Registration.

                         In the event the Underwriter’s Representative advises the Holders seeking Registration of
Registrable Securities pursuant to Section 3.2 in writing that market factors (including, without
limitation, the aggregate number of shares of Common Stock requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell securities pursuant to the
Registration) require a limitation of the number of shares to be underwritten, the Underwriter’s
Representative (subject to the allocation priority set forth in Section 3.2.2(c)) may:

                         i. in the case of the first registered offering of the Company’s securities, exclude some or
all Registrable Securities from such Registration and underwriting; and

                         ii. in the case of any subsequent registered public offering of the Company’s securities,
limit the number of shares of Registrable Securities to be included in such Registration and
underwriting to not less than thirty percent (30%) of the securities included in such Registration
(based on aggregate market values).

                         c. Allocation of Shares in
Piggyback Registration.

                         In the event that the Underwriter’s Representative limits the number of shares to be included
in a Registration pursuant to Section 3.2.2(b), the number of shares to be included in such
Registration shall be allocated (subject to Section 3.2.2(b)) in the following manner: The number
of shares, if any, that may be included in the Registration and underwriting by selling
stockholders shall first
be allocated among all the requesting Holders pro rata according to the respective amounts of
Registrable Securities entitled to be included in such offering by such requesting Holders and then
among all other holders of securities other than Registrable Securities requesting and legally
entitled to include shares in such Registration, in proportion, as nearly as practicable, to the
respective amounts of securities (including Registrable Securities) which such Holders and such
other holders would otherwise be entitled to include in such Registration. No Registrable
Securities or other securities excluded from the underwriting by reason of this Section 3.2.2(c)
shall be included in the Registration Statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the Underwriter’s Representative may round the
number of shares allocated to any Holder to the nearest one hundred (100) shares.

                         d. Withdrawal in Piggyback
Registration.

                         If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter delivered at least seven (7)
business days prior to the effective date of the Registration Statement. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from
such Registration.

          3.2.3. Blue Sky in Piggyback Registration. In the event of any Registration of
Registrable Securities pursuant to Section 3.2, the Company will exercise its best efforts to
Register and

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qualify the securities covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions (not exceeding twenty (20) unless otherwise
agreed to by the Company) as shall be reasonably appropriate for the distribution of such
securities; provided, however, that (i) the Company shall not be required to qualify to do business
or to file a general consent to service of process in any such states or jurisdictions, and (ii)
notwithstanding anything in this Agreement to the contrary, in the event any jurisdiction in which
the securities shall be qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling stockholders, such expenses
shall be payable pro rata by selling stockholders.

     3.3 Expenses of Registration. All Registration Expenses incurred in connection with
two (2) Registrations pursuant to Section 3.1.1, all Registrations pursuant to Section 3.1.3 (Form
S-3) and all Registrations pursuant to Section 3.2 shall be borne by the Company. All Registration
Expenses incurred in connection with any other registration, qualification or compliance shall be
apportioned among the Holders and other holders of the securities so registered on the basis of the
number of shares so registered. Notwithstanding the above, the Company shall not be required to
pay for any expenses of any Registration proceeding begun pursuant to Section 3.1 if the
Registration request is subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be Registered (which Holders shall bear such expenses), unless the
Holders of a majority of the Registrable Securities agree to forfeit their right to demand
Registration pursuant to Section 3.1; provided further, however, that if at the time of such
withdrawal, (a) the Holders have learned of a Material Adverse Event either (i) not known to the
Holders at the time of their request or (ii) not made known to the Holders within fifteen (15) days
after their request and (b) the Holders have withdrawn the request with reasonable promptness
following the discovery of such Material Adverse Event, then the Holders shall not be required to
pay any of such expenses and shall retain their rights pursuant to Section 3.1. All Selling
Expenses shall be borne by the respective holders of the securities Registered pro rata on the
basis of the number of shares registered.

     3.4 Registration Procedures. In the case of each registration, qualification or
compliance effected by the Company pursuant to this Section 3, the Company will:

          (a) Keep each Holder whose Registrable Securities are included in any Registration pursuant to
this Agreement advised as to the initiation and completion of such Registration. At its expense
the Company will: (i) use its best efforts to keep such Registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the distribution described
in the Registration Statement relating thereto, whichever first occurs; and (ii) furnish such
number of prospectuses (including preliminary prospectuses) and other documents as a Holder from
time to time may reasonably request. With respect to clause (i) of the preceding sentence, the
Company may at any time upon written notice to the participating Holders and for a period not to
exceed sixty (60) days thereafter (the “Suspension Period”) delay the filing or effectiveness of
any registration statement or suspend the use or effectiveness of any registration statement (and
the Holders hereby agree not to offer or sell any Registrable Securities pursuant to such
registration statement (or any prospectus relating thereto) during the Suspension Period) if the
Company reasonably believes that the Company may, in the absence of such delay or suspension
hereunder, be required under state or federal securities laws to disclose any corporate development
the disclosure of which could reasonably be expected to have an adverse effect upon the Company,
its stockholders, a potentially significant transaction or event involving the Company, or any
negotiations, discussions, or proposals directly relating thereto. In the event that the Company
shall exercise its rights hereunder, the applicable time period during which the registration
statement is to remain effective shall be extended by a period of time equal to the duration of the
Suspension Period. The Company may extend the Suspension Period for an additional consecutive
sixty (60) days with the consent of the holders of a majority of the Registrable Securities
proposed to be sold by the Holders in the applicable Registration, which consent shall not be
unreasonably withheld. If so

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directed by the Company, the Holders shall use their best efforts to
deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then
in such Holders’ possession, of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice. Notwithstanding anything to the contrary contained herein, the
Company shall not be required to file, cause to become effective or maintain the effectiveness of
any registration statement that contemplates a distribution of securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.

          (b) Prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statements as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement for a period of up to one hundred twenty
(120) days;

          (c) Promptly notify each Holder of Registrable Securities covered by the registration
statement at any time when the Company becomes aware of the happening of any event as a result of
which the registration statement or the prospectus included in such registration statement or any
supplement to the prospectus (as then in effect) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were made) not misleading or, if for any
other reason it shall be necessary during such time period to amend or supplement the registration
statement or the prospectus in order to comply with the Securities Act, whereupon, in either case,
each Holder shall immediately cease to use such registration statement or prospectus for any
purpose and, as promptly as practicable thereafter, the Company shall prepare and file with the
Commission, and furnish without charge to the appropriate Holders and managing underwriters, if
any, a supplement or amendment to such registration statement or prospectus which will correct such
statement or omission or effect such compliance and such copies thereof as the Holders and any
underwriters may reasonably request;

          (d) Use its reasonable best 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 except as may be required by law;

          (e) Cause all such Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed;

          (f) Provide a transfer agent and registrar for all Registrable Securities and a CUSIP number
for all such Registrable Securities, in each case not later than the effective date of such
registration;

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

          (h) Use its reasonable best efforts to furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 3, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 3, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public

- 12 -

 

offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities (to the extent the then applicable standards of
professional conduct permit said letter to be addressed to the Holders).

     3.5 Information Furnished by Holder. It shall be a condition precedent of the
Company’s obligations under this Agreement that each Holder of Registrable Securities included in
any Registration furnish to the Company such information regarding such Holder and the distribution
proposed by such Holder or Holders as the Company may reasonably request.

     3.6 Indemnification.

          3.6.1. Company’s Indemnification of Holders. To the extent permitted by law, the
Company will indemnify each Holder, each of its officers, directors and constituent partners, legal
counsel for the Holders, and each person controlling such Holder, with respect to which
Registration, qualification or compliance of Registrable Securities has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any underwriter, against
all claims, losses, damages or liabilities (or actions in respect thereof) to the extent such
claims, losses, damages or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or other document
(including any related Registration Statement) incident to any such Registration, qualification or
compliance, or are based on
any 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 any violation by the Company
of any rule or regulation promulgated under the Securities Act or Exchange Act or state or federal
law applicable to the Company and relating to action or inaction required of the Company in
connection with any such Registration, qualification or compliance; and the Company will reimburse
each such Holder, each such underwriter and each person who controls any such Holder or underwriter
for any legal and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 3.6.1 shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent of the Company
(which consent shall not unreasonably be withheld); and provided, further, that the Company will
not be liable in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based upon any untrue statement or omission based upon written
information furnished to the Company by such Holder, underwriter, or controlling person and stated
to be for use in connection with the offering of securities of the Company.

          3.6.2. Holder’s Indemnification of Company. To the extent permitted by law, each
Holder will, if Registrable Securities held by such Holder are included in the securities as to
which such Registration, qualification or compliance is being effected pursuant to this Agreement,
indemnify the Company, each of its directors and officers that has signed the registration
statement, each underwriter, if any, of the Company’s securities covered by such a Registration
Statement, each person who controls the Company or such underwriter within the meaning of the
Securities Act, and each other such Holder, each of its officers, directors and constituent
partners and each person controlling such other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any such Registration Statement,
prospectus, offering circular or other document, or any 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 any violation by such Holder of any rule or regulation promulgated under the
Securities Act or Exchange Act or state or federal law applicable to such Holder and relating to
action or inaction

- 13 -

 

required of such Holder in connection with any such Registration, qualification
or compliance; and will reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such Registration Statement, prospectus,
offering circular or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use in connection with
the offering of securities of the Company; provided, however, that each Holder’s liability under
this Section 3.6.2 shall be several, and not joint with other Holders, and shall not exceed such
Holder’s net proceeds from the offering of securities made in connection with such Registration,
except in the case of willful fraud by such holder.

          3.6.3. Indemnification Procedure. Promptly after receipt by an indemnified party
under this Section 3.6 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under this Section 3.6,
notify the indemnifying party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to assume the defense of
such claim; provided, however, that the indemnifying party shall be entitled to select counsel for
the defense of such claim with the approval of any parties entitled to indemnification, which
approval shall not be unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
indemnifying party and the indemnified party in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this Section 3.6, then counsel for
such party shall be entitled to conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interest of such party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if prejudicial to the ability
of the indemnifying party to defend such action, shall relieve such indemnifying party, to the
extent so prejudiced, of any liability to the indemnified party under this Section 3.6, but the
omission so to notify the indemnifying party will not relieve such party of any liability that such
party may have to any indemnified party otherwise other than under this Section 3.6.

          3.6.4. Contribution. If the indemnification provided for in this Section 3.6 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 therein, then the indemnifying party, in lieu
of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the 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 of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.

          3.6.5. 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 shall control.

          3.6.6. Survival. The obligations of the Company and Holders under this Section 3.6
shall survive the completion of any offering of Registrable Securities in a registration statement
under this Section 3, and otherwise. No indemnifying party, in defense of any claim of litigation
set forth under this

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Section 3.6, shall, except with the consent of each indemnified party, consent
to entry of any judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.

     3.7 Limitations on Registration Rights Granted to Other Securities. From and after
the date of this Agreement, the Company shall not enter into any other agreement with any holder or
prospective holder of any securities of the Company providing for the granting to such holder of
any Registration rights, except that, with the consent of the Holders of sixty-seven percent (67%)
of the Convertible Securities then outstanding, additional holders may be added as parties to this
Agreement with regard to any or all securities of the Company held by them. Any such additional
parties shall execute a counterpart of this Agreement, and upon execution by such additional
parties and by the Company, shall be considered an Investor for all purposes of this Agreement.
The additional parties and the additional Registrable Securities shall be identified in an
amendment to Schedule A hereto.

     3.8 Transfer of Rights. The right to cause the Company to Register securities granted
by the Company to the Investors under Sections 3.1 and 3.2 may be assigned by any Holder to a
transferee or assignee of any Convertible Securities not sold to the public acquiring at least One
Hundred Fifty Thousand (150,000) shares of such Holder’s Convertible Securities (equitably adjusted
for all stock splits, subdivisions, stock dividends, combinations and the like with respect to such
shares); provided, however, that the Company must receive written notice prior to the time of said
transfer, stating the name and address of said transferee or assignee and identifying the
securities with respect to which such rights are being assigned. Notwithstanding the limitation
set forth in the foregoing sentence respecting the minimum number of shares which must be
transferred, (a) any Holder which is a partnership may transfer such Holder’s rights to such
Holder’s constituent partners, limited partners, retired partners (including spouses, ancestors,
lineal descendants and siblings of such partners or spouses who acquire Convertible Securities or
Registrable Securities by gift, will or intestate succession), (b) any Holder which is a limited
liability company may transfer such Holder’s rights to such Holder’s constituent members or retired
members (including spouses, ancestors, lineal descendants and siblings of such members or spouses
who acquire Convertible Securities or Registrable Securities by gift, will or intestate
succession), (c) any Holder which is a natural person may transfer such Holder’s rights to any
immediate family member, niece or nephew or to any trust created for the benefit of such Holder or
his or her immediate family members, nieces or nephews, (d) any Holder may transfer such Holder’s
rights to an Affiliate, subject in each case to such transferee’s agreeing to be bound by the
rights and restrictions of this Agreement, and (e) any Holder may transfer such Holder’s rights to
any other Holder who has the right to cause the Company to Register securities granted by the
Company to the Investors under Sections 3.1 and 3.2. The rights under Sections 4 and 5 may be
assigned by an Investor only as provided in such Sections.

     3.9 Market Stand-off. If requested in writing by the underwriters for the initial
public offering of the Company’s Common Stock, each holder of Registrable Securities who is a party
to this Agreement shall agree not to sell publicly any shares of Registrable Securities or any
other securities of the Company (other than shares of Registrable Securities or other securities of
the Company being registered in such offering), without the consent of such underwriters, for a
period of not more than one hundred eighty (180 days) following the effective date of the
registration statement relating to such offering; provided, however that all executive officers and
directors of the Company and holders of at least one percent (1%) of the Company’s voting
securities shall also have agreed not to sell publicly their Common Stock under the circumstances
and pursuant to the terms set forth in this section. Each Holder agrees to execute and deliver
such other agreements as may be reasonably requested by the Company, or the Company’s underwriters,
which are consistent with the foregoing, or which are reasonably necessary to give further effect
thereto. In order to enforce the covenants of this Section 3.9, the Company shall have the right
to place restrictive legends on the certificates representing the securities of each Holder and may
impose stop-transfer instructions with respect to such securities.

- 15 -

 

     3.10 No-Action Letter or Opinion of Counsel in Lieu of Registration; Conversion of
Convertible Securities. Notwithstanding anything else in this Agreement, if the Company shall
have obtained from the Commission a “no-action” letter in which the Commission has indicated that
it will take no action if, without Registration under the Securities Act, any Holder disposes of
Registrable Securities
covered by any request for Registration made under this Agreement in the specific manner in
which such Holder proposes to dispose of the Registrable Securities included in such request (such
as including, without limitation, the inclusion of such Registrable Securities in an underwriting
initiated by either the Company or the Holders), or if in the opinion of counsel for the Company
concurred in by counsel for such Holder, which concurrence shall not be unreasonably withheld, no
Registration under the Securities Act is required in connection with such disposition, the shares
included in such request shall not be eligible for Registration under this Agreement; provided,
however, that any Registrable Securities not so disposed of shall be eligible for Registration in
accordance with the terms of this Agreement with respect to other proposed dispositions to which
this Section 3.10 does not apply. The Registration rights of the Holders of Convertible Securities
set forth in this Agreement are conditioned upon the conversion of the Convertible Securities with
respect to which Registration is sought into Common Stock prior to the effective date of the
Registration Statement.

     3.11 Rule 144 Requirements. Immediately after the date on which a Registration
Statement filed by the Company under the Securities Act becomes effective, the Company shall
undertake to make publicly available, and available to the Holders of Registrable Securities, such
information as is necessary to enable the holders of Registrable Securities to make sales of
Registrable Securities pursuant to Rule 144 of the Commission under the Securities Act. The
Company shall furnish to any holder of Registrable Securities, upon request, a written statement
executed by the Company as to the steps it has taken to comply with the current public information
requirements of Rule 144.

     3.12 Reports Under Securities Exchange Act of 1934. With a view to making available
to the Investors the benefits of Rule 144 and any other rule or regulation of the Commission that
may at any time permit an Investor to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to use its commercially
reasonable efforts to:

          (a) make and keep public information available, as those terms are defined in Rule 144, at all
times after ninety (90) days after the effective date of the first registration statement filed by
the Company for the offering of its securities to the general public; file with the Commission in a
timely manner all reports and other documents required of the Company under the Securities Act and
the Exchange Act; and

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

     3.13 Termination of Company Agreements. The Registration rights set forth in Sections
3.1 and 3.2 shall terminate seven (7) years after the effective date of the Company’s Registration
Statement filed in connection with the Company’s first Qualified Public Offering or, as to any
Holder, at any time following the effective date of the Company’s first Qualified Public Offering,
when such Holder is

- 16 -

 

entitled to sell all of such Investor’s
Registrable Securities pursuant to Rule 144 (including Rule 144(k)) of the Commission under
the Securities Act.

SECTION 4. RIGHT OF FIRST OFFER

     4.1 Right of First Offer. Subject to Section 4.4 hereof, the Company hereby grants to
each Investor the right of first refusal (the “Right of First Offer”) to purchase such Investor’s
pro rata share of New Securities (as defined in Section 4.2) which the Company may from time to
time propose to sell and issue. For purposes of the Right of First Offer an Investor’s pro rata
share (the “Pro Rata Share”) shall be determined as follows: an Investor’s Pro Rata Share shall be
equal to that number or amount of New Securities to be sold multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock owned by such Investor (including shares of
Common Stock issuable upon the full exercise and conversion of all convertible or exercisable
securities owned by such Investor) and the denominator of which shall be the total number of shares
of the Company’s Common Stock deemed to be outstanding assuming the conversion of all outstanding
convertible securities and the exercise of all outstanding options and warrants. Notwithstanding
the foregoing, any Investor that elects to purchase all of its respective Pro Rata Share (a
“Fully-Exercising Investor”) may, at the time it accepts the Company’s offer, subscribe to purchase
any or all of the securities offered (“Oversubscription Securities”) which may be available as a
result of the rejection, or partial rejection, of the offer by other Investors. All such
Oversubscription Securities shall be allocated among each Fully-Exercising Investor subscribing to
purchase them in a proportion equal to that number of shares of Common Stock owned by such
Fully-Participating Investor (including shares of Common Stock issuable upon the full exercise and
conversion of all convertible or exercisable securities owned by such Fully-Participating Investor)
bears to the total number of shares of Common Stock (including shares of Common Stock issuable upon
the full exercise and conversion of all convertible or exercisable securities) held by all
Fully-Exercising Investors who elected to purchase some of the Oversubscribed Securities.
Notwithstanding the foregoing, the Company shall not be required to offer or sell such New
Securities to any Investor who would cause the Company to be in violation of applicable federal
securities laws by virtue of such offer or sale. The Right of First Offer shall be subject to the
provisions of this Section 4.

     4.2 Definition of New Securities. “New Securities” shall mean any shares of Common
Stock or Preferred Stock of the Company, whether now authorized or not, and rights, options, or
warrants to purchase such shares of Common Stock or Preferred Stock, and all other securities
having equity features, such as convertible notes or notes issued in conjunction with options or
warrants; provided that “New Securities” shall not include:

          (a) Securities issued pursuant to the Purchase Agreement;

          (b) securities issued upon the conversion of any shares of the Convertible Securities;

          (c) securities issued to the Company’s employees, officers, directors, advisors, outside
consultants or contractors pursuant to a plan, agreement or arrangement duly approved by the Board;

          (d) securities issued or issuable pursuant to the exercise of options, warrants or convertible
securities outstanding as of the date hereof;

          (e) securities issued in connection with obtaining equipment lease financing, credit
agreements, debt financing and other similar transactions, whether issued to a lessor, guarantor or
other Person, provided that such issuance is pursuant to an agreement or arrangement duly approved
by the Board, and provided, further, that such issuance shall not be primarily for general capital
raising purposes;

- 17 -

 

          (f) securities issued to effect any stock split, stock dividend or recapitalization or like
transactions of the Company;

          (g) securities issued in connection with the acquisition of all or a substantial portion of
the assets or the business of another entity by the Company, provided that such issuance is
pursuant to an agreement or arrangement duly approved by the Board;

          (h) securities issued in connection with a research and development partnership, corporate
partnering transaction, licensing or collaborative arrangements, strategic alliance, technology
acquisition or transfer, or similar transaction, provided that such issuance is pursuant to an
agreement or arrangement duly approved by the Board; and

          (i) securities issued pursuant to a Qualified Public Offering.

     4.3 Notices. In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Investor written notice (the “Notice”) of its intention, describing
the type of New Securities, the price, and the principal terms upon which the Company proposes to
issue the same. Each Investor shall have twenty (20) days from the delivery of the Notice to agree
to purchase up to such Investor’s Pro Rata Share plus, in the event of a Fully-Participating
Investor, any Oversubscription Securities, for the price and upon the terms specified in the Notice
by giving written notice to the Company and stating therein the quantity of New Securities and
Oversubscription Securities to be purchased.

     4.4 Failure to Exercise Right. Unless (i) Investors holding at least 60% of the then
outstanding shares of Series A-3 Preferred Stock deem otherwise (by vote or by action by written
consent) or (ii) the Company requests in writing a lesser investment commitment of such holders, at
any time or from time to time following the date of the issuance of shares of Series A-3 Preferred
Stock in the Closing (as defined in the Purchase Agreement), if (A) any Investor holding an
aggregate of at least One Million Seven Hundred Thousand (1,700,000) shares of Series A-3 Preferred
Stock (as adjusted for all stock splits, stock dividends, consolidations, recapitalizations and
reorganizations with respect to such shares) (a “Significant Holder”) is entitled to exercise the
Right of First Offer provided in this Section 4, (B) the Company has complied with its obligations
under this Section 4 with respect to the Right of First Offer, and (C) such Significant Holder does
not by exercise of such Significant Holder’s Right of First Offer to acquire at least its Minimum
Share (as defined below) of New Securities (a “Non-Participating Holder”), then, effective
immediately prior to the issuance of such New Securities each Non-Participating Holder shall lose
its Right of First Offer for all subsequent issuances of New Securities which would otherwise
trigger the Right of First Offer pursuant to this Section 4. Each Significant Holder’s “Minimum
Share” of the New Securities shall be a number of shares equal to (X) the product of (i) 0.5
multiplied by (ii) (A) sixty percent (60%) of the aggregate original purchase price paid by such
Significant Holder for the shares of Series A-3 Preferred Stock held by such Significant Holder,
divided by (Y) the per share price of the New Securities, rounded down to a whole number.
Notwithstanding anything contained in this Agreement to the contrary, this Section 4.4 may not be
amended or modified in a manner that adversely affects the
rights or otherwise increases the obligations of a Significant Holder to purchase New
Securities without the written consent of such Significant Holder.

     4.5 Company Right to Offer New Securities. In the event an Investor does not elect to
purchase all of such Investor’s Pro Rata Share of the New Securities pursuant to Section 4.1 and
such New Securities are not purchased by other Fully-Participating Investors, the Company shall
have ninety (90) days after the last date on which any Investor’s right to purchase lapsed to sell
or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within ninety (90) days from the date of said agreement) to sell the New
Securities respecting which such

- 18 -

 

Investor’s option was not exercised, at or above the price and
upon terms not materially more favorable to the purchasers of such securities than the terms
specified in the initial Notice given in connection with such sale. In the event the Company has
not sold the New Securities within said 90-day period (or sold and issued New Securities in
accordance with the foregoing within ninety (90) days from the date of said agreement), the Company
shall not thereafter issue or sell any New Securities without first offering such New Securities to
the Investors in the manner provided in this Section 4.

     4.6 Rights of Affiliated Investors. For the purposes of this Section 4, Investors who
are Affiliates of one or more other Investors shall, at the election of an Investor and one or more
such Affiliates, be treated as a group (an “Investor Group”). Members of an Investor Group shall
have the right to reallocate the rights granted by this Section 4 among themselves as they
determine.

     4.7 Assignment. The Right of First Offer set forth in this Section 4 may not be
assigned or transferred, except that each Investor shall have the right to assign its right to
purchase securities under this Section 4 to any Affiliate of such Investor; provided such Affiliate
agrees in writing with the Company and the Investor, prior to and as a condition precedent to such
transfer, to be bound by all the provisions of Sections 3.9, 4, 5 and 6 of this Agreement.

     4.8 Termination. The Right of First Offer granted under this Section 4 shall not
apply to, and shall terminate on and be of no further force or effect upon the earlier of (a) the
effective date of the Company’s Registration Statement filed in connection with the Company’s first
Qualified Public Offering and (b) the date of the closing of a sale, lease, or other disposition of
all or substantially all of the Company’s assets or the Company’s merger into or consolidation with
any other corporation or other entity, or any other corporate reorganization, in which the holders
of the Company’s outstanding voting stock immediately prior to such transaction own, immediately
after such transaction, securities representing less than fifty percent (50%) of the voting power
of the corporation or other entity surviving such transaction, provided that this Section 4.8 shall
not apply to a merger effected exclusively for the purpose of changing the domicile of the Company
or a sale of shares by the Company for primarily equity financing purposes.

SECTION 5. TRANSFERS OF SECURITIES BY INVESTORS.

     5.1 Notices. If any Investor (the “Transferor”) proposes to sell, assign, hypothecate
or otherwise transfer (a “Transfer”) any securities of the Company owned by such Investor from and
after the date of
this Agreement, other than pursuant to the provisions of Section 5.6 of this Agreement, the
Transferor shall first give each of the other Investors the right to purchase such securities by
delivering to them a written offer which shall state the price and other terms and conditions of
the proposed Transfer. If the Transferor proposes to Transfer the securities for consideration
other than solely cash and/or promissory notes, the offer to the Investors shall, to the extent of
such consideration, permit each Investor to pay in lieu thereof, cash equal to the fair market
value of such consideration, and the offer shall state the estimate of such fair market value as
determined by the Board. The Transferor shall fix the period of the offer which shall be a minimum
of thirty (30) days or such longer period as is necessary to determine the fair market value of the
consideration referred to in the preceding sentence.

     5.2 Acceptance of Offer. An Investor may accept an offer (“Purchasing Investor”) only
by giving written notice to the Transferor before the offer expires that such Purchasing Investor
has accepted the offer to purchase some or all of the securities offered (the “Accepted
Securities”); provided, however, that the maximum number or amount of securities a Purchasing
Investor shall be entitled to purchase shall be equal to that number or amount of securities to be
transferred multiplied by a fraction, the numerator of which shall be the number of shares of
Common Stock owned by such Purchasing Investor (including shares of Common Stock issuable upon the
full exercise and conversion of all convertible or exercisable

- 19 -

 

securities owned by such Investor)
and the denominator of which shall be the aggregate number of shares of Common Stock held by all
Investors (including shares of Common Stock issuable upon the full exercise and conversion of all
convertible or exercisable securities owned by all Investors), excluding the Transferor’s shares of
Common Stock. Notwithstanding the foregoing, any Purchasing Investor may, at the time it accepts
the offer, subscribe to purchase any or all securities offered which may be available as a result
of the rejection, or partial rejection, of the offer by other Investors, which securities shall be
allocated on a pro rata basis among those Purchasing Investors subscribing to purchase them.

     5.3 Allocation of Securities and Payment. Promptly following the expiration of an
offer, the Transferor shall allocate the securities subscribed for among the Purchasing Investors
accepting or partially accepting the offer, pro rata, based upon their respective holdings as
aforesaid, and shall by written notice (the “Acceptance Notice”) advise all Purchasing Investors of
the number or amount of securities allocated to each of the Purchasing Investors. Within ten (10)
days following receipt of the Acceptance Notice, each of the Purchasing Investors shall deliver to
the Transferor payment in full for the Accepted Shares purchased by it against delivery by the
Transferor to each Purchasing Investor of a certificate or certificates evidencing the Accepted
Securities purchased by it.

     5.4 Failure to Exercise. To the extent an offer pursuant to Section 5.1 is not
accepted by the other Investors, the Transferor may, for a period of ninety (90) days thereafter,
transfer the unaccepted securities, or any of them, at or above the price, and upon the other terms
and conditions specified in such offer, to any Person or Persons; provided that such Person or
Persons agrees in writing with the Company and the Investors, prior to and as a condition precedent
to such Transfer, to be bound by all of the provisions of Sections 3.9, 5 and 6 of this Agreement.

     5.5 Assignment. The right of first refusal set forth in this Section 5 may not be
assigned or transferred, except that each Investor shall have the right to assign its rights to
purchase such securities under this
Section 5 to any Affiliate of such Investor; provided such Affiliate agrees in writing with
the Company and the Investors, prior to and as a condition precedent to such assignment, to be
bound by all of the provisions of Sections 3.9, 5 and 6 of this Agreement.

     5.6 Permitted Transfers.

          (a) Notwithstanding anything to the contrary contained herein, any Investor which is a
partnership or limited liability company may transfer, without first offering any securities of the
Company to any other Investor, all or any of its securities to any of its Affiliates or successor
funds or to a partner, limited partner, member or retired partner of such partnership or retired
member of such limited liability company or to the estate of any such partner or transfer by will
or intestate succession to his spouse or to the siblings, lineal descendants or ancestors of such
partner or his spouse; provided such transferee agrees in writing with the Company and the
Investors, prior to and as a condition precedent to such Transfer, to be bound by all of the
provisions of Sections 3.9, 5 and 6 of this Agreement.

          (b) Notwithstanding anything to the contrary contained herein, any Investor which is a
corporation may Transfer, without first offering any securities of the Company to any other
Investor, all or any of its securities to any of its Affiliates, provided such Affiliate agrees in
writing with the Company and the Investors, prior to and as a condition precedent to such Transfer,
to be bound by all of the provisions of Sections 3.9, 5 and 6 of this Agreement.

          (c) Notwithstanding anything to the contrary contained herein, any Investor who is an
individual may Transfer, without first offering any securities of the Company to any other
Investor, all or any of his or her securities to his or her spouse or their spouse’s siblings,
lineal descendants or ancestors, nieces or nephews, or any entity that is an Affiliate of such
Investor; provided such transferee

- 20 -

 

agrees in writing with the Company and the Investors, prior to
and as a condition precedent to such Transfer, to be bound by all of the provisions of Sections
3.9, 5 and 6 of this Agreement.

     5.7 Termination. The right of first refusal granted under this Section 5 shall expire
upon the effective date of the Company’s registration statement filed in connection with the
Company’s first Qualified Public Offering and shall not be applicable to any shares sold pursuant
thereto.

SECTION 6. MISCELLANEOUS.

     6.1 Entire Agreement; Successors and Assigns. This Agreement constitutes the entire
contract between the Company and the Investors relative to the subject matter hereof. Any previous
agreement between the Company, the Investors and the Holders concerning Registration rights and the
other matters set forth herein is superseded by this Agreement. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective executors, administrators, heirs, successors and
assigns of the parties.

     6.2 Aggregation of Stock. All Convertible Securities and Registrable Securities held
or acquired by affiliated entities or persons shall be aggregate together for the purpose of
determining the availability of any rights under this Agreement.

     6.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS ENTERED INTO AND WHOLLY TO BE
PERFORMED WITHIN THE STATE OF CALIFORNIA BY CALIFORNIA RESIDENTS.

     6.4 Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.

     6.5 Headings. The headings of the Sections of this Agreement are for convenience and
shall not by themselves determine the interpretation of this Agreement.

     6.6 Notices. Any notice required or permitted hereunder shall be given in writing and
shall be conclusively deemed effectively given upon personal delivery, or five (5) days after
deposit in the United States mail, by registered or certified mail (or airmail, if notice shall be
sent outside the United States), postage prepaid, or two (2) days after delivery to a nationally
known air courier company, addressed (a) if to the Company, to the Company’s address as set forth
below the Company’s name on the signature page of this Agreement and (b) if to an Investor, to such
Investor’s address as set forth on the signature page of this Agreement, or at such other address
as the Company or such Investor may designate by ten (10) days, advance written notice to the other
parties hereto. Any notice sent outside the United States shall also be telexed or telecopied.

     6.7 Amendment of Agreement; Waivers. Subject to Section 3.7 and Section 4.4, any
provision of this Agreement may be amended or waived by a written instrument signed by the Company
and by Persons holding at least 60% of the Convertible Securities issued or issuable upon
conversion of the Series A-3 Preferred Stock provided, however, if such amendment would adversely
affect the rights of a specific Investor in a manner different from the other Investors, then such
amendment shall require the consent of such Investor. Any amendment or waiver effected in
accordance with Section 3.7 or this Section 6.7 shall be binding upon the Company and all Holders
and each of their respective successors and assigns. In addition, the Company may waive performance
of any obligation owing to it, as to some or all of the Investors, or agree to accept alternatives
to such performance, without obtaining the consent of any Investor.

- 21 -

 

     6.8 Effect of Amendment or Waiver. The Investors and their successors and
assigns acknowledge that by the operation of Section 6.7 hereof Investors holding at least sixty
percent (60%) of the Convertible Securities issued or issuable upon conversion of the Series A-3
Preferred Stock, acting in conjunction with the Company, will have the right and power to diminish
or eliminate any or all rights pursuant to this Agreement.

     6.9 Waiver of Right of First Offer. Upon execution of this Agreement by the Company and Persons holding at least a
majority of the Convertible Securities under the Prior Agreement, all provisions of, rights granted
and covenants made in the Prior Agreement (including, without limitation, the rights of first offer
set forth in Section 4 of the Prior Agreement) are hereby waived, released and terminated in their
entirety and shall have no further force and effect (including, without limitation, with respect to
the Series A-3 Preferred Stock issued pursuant to the Purchase Agreement and the shares issued upon
conversion thereof).

[Remainder of Page Intentionally Left Blank]

- 22 -

 

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

	 	 	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CADENCE PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Theodore R. Schroeder
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Theodore R. Schroeder	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	12730 High Bluff Drive, Suite 410	 	 
	 

	 	 	 	 	 	San Diego, California 92130	 	 
	 

	 	 	 	 	 	Fax No.: (858) 436-1401	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	FRAZIER HEALTHCARE V, LP
	 	 	By FHM V, LP, its general partner
	 	 	By FHM V, LLC, its general partner
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ Patrick Heron
	 

	 	 	 	 	 	 
	 

	 	 	 	Patrick Heron, Authorized Representative	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	601 Union Steet, Suite 3200
	 	 
	 

	 	 	 	Seattle, WA 98101	 	 
	 

	 	 	 	Phone No.: (206) 621-7200	 	 
	 

	 	 	 	Fax No.: (206) 621-1848	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	Versant Side Fund II, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Versant Ventures II, L.L.C.	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brian G. Atwood
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Brian G. Atwood	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Versant Venture Capital II, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Versant Ventures II, L.L.C.	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brian G. Atwood
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Brian G. Atwood	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Versant Affiliates Fund II-A, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Versant Ventures II, L.L.C.	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brian G. Atwood
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Brian G. Atwood	 	 
	 

	 	Title:
	 	Managing Director	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	3000 Sand Hill Road, Bldg 4, Suite 210
	 	 
	 

	 	 	 	Menlo Park, CA 94025	 	 
	 

	 	 	 	Phone No.: (650) 233-7877	 	 
	 

	 	 	 	Fax No.: (650) 854-9513	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	TECHNOLOGY PARTNERS FUND VII, L.P.
	 

	 	By:
	 	TP MANAGEMENT VII, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Sheila Mutter
	 

	 	 	 	 	 	 
	 

	 	 	 	     Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	TECHNOLOGY PARTNERS AFFILIATES VII, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	TP MANAGEMENT VII, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Sheila Mutter
	 

	 	 	 	 	 	 
	 

	 	 	 	     Managing Member	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	100 Shoreline Hwy, Suite 282, Building B
	 	 
	 

	 	 	 	Mill Valley, CA 94941	 	 
	 

	 	 	 	Phone No.: (415) 332-9999	 	 
	 

	 	 	 	Fax No.: (415) 332-9998	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	ABBOTT INVESTMENT COMPANY, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ James C. Gilstrap
	 

	 	 	 	 	 	 
	 

	 	Name:	 	James C. Gilstrap
	 

	 	Title:	 	President

	 	 	 	 	 	 	 
	 

	 	Address:
	 	5067 Shore Drive
	 	 
	 

	 	 	 	Carlsbad, CA 92008	 	 
	 

	 	 	 	Fax No.: (858) 756-9518	 	 

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	INVESTOR:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DOMAIN PARTNERS VI, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	One Palmer Square Associates VI, L.L.C., its

General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Kathleen K. Schoemaker
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Kathleen K. Schoemaker	 	 
	 

	 	 	 	 	 	Title: Managing Member	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	Domain Associates, L.L.C.
	 	 
	 

	 	 	 	One Palmer Square	 	 
	 

	 	 	 	Princeton, New Jersey 08542	 	 
	 

	 	 	 	Attn: Kathleen K. Schoemaker	 	 
	 

	 	 	 	Fax No.: (609) 683-9789	 	 

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	INVESTOR:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	DP VI ASSOCIATES, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	One Palmer Square Associates VI, L.L.C., its

General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Kathleen K. Schoemaker
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Kathleen K. Schoemaker	 	 
	 

	 	 	 	Title:
	 	Managing Member	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	Domain Associates, L.L.C.
	 	 
	 

	 	 	 	One Palmer Square	 	 
	 

	 	 	 	Princeton, New Jersey 08542	 	 
	 

	 	 	 	Attn: Kathleen K. Schoemaker	 	 
	 

	 	 	 	Fax No.: (609) 683-9789	 	 

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	INVESTOR:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PROQUEST INVESTMENTS III, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	ProQuest Associates III LLC, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Pasquale DeAngelis
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Pasquale DeAngelis	 	 
	 

	 	 	 	Title:
	 	Managing Member	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	90 Nassau Street, 5th Floor
	 	 
	 

	 	 	 	Princeton, New Jersey 08540	 	 
	 

	 	 	 	Fax No.: (609) 375-1047	 	 

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	WINDAMERE III, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Scott L. Glenn
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Scott L. Glenn	 	 
	 

	 	Title:
	 	 Managing Member	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	c/o Windamere Venture Partners L.L.C.
	 	 
	 

	 	 	 	6402 Cardeno Drive	 	 
	 

	 	 	 	La Jolla, California 92037	 	 
	 

	 	 	 	Fax No.: (858) 456-2295	 	 

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	GARNER INVESTMENTS, L.L.C.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Cam L. Garner
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Cam L. Garner	 	 
	 

	 	Title:
	 	President	 	 

	 	 	 	 	 
	 

	 	Address:
	 	P.O. Box 675866
	 

	 	 	 	5949 Greensview Court
	 

	 	 	 	Rancho Santa Fe, California 92067
	 

	 	 	 	Fax No.: (858) 756-9518

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	HALE FAMILY TRUST UDT 2/10/86, David F. and 
Linda C.
Hale, Trustees
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David F. Hale
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	David F. Hale	 	 
	 

	 	Title:
	 	Trustee	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	2110 Rutherford Road
	 	 
	 

	 	 	 	Carlsbad, California 92008	 	 
	 

	 	 	 	Fax No.: (760) 431-7917	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Cam S. Gallagher
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Cam Stephen Gallagher	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	3888 Quarter Mile Drive
	 	 
	 

	 	 	 	San Diego, California 92130	 	 
	 

	 	 	 	Fax No.: (858) 436-1601	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:  
	 
	 	 	 	 	 	 
	 	 	JAMES C. GILSTRAP IRA
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ James C. Gilstrap
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	James C. Gilstrap	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	5067 Shore Drive
	 	 
	 

	 	 	 	Carlsbad, California 92008	 	 
	 

	 	 	 	Fax No.: (760) 431-2424	 	 
	 
	 	 	 	 	 	 
	 

	 	Copy to:
	 	Daniel J. Gatto, CPA	 	 
	 

	 	 	 	Gatto & Pope	 	 
	 

	 	 	 	550 West C Street, #1700	 	 
	 

	 	 	 	San Diego, California 92101	 	 

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	JAMES C. GILSTRAP TRUST DATED 1/16/95
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ James C. Gilstrap
	 	 	 	 	 
	 	 	Name: James C. Gilstrap, Trustee
	 
	 	 	Address:	 	5067 Shore Drive
	 

	 	 	 	 	 	Carlsbad, California 92008
	 

	 	 	 	 	 	Fax No.: (760) 431-2424
	 
	 	 	 	 	 	 
	 	 	Copy to:	 	Daniel J. Gatto, CPA
	 

	 	 	 	 	 	Gatto & Pope
	 

	 	 	 	 	 	550 West C Street, #1700
	 

	 	 	 	 	 	San Diego, California 92101

Cadence Pharmaceuticals, Inc.

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Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	WALTERS GROUP GENERAL PARTNERSHIP
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael E. Luce
	 	 	 	 	 
	 	 	Name: Michael E. Luce
	 	 	Title: President
	 
	 	 	 	 	 	 
	 	 	Address:	 	5500 East Flamingo Road
	 

	 	 	 	 	 	Las Vegas, Nevada 89122
	 

	 	 	 	 	 	Fax No.: (702) 450-8055

Cadence Pharmaceuticals, Inc.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	GRAHAM CAPITAL GROUP, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John Graham
	 	 	 	 	 
	 	 	Name: John Graham
	 	 	Title: Manager
	 
	 	 	 	 	 	 
	 	 	Address:	 	1505 Westlake Avenue N., Suite 320
	 

	 	 	 	 	 	Seattle, Washington 98109
	 

	 	 	 	 	 	Fax No.: (206) 284-4061

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	GRAHAM PACIFIC, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ron Graham
	 	 	 	 	 
	 	 	Name: Ron Graham
	 	 	Title: President
	 
	 	 	 	 	 	 
	 	 	Address:	 	1505 Westlake Avenue N., Suite 320
	 

	 	 	 	 	 	Seattle, Washington 98109
	 

	 	 	 	 	 	Fax No.: (206) 284-4061

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	STEVEN A. LYMAN TRUST II, dated 8/27/90
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steven A. Lyman
	 	 	 	 	 
	 	 	Name: Steven A. Lyman
	 	 	Title: Trustee
	 
	 	 	 	 	 	 
	 	 	Address:	 	P.O. Box 676046
	 

	 	 	 	 	 	Ranch Santa Fe, California 92067
	 

	 	 	 	 	 	Fax No.: (858) 756-7465

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	BB BIOTECH VENTURES II, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	Its General Partner, BB
BIOTECH VENTURES 
GP (Guernsey) Limited
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Christopher Cochrane
	 	 	 	 	 
	 	 	Name: Christopher Cochrane
	 	 	Title: Director
	 
	 	 	 	 	 	 
	 	 	Address:	 	Trafalgar Court
	 

	 	 	 	 	 	Les Banques
	 

	 	 	 	 	 	St Peter Port
	 

	 	 	 	 	 	Guernsey
	 

	 	 	 	 	 	Channel Islands
	 

	 	 	 	 	 	GY1 3QL
	 

	 	 	 	 	 	Contact :C W Cochrane/P Mahieux
	 

	 	 	 	 	 	Fax 00 44 1481 745074

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	CDIB BIOSCIENCE VENTURES I, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Benny Hu
	 	 	 	 	 
	 	 	Name: Benny Hu
	 	 	Title: Chairman
	 
	 	 	 	 	 	 
	 	 	Address:	 	c/o CDIB BioScience Venture Management
	 

	 	 	 	 	 	9F-1, No. 205, Sec 3, Beisin Road
	 

	 	 	 	 	 	Sindian City, Taipei County 231, Taiwan
	 

	 	 	 	 	 	Attn: Karen Huang
	 

	 	 	 	 	 	Phone No.: 886-02-8913-1956
	 

	 	 	 	 	 	Fax Nos.: 886-02-8913-1955 / 886-02-8913- 1726

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 	 	EPSTEIN FAMILY TRUST DATED 4/14/93
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Dan Epstein
	 	 	 	 	 
	 	 	Name: Dan Epstein
	 	 	Title: Trustee
	 
	 	 	 	 	 	 
	 	 	Address:	 	c/o Con Am
	 

	 	 	 	 	 	3990 Ruffin Road, Suite 100
	 

	 	 	 	 	 	San Diego, California 92123
	 

	 	 	 	 	 	Fax No.: (858) 614-1874

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ J. Bradley Forrester
	 	 	 	 	 
	 	 	Name: J. Bradley Forrester
	 
	 	 	 	 	 	 
	 	 	Address:	 	c/o Con Am
	 

	 	 	 	 	 	3990 Ruffin Road, Suite 100
	 

	 	 	 	 	 	San Diego, California 92123
	 

	 	 	 	 	 	Fax No.: (858) 614-1874

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 	 	STEPHEN F. GALLAGHER, TRUSTEE WITH
	 	 	FIRST NATIONAL BANK, N.A., AS SUCCESSOR
	 	 	TRUSTEE U/A DATED MARCH 21, 2005 AS MAY
	 	 	BE AMENDED
	 
	 	 	 	 
	 

	 	By:	 	/s/ Stephen F. Gallagher
	 

	 	 	 	 
	 	 	Name: Stephen F. Gallagher
	 	 	Title:   Trustee

	 	 	 	 	 
	 

	 	Address:
	 	3015 Fleming Road
	 

	 	 	 	Middletown, Ohio 45042
	 

	 	 	 	Phone No.: (513) 423-1064
	 

	 	 	 	Fax No.: (513) 422-2609

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 	 	LYNDA GALLAGHER
	 
	 	 	 	 
	 

	 	By:	 	/s/ Lynda Gallagher
	 

	 	 	 	 
	 

	 	 	 	Lynda Gallagher

	 	 	 	 	 
	 

	 	Address:
	 	3015 Fleming Road
	 

	 	 	 	Middletown, Ohio 45042
	 

	 	 	 	Phone No.: (513) 423-1064
	 

	 	 	 	Fax No.: (513) 422-2609

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 	 	VP COMPANY INVESTMENTS 2004, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ David Raab
	 

	 	 	 	 
	 	 	Name: David Raab
	 	 	Title:   Member of Management Committee

	 	 	 	 	 
	 

	 	Address:
	 	555 W. Fifth Street, Suite 800
	 

	 	 	 	Los Angeles, California 90013-1010
	 

	 	 	 	Attention: Grant Johnson
	 

	 	 	 	Fax No.: (213) 891-7123

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 	 	FAYE HUNTER RUSSELL TRUST UTD 7/11/88
	 
	 	 	 	 
	 

	 	By:	 	/s/ Faye H. Russell
	 

	 	 	 	 
	 	 	Name: Faye H. Russell
	 	 	Title:   Trustee

	 	 	 	 	 
	 

	 	Address:
	 	c/o Latham & Watkins LLP
	 

	 	 	 	12636 High Bluff Drive, Suite 400
	 

	 	 	 	San Diego, California 92130
	 

	 	 	 	Fax No.: (858) 523-5450

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 
	 

	 	INVESTOR:
	 
	 	 
	 
	 	/s/ Scott N. Wolfe
	 

	 	 
	 

	 	Scott N. Wolfe

	 	 	 	 	 
	 

	 	Address:
	 	c/o Latham & Watkins LLP
	 

	 	 	 	12636 High Bluff Drive, Suite 400
	 

	 	 	 	San Diego, California 92130
	 

	 	 	 	Fax No.: (858) 523-5450

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 
	 

	 	INVESTOR:
	 
	 	 
	 
	 	/s/ Cheston J. Larson
	 

	 	 
	 

	 	Cheston J. Larson

	 	 	 	 	 
	 

	 	Address:
	 	c/o Latham & Watkins LLP
	 

	 	 	 	12636 High Bluff Drive, Suite 400
	 

	 	 	 	San Diego, California 92130
	 

	 	 	 	Fax No.: (858) 523-5450

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 
	 

	 	INVESTOR:
	 
	 	 
	 
	 	/s/ Adam K. Simpson
	 

	 	 
	 

	 	Adam K. Simpson

	 	 	 	 	 
	 

	 	Address:
	 	c/o Verus Pharmaceuticals, Inc.
	 

	 	 	 	12671 High Bluff Drive, Ste 200
	 

	 	 	 	San Diego, California 92130
	 

	 	 	 	Fax No.: (858) 436-1601

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	 	INVESTOR:
	 
	 	 	 	 
	 

	 	Print Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 	 	(if signing on behalf of a partnership, corporation, trust
Or other entity)

	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 
	 

	 	 	 	 	 	 

Cadence Pharmaceuticals, Inc.

Amended and Restated Investor Rights Agreement

Counterpart Signature Page

 

 

Schedule A

INVESTORS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Series A-1	 	Series A-2	 	Series A-3
	 	 	Preferred	 	Preferred	 	Preferred
	Investor	 	Stock	 	Stock	 	Stock
	FRAZIER HEALTHCARE V, LP
	 	 	—	 	 	 	—	 	 	 	10,000,000	 
	VERSANT VENTURE CAPITAL II, L.P.
	 	 	—	 	 	 	—	 	 	 	7,782,747	 
	VERSANT AFFILIATES FUND II-A, L.P.
	 	 	—	 	 	 	—	 	 	 	147,695	 
	VERSANT SIDE FUND II, L.P.
	 	 	—	 	 	 	—	 	 	 	69,558	 
	TECHNOLOGY PARTNERS FUND VII, L.P.
	 	 	—	 	 	 	—	 	 	 	7,520,000	 
	TECHNOLOGY PARTNERS AFFILIATES VII, L.P.
	 	 	—	 	 	 	—	 	 	 	480,000	 
	ABBOTT INVESTMENT COMPANY, LLC
	 	 	—	 	 	 	—	 	 	 	400,000	 
	DOMAIN PARTNERS VI, L.P.
	 	 	3,947,061	 	 	 	6,297,638	 	 	 	12,367,456	 
	DP VI ASSOCIATES, L.P.
	 	 	42,301	 	 	 	67,492	 	 	 	132,544	 
	PROQUEST INVESTMENTS III, L.P.
	 	 	2,393,618	 	 	 	3,819,080	 	 	 	6,000,000	 
	WINDAMERE III, LLC
	 	 	531,915	 	 	 	848,684	 	 	 	—	 
	GARNER INVESTMENTS LLC
	 	 	106,383	 	 	 	—	 	 	 	100,000	 
	HALE FAMILY TRUST UDT 2/10/86
	 	 	106,383	 	 	 	50,000	 	 	 	100,000	 
	CAM STEPHEN GALLAGHER
	 	 	106,383	 	 	 	20,000	 	 	 	10,000	 
	JAMES C. GILSTRAP IRA
	 	 	319,149	 	 	 	500,000	 	 	 	—	 
	JAMES C. GILSTRAP TRUST DATED 1/16/95
	 	 	—	 	 	 	—	 	 	 	1,000,000	 
	WALTERS GROUP GENERAL PARTNERSHIP
	 	 	319,149	 	 	 	500,000	 	 	 	1,400,000	 
	GRAHAM PACIFIC, INC.
	 	 	106,383	 	 	 	87,453	 	 	 	—	 
	GRAHAM CAPITAL GROUP, LLC
	 	 	—	 	 	 	—	 	 	 	100,000	 
	STEVEN A. LYMAN TRUST II, DATED 8/27/90
	 	 	106,383	 	 	 	—	 	 	 	150,000	 
	BB BIOTECH VENTURES II, L.P.
	 	 	—	 	 	 	3,000,000	 	 	 	4,000,000	 
	CDIB BIOSCIENCE VENTURES I, INC.
	 	 	—	 	 	 	2,000,000	 	 	 	1,800,000	 
	EPSTEIN FAMILY TRUST DATED 4/14/93
	 	 	—	 	 	 	250,000	 	 	 	150,000	 
	J. BRADLEY FORRESTER
	 	 	—	 	 	 	100,000	 	 	 	50,000	 
	STEPHEN F. GALLAGHER, TRUSTEE WITH
FIRST NATIONAL BANK, N.A., AS SUCCESSOR
TRUSTEE U/A DATED MARCH 21, 2005 AS MAY
BE AMENDED
	 	 	—	 	 	 	85,000	 	 	 	50,000	 
	LYNDA GALLAGHER
	 	 	—	 	 	 	—	 	 	 	10,000	 
	VP COMPANY INVESTMENTS 2004, LLC
	 	 	—	 	 	 	25,000	 	 	 	25,000	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Series A-1	 	Series A-2	 	Series A-3
	 	 	Preferred	 	Preferred	 	Preferred
	Investor	 	Stock	 	Stock	 	Stock
	FAYE HUNTER RUSSELL TRUST UTD 7/11/88
	 	 	—	 	 	 	10,000	 	 	 	10,000	 
	SCOTT N. WOLFE
	 	 	—	 	 	 	5,000	 	 	 	5,000	 
	CHESTON J. LARSON
	 	 	—	 	 	 	5,000	 	 	 	5,000	 
	ADAM K. SIMPSON
	 	 	—	 	 	 	5,000	 	 	 	5,000	 
	 	 	 
	TOTAL
	 	 	8,085,108	 	 	 	17,675,347	 	 	 	53,870,000exv4w3

 

Exhibit 4.3

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT
TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN
THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE STOCK

Company: CADENCE PHARMACEUTICALS, INC., a Delaware corporation

Number of Shares: 192,500

Class of Stock: Series A-2 Preferred

Warrant Price: $1.00 per shares

Issue Date: February 17, 2006

Expiration Date: Subject to Section 1.6 hereof, the longer of (i) the 10th anniversary after the
Issue Date, and (ii) five years after the closing of the Company’s initial public offering of its
Common Stock

     THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and
valuable consideration, including without limitation the mutual promises contained in that certain
Loan and Security Agreement of even date herewith (the “Loan Agreement”) entered into by and among
SILICON VALLEY BANK (“Holder”), Oxford Finance Corporation and the company named above (the
“Company”), Holder is entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the “Shares”) of the Company at the Warrant Price, all as set forth above and
as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth in this Warrant. This Warrant is issued in connection with the Loan
Agreement.

ARTICLE 1. EXERCISE.

     1.1 Method of Exercise. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal
office of the Company. Unless Holder is exercising the conversion right set forth in Article 1.2,
Holder shall also deliver to the Company a check, wire transfer (to an account designated by the
Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for
the Shares being purchased.

     1.2 Conversion Right. In lieu of exercising this Warrant as specified in Article 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.

1

 

     1.3 Fair Market Value. If the Company’s common stock is traded in a public market and
the Shares are common stock, the fair market value of each Share shall be the closing price of a
Share reported for the business day immediately before Holder delivers its Notice of Exercise to
the Company (or in the instance where the Warrant is exercised immediately prior to the
effectiveness of the Company’s initial public offering, the “price to public” per share price
specified in the final prospectus relating to such offering). If the Company’s common stock is
traded in a public market and the Shares are preferred stock, the fair market value of a Share
shall be the closing price of a share of the Company’s common stock reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company (or, in the instance where
the Warrant is exercised immediately prior to the effectiveness of the Company’s initial public
offering, the initial “price to public” per share price specified in the final prospectus relating
to such offering), in both cases, multiplied by the number of shares of the Company’s common stock
into which a Share is convertible. If the Company’s common stock is not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its reasonable good
faith judgment.

     1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant
Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new Warrant representing
the Shares not so acquired.

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

     1.6 Treatment of Warrant Upon Acquisition of Company.

          1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale,
license, or other disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the Company’s
securities before the transaction beneficially own less than 50% of the outstanding voting
securities of the surviving entity after the transaction.

          1.6.2 Treatment of Warrant at Acquisition.

A) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is not an asset sale and in which the sole consideration is cash, either (a) Holder shall exercise
its conversion or purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will expire upon the consummation of such Acquisition. The Company shall
provide the Holder with written notice of its request relating to the foregoing (together with such
reasonable information as the Holder may request in connection with such contemplated Acquisition
giving rise to such notice), which is to be delivered to Holder not less than ten (10) days prior
to the closing of the proposed Acquisition.

2

 

B) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is an “arms length” sale of all or substantially all of the Company’s assets (and only its assets)
to a third party that is not an Affiliate (as defined below) of the Company (a “True Asset Sale”),
either (a) Holder shall exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b)
if Holder elects not to exercise the Warrant, this Warrant will continue until the Expiration Date
if the Company continues as a going concern following the closing of any such True Asset Sale. The
Company shall provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less
than ten (10) days prior to the closing of the proposed Acquisition.

C) Notwithstanding the foregoing provisions of this Section 1.6, in the event that the acquirer in
an Acquisition does not agree to assume this Warrant at and as of the closing thereof, this
Warrant, to the extent not exercised or converted on or prior to such closing, shall terminate and
be of no further force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquirer is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, (ii) the class of stock or other
security of the acquirer that would be received by Holder in connection with such Acquisition were
Holder to exercise or convert this Warrant on or prior to the closing thereof is listed for trading
on a national securities exchange or approved for quotation on an automated inter-dealer quotation
system, (iii) the value (determined as of the closing of such Acquisition in accordance with the
definitive agreements therefor) of the acquirer stock and/or other securities that would be
received by Holder in respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3) times the
then-effective Warrant Price, and (iv) upon the exercise or conversion of this Warrant on or prior
to the closing of such Acquisition, Holder would be able to publicly resell all of the acquirer
stock and/or other securities that would be received by Holder in such Acquisition within 120 days
following the closing thereof pursuant to an effective registration statement covering such
acquirer stock and/or other securities or pursuant to the provisions of Rule 144 under the Act.

D) Upon the closing of any Acquisition other than those particularly described in subsections (A),
(B) and (C) above, the successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price
and/or number of Shares shall be adjusted accordingly.

As used herein “Affiliate” shall mean any person or entity that owns or controls directly
or indirectly ten (10) percent or more of the stock of Company, any person or entity that controls
or is controlled by or is under common control with such persons or entities, and each of such
person’s or entity’s officers, directors, joint venturers or partners, as applicable.

3

 

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

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

     2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall
be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or other event. Such
an event shall include any automatic conversion of the outstanding or issuable securities of the
Company of the same class or series as the Shares to common stock pursuant to the terms of the
Company’s Restated Certificate of Incorporation, as may be amended from time to time (the
“Certificate of Incorporation”) upon the closing of a registered public offering of the Company’s
common stock, but shall not include any conversions as a result of a failure to participate in any
subsequent equity financings of the Company or any “Right of First Offer” or other pay to play
provisions set forth in the Company’s Certificate of Incorporation. The Company or its successor
shall promptly issue to Holder an amendment to this Warrant setting forth the number and kind of
such new securities or other property issuable upon exercise or conversion of this Warrant as a
result of such reclassification, exchange, substitution or other event that results in a change of
the number and/or class of securities issuable upon exercise or conversion of this Warrant. The
amendment to this Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant. The provisions of this Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

     2.3 Adjustments for Diluting Issuances. The Warrant Price and the number of Shares
issuable upon exercise of this Warrant or, if the Shares are preferred stock, the number of shares
of common stock issuable upon conversion of the Shares, shall be subject to adjustment, from time
to time in the manner set forth in the Company’s Certificate of Incorporation as if the Shares
were issued and outstanding on and as of the date of any such required adjustment. The provisions
set forth for the Shares in the Company’s Certificate of Incorporation relating to the above in
effect as of the Issue Date may not be amended, modified or waived, without the prior written
consent of Holder unless such amendment, modification or waiver affects the rights associated with
the Shares in the same manner as such amendment, modification or waiver affects the rights
associated with all other shares of the same series and class as the Shares granted to the Holder.

4

 

     2.4 No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Article against impairment; provided, however, that notwithstanding the foregoing, nothing in
this Section 2.4 shall restrict or impair the Company’s right to effect changes to the rights,
preferences and privileges associated with the Shares with the requisite consent of the
stockholders as may be required to amend the Certificate of Incorporation from time to time so long
as such amendment affects the rights, preferences and privileges granted to Holder associated with
the Shares in the same manner as the other holders of Series A-2 Preferred Stock.

     2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of this Warrant and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value, as determined in
accordance with Section 1.3, of a full Share.

     2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the
Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute
such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

     3.1 Representations and Warranties. The Company represents and warrants and covenants
to the Holder as follows:

          (a) The initial Warrant Price referenced on the first page of this Warrant is not greater than
the price per share at which the Shares were last issued in an arms-length transaction in which at
least $500,000 of the Shares were sold.

          (b) All Shares which may be issued upon the exercise of the purchase right represented by this
Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or under applicable federal
and state securities laws. Notwithstanding the foregoing, such Shares of Series A-2 Preferred
Stock have not been authorized or reserved for issuance as of the Issue Date, but the Company shall
use its best efforts to cause an amendment no later than February 28, 2006 of its Restated
Certificate of Incorporation to authorize sufficient shares of Series A-2 Preferred Stock to permit
reservation of all Shares which may be issued upon the exercise of the purchase right represented
by this Warrant, upon exercise of this Warrant; provided, however, in any event, the Company
covenants and agrees that all such Shares of Series A-2

5

 

Preferred Stock which may be issued upon the exercise of the purchase right represented by this
Warrant shall be authorized and reserved for issuance prior to the earliest to occur of the
following: (1) any Liquidation Event (as defined in the Company’s Restated Certificate of
Incorporation), (2) any amendment to the Company’s’ Restated Certificate of Incorporation, (3) the
closing of the Company’s next equity financing or (4) the closing of the Company’s initial public
offering of its Common Stock.

          (c) The Capitalization Table previously provided to Holder remains true and complete as of the
Issue Date.

     3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon any of its stock, whether in cash, property, stock, or other
securities and whether or not a regular cash dividend; or (b) to merge or consolidate with or into
any other corporation, or sell, lease, license, or convey all or substantially all of its assets,
or to liquidate, dissolve or wind up; then, in connection with each such event, the Company shall
give Holder: (1) at least 10 calendar days prior written notice of the date on which a record will
be taken for such dividend or distribution (and specifying the date on which the holders of common
stock will be entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (a) above; and (2) in the case of the matters referred to in (b) above at
least 10 calendar days prior written notice of the date when the same will take place (and
specifying the date on which the holders of common stock will be entitled to exchange their common
stock for securities or other property deliverable upon the occurrence of such event). While the
Company is a private company, the Company shall send a concurrent written notice to Holder if the
Company sends any written notice to its preferred stockholders regarding: (a) the Company offering
for sale any shares of the Company’s capital stock (or other securities convertible into such
capital stock), other than (i) pursuant to the Company’s stock option or other compensatory plans,
(ii) in connection with commercial credit arrangements or equipment financings, or (iii) in
connection with strategic transactions for purposes other than capital raising; or (b) the Company
proposing to effect any reclassification or recapitalization of any of its stock. The Company
shall send concurrently to Holder the same notice as the Company gives to the holders of
registration rights if the Company proposes to offer holders of registration rights the opportunity
to participate in an underwritten public offering of the Company’s securities for cash.

     3.3 Registration Under Securities Act of 1933, as amended. The Company agrees that
the Shares or, if the Shares are convertible into common stock of the Company, such common stock,
shall have certain incidental, or “Piggyback,” registration rights pursuant to and as set forth in
the Company’s Amended and Restated Investor Rights Agreement dated September 30, 2005 (as amended
from time to time, the “Investor Rights Agreement”) or similar agreement. The provisions set forth
in the Company’s Investors’ Right Agreement or similar agreement relating to the above in effect as
of the Issue Date may not be amended, modified or waived without the prior written consent of
Holder unless such amendment, modification or waiver affects the rights associated with the Shares
in the same manner as such amendment, modification, or waiver affects the rights associated with
all other shares of the same series and class as the Shares granted to the Holder.

6

 

     3.4 No Shareholder Rights. Except as provided in this Warrant, the Holder
will not have any rights as a shareholder of the Company until the exercise of this Warrant.

     3.5  Information. So long as the Company is not a public company and after
the Company’s obligations to provide financial information under the Loan Agreement have
terminated, upon the request by Holder, the Company shall provide to the Holder: (i) the monthly
reports furnished to certain of Company’s investors under Section 2.1(b)(i) of the Investor Rights
Agreement (as defined in Section 3.3 of this Warrant), (ii) the annual reports furnished to certain
of Company’s investors under Section 2.1(a) of the Investor Rights Agreement; and (iii) the annual
budget furnished to certain of Company’s investors under Section 2.1(b)(ii) of the Investor Rights
Agreement.

ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and warrants
to the Company as follows:

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

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

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

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

     4.5 The Act. The Holder understands that this Warrant and the Shares issuable upon
exercise or conversion hereof have not been registered under the

7

 

Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Holder’s investment intent as expressed herein. The Holder
understands that this Warrant and the Shares issued upon any exercise or conversion hereof must be
held indefinitely unless subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification are otherwise
available.

ARTICLE 5. MISCELLANEOUS.

     5.1 Term: This Warrant is exercisable in whole or in part at any time and from time
to time on or before the Expiration Date. 

     5.2 Legends. This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.

     5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable
upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion
of the Shares, if any) may not be transferred or assigned in whole or in part without compliance
with applicable federal and state securities laws by the transferor and the transferee (including,
without limitation, the delivery of investment representation letters and legal opinions reasonably
satisfactory to the Company, as reasonably requested by the Company). The Company shall not
require Holder to provide an opinion of counsel if the transfer is to Holder’s parent company, SVB
Financial Group (formerly Silicon Valley Bancshares), or any other affiliate of Holder.
Additionally, the Company shall also not require an opinion of counsel if there is no material
question as to the availability of Rule 144, including, without limitation, the availability of
current information as referenced in Rule 144(c), Holder represents that it has complied with Rule
144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.

     5.4 Transfer Procedure. Upon receipt by Holder of the executed Warrant, Holder will
transfer all of this Warrant to Holder’s parent company, SVB Financial Group, by execution of an
Assignment substantially in the form of Appendix 2. Subject to the provisions of Article 5.3 and
upon providing Company with written notice, SVB Financial Group and any subsequent Holder may
transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the
Shares issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee,
provided, however, in

8

 

connection with any such transfer, SVB Financial Group or any subsequent Holder will give the
Company notice of the portion of the Warrant being transferred with the name, address and taxpayer
identification number of the transferee and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable). The Company may refuse to transfer
this Warrant or the Shares to any person who directly competes with the Company, unless, in either
case, the stock of the Company is publicly traded.

     5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, at such address as may have been furnished to the
Company or the Holder, as the case may (or on the first business day after transmission by
facsimile) be, in writing by the Company or such Holder from time to time. Effective upon receipt
of the fully executed Warrant and the initial transfer described in Article 5.4 above, all notices
to the Holder shall be addressed as follows until the Company receives notice of a change of
address in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

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

Cadence Pharmaceuticals, Inc.

12730 High Bluff Drive, Suite 410

San Diego, CA 92130

Attn: Chief Executive Officer

Telephone: (858) 436-1400

Facsimile: (858) 436-1401

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

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

     5.8 Automatic Conversion upon Expiration. In the event that, upon the Expiration
Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as
determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to be converted
pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not
previously have been exercised or

9

 

converted, and the Company shall promptly deliver a certificate representing the Shares (or such
other securities) issued upon such conversion to the Holder.

     5.9 Counterparts. This Warrant may be executed in counterparts, all of which together
shall constitute one and the same agreement.

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

[Remainder of page intentionally left blank; signature page follows]

10

 

	 	 	 	 	 	 	 	 	 
	“COMPANY”	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CADENCE PHARMACEUTICALS, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Theodore R. Schroeder	 	 	 	By:	 	/s/ David A. Socks
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Theodore R. Schroeder	 	 	 	Name:	 	David A. Socks
	 

	 	 
	 	 	 	 	 	 
	 

	 	(Print)
	 	 	 	 	 	(Print)
	Title:

	 	President
	 	 	 	Title:
	 	Secretary
	 
	 	 	 	 	 	 	 	 
	“HOLDER”	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SILICON VALLEY BANK	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ Edgar Arvizu	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	Edgar Arvizu	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	(Print)	 	 	 	 	 	 
	Title:
	 	Relationship Manager	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

11

 

APPENDIX 1

NOTICE OF EXERCISE

     1. Holder elects to purchase                      shares of the Common/Series ___ Preferred [strike
one] Stock of                                          pursuant to the terms of the attached Warrant, and tenders payment
of the purchase price of the shares in full.

          [or]

     1. Holder elects to convert the attached Warrant into Shares/cash [strike one] in the manner
specified in the Warrant. This conversion is exercised for                      of the Shares
covered by the Warrant.

     [Strike paragraph that does not apply.]

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

	 	 	 	 	 
	 

	 	 

     Holders Name
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

     (Address)
	 	 

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

	 	 	 	 	 
	 	 	HOLDER:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 

	 	(Date):	 	 
	 

	 	 	 	 

12

 

APPENDIX 2

ASSIGNMENT

For value received, Silicon Valley Bank hereby sells, assigns and transfers unto

	 	 	 
	Name:

	 	SVB Financial Group
	Address:

	 	3003 Tasman Drive (HA-200)
	 

	 	Santa Clara, CA 95054
	 
	 	 
	Tax ID:

	 	91-1962278

that certain Warrant to Purchase Stock issued by Cadence Pharmaceuticals, Inc. (the
“Company”), on ___, 200___ (the “Warrant”) together with all rights, title and
interest therein.

	 	 	 	 	 
	 	 	SILICON VALLEY BANK
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

Date:                                                             

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

	 	 	 	 	 
	 	 	SVB Financial Group
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:

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