Document:

exv10w15

 

Exhibit 10.15

INDEMNIFICATION AGREEMENT

     INDEMNIFICATION AGREEMENT (this “Agreement”) dated as of May 23, 2006 by and between
Sucampo Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and Gregory D. Perry
(“Indemnitee”):

     WHEREAS, competent persons are reluctant to serve a corporation as a director or in another
capacity unless they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of corporations;

     WHEREAS, the Board of Directors of the Company has determined that the ability to attract and
retain such persons is in the best interests of the Company’s stockholders and that the Company
should act to assure such persons that there will be increased certainty of such protection in the
future; and

     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they will not be so
indemnified; and

     WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the Company on the condition that Indemnitee be so indemnified;

     NOW, THEREFORE, in consideration of the premises, the mutual agreements herein set forth below
and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

     1. Definitions. For purposes of this Agreement the following terms shall have the
meanings set forth below:

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

          (b) “Change of Control” shall mean any of the following events:

          (i) Unless approved by the affirmative vote of at least two-thirds of those
members of the Board who are in office immediately prior to the event(s) and who are
not employees of the Company:

          (A) the merger or consolidation of the Company with, or the sale of all
or substantially all of the assets of the Company to, any person or entity
or group of associated persons or entities; or

          (B) the acquisition of direct or indirect beneficial ownership in the
aggregate of securities of the Company representing twenty percent (20%) or
more of the total combined voting power of the Company’s then issued

Sucampo Pharmaceuticals, Inc.

Director Indemnification Letter

 

 

and outstanding securities by any person or entity, or group of associated
persons or entities acting in concert, not affiliated (within the meaning of
the Securities Act of 1933) with the Company as of the date of this
Agreement; or

          (C) approval by the stockholders of the Company of any plan or proposal
for the liquidation or dissolution of the Company; or

          (i) A change in the composition of the Board at any time during any consecutive
24-month period such that the “Continuing Directors” cease for any reason to
constitute at least a seventy percent (70%) majority of the Board. For purposes of
this clause (ii), “Continuing Directors” means those members of the Board who
either:

          (A) were members of the Board at the beginning of such consecutive
24-month period; or

          (B) were elected by, or on the nomination or recommendation of, at
least a two-thirds majority (consisting of at least five directors) of the
then-existing Board.

     (c) “Corporate Status” describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise which such
person is or was serving at the express written request of the Company.

     (d) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (e) “Enterprise” shall mean the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was
serving at the express written request of the Company as a director, officer, employee,
agent or fiduciary.

     (f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating, being or
preparing to be a witness in a Proceeding.

     (g) “Good Faith” shall mean Indemnitee having acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal Proceeding, having had no reasonable cause to believe
Indemnitee’s conduct was unlawful.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (h) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any matter material
to either such party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel”
shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

     (i) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or any other actual, threatened or
completed proceeding whether civil, criminal, administrative or investigative, other than
one initiated by Indemnitee. For purposes of the foregoing sentence, a “Proceeding” shall
not be deemed to have been initiated by Indemnitee where Indemnitee seeks pursuant to
Section 9 of this Agreement to enforce Indemnitee’s rights under this Agreement.

     2. Term of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) 10 years after the date that Indemnitee has ceased to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which Indemnitee served at the express
written request of the Company or (b) the final termination of all pending Proceedings in respect
of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Section 9 of this Agreement relating thereto.
In addition, no legal action shall be brought and no cause of action shall be asserted by or in
the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of five (5) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within such five (5) year
period; PROVIDED, HOWEVER, that if any shorter period of limitations is otherwise applicable to any
such cause of action, such shorter period shall govern.

     3. Services by Indemnitee, Notice of Proceedings.

     (a) Services. Indemnitee agrees to serve as a director of the Company. Indemnitee may at any time and
for any reason resign from such position (subject to any other contractual obligation or any
obligation imposed by operation of law).

     (b) Notice of Proceeding. Indemnitee agrees promptly to notify the Company in writing
upon being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter that may be subject to indemnification or advancement
of Expenses covered hereunder.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     4. Indemnification.

     (a) In General. In connection with any Proceeding, the Company shall indemnify and
advance Expenses to Indemnitee as provided in this Agreement and to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit.

     (b) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4(b) if, by reason of
Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to any
Proceeding, other than a Proceeding by or in the right of the Company. Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts paid in settlements actually
and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding
or any claim, issue or matter therein, if Indemnitee acted in Good Faith including without
limitation, any and all losses, claims, damages, expenses and liabilities, joint or several
(including any investigation, legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit, proceeding or any claim asserted) under the Securities Act
of 1933, the Securities Exchange Act of 1934, as amended (the “Exchange Act of 1934”) or other
federal or state statutory law or regulation, at common law or otherwise or which relate directly
or indirectly to the registration, purchase, sale or ownership of any securities of the Company or
to any fiduciary obligation owed with respect thereto or as a direct or indirect result of any
Proceeding or any claim, issue or matter therein made by any stockholder of the Company against
Indemnitee and arising out of or related to any round of financing of the Company (including but
not limited to Proceedings or any claims, issues or matters therein regarding non-participation, or
non-pro rata participation, in such round by such stockholder), or made by a third party against
Indemnitee based on any misstatement or omission of a material fact by the Company in violation of
any duty of disclosure imposed on the Company by federal or state securities or common laws.

     (c) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to
the rights of indemnification provided in this Section 4(c) if, by reason of Indemnitee’s Corporate
Status, Indemnitee is or is threatened to be made a party to any Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Indemnitee shall be indemnified against
Expenses, judgments, penalties and amounts paid in settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding if Indemnitee acted in Good Faith. Notwithstanding the foregoing,
no such indemnification shall be made in respect of any claim, issue or matter in such Proceeding
as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law
prohibits such indemnification; provided, however, that, if applicable law so permits,
indemnification shall nevertheless be made by the Company in such event if and only to the extent
that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall
have been brought or is pending, shall determine.

     (d) Indemnification of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s
Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding,
Indemnitee shall be indemnified to the maximum extent permitted by law against all

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

Expenses,judgments, penalties, fines and amounts paid in settlement, actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee
to the maximum extent permitted by law, against all Expenses, judgments, penalties, fines and
amounts paid in settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with each successfully resolved claim, issue or matter. For purposes of this
Section 4(d) and without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to
such claim, issue or matter, so long as there has been no finding (either adjudicated or pursuant
to Section 6) that Indemnitee did not act in Good Faith.

     (e) Indemnification for Expenses of a Witness. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a
witness in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

     (f) Assumption of Defense and Settlement. Notwithstanding any other provision of this
Agreement, with respect to any such Proceeding as to which the Indemnitee gives notice to the
Company of the commencement thereof:

     (1) the Company will be entitled to participate therein at its own expense;

     (2) the Company, jointly with any other indemnifying party similarly notified, shall be
entitled to assume the defense thereof, with counsel satisfactory to the Indemnitee. If the
Company assumes the defense of the Indemnitee, it shall notify the Indemnitee, and after the
Indemnitee receives such notice, the Company shall not be liable to the Indemnitee under
this Agreement for any Expenses incurred by the Indemnitee after the date such notice was
received. The Indemnitee shall be entitled to employ Indemnitee’s own counsel at
Indemnitee’s own expense. Nevertheless, the Company shall pay for Indemnitee’s own counsel if (1) the Company agrees to do the
same, (2) the Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee regarding the defense of such action, or (3)
the Company shall not in fact have employed counsel to assume the defense of the Proceeding.
The Company shall not be entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which the Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and the Indemnitee regarding the
defense of such Proceeding; and

     (3) the Company shall not be liable to the Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding unless the Company consents to such settlement.
The Company shall not settle any Proceeding in any manner that would impose any penalty or
limitation on the Indemnitee without the Indemnitee’s written consent. Neither the Company
nor the Indemnitee will unreasonably withhold their consent to any proposed settlement.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (g) Contribution. 

     (1) Notwithstanding any other provision of this Agreement, if the indemnification
provided for in this Section 4 for any reason is held by a court of competent jurisdiction
to be unavailable to Indemnitee in respect of any losses, claims, damages, expenses or
liabilities referred to therein, then the Company, in lieu of indemnifying Indemnitee
thereunder, shall contribute to the amount paid or payable by Indemnitee as a result of such
losses, claims, damages, expenses or liabilities

     (A) in such proportion as is appropriate to reflect the relative benefits
received by the Company and Indemnitee; or

     (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (A) above but also the relative fault of the
Company and Indemnitee in connection with the action or inaction which resulted in
such losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations.

     (2) In connection with the registration of the Company’s securities, the relative
benefits received by the Company and Indemnitee shall be deemed to be in the same respective
proportions that the net proceeds from the offering (before deducting expenses) received by
the Company and Indemnitee, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the securities so
offered. The relative fault of the Company and Indemnitee shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information supplied by
the Company or Indemnitee and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company and
Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 4(g) were determined by pro rata or
per capita allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.

     (3) In connection with the registration of the Company’s securities, in no event shall
Indemnitee be required to contribute any amount under this Section 4(g) in excess of the
lesser of:

     (C) that proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total securities sold under such
registration statement which is being sold by Indemnitee; or

     (D) the proceeds received by Indemnitee from its sale of securities under such
registration statement.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (4) Persons found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act of 1933) shall only be entitled to contribution from any person
who was found guilty of such fraudulent misrepresentation.

     5. Exceptions

     Any other provision herein to the contrary notwithstanding, the Company shall not be obligated
pursuant to the terms of this Agreement:

     (a) Claims Under Section 16(b)

     To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and
sale by Indemnitee of securities in violation of Section 16(b) of the Exchange Act of 1934 or any
similar successor statute; or

     (b) Unlawful Indemnification.

     To indemnify Indemnitee if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful.

     6. Advancement of Expenses. Notwithstanding any provision to the contrary in Section
7, the Company shall advance all reasonable Expenses which, by reason of Indemnitee’s Corporate
Status, were incurred by or on behalf of Indemnitee in connection with any Proceeding, within 20
days after the receipt by the Company of a statement or statements from Indemnitee requesting such
advance or advances, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified against such
Expenses. Any advance and undertakings to repay pursuant to this Section 6 shall be unsecured and
interest free.

     7. Procedures for Determination of Entitlement to Indemnification.

     (a) Initial Request. To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company
shall promptly advise the Board in writing that Indemnitee has requested indemnification.

     (b) Method of Determination. A determination (if required by applicable law) with
respect to Indemnitee’s entitlement to indemnification shall be made as follows:

     (1) if a Change in Control has occurred, unless Indemnitee shall request in writing
that such determination be made in accordance with clause (2) of this Section 7(b), the
determination shall be made by Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee;

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (2) if a Change of Control has not occurred, the determination shall be made by the
Board by a majority vote of Disinterested Directors, even though less than a quorum. In the
event that there are no Disinterested Directors or if such Disinterested Directors so
direct, the determination shall be made by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to Indemnitee.

     (c) Selection, Payment, Discharge, of Independent Counsel. In the event the
determination of entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 7(b) of this Agreement, the Independent Counsel shall be selected, paid and discharged in
the following manner:

     (1) If a Change of Control has not occurred, the Independent Counsel shall be selected
by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of
the identity of the Independent Counsel so selected.

     (2) If a Change of Control has occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in
which event clause (1) of this Section 7(c) shall apply), and Indemnitee shall give written
notice to the Company advising it of the identity of the Independent Counsel so selected.

     (3) Following the initial selection described in clauses (1) and (2) of this Section
7(c), Indemnitee or the Company, as the case may be, may, within seven days after such
written notice of selection has been given, deliver to the other party a written objection
to such selection. Such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely objection,
the person so selected shall act as Independent Counsel. If such written objection is made,
the Independent Counsel so selected may not serve as Independent Counsel unless and until a
court has determined that such objection is without merit.

     (4) Either the Company or Indemnitee may petition any court of competent jurisdiction
if the parties have been unable to agree on the selection of Independent Counsel within 20
days after submission by Indemnitee of a written request for indemnification pursuant to
Section 7(a) of this Agreement. Such petition may request a determination whether an
objection to the party’s selection is without merit and/or seek the appointment as
Independent Counsel of a person selected by the Court or by such other person as the Court
shall designate. A person so appointed shall act as Independent Counsel under Section 7(b)
of this Agreement.

     (5) The Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant to this
Agreement, and the Company shall pay all reasonable fees and expenses incident to the
procedures of this Section 7(c), regardless of the manner in which such Independent Counsel
was selected or appointed.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (6) Upon the due commencement of any judicial proceeding or arbitration pursuant to
Section 9(c) of this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of professional
conduct then prevailing).

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (d) Cooperation. Indemnitee shall cooperate with the person, persons or entity making
the determination with respect to Indemnitee’s entitlement to indemnification under this Agreement,
including providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and
the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (e) Payment. If it is determined that Indemnitee is entitled to indemnification,
payment to Indemnitee shall be made within 10 days after such determination.

     8. Presumptions and Effect of Certain Proceedings.

     (a) Burden of Proof. In making a determination with respect to entitlement to
Indemnification hereunder, the person or persons or entity making such determination shall presume
that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 7(a), and the Company shall have the burden
of proof to overcome that presumption in connection with the making by any person, persons or
entity of any determination contrary to that presumption.

     (b) Effect of Other Proceedings. The termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement)
of itself adversely affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in Good Faith.

     (c) Reliance as Safe Harbor. For purposes of any determination of Good Faith,
Indemnitee shall be deemed to have acted in Good Faith if Indemnitee’s action is based on the
records or books of account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records given or reports made to
the Enterprise by an independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. The provisions of this Section 8(c) shall not be
deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may
be deemed to have met the applicable standard of conduct set forth in this Agreement.

     (d) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.

     9. Remedies of Indemnitee.

     (a) Application. This Section 9 shall apply in the event of a Dispute. For purposes
of this article, “Dispute” shall mean any of the following events:

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (1) a determination is made pursuant to Section 7 of this Agreement that Indemnitee is
not entitled to indemnification under this Agreement;

     (2) advancement of Expenses is not timely made pursuant to Section 6 of this Agreement;

     (3) if the determination of entitlement to be made pursuant to Section 7(b) of this
Agreement is to be made by the Board and the Board has not made such determination within 60
days after receipt by the Company of the request for indemnification;

     (4) if the determination of entitlement to be made pursuant to Section 7(b) of this
Agreement is to be made by Independent Counsel and Independent Counsel has not made such
determination within 90 days after receipt by the Company of the request for
indemnification;

     (5) payment of indemnification is not made pursuant to Section 4(e) of this Agreement
within 10 days after receipt by the Company of a written request therefor; or

     (6) payment of indemnification is not made within 10 days after a determination has
been made that Indemnitee is entitled to indemnification or such determination is deemed to
have been made pursuant to Section 7 of this Agreement.

     (b) Adjudication. In the event of a Dispute, Indemnitee shall be entitled to an
adjudication in an appropriate court in the State of Delaware, or in any other court of competent
jurisdiction, of Indemnitee’s entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted
by a single arbitrator pursuant to the rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days
following the date on which Indemnitee first has the right to commence such proceeding pursuant to
this Section 9(b). The Company shall not oppose Indemnitee’s right to seek any such adjudication
or award in arbitration.

     (c) De Novo Review. In the event that a determination shall have been made pursuant
to Section 7 of this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects
as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason
of that adverse determination. In any such proceeding or arbitration, the Company shall have the
burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as
the case may be.

     (d) Company Bound. If a determination shall have been made or deemed to have been
made pursuant to Section 7 of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or arbitration absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading in connection

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

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	Director Indemnification Letter
	 	 	 	 	 	 

 

 

with the request for indemnification or (ii) a prohibition of such indemnification under applicable law.

     (e) Procedures Valid. The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions
of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

     (f) Expenses of Adjudication. In the event that Indemnitee, pursuant to this Section
9, seeks a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights
under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any and all expenses (of the
types described in the definition of Expenses in this Agreement) actually and reasonably incurred
by Indemnitee in such adjudication or arbitration, but only if Indemnitee prevails therein. If it
shall be determined in such adjudication or arbitration that Indemnitee is entitled to receive part
but not all of the indemnification or advancement of expenses sought, the expenses incurred by
Indemnitee in connection with such adjudication or arbitration shall be appropriately prorated.

     10. Non-exclusivity, Insurance, Subrogation.

     (a) Non-Exclusivity. The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the
Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration, rescission or replacement of this Agreement or any provision hereof shall be
effective as to Indemnitee with respect to any action taken or omitted by such Indemnitee in
Indemnitee’s Corporate Status prior to such amendment, alteration, rescission or replacement.

     (b) Insurance. The Company may maintain an insurance policy or policies against
liability arising out of this Agreement or otherwise.

     (c) Subrogation. In the event of any payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such
rights.

     (d) No Duplicative Payment. The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under any insurance policy, contract, agreement or
otherwise.

     11. Miscellaneous Provisions.

     (a) Entire Agreement. This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes any prior understandings,
agreements or representations, written or oral, relating to the subject matter hereof.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

	 	 	12	 	 	 
	Director Indemnification Letter
	 	 	 	 	 	 

 

 

     (b) Counterparts. This Agreement may be executed in separate counterparts, each of
which will be an original and all of which taken together shall constitute one and the same
agreement, and any party hereto may execute this Agreement by signing any such counterpart.

     (c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule, the validity, legality and enforceability of the other provision of this Agreement
will not be affected or impaired thereby.

     (d) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal representatives and successors
and assigns.

     (e) Modification, Amendment, Waiver or Termination. No provision of this Agreement
may be modified, amended, waived or terminated except by an instrument in writing signed by the
parties to this Agreement. No course of dealing between the parties will modify, amend, waive or
terminate any provision of this Agreement or any rights or obligations of any party under or by
reason of this Agreement.

     (f) Notices. All notices, consents, requests, instructions, approvals or other
communications provided for herein shall be in writing and delivered by personal delivery,
overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at the
address set forth herein. All such communications shall be effective when received.

If
to the Company:

Robert R. Gillispie, General Counsel

c/o Sucampo Pharmaceuticals, Inc.

4733 Bethesda Avenue

Suite 450

Bethesda, MD 20814

If
to the Indemnitee:

Gregory D. Perry

500 Washington Road

Barrington, RI 02806

     Any party may change the address set forth above by notice to each other party given as
provided herein.

     (g) Headings. The headings and any table of contents contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or interpretation of this
Agreement.

     (h) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

	 	 	13	 	 	 
	Director Indemnification Letter
	 	 	 	 	 	 

 

 

OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.

     (i) Third-Party Benefit. Nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights, remedies, obligations or liabilities of any nature
whatsoever.

     (j) Jurisdiction and Venue. THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR
STATE COURT SITTING IN DELAWARE, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF ANY PARTY COMMENCES
ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS AGREEMENT IN ANOTHER JURISDICTION OR VENUE, ANY OTHER
PARTY TO THIS AGREEMENT SHALL HAVE THE OPTION OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED
VENUE OR JURISDICTION OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED, TO HAVE SUCH CASE DISMISSED
WITHOUT PREJUDICE.

     (k) Remedies. The parties agree that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party may, in its discretion, apply to
any court of law or equity of competent jurisdiction for specific performance and injunctive relief
in order to enforce or prevent any violations this Agreement, and any party against whom such
proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at
law and agrees not to raise the defense that the other party has an adequate remedy at law.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

	 	 	14	 	 	 
	Director Indemnification Letter
	 	 	 	 	 	 

 

 

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

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	SUCAMPO PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sachiko Kuno	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	 Sachiko Kuno	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 	 	GREGORY D. PERRY	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Gregory D. Perry	 	 
	 	 	 	 	 
	 	 	Indemnitee	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Sucampo Pharmaceuticals, Inc.

	 	 	15	 	 	 
	Director Indemnification Letterexv10w16

 

Exhibit 10.16

     The
Registrant has entered into an Investor Rights Agreement substantially
similar to the attached agreement with each of the following stockholders:

	 	 	 	 	 
	 	 	Shares of Class A Common Stock
	 	 	(assuming conversion of all outstanding shares
	Name	 	of convertible preferred stock)
	Astellas Pharma, Inc.
	 	 	147,500	 
	 
	 	 	 	 
	Mitsubishi UFJ Capital Co., Ltd.
	 	 	83,000	 
	 
	 	 	 	 
	Mizuho Capital Co., Ltd.
	 	 	90,595	 
	 
	 	 	 	 
	NIF SMBC Ventures Co., Ltd.
	 	 	63,412	(1)
	 
	 	 	 	 
	Nissay Capital No. 3 Investment
Limited Partnership
	 	 	17,600	(2)
	 
	 	 	 	 
	OPE Partners Limited
	 	 	233,376	(3)
	 
	 	 	 	 
	Tokio Marine and
Nichido Fire Insurance Co. Ltd.
	 	 	100,000	 
	 
	 	 	 	 
	Yoshihiro Mikami
	 	 	58,824	 
	 
	 	 	 	 
	Total
	 	 	794,307	 

 

			
	(1)	 	Includes 45,912 shares purchased from R-Tech Ueno, Ltd. as selling stockholder.
	 
	(2)	 	Includes 17,600 shares purchased from R-Tech Ueno, Ltd. as selling stockholder.
	 
	(3)	 	Includes 70,588 shares purchased from R-Tech Ueno, Ltd. as selling stockholder.

 

Exhibit 10.16

 

 

SUCAMPO PHARMACEUTICALS, INC.

INVESTOR RIGHTS AGREEMENT

                    , 20
             

 

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	Preamble
	 	 	1	 
	 
	 	 	 	 
	Article 1 Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	Article 2 Restrictions on Transferability
	 	 	3	 
	 
	 	 	 	 
	Article 3 Restrictive Legend
	 	 	3	 
	 
	 	 	 	 
	Article 4 Notice of Proposed Transfers
	 	 	4	 
	 
	 	 	 	 
	Article 5 Registration
	 	 	5	 
	5.1 Company Registration
	 	 	5	 
	5.2 Registration on Form S-3
	 	 	6	 
	5.3 Expenses of Registration
	 	 	7	 
	5.4 Registration Procedures
	 	 	7	 
	5.5 Indemnification.
	 	 	9	 
	5.6 Information by the Investor
	 	 	12	 
	5.7 Rule 144 Reporting
	 	 	12	 
	5.8 Termination of Registration Rights
	 	 	13	 
	 
	 	 	 	 
	Article 6 Financial Information
	 	 	13	 
	6.1 Information Rights
	 	 	13	 
	6.2 Termination
	 	 	13	 
	 
	 	 	 	 
	Article 7 Lockup Agreement
	 	 	13	 
	 
	 	 	 	 
	Article 8 Right of First Offer on Company Issuance
	 	 	14	 
	8.1 Right of First Offer
	 	 	14	 
	8.2 Pro Rata Share
	 	 	14	 
	8.3 New Securities
	 	 	14	 
	8.4 Procedure
	 	 	15	 
	8.5 Termination and Assignment
	 	 	16	 
	8.6 Company Right to Terminate Issuance of New Securities
	 	 	16	 
	 
	 	 	 	 
	Article 9 Transfer of Rights
	 	 	16	 
	 
	 	 	 	 
	Article 10 Amendment
	 	 	16	 
	 
	 	 	 	 
	Article 11 Governing Law
	 	 	17	 
	 
	 	 	 	 
	Article 12 Entire Agreement
	 	 	17	 
	 
	 	 	 	 
	Article 13 Notices, Etc.
	 	 	17	 
	 
	 	 	 	 
	Article 14 Successors and Assigns
	 	 	18	 
	 
	 	 	 	 
	Article 15 Severability
	 	 	18	 
	 
	 	 	 	 
	Article 16 Counterparts
	 	 	18	 
	 
	 	 	 	 

ii

 

SUCAMPO PHARMACEUTICALS, INC.

INVESTOR RIGHTS AGREEMENT

     This INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made effective as of ___,
20___ by and between Sucampo Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and
___, a ___ (the “Investor”).

     WHEREAS, the Company and the Investor are parties to a Stock Purchase Agreement dated as of
the date hereof (the “Purchase Agreement”), whereby the Company will sell, and the Investor will
purchase, newly issued shares of Class A Stock of the Company
(the “Class A Common
Stock”); and

     WHEREAS, the obligations the Company and the Investor under the Purchase Agreement are
conditioned, among other things, upon the execution and delivery of this Agreement by the Company
and the Investor;

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article 1

Certain Definitions

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

     “Affiliate” means, with respect to any Person, any other Person, directly or indirectly
controlling, controlled by or under common control with such Person and any partner of a Person
which is a partnership and any member of a Person which is a limited liability company. For
purposes of determining who is an Affiliate, the stock holdings of Dr. Ryuji Ueno and Dr. Sachiko
Kuno shall be aggregated.

     “Commission” means the United States Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

     “Common Stock” means the Class A Common Stock and the Class B Common Stock, par value $0.01
per share, of the Company (the “Class B Common Stock”).

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

     ”Founders” means, collectively, Dr. Ryuji Ueno, Dr. Sachiko Kuno, any Persons controlled by
each of them, including without limitation, S&R Technology Holdings, LLC, a Delaware limited
liability company, R-Tech Ueno, Ltd., a Japanese corporation, Sucampo AG, a

 

Swiss corporation, and any transferee of a Founder who hereafter becomes a party to the
Stockholders Agreement, and each individually, a “Founder.”

     “Holders” means (i) the Investor, so long as it continues to hold Registrable Securities and
(ii) each person holding Registrable Securities to whom the rights under this Agreement have been
transferred in accordance with Article 10 hereof.

     “Person” means any individual, trust (or any of its beneficiaries), estate, partnership,
limited partnership, limited liability partnership, association, limited liability company,
corporation, any other enterprise engaged in the conduct of business or operating as a non-profit
entity, however formed or wherever organized, or any governmental body, agency or unit.

     “Preferred Stock” means any series of preferred stock of the Company issued from time to time.

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

     “Registrable
Securities” means, at any time, (i) the Class A Common Stock acquired pursuant
to the Purchase Agreement and (iii) any Common Stock issued or issuable upon any stock split, stock
dividend, recapitalization or similar event; provided, however, that securities
shall only be treated as Registrable Securities if and so long as (i) they have not been registered
or sold to or through a broker, dealer, market maker or underwriter in a public distribution or a
public securities transaction (including but not limited to a public distribution pursuant to Rule
144) and (ii) the registration rights with respect to such securities have not terminated pursuant
to Section 5.8 below.

     “Registration Expenses” shall mean all expenses, except Selling Expenses, incurred by the
Company in complying with Sections 5.1 and 5.2 below, including without limitation, all
registration, qualification and filing fees, printing expenses, and escrow fees, reasonable fees
and disbursements of counsel for the Company and one counsel for the Holders, “blue sky” fees and
expenses, the expense of any special audits incidental to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be paid in any event by
the Company).

     “Restricted Securities” shall mean the securities of the Company required to bear the legends
set forth in Article 3 below.

     “Rule 144” and “Rule 145” shall mean Rules 144 and 145, respectively, promulgated under the
Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the
time.

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

2

 

     “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock
transfer taxes applicable to the securities registered by the Investor and all fees and
disbursements of counsel for the Holders other than reasonable fees and disbursements of one
counsel for the Holders.

     “Series B
Financing” means the sale by the Company of up to 326,912 shares of newly
issued Class A Common Stock in a private placement completed by May 31, 2006.

     “Stockholders Agreement” shall mean the Stockholders Agreement, dated July 31, 2002, by and
among the Company, the Investor and the other stockholders of the Company who thereafter become
parties thereto.

Article 2

Restrictions on Transferability

     The Class A Common Stock and any other securities issued in respect of such stock upon any
stock split, stock dividend, recapitalization, merger or similar event shall not be sold, assigned,
transferred or pledged except pursuant to the provisions of Article 4 below and the applicable
provisions of the Stockholders Agreement. The Investor will cause any proposed purchaser,
assignee, transferee or pledgee of any such shares held by the Investor to agree to take and hold
such securities subject to the provisions and upon the conditions specified in this Agreement.

Article 3

Restrictive Legend

     Each certificate representing the Class A Common Stock or any other securities issued in
respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar
event shall (unless otherwise permitted by the provisions of Article 4 below) be stamped or
otherwise imprinted with legends in substantially the following form (in addition to any legends
required by agreement or by applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CONTRACTUAL
TRANSFER RESTRICTIONS AS SET FORTH IN THE STOCKHOLDERS’ AGREEMENT DATED AS OF JULY
31, 2002, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SECURITIES.

3

 

     The Investor consents to the Company making a notation on its records and giving stop transfer
instructions to any transfer agent of its capital stock in order to implement the restrictions on
transfer established in this Agreement.

     The Company shall reissue unlegended certificates as soon as practicable following the request
of any Holder if the Holder shall have obtained an opinion of counsel reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of
without registration, qualification or legend.

Article 4

Notice of Proposed Transfers

     The Holder, by acceptance of certificates representing Restricted Securities, agrees to comply
in all respects with the provisions of this Article 4. Without in any way limiting the immediately
preceding sentence, no sale, assignment, transfer or pledge of Restricted Securities shall be made
by the Holder to any person unless such person shall first agree in writing to be bound by the
restrictions of this Agreement. Prior to any proposed sale, assignment, transfer or pledge of any
Restricted Securities, unless there is in effect a registration statement under the Securities Act
covering the proposed transfer, the Holder shall give written notice to the Company of the Holder’s
intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail,
and, if reasonably requested by the Company, the Holder shall also provide, at the Holder’s
expense, a written opinion of legal counsel reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, whereupon the Holder shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice delivered by the Holder to
the Company.

     Each certificate evidencing Restricted Securities transferred as provided above shall bear,
except if such transfer is registered pursuant to an effective registration statement or is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Article 3 above, except that
such certificate shall not bear such restrictive legend if in the opinion of counsel for the Holder
and counsel for the Company such legend is not required in order to establish compliance with any
provision of the Securities Act.

     Notwithstanding the foregoing provisions of this Article 4, no opinion of counsel shall be
necessary for (I) a transfer by a Holder that is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its shareholders in
accordance with their interests in the corporation, (C) a limited liability company to its members
or former members in accordance with their interests in the limited liability company, (D) an
Investor to an Affiliate of such Investor, who shall become party to this Agreement and shall sign
an investor representation letter satisfactory to the Company, or (E) an individual to a member of
the transferor’s immediate family or trust created for the benefit of such individual or members of
such individual’s immediate family or (II) a transfer by a Holder pursuant to Rule 144 if such
Holder shall have delivered to the Company a certificate in form satisfactory to the Company
certifying that (a) such Holder has held the securities to be transferred for a period of not less
than two consecutive years, (b) such Holder has not been an affiliate of the Company, as defined

4

 

in Rule 144, for a period of at least 90 days prior to such transfer and (iii) such other
matters as may be appropriate in accordance with Rule 144(b).

Article 5

Registration

     5.1 Company Registration.

     (a) Notice of Registration. If at any time or from time to time following a firm
commitment underwritten public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of Class A Common Stock of which the aggregate gross
proceeds are at least $30 Million (a “Qualified IPO”), the Company shall determine to register any
of its equity securities, either for its own account or the account of a Holder or other holders,
other than (i) a registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Rule 145 transaction or (iii) a registration in which the only equity security
being registered is Common Stock issuable upon conversion of convertible debt securities which are
also being registered, the Company will:

     (i) give to the Holder written notice thereof as soon as reasonably practicable; and

     (ii) use its best efforts to include in such registration (and any related
qualifications including compliance with “blue sky” laws) on the same terms and conditions
as the securities otherwise being sold in such registration, and in any underwriting
involved therein, all the Registrable Securities specified in a written request or requests,
made within 20 business days after the date of such written notice from the Company, by the
Holder.

     (b) Underwriting. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so advise the Holder as
part of the written notice given pursuant to Section 5.1(a)(i) above. In such event, the right of
the Holder to registration pursuant to this Section 5.1 shall be conditioned upon the Holder’s
participation in such underwriting, and the inclusion of Registrable Securities in the underwriting
shall be limited to the extent provided herein.

     (c) Underwriting Agreement; Limitation of Underwritten Securities. If a Holder
proposes to distribute its securities through such underwriting, it shall (together with the
Company and all the other Holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the managing underwriter selected for such
underwriting by the Company. Notwithstanding any other provision of this Section 5.1, if the
managing underwriter determines that marketing factors require a limitation of the number of shares
to be underwritten, the managing underwriter may limit the Registrable Securities to be included in
such registration and each Holder will have the number of Registrable Securities reduced pro rata
(with the Founders and any other holders of Company securities having similar “piggy-back”
registration rights) based upon the number of Registrable Securities requested to be included in
such registration so that the resultant aggregate number of such Registrable Securities so included
in such registration shall equal the number of shares determined by the

5

 

underwriters. To facilitate the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares. If the Investor disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company.

     (d) Right to Terminate Registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 5.1 prior to the effectiveness of such
registration whether or not a Holder has elected to include securities in such registration.

     5.2 Registration on Form S-3.

     (a) Request for Registration. In the event the Company receives from the Holders a
written request that the Company file a registration statement on Form S-3 (or any successor form
to Form S-3) for a public offering of shares of Registrable Securities, and the Company is a
registrant entitled to use Form S-3 to register the sale of Registrable Securities for such an
offering, the Company shall use best efforts to cause such Registrable Securities to be registered
for the offering on such form and to cause such Registrable Securities to be qualified in such
jurisdictions as the Holders may reasonably request. The Company shall inform the other Holders of
the proposed registration and offer them the opportunity to participate. In the event the
registration is proposed to be part of a firm commitment underwritten public offering, the
provisions of Section 5.1(c) above shall be applicable to each such registration initiated under
this Section 5.2.

     (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action
pursuant to this Section 5.2:

     (i) During the period starting with the date 60 days prior to the Company’s estimated
date of filing of, and ending on the date 180 days immediately following the effective date
of, any registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith best efforts to cause
such registration statement to become effective;

     (ii) If the number of Registrable Securities proposed to be registered by the Holder
under such registration is less than 25% of the aggregate Registrable Securities originally
issued to the Investor pursuant to the Purchase Agreement and issued upon any stock split,
stock dividend, recapitalization or other similar event;

     (iii) If, during the previous 4 months, the Company has effected one registration
pursuant to this Section 5.2 above;

     (iv) If the Company shall furnish to the Holder a certificate signed by the President
of the Company stating that such registration would require disclosure of material
non-public information regarding a potential financing, acquisition, merger or other
corporate development and such disclosure, in the good faith judgment of the Board of
Directors, would not be in the best interest of the Company or its stockholders;
provided, however, that the Company shall not utilize this right more than
three times in any 12-month period.

6

 

     5.3 Expenses of Registration. All Registration Expenses incurred in connection with
all registrations pursuant to Section 5.1, and Section 5.2 shall be borne by the Company. Unless
otherwise agreed, all Selling Expenses relating to securities registered on behalf of the Holders
and all other registration expenses shall be borne by the Holders pro rata on the basis of the
number of shares so registered or proposed to be so registered.

     5.4 Registration Procedures. The Company will keep the Holders of securities being
registered advised in writing as to the initiation of each registration effected by the Company
pursuant to this Agreement and as to the completion thereof. The Company will:

     (a) prepare and file with the Commission a registration statement and such amendments
and supplements as may be necessary, and use best efforts to cause such registration
statement to become and remain effective (i) in the case of a registration statement filed
pursuant to Section 5.1, until the earlier of 120 days from the date of effectiveness or the
distribution described in the registration statement has been completed and (ii) in the case
of a registration statement filed pursuant to Section 5.2, until the earlier of the date on
which all Registrable Securities registered thereon have been sold or all such securities
cease to be Registrable Securities;

     (b) furnish to the Holders and to the underwriters, if any, of the securities being
registered such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as the Holders or such underwriters
may reasonably request in order to facilitate the public offering of such securities;

     (c) prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for the periods set forth in Section 5.4(a)
and to comply with the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares;

     (d) use its best efforts to cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities; provided, however, the Company
shall not be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to generally service of process in any such jurisdiction;

     (e) in the case of an underwritten offering, furnish to the underwriters:

     (i) an opinion of counsel for the Company, dated the date of the closing under
the underwriting agreement, customary in form and substance to those delivered in
similar transactions, and

     (ii) a “comfort” letter (or, in the case of any such Person which does not
satisfy the conditions for receipt of a “comfort” letter specified in Statement on
Auditing Standards No. 72, an “agreed upon procedures” letter), dated the

7

 

effective date of such registration statement and a letter of like kind dated
the date of the closing under the underwriting agreement, signed by the independent
public accountants who have certified the Company’s financial statements included in
such registration statement, covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the case
of the accountants’ letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants’ letters delivered
to the underwriters in underwritten public offerings of securities (with, in the
case of an “agreed upon procedures” letter, such modifications or deletions as may
be required under Statement on Auditing Standards No. 35) and, in the case of the
accountants’ letter, such other financial matters;

     (f) promptly notify the Holders of the securities being registered and the managing
underwriter or underwriters, if any:

     (i) when the registration statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the registration statement
has been filed, and, with respect to the registration statement or any
post-effective amendment thereto, when the same has become effective;

     (ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceedings for
that purpose; and

     (iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction or the initiation or threat of any
proceeding for such purpose;

     (g) notify the Holders on a timely basis, if covered by such registration statement,
and each managing underwriter, if any, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the Company’s discovery that, or
upon the happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which they were
made, and promptly as practicable prepare and furnish to the Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the offerees of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the
circumstances then existing unless, in the good faith judgment of the Board of the Directors
of the Company, such supplement or amendment would require disclosure of material non-public
information regarding a potential financing, acquisition, merger or other corporate
development and such disclosure would not be in the best interest of the Company or its
stockholders;

8

 

     (h) make every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of the registration statement at the earliest possible moment; and

     (i) use its best efforts to list all Registrable Securities covered by such
registration statement on the Nasdaq National Market or any other securities exchange on
which any of the securities of the same class as the Registrable Securities are then listed;

     (j) provide a transfer agent and registrar (which may be the same entity and which may
be the Company) for such Registrable Shares; and

     (k) upon the reasonable request of the Holders and subject to all other provisions and
conditions of this Agreement, use its commercially reasonable efforts to take all other
steps necessary to effect the registration of such Registrable Securities contemplated
hereby.

     The Holders shall be deemed to have agreed by acquisition of such Registrable Securities that,
upon receipt of any notice from the Company of the occurrence of any event of the kind described in
paragraph (g) of this Section 5.4, the Holders will forthwith discontinue the Holders’ disposition
of Registrable Securities pursuant to the registration statement relating to such Registrable
Securities until the Holders’ receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (g) of this Section 5.4 and, if so directed by the Company, will deliver
to the Company (at the Company’s expense) all copies, other than permanent file copies, then in
such holder’s possession of the prospectus relating to such Registrable Securities current at the
time of receipt of such notice. In the event the Company shall give any such notice, the period
mentioned in paragraph (a) of this Section 5.4 shall be extended by the length of the period from
and including the date when each seller of any Registrable Securities covered by such registration
statement shall have received such notice to the date on which each such seller has received the
copies of the supplemented or amended prospectus contemplated by paragraph (g) of this Section.

     5.5 Indemnification.

     (a) The Company will indemnify the Holders covered by a registration statement, its officers
and directors, and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration has been effected pursuant to this Agreement,
against all expenses, claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or 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, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or
any rule or regulation promulgated under such laws applicable to the Company in connection with any
such registration, and the Company will reimburse such Holder, its officers and directors, and each
person controlling such Holder, for any legal and any

9

 

other expenses reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or action,
provided, however, 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 on any
untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by a Holder or controlling person
specifically for use therein; provided further, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to any such untrue
statement, alleged untrue statement, omission or alleged omission made in a registration statement
or prospectus which has subsequently been amended, such indemnity agreement shall not inure to the
benefit of a Holder if a copy of such amended registration statement or prospectus was furnished to
such Holder at or prior to the time of the delivery of the registration statement or prospectus by
such Holder and such amended registration statement or prospectus would have cured the defect
giving rise to the loss, liability, claim or damage.

     (b) Each Holder severally will, if Registrable Securities held by such Holder are included in
the securities as to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, each person who controls the Company
within the meaning of Section 15 of the Securities Act, and each other Holder covered by such
registration statement, each of its officers and directors and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement
of any litigation, commenced or threatened, arising out of or based on 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 amendment or supplement thereto, or any
omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances they were made, not
misleading, or any violation by such Holder of the Securities Act, the Exchange Act, state
securities laws or any rule or regulation promulgated under such laws applicable to the Investor in
connection with any such registration, and the Investor will reimburse the Company, such other
Holders, and the directors, officers, persons, underwriters or control persons of the Company or
such other Holders for any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such claim, loss, damage,
liability or action, 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 information furnished
to the Company by such Holder in writing; provided, however, that the total amounts
payable in indemnity by any Holder under this Section 5.5 shall not exceed the gross proceeds
received by such Holder in the registered offering out of which such claim, loss, damage or
liability arises.

     (c) Each party entitled to indemnification under this Section 5.5 (the “Indemnified Party”)
shall give written notice to the party required to provide indemnification (the “Indemnifying
Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved

10

 

by the Indemnified Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such Indemnified Party’s expense, and provided
further that the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give
such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action, and
provided further, that the Indemnifying Party shall not assume the defense for matters as to which
there is a conflict of interest or there are separate and different defenses. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any
judgment or enter into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from all liability with
respect to such claim or litigation. No Indemnifying Party shall, without the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement of any such action
which does not include as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability, or a covenant not to sue, in respect to
such claim or litigation. No Indemnified Party shall consent to entry of any judgment or enter
into any settlement of any such action the defense of which has been assumed by an Indemnifying
Party without the consent of such Indemnifying Party.

     (d) If the indemnification provided for in this Section 5.5 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. The parties hereto agree that it
would not be just and equitable if contribution pursuant hereto were determined by pro rata
allocation or by any other method or allocation that does not take account of the equitable
considerations referred to herein; provided, however, that in no event shall any
contribution by a Holder hereunder exceed the gross proceeds from the offering received by such
Holder. Any person guilty of fraudulent misrepresentation shall not be entitled to contribution
from any person.

     (e) 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 of the Company’s Common Stock are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control, except that no such
provisions shall affect the Company’s obligations to indemnify a Holder pursuant to Section 5.5(a).

11

 

     (f) The obligations of the Company and the Holder under this Section 5.5 shall survive the
completion of any offering of Registrable Securities in a registration statement under this Article
5 and otherwise, unless such obligations are superseded by an underwriting agreement in connection
with the underwritten public offering of the Company’s Common Stock.

     5.6 Information by the Holders. If any Holder’s Registrable Securities are included
in any registration, such Holder shall furnish to the Company such information regarding such
Holder, the Registrable Securities held by it and the distribution proposed by the Holder as the
Company may request in writing and as shall be required in connection with any registration
referred to in this Agreement.

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

     (a) Make and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act, at all times after the effective date that the
Company becomes subject to the reporting requirements of the Securities Act or the Exchange
Act;

     (b) 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 (at any time after it
has become subject to such reporting requirements); and

     (c) So long as the Holder owns any Restricted Securities, to furnish it forthwith upon
request and at the Holder’s expense a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 (at any time after 180 days after the
effective date of the first registration statement filed by the Company for an offering of
its securities to the general public) and such other reports and documents of the Company
and other information in the possession of or reasonably obtainable by the Company as the
Holders may reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without registration.

12

 

     5.8 Termination of Registration Rights. The rights granted pursuant to Sections 5.1
and 5.2 above shall terminate upon the date the applicable Holder is able to sell publicly without
registration all Registrable Securities then held by the Investor, if any, within a 90-day period
pursuant to Rule 144 under the Securities Act or a similar exemption.

Article 6

Financial Information

     6.1 Information Rights. The Company will provide the following documents to each
Holder so long as the Holder holds Registrable Securities unless such delivery is expressly waived
in writing by such Holder:

     (a) As soon as practicable after the end of the fiscal year ending December 31, 20___,
and each fiscal year thereafter, and in any event within 90 days after the end of each such
fiscal year, consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of each such fiscal year, and consolidated statements of operations and consolidated
statements of cash flows and stockholders’ equity of the Company and its subsidiaries, if
any, for such year, each prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures for the previous
year, all in reasonable detail and audited by independent public accountants of national
standing selected by the Company; and

     (b) As soon as practicable after the first, second and third quarterly accounting
periods in each fiscal year of the Company and in any event within 60 days thereafter, a
consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of
each such quarterly period, and consolidated statements of operations and, to the extent
prepared for the Board of Directors of the Company, consolidated statements of cash flow of
the Company and its subsidiaries for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles (other than for
accompanying notes), subject to changes resulting from year-end audit adjustments.

     The Holders acknowledge and agree that any information obtained pursuant to this Article 6
which may be considered nonpublic information will be maintained in confidence by the Holders and,
in all cases subject to such confidentiality obligation, will not be utilized by the Holders in
connection with purchases or sales of the Company’s securities except as permitted by applicable
state and federal securities laws.

     6.2 Termination. The covenants of the Company set forth in this Article 6 shall
terminate and be of no further force or effect upon the closing of a Qualified IPO or at such time
as the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act,
whichever shall occur first.

Article 7

Lockup Agreement

     The Investor and any other Holder hereby agree that, in connection with any registration of
the offering of any securities of the Company under the Securities Act for the account of the
Company, if so requested by the Company or any representative of the underwriters (the

13

 

“Managing Underwriter”), the Investor or other Holder shall not lend, offer, pledge, sell,
contract to sell, sell any option or contract to purchase or grant any option or warrant to
purchase or otherwise transfer any securities of the Company during the period specified by the
Company’s Board of Directors at the request of the Managing Underwriter (the “Market Standoff
Period”), with such period not to exceed 180 days following the effective date of the registration
statement of the Company filed under the Securities Act; provided that all officers and directors
of the Company, holders of at least five percent of the Company’s voting securities and Founders
holding at least one percent of the the Company’s voting securities are bound by and have entered
into similar agreements. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market Standoff Period.

Article 8

Right of First Offer on Company Issuance

     8.1 Right of First Offer. The Company hereby grants to the Investor a right of first
offer (“Right of First Offer”) to purchase the Investor’s Pro Rata Share (as defined in Section 8.2
below) of any New Securities (as defined in Section 8.3 below) which the Company may, from time to
time, propose to issue and sell; provided, however, if the New Securities to be
issued shall be the Company Class B Common Stock, the Investor shall receive the number of Class A
Common Stock that would be issuable upon conversion of the Class B Common Stock the Investor would
have otherwise received but for this proviso; provided further, however,
that shares of Class B Common Stock issued after the date hereof shall only be issued to a Founder
or an Affiliate of a Founder.

     8.2 Pro Rata Share. The Investor’s “Pro Rata Share,” for purposes of this Article 8,
is equal to the fraction obtained by dividing (a) the sum of the total number of shares of Common
Stock then held, or issued or issuable upon conversion of Series A Preferred Stock then held, by
the Investor by (b) the sum of the total number of shares of (i) Common Stock, (ii) Common Stock
issuable upon the conversion of the Series A Preferred Stock and any other series of preferred
stock of the Company then outstanding and (iii) Common Stock issuable upon any exercise of any
options or warrants then outstanding.

     8.3 New Securities. Except as set forth below, “New Securities” shall mean any shares
of capital stock of the Company, including without limitation, Common Stock and Series A Preferred
Stock, whether or not now authorized, and rights, options or warrants to purchase said shares of
Common Stock or Series A Preferred Stock and securities of any type whatsoever that are, or may by
their terms become, convertible into said shares of Common Stock or Series A Preferred Stock.
Notwithstanding the foregoing, “New Securities” shall not include the following:

     (a) the outstanding shares of the Company’s Series A Preferred Stock and the shares of
Common Stock issued upon the conversion of Series A Preferred Stock;

     (b) up to 10% of the authorized shares of Common Stock in the form of options or other
rights to purchase Common Stock, issued or granted to employees,

14

 

officers, directors and consultants of the Company pursuant to any one or more employee
stock plans or agreements approved by the Company’s Board of Directors;

     (c) shares of Common Stock or other securities issued as a dividend or distribution to
all Holders of Common Stock or to a class of Preferred Stock in accordance with the terms of
such securities on, or in connection with a split of or recapitalization of, any of the
capital stock of the Company;

     (d) securities issued by the Company pursuant to a strategic partnership, joint venture
or other similar arrangement approved by the Board of Directors;

     (e) securities sold pursuant to a registration statement filed by the Company under the
Securities Act;

     (f) securities issued by the Company pursuant to the acquisition of another corporation
or other entity by the Company by merger, purchase of all or substantially all of the
capital stock or assets, or other reorganization;

     (g) securities issued pursuant to currently outstanding options, warrants, rates or
other rights to acquire securities of the Company;

     (h) Shares of Class A Common Stock issued upon conversion of Class B Common Stock or
any other Common Stock issued upon conversion of New Securities; and

     (i) Any shares of Class A Common Stock issued by the Company as part of the Series B
Financing.

     8.4 Procedure. In the event the Company proposes to undertake an issuance of New
Securities, it shall give the Investor written notice (the “Company Notice”) of its intention,
describing the amount and type of New Securities to be issued, and the price and terms upon which
the Company proposes to issue the same. The Investor shall have 20 days from the date of receipt
of the Company Notice to exercise its Right of First Offer to purchase up its Pro Rata Share of
such New Securities for the price and upon the terms specified in the Company Notice by delivering
written notice (the “Right of First Offer Election Notice”) to the Company and stating therein the
quantity of New Securities to be purchased.

     (a) Settlement for the New Securities to be purchased by the Investor pursuant to this Section
8.4 shall be made in cash within 25 days from the Investor’s deemed date of receipt of the Company
Notice; provided, however, that if the terms of payment for the New Securities
specified in the Company Notice were other than cash against delivery, the Investor shall pay in
cash to the Company the fair market value of such consideration as mutually agreed upon by the
Company and the Investor or, if no such agreement is reached, as determined by an independent,
nationally recognized appraisal firm selected by the Company’s Board of Directors and reasonably
acceptable to the Investor, which determination shall be final, within five days of such
determination. The fees and expenses of such appraisal firm shall be shared equally by the
Investor and the Company.

15

 

     (b) The Company shall have 90 days after the deemed receipt of the Company Notice to sell the
New Securities not elected to be purchased by the Investor at the price and upon terms no more
favorable to the purchasers of such securities than specified in the Company Notice. In the event
the Company has not sold some or all of the New Securities within such 90-day period, the Company
shall not thereafter issue or sell any unsold New Securities without first offering such securities
to the Investor in the manner provided above.

     (c) If the Investor shall have failed to deliver to the Company its Right of First Offer
Election Notice within the time period described in this Section 8.4, the Investor shall be deemed
to have waived its Right of First Offer as to such financing to which such notice pertains.

     8.5 Termination and Assignment. The Right of First Offer granted in this Article 8
shall expire upon the effective date of a Qualified IPO. The Right of First Offer is
non-assignable.

     8.6 Company Right to Terminate Issuance of New Securities. Notwithstanding the
foregoing, the Company may in its sole discretion terminate any proposed issuance of New Securities
in respect of which the Company has given Company Notice, at any time prior to the consummation
thereof. The foregoing provision shall apply even in the event the Investor shall have exercised
its Rights of First Offer hereunder; provided, however, that no New Securities
shall then have been issued.

Article 9

Transfer of Rights

     The rights granted under Article 5 and Article 6 of this Agreement (the “Rights”) are
assignable by the Investor or any subsequent Holder to any party that (i) acquires at least 25% of
the aggregate Registrable Securities held by the Investor on the date hereof, originally issued to
the Investor pursuant to the Purchase Agreement, purchased pursuant to Article 8 hereof and issued
upon any stock split, stock dividend, recapitalization or other similar event (in each case,
counted on an as-converted to Common Stock basis and appropriately adjusted for recapitalizations,
stock splits and the like) and (ii) agrees in writing to be bound by the terms of this Agreement.
In the event of such a permitted transfer, the permitted transferee must provide written notice of
such assignment to the Company and agree in writing to be bound by the terms and conditions of this
Agreement and shall thereupon be deemed to be a Holder.

Article 10

Amendment

     Except as otherwise provided herein, additional parties may be added to this Agreement, any
provision of this Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Investor.

16

 

Article 11

Governing Law

     This Agreement and the legal relations among the parties hereto arising hereunder shall be
governed by and interpreted in accordance with the laws of the State of New York without regard to
conflict of law principles. The parties hereto agree to submit to the jurisdiction of the federal
and state courts of the State of New York located in New York County with respect to the breach or
interpretation of this Agreement or the enforcement of any and all rights, duties, liabilities,
obligations, powers and other relations between the parties hereto arising under this Agreement.

Article 12

Entire Agreement

     This Agreement, together with the Stockholders Agreement, constitutes the full and entire
understanding and agreement among the parties hereto regarding the matters set forth herein.
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon the successors, assigns, heirs, executors and administrators of the parties
hereto.

Article 13

Notices, Etc.

     All notices and other communications required or permitted hereunder shall be effective upon
receipt, shall be in writing and shall be mailed by registered or certified mail, postage prepaid,
or otherwise delivered by facsimile transmission, by hand or by messenger, addressed:

     If to the Investor:

_______________________________

_______________________________

_______________________________

_______________________________

Attention:_______________________

Facsimile No.:

     If to the Company:

Sucampo Pharmaceuticals, Inc.

4733 Bethesda Avenue

Bethesda, MD 20814

USA

Attention: Dr. Sachiko Kuno

Facsimile No.: (301) 961-3440

17

 

     With a copy to:

Dorsey & Whitney LLP

250 Park Avenue

New York, NY 10177

USA

Attention: Robert J. Dwyer, Jr., Esq.

Facsimile No.: (212) 953-7201

     Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given when received if delivered personally, if sent by facsimile, the
first business day after the date of confirmation that the facsimile has been successfully
transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for
the deposit of United States mail, addressed and mailed as aforesaid.

Article 14

Successors and Assigns

     Except as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon the successors, assigns, heirs, executors and administrators of the
parties hereto.

Article 15

Severability

     In the event any provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.

Article 16

Counterparts

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

[Remainder of page intentionally left blank.]

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

	 	 	 	 	 
	 	 	SUCAMPO PHARMACEUTICALS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Dr. Sachiko Kuno, Ph.D.

President and Chief Executive Officer

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

Investors’ Rights Agreement Signature Page

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