Document:

Third Amendment to Loan and Security Agreement

 Exhibit 10.39 
  
 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT 
  
 This THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated March 29, 2005, by and among LASALLE BUSINESS CREDIT, LLC, a Delaware
limited liability company (“LaSalle”), with its principal office at 135 South LaSalle Street, Chicago, Illinois 60603, the financial institutions that, from time to time, become a party to the Loan Agreement (hereinafter
defined) (such financial institutions, collectively, the “Lenders” and each individually, a “Lender”), LaSalle as agent for the Lenders (in such capacity, the “Agent”), and IMPCO TECHNOLOGIES, INC.,
a Delaware corporation, with its principal office at 16804 Gridley Place, Cerritos, California 90703 (the “Borrower”). 
  
 WHEREAS, the Borrower and LaSalle as a Lender and the Agent, are parties to a Loan and Security Agreement dated as of July 18, 2003 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Loan Agreement”), pursuant to which the Lenders have agreed, upon satisfaction of certain conditions, to make Revolving Advances and other financial accommodations to the
Borrower in the aggregate principal amount not to exceed $12,000,000; 
  
 WHEREAS, the Borrower has requested that the Lenders and the Agent agree to an extension of the credit facilities provided by the Loan Agreement and to amend the Loan Agreement in certain other respects, and the Lenders and the Agent are
willing to so extend and otherwise amend the Loan Agreement, all on the terms and subject to the conditions hereinafter set forth; 
  
 NOW THEREFORE, the parties hereto agree as follows: 
  
 1.  Amendments to Loan Agreement.  Subject to Section 2, below, effective upon the Effective Date (as hereinafter defined), the Loan
Agreement is hereby amended as follows: 
  
 (a)  The following new
definition is hereby added to Paragraph 1(a) of the Loan Agreement in alphabetical order to read as follows: 
  
 “  ‘Pre-Tax Income’ shall mean, with respect to any applicable fiscal period and for any Person or Persons, calculated for
such fiscal period, such Person’s or Persons’ net income before taxes for such period, excluding pre-tax gains or losses on the sale of assets (other than the sales of Inventory in the ordinary course of business) and excluding other
pre-tax extraordinary gains.” 
  
 (b)  The definition of
“Revolving Loan Commitment” set forth in Paragraph 1(a) of the Loan Agreement is hereby amended and restated to read in its entirety as follows: 
  
 “  ‘Revolving Loan Commitment’ shall mean the sum of $9,000,000.” 
  
 (c)  The inventory sublimit set forth in Paragraph 2(b)(i)(A)(2)(x) of
the Loan Agreement is hereby amended by reducing such sublimit from $6,000,000 to $4,500,000. 

 (d)  Paragraph 12(a) of the Loan Agreement is hereby amended by replacing the phrase “July
18, 2006” with the phrase “July 18, 2007”. 
  
 (e)  Paragraph 12(b)(vii)(z) of the Loan Agreement is hereby amended and restated to read in its entirety as follows: 
  
 “  (z)  one-half of one percent ( 1/2%) of the Revolving Loan Commitment if such prepayment is made at any time after the expiration of the second Contract Year, but prior to the expiration of the Term.”  
  
 (f)  Paragraph 14(p)(i) of the Loan Agreement (Consolidated Tangible
Net Worth) is hereby amended and restated in its entirety to read as follows: 
  
 “  (i)  Consolidated Tangible Net Worth.  Borrower shall maintain and cause the Consolidated Group to maintain, as of the end of each fiscal quarter, Consolidated Tangible Net Worth of not less than
the respective amount set forth below opposite each such fiscal quarter: 
  

			
	    Fiscal Quarter    

	 	Minimum Consolidated
Tangible Net Worth

	FQ4 2004	 	($1,100,000)
	FQ1 2005	 	$34,000,000
	FQ2 2005	 	$34,500,000
	FQ3 2005	 	$34,500,000
	FQ4 2005	 	$35,000,000
	FQ1 2006	 	$36,000,000
	FQ2 2006	 	$37,000,000
	FQ3 2006 and each
fiscal quarter thereafter	 	$37,500,000”

  
 (g)  Paragraph
14(p)(ii) of the Loan Agreement (Minimum Consolidated EBITDA) is hereby amended and restated in its entirety to read as follows: “Reserved”. 
  
 (h)  Paragraph 14(p)(iii) of the Loan Agreement (Fixed Charge Coverage Ratio) is hereby amended and restated in its entirety to read as follows:
“Reserved”. 
  
 (i)  Paragraph 14(p)(iv) of the
Loan Agreement (Consolidated Leverage Ratio) is hereby amended and restated in its entirety to read as follows: “Reserved”. 
  
 (j)  A new Paragraph 14(p)(vi) is hereby added to the Loan Agreement to read in its entirety as follows: 
  
 “  (v)  Consolidated Minimum Pre-Tax
Income.  Borrower shall maintain and cause the Consolidated Group to maintain, as of the end of each fiscal period set 

  

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forth below, Pre-Tax Income of not less than the respective amount set forth below opposite each such fiscal period: 
  

			
	     Fiscal Period    

	  	Minimum Pre-Tax Income

		
	 January 1, 2005 through
 end of
FQ1 2005
	  	$1,700,000
		
	 January 1, 2005 through
 end of
FQ2 2005
	  	$3,600,000
		
	 January 1, 2005 through
 end of
FQ3 2005
	  	$4,900,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ4 2005
	  	$6,200,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ1 2006
	  	$6,500,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ2 2006
	  	$7,100,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ3 2006 and
 each fiscal quarter thereafter
	  	$7,100,000”

  
 (k)  Paragraph
14(q) of the Loan Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “  (q)  For any period of four (4) consecutive fiscal quarters of Borrower (measured as at the end of each fiscal quarter of Borrower with
respect to the period of four (4) consecutive fiscal quarters ending on such date): (i) Borrower, together with all of its Subsidiaries and Affiliates, shall not make Capital Expenditures of an aggregate amount of more than $5,000,000; and (ii) the
US Consolidated Group shall not make Capital Expenditures of an aggregate amount of more than $3,000,000.” 
  
 (l)  Paragraph 14(x)(i) of the Loan Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “  (i)  Tangible Net Worth.  Borrower shall
cause the U.S. Consolidated Group to maintain, as of the end of each fiscal quarter, Tangible Net Worth of not less than the respective amount set forth below opposite each such fiscal quarter: 
  

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	    Fiscal Quarter    

	 	Minimum Tangible Net Worth

	FQ4 2004	 	$  8,500,000
	FQ1 2005	 	$17,500,000
	FQ2 2005	 	$18,000,000
	FQ3 2005	 	$17,000,000
	FQ4 2005	 	$17,000,000
	FQ1 2006	 	$16,500,000
	FQ2 2006	 	$17,000,000
	FQ3 2006 and each
fiscal quarter thereafter	 	$16,000,000

  
 (m)  Paragraph
14(x)(ii) of the Loan Agreement (Minimum U.S. EBITDA) is hereby amended and restated in its entirety to read as follows: “Reserved”. 
  
 (n)  Paragraph 14(x)(iii) of the Loan Agreement (U.S. Fixed Charge Coverage Ratio) is hereby amended and restated in its entirety to read as
follows: “Reserved”. 
  
 (o)  Paragraph 14(x)(iv)
of the Loan Agreement (U.S. Leverage Ratio) is hereby amended and restated in its entirety to read as follows: “Reserved”. 
  
 (p)  A new Paragraph 14(x)(v) is hereby added to the Loan Agreement to read in its entirety as follows: 
  
 “  (v)  U.S. Minimum Pre-Tax Income. Borrower shall
maintain and cause the U.S. Consolidated Group to maintain, as of the end of each fiscal period set forth below, Pre-Tax Income of not less than the respective amount set forth below opposite each such fiscal period: 
  

			
	 Fiscal Period

	  	Minimum Pre-Tax Income

		
	 January 1, 2005 through
 end of
FQ1 2005
	  	$   200,000
		
	 January 1, 2005 through
 end of
FQ2 2005
	  	$   500,000
		
	 January 1, 2005 through
 end of
FQ3 2005
	  	$   800,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ4 2005
	  	$1,000,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ1 2006
	  	$1,200,000

  

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	     Fiscal Period    

	  	Minimum Pre-Tax Income

		
	 Four consecutive fiscal quarters
 ending at end of FQ2 2006
	  	$1,600,000
		
	 Four consecutive fiscal quarters
 ending at end of FQ3 2006 and
 each fiscal quarter thereafter
	  	$1,400,000

  
 2.  Retroactive
Effect of Certain Amendments.  Subject to Section 7 below, the amendments set forth in Sections 1(f), 1(g), 1(h), 1(i), 1(l), 1(m), 1(n), and 1(o) have retroactive effect
to December 31, 2004, and the Loan Agreement will be deemed amended as set forth in such Sections as of such date. 
  
 3.  Deposit Accounts.  The Borrower hereby confirms its covenant set forth in the Second Amendment to Loan and Security Agreement,
Limited Waiver, and Consent dated June 30, 2004, between the Borrower and the Agent, that it will cause all of its cash deposit accounts to be maintained with LaSalle Bank, subject to a deposit account control agreement in form and substance
satisfactory to the Agent, provided that the Borrower may maintain cash deposit accounts with other financial institutions so long as the aggregate amount of all deposits in such accounts does not exceed $50,000 at any time. 
  
 4.  Amendment Fee.  In consideration for the accommodations
granted by the Agent and the Lenders herein and in addition to all other fees and costs, the Borrower hereby agrees to pay to the Agent a nonrefundable fee equal to Five Thousand Dollars ($5,000), which fee will be fully earned, due, and payable as
of the date of this Amendment (the “Amendment Fee”). 
  
 5.  Acknowledgments and Confirmations.  The Borrower, the Lenders, and the Agent hereby acknowledge and confirm that as of the Effective Date: (i) all references in the Loan Agreement to “this Agreement”
will be deemed to refer to the Loan Agreement, as amended by this Amendment; and (ii) all references in each of the Other Agreements to the “Loan Agreement” will be deemed to refer to the Loan Agreement, as amended by this Amendment.

  
 6.  Representations and Warranties.  The
Borrower hereby represents and warrants to the Lenders and the Agent, that: 
  
 (a)  Each of the representations and warranties set forth in Paragraph 13 of the Loan Agreement is true in all material respects as of the date hereof, except for changes in the ordinary course of business, that, either
singly or in the aggregate, are not materially adverse to the business or financial condition of the Borrower or to the Collateral. 
  
 (b)  As of the date hereof, after giving effect to the terms of this Agreement, there exists no Default or Event of Default. 
  
 (c)  The Borrower has the power to execute, deliver, and perform this
Amendment and all agreements, instruments, and documents executed in connection herewith (this Amendment and such other agreements, instruments, are documents are sometimes hereinafter 

  

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referred to collectively as the “Amendment Documents”). The Borrower has taken all necessary action to authorize the execution, delivery, and
performance of this Amendment and the other Amendment Documents. No consent or approval of any entity or Person (including without limitation, any shareholder of the Borrower), no consent or approval of any landlord or mortgagee, no waiver of any
Lien or right of distraint or other similar right, and no consent, license, approval, authorization, or declaration of any governmental authority, bureau, or agency is required in connection with the execution, delivery, or performance by the
Borrower, or the validity or enforcement, of this Amendment or the other Amendment Documents. 
  
 (d)  The execution and delivery by the Borrower of this Amendment and the other Amendment Documents and performance by it hereunder and thereunder, will not violate any provision of law and will not conflict with or
result in a breach of any order, writ, injunction, ordinance, resolution, decree, or other similar document or instrument of any court or governmental authority, bureau, or agency, domestic or foreign, or the certificate of incorporation or by-laws
of the Borrower, or create (with or without the giving of notice or lapse of time, or both) a default under or breach of any agreement, bond, note, or indenture to which the Borrower is a party, or by which it is bound or any of its properties or
assets is affected (including without limitation, the Subordinated Debt Documents), or result in the imposition of any Lien of any nature whatsoever upon any of the properties or assets owned by or used in connection with the business of the
Borrower, other than the Liens contemplated by this Amendment. 
  
 (e)  This Amendment and the other Amendment Documents have been duly executed and delivered by the Borrower and constitute the valid and legally binding obligation of the Borrower, enforceable in accordance with their respective
terms. 
  
 7.  Conditions to Effectiveness of Amendment and
Waiver.  The effectiveness of the amendments, consent, and waiver contained in this Amendment, is subject to the fulfillment (to the satisfaction of the Agent and the Lenders) of the following conditions precedent (the date upon which
conditions are satisfied to the satisfaction of the Agent and the Lenders, the “Effective Date”): 
  
 (a)  Each of the Borrower and the Agent has executed this Amendment and the same has been delivered to the Agent; 
  
 (b)  The Borrower has delivered to the Agent a certificate of an Executive
Officer, certifying as to resolutions of the Board of Directors of the Borrower authorizing the execution, delivery, and performance of this Amendment, all agreements, instruments, and documents executed in connection therewith and the transactions
contemplated hereby and thereby. 
  
 (c)  The Borrower has
executed and delivered to the Agent all agreements, instruments, and documents reasonably requested by the Agent in connection with this Amendment. 
  
 (d)  All legal matters incident to this Amendment are reasonably satisfactory to the Lenders, the Agent, and their counsel. 
  
 (e)  The Borrower has paid the Amendment Fee to the Agent. 
  

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 8.  Further Assurances.  The Borrower agrees that it will, from time to time, execute
and/or deliver all agreements, instruments, and documents and do and perform all actions and things (all at the Borrower’s sole expense) as the Agent may reasonably request to carry out the intent and terms of this Amendment. 
  
 9.  Release of the Borrower’s Claims. 
  
 (a)  The Borrower and its legal representatives, successors, and assigns,
agree to and hereby do RELEASE, ACQUIT, and FOREVER DISCHARGE, the Lenders and the Agent (including without limitation, all affiliated entities, divisions, subsidiaries, direct and indirect parent corporations, and holding companies) and their
respective officers, directors, shareholders, employees, trustees, substitute trustees, agents, and attorneys, past and present (the “Indemnified Lender Parties”), from all of Borrower’s Claims, as defined in Section
9(b) below. 
  
 (b)  As used in Section 9(a) above, the
term “Borrower’s Claims” means any and all possible claims, disputes, obligations, demands, actions, causes of action, costs, expenses, and liabilities whatsoever, known or unknown, at law or in equity, to the extent
originating on or before the date hereof, that the Borrower may now or hereafter have against the Lenders or the Agent or any of the other Indemnified Lender Parties, if any, and irrespective of whether any such Borrower’s Claims arise out of
contract, tort, violation of laws or regulations, or otherwise, that arise out of, are connected with, related to, or concern in any way any of this Amendment, the Loan Agreement, or the Other Agreements (or the transactions contemplated hereby or
thereby) or the Collateral, or that arise out of, are connected with, related to, or concern in any way, any action, inaction, performance, non-performance, representation, transaction, or occurrence involving or in any way related to this
Amendment, the Loan Agreement, or the Other Agreements (or the transactions contemplated thereby) or the Collateral. 
  
 (c)  The Borrower intends the above release to cover, encompass, release, and extinguish, inter alia, all claims, demands, and causes of action
that might otherwise be reserved by California Civil Code Section 1542 or any similar provision of New York law. California Civil Code Section 1542 provides as follows: 
  
 “  A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially affected his settlement with the debtor.” 
  
 10.  Miscellaneous. 
  
 (a)  The Borrower’s breach of any of its covenants contained in this Amendment will constitute an Event of Default. 
  
 (b)  Nothing contained in this Agreement imposes an obligation on the Lenders
or the Agent to further amend the Loan Agreement or waive compliance with any other provision. 
  
 (c)  Except as set forth in this Amendment, none of the Lenders nor the Agent waive any breach of, or Default or Event of Default under, the Loan Agreement, nor any right or 

  

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remedy the Lenders or the Agent may have under the Loan Agreements, the Other Agreements, or applicable law, all of which rights and remedies are expressly reserved.

  
 (d)  Except as specifically amended in this Amendment, the
Loan Agreement and the Other Agreements remain in full force and effect in accordance with their respective terms. 
  
 (e)  No modification or waiver of or with respect to any provision of this Amendment and all other agreements, instruments, and documents delivered
pursuant hereto or referred to herein, nor consent to any departure by any party hereto or thereto from any of the terms or conditions hereof or thereof, will in any event be effective, unless it is in writing and signed by each party hereto, and
then such waiver or consent will be effective only in the specific instance and for the purpose for which given. 
  
 (f)  This Amendment, together with all of the other agreements, instruments, and documents referred to herein, embodies the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings relating to the subject matter hereof. 
  
 (g)  Without in any way limiting Paragraph 14(r) of the Loan Agreement, the Borrower shall pay all of the
Lenders’ and the Agent’s fees, costs, and expenses incurred in connection with this Amendment and the transactions contemplated hereby, including without limitation, the Lenders’ and the Agent’s legal fees and expenses incurred
in connection with the preparation, negotiation, consummation, and, if required, the enforcement, of this Amendment and the other Amendment Documents. 
  
 (h)  This Amendment may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same
instrument. 
  
 (i)  EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT PERTAINS DIRECTLY OR INDIRECTLY TO THIS AMENDMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT OF THE BORROWER, THE AGENT, OR THE
LENDERS OR THAT, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP AMONG THE BORROWER, THE AGENT, AND/OR THE LENDERS. IN NO EVENT WILL THE AGENT OR ANY LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES. 
  
 (j)  This Amendment is governed by and
must be construed in accordance with the applicable law pertaining in the State of New York, other than those conflict of law provisions that would defer to the substantive laws of another jurisdiction. 
  
 [Remainder of Page Intentionally Left Blank] 
  

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

			
	 LASALLE BUSINESS CREDIT, LLC,
 as a Lender and as
Agent

		
	By:	 	 
		
	Name:	 	 
		
	Title:	 	 
	
	 IMPCO TECHNOLOGIES, INC.,
 as
Borrower

		
	By:	 	 
		
	Name:	 	 
		
	Title:	 	 

  

 9Form of Series C Preferred Stock Purchase Agreement

 Exhibit 10.1 
  
 SERIES C PREFERRED STOCK PURCHASE AGREEMENT 
  
 BETWEEN 
  
 ARROWHEAD RESEARCH CORPORATION 
  
 AND THE PURCHASERS 
 SIGNATORY HERETO

  
 Dated as of the date indicated on the signature page hereto

 SERIES C PREFERRED STOCK PURCHASE AGREEMENT 
  
 THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT
(“Agreement”) is made as of the date indicated on the later of the dates indicated on the signature pages hereto, by and between Arrowhead Research Corporation (the “Seller”), a Delaware corporation,
and the person signatory hereto (each a “Purchaser” and, collectively, the “Purchasers”). 
  
 RECITALS 
  
 WHEREAS, Seller currently owns 24,496,533 shares of Series B Preferred Stock of Insert Therapeutics, Inc. (the “Company”), of
which 5,000,000 shares will be exchanged for Series C Preferred Stock (“Series C Shares”) of the Company, with rights, preferences and privileges as summarized on the Summary Term Sheet, attached as Exhibit A
hereto; and 
  
 WHEREAS, the Purchaser wishes to purchase from the
Seller, and the Seller wishes to sell to the Purchaser, at $1.00 per share (the “Purchase Price”) and on the terms and conditions set forth herein, the number of shares of Series C Shares of the Company set forth on the
Purchaser’s signature page hereto. 
  
 NOW THEREFORE, in
consideration of the premises and mutual agreements herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 ARTICLE 1 
  
 Sale and Purchase of Series C Shares 
  
 1.1 Sale of Shares. Subject to the terms and conditions of this
Agreement, the Seller will sell to the Purchaser, and the Purchaser will purchase, the number of Series C Shares, specified on the Purchaser’s signature page. Each Series C Share shall be sold for the Purchase Price. The Purchaser shall pay to
the Seller, by means of wire transfer or certified or cashier’s check or checks, representing immediately available funds, an amount equal to the Purchase Price, times the number of Series C Shares to be purchased by the Purchaser. 

 
 1.2 Closing Date. The sale of Series C Shares contemplated hereby
(the “Share Sale”) will close on March 31, 2005, unless extended by Seller, in its sole and absolute discretion (the “Closing Date”). 
  
 ARTICLE 2  
  
 Representations and Warranties of the Seller 
  
 In order to induce the Purchaser to enter into this Agreement and consummate the transactions contemplated hereby, Seller hereby makes to the Purchaser
the representations and warranties contained in this ARTICLE 2, as of the date hereof and of the applicable Closing Date. 
  
 2.1 Good Standing; Power and Authority; Legal and Binding Nature; Compliance with Other Instruments. The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller has full power and authority and has taken all required corporate and other action necessary to permit it to execute, deliver and perform all of its obligations contained
in this Agreement, and to issue the Series C Shares hereunder. This Agreement has been duly authorized and validly executed by, and is the valid and binding obligation of, Seller enforceable in accordance with its terms. Neither the execution and
delivery by Seller of this Agreement, nor the performance by Seller of its obligations hereunder, requires the consent, approval or authorization of any person or governmental authority, which consent, approval or authorization has not been
obtained. 
  

 1 

 2.2 Non-Contravention. The execution, delivery and performance of this Agreement does not and will
not: (i) conflict with or result in any default under any material contract, obligation or commitment of Seller or any provision of Seller’s certificate of incorporation or bylaws; (ii) result in the creation of any Lien (as defined below) of
any kind, or the interest of a vendor or lessor under any conditional sale agreement, capitalized lease or other title retention agreement of any nature upon any of the properties or assets of Seller, or (iii) violate any instrument, agreement,
judgment, decree or order, or any statute, rule or regulation of any federal, state or local government or agency, applicable to Seller or to which Seller is a party, except in each case for such conflicts, defaults, Liens or violations that shall
not have a material adverse effect on Seller. “Liens” means all liens, claims, options, charges, pledges, security interests, voting agreements, trusts, encumbrances, rights, mortgages or restrictions of any nature.

  
 2.3 Capitalization. Attached as Schedule 2.3 to
this Agreement is a capitalization table setting forth the equity capitalization of the Company as of the date hereof, and on a pro forma basis, after giving affect to the sale of 4,000,000 shares of Series C Preferred Stock. The Company has no
obligation to repurchase or redeem any of its outstanding equity interests. 
  
 2.4 SEC Reports; Financial Statements. Since June 2004, the Company’s financial results have been consolidated as part of Seller’s financial statements reflected in Seller’s filings with the
Securities and Exchange Commission (“SEC”). Seller has filed all required forms, reports and documents with the SEC since January 2004 (the “SEC Reports”), each of which complied in all material
respects with the applicable requirements of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”), as in effect on the dates such forms,
reports and documents were filed. None of such SEC Reports, including any financial statements or schedules included or incorporated by reference therein, contained, when filed, any untrue statements of material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in order to make the statement therein in light of the circumstances under which they were made not misleading. The audited financial statements of Seller included in the
SEC Reports were prepared in accordance with generally accepted accounting principles of the United States and present fairly the financial position of Seller, and its consolidated subsidiaries, as of the dates thereof. 
  
 ARTICLE 3 
  
 Representation and Warranties of the Purchasers 
  
 As a material inducement to the Seller to enter into this Agreement and
consummate the transactions contemplated hereby, Purchaser hereby represents and warrants as of the date hereof to the Company as follows: 
  
 3.1 Acquisition of Series C Shares. This Agreement is made with Purchaser in reliance upon Purchaser’s representation to the Seller, which by
Purchaser’s execution of this Agreement Purchaser hereby confirms, that the Series C Shares to be received by Purchaser will be acquired for investment for Purchaser’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. 
  
 3.2 No Registration. Purchaser understands and acknowledges that the Series C Shares will not be registered under the
Securities Act or under any other applicable blue sky or state securities law, on the grounds that the sale of the Series C Shares from Seller to Purchaser contemplated by this Agreement is exempt from registration pursuant to Section 4(2) of the
Securities Act and the regulations thereunder and are exempt from qualification pursuant to comparable available exceptions in various states, and that the Seller’s reliance upon such exemptions is predicated upon Purchaser’s
representations set forth in this Agreement. Purchaser acknowledges and understands that the Series C Shares and/or the Common Stock into which the Series C Shares may convert must be held indefinitely 
  

 2 

 unless the Series C Shares and/or the Common Stock into which the Series C Shares may convert are subsequently registered
under the Securities Act and other applicable blue sky and state securities laws or an exemption from such registration is available. 
  
 3.3 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, or payment of any tax, fee, fine
or penalty to, any governmental or regulatory authority (domestic or foreign) or any other person (either governmental or private), is required to be obtained or made by Purchaser in connection with the execution and delivery by Purchaser of this
Agreement or the consummation by Purchaser of the transactions contemplated hereby. 
  
 3.4 Investment Representations. Purchaser (a) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Purchaser’s prospective investment
hereunder; (b) has the ability to bear the economic risks of Purchaser’s prospective investment, including a complete loss of the investment; (c) has been furnished with and has had access to such information as Purchaser has considered
necessary to make a determination as to its investment hereunder; (d) has had all questions which have been asked by Purchaser satisfactorily answered by the Company; (e) has not been offered the Series C Shares by any form of general solicitation
or general advertising, including any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising; and (f) has not relied on any representations and warranties of the Company other than those contained in this Agreement. 
  
 3.5 Accredited Investor Status. Purchaser is an “accredited investor” within the meaning of Rule 501(a) of
Regulation D promulgated by the SEC under the Securities Act and is an “institutional investor” within the meaning of applicable state statutes and the regulations thereunder. 
  
 3.6 Restrictions on Transfer. Purchaser understands that unless and until the Company (i) registers the Series C
Shares and/or the Common Stock into which the Series C Shares may be converted with the SEC pursuant to Section 12, (ii) becomes subject to Section 15(d) of the Exchange Act, (iii) supplies information pursuant to Rule 15c2 11 thereunder, or (iv) if
a registration statement covering the Series C Shares (or a filing pursuant to the exemption from registration under Regulation A of the Securities Act covering the Series C Shares) under the Securities Act is in effect when Purchaser desires to
sell Series C Shares, Purchaser may be required to hold the Series C Shares for an indeterminate period. Each Purchaser also understands that any sale of the Common Stock into which the Series C Shares may convert that might be made by Purchaser in
reliance upon Rule 144 or Rule 144A under the Securities Act may be made only in limited amounts in accordance with the terms and conditions of those rules. Purchaser understands and acknowledges that all certificates representing the Series C
Shares (as well as the Common Stock into which the Series C Shares may be converted), shall bear the following legend (and any other legend that may be required under any Federal or state securities law), until such Series C Shares and/or shares of
Common Stock are registered under the securities Act, exchanged for securities registered under the securities Act, or until the holder of the Series C Shares and/or Common Stock delivers an opinion of its legal counsel, reasonably acceptable to the
Company, that such legend is no longer necessary. 
  
 “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED,
OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH HEREIN.” 
  

 3 

 3.7 Authorization. Purchaser has full power and authority to enter into this Agreement and to
perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby. This Agreement is a valid and binding agreement of Purchaser, enforceable in accordance with its terms. 
  
 3.8 ERISA. Purchaser will not acquire the Series C Shares with the
assets of any “employee benefit plan” as defined in ERISA and no “prohibited transactions” under ERISA and the Code will occur in connection with the Purchaser’s acquisition of the Series C Shares. 
  
 3.9 Taxes. Purchaser (a) understands that there may be tax
consequences resulting from the purchase, ownership and/or sale of Series C Shares, and (b) represents and warrants that (i) Purchaser has had a full opportunity to seek the advice of independent counsel respecting this investment and the tax risks
and implications thereof, (ii) Purchaser has relied only upon such independent tax advice and not upon any tax counsel from, or discussions with, Seller or the Company or their respective representatives, and (iii) has never been notified by the
Internal Revenue Service that Purchaser is subject to 20% backup withholding. 
  
 3.10 Risk Factors. Purchaser has read and understands the Risk Factors in Seller’s SEC Reports and hereby represents and warrants that in participating in Share Sale, Purchaser is solely and fully
undertaking the risk of investment in the Series C Shares, excluding only any loss that may result primarily and directly from fraud on the part of the Company. 
  

ARTICLE 4  
  
 Closing Conditions and Deliveries 
  
 4.1 Conditions to Purchaser Obligations. The obligation of Purchaser to purchase the Series C Shares and to perform the obligations set forth
herein, at the Closing, is subject to the fulfillment on or prior to the Closing Date of the following conditions, any of which may be waived in accordance with the provisions set forth herein: 
  
 4.1.1 Delivery of this Agreement and Preferred Shares. The Purchaser
shall have received a duly executed copy of this Agreement from Seller. 
  
 4.1.2 Accuracy of Representations and Warranties; Performance of Obligations. The representations and warranties made by Seller herein shall be true and correct on the Closing Date; and Seller shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the Closing Date. 
  
 4.1.3 Absence or Violation or Litigation. The consummation of the transactions contemplated hereby shall not be in violation of any law or regulation applicable to the Company or Seller. Neither the Company nor
Seller shall be subject to any injunction, stay or restraining order nor shall it require any filings, approvals or consents that have not been previously made or obtained. 
  
 4.1.4 All Proceedings Satisfactory. All organizational and other proceedings taken by Seller in connection with the
Share Sale, and all documents and instruments related thereto, shall be reasonably satisfactory in form and substance to Purchaser and Purchaser shall have received copies thereof and other materials (certified, if requested) as Purchaser may
reasonably request in connection herewith. 
  
 4.1.5 Consents
and Waivers. Seller shall have made all filings with, and provided notices to, governmental authorities, regulatory agencies and other entities required to be made by Seller in connection with the execution and delivery of this Agreement, the
performance of the Share Sale and the continued operation of the business of the Company and Seller subsequent to the date hereof. 
  

 4 

 4.1.6 Investors’ Rights Agreement. Seller shall have delivered a signed Joinder Agreement to
Purchaser, attached as Exhibit B hereto, pursuant to which Purchaser will become a party to the Company’s Investors’ Rights Agreement, as amended and attached as Exhibit C hereto. 
  
 4.1.7 Liquidation Preference Agreement. Seller shall have delivered a
signed Liquidation Preference Agreement to Purchaser, attached as Exhibit D hereto, pursuant to which Seller will agree to subordinate the liquidation preference of the Series B preferred stock owned by Seller to the liquidation
preference of the Series C Shares held by Purchaser. 
  
 4.2
Conditions to Seller’s Obligations. Seller’s obligation to sell the Series C Shares and to perform the obligations set forth herein, at the Closing, is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by Seller (unless specifically stated below) as to any one or more of the Purchasers if such waiver will not adversely affect the other Purchasers: 
  
 4.2.1 Representations and Warranties Correct. The representations and warranties made by Purchaser herein shall be
true and correct on the Closing Date; and Purchaser shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date. 
  
 4.2.2 Investors’ Rights Agreement. Purchaser shall have delivered a signed Joinder Agreement to Seller, attached
as Exhibit B hereto, pursuant to which Purchaser will become a party to the Company’s Investors’ Rights Agreement, as amended and attached as Exhibit C hereto 
  
 4.2.3 Liquidation Preference Agreement. Purchaser shall have delivered
a signed Liquidation Preference Agreement to Seller, attached as Exhibit D hereto, pursuant to which Seller will agree to subordinate the liquidation preference of the Series B preferred stock owned by Seller to the liquidation
preference of the Series C Shares held by Purchaser. 
  
 4.2.4
Payments by Purchasers. Seller shall have received Purchaser’s payment for the number of Series C Shares set forth opposite Purchaser’s name on the signature page hereto. 
  
 ARTICLE 5  
  
 Miscellaneous 
  
 5.1 Delivery of Series C Shares. Seller shall deliver duly issued, non-assessable and fully-executed Series C Shares, free and clear of any and all
Liens within thirty (30) days of the Closing Date. 
  
 5.2
Fiduciary Capacity. If the undersigned is purchasing the Series C Shares in a fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the undersigned is so
purchasing. 
  
 5.3 Entire Agreement. This Agreement, and
the agreements referred to herein constitute the full and entire understanding and agreement among the parties with regard to the subject matter hereof and thereof and supercede all prior written or oral agreements and all contemporaneous oral
agreements with respect to the subject matter hereof. 
  
 5.4
Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 
  
 5.5 Construction of Agreement. None of the parties hereto or their respective counsel shall be deemed to have drafted
this Agreement for purposes of construing the terms hereof. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning, and not strictly for or against any party hereto. Throughout this Agreement, as
the context may require, references to any word used in one tense or case shall include all other appropriate tenses or cases. In addition, unless followed by the word “only”, the term “including” means “including but not
limited to.” 
  

 5 

 5.6 Governing Law. This Agreement is only for the benefit of the Company and will be construed in
accordance with and governed by the laws of the State of Delaware, without giving effect to the conflicts of law provisions thereof. 
  
 5.7 Attorneys’ Fees. In any dispute between the parties hereto concerning any provision of this Agreement or the rights and duties of any
person or entity hereunder, the party or parties prevailing in such dispute shall be entitled, in addition to such other relief as may be granted, to the attorneys’ fees and court costs incurred by reason of such dispute. 
  
 5.8 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no waiver or extension of time shall be effective unless expressly contained in a writing signed by the waiving party; and (ii) no alteration, modification or impairment shall
be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or by any other indulgence. 
  
 5.9 Additional Acts. The parties signatory to this Agreement agree to execute any and all further documents and writings and perform such other
reasonable actions which may be or become necessary or expedient to effectuate and carry out the business of the Company (which shall not include any obligation to make payments), including making commercially reasonable efforts to provide,
post-funding, all information reasonably requested to apply for any and all licenses required for the Company to operate and/or effect any transaction for the purpose of acquiring any licenses for the Company to conduct business. 
  
 5.10 Notices. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and delivered personally, by facsimile transmission, by overnight delivery service or by mail, postage prepaid, addressed (a) if to a Purchaser, at Purchaser’s address
set forth below its name on the signature pages hereto, or at such other address as Purchaser shall have furnished to the Company in writing, or (b) if to the Company, at Arrowhead Research Corporation, 1118 East Green Street, Pasadena, CA 91106;
Attention: President; Facsimile number 626-792-5554, or at such other address as the Company shall have furnished to the Purchasers in writing, with a copy to Rachael A. Simonoff, Esq., Guth | Christopher LLP, 10866 Wilshire Boulevard,
Suite 1250, Los Angeles, California 90024; Facsimile number 310-470-8354. This provision shall be deemed a material to this Agreement, and no notice shall be deemed given or perfected pursuant to this Section unless all parties are noticed as
required by this Section. 
  
 5.11 Severability;
Counterparts. In case any provision of this Agreement shall 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. This
Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. 
  
 [PLEASE COMPLETE THE FOLLOWING PAGE] 
  

 6 

 YOU MUST COMPLETE THIS PAGE 
  
 5.12 Nature of Investor. PLEASE MARK (ONLY ONE BOX NEEDS TO BE CHECKED; CONTACT THE SELLER IF NONE IS APPLICABLE):

  

			
	 ̈	  	A natural person whose net worth (or joint net worth with my spouse) is in excess of $1,000,000 as of the date hereof.
		
	 ̈	  	A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the current year.
		
	 ̈	  	A trust with total assets in excess of $5,000,000, not formed for the specific purpose of investing in the Interest, whose purchases are directed by a “sophisticated person” as
described in Rule 506(b)(2)(ii) of the Act.
		
	 ̈	  	A “bank,” “savings and loan association,” or “insurance company” as defined in the Act.
		
	 ̈	  	An “employee benefit plan” as defined in the Employee Retirement Income Security Act of 1974 (a “Plan”) which has total assets in excess of
$5,000,000.
		
	 ̈	  	A Plan whose investment decisions, including the decision to subscribe for the Interest, are made solely by (i) a “plan fiduciary” as defined in the Employee Retirement Income
Security Act of 1974, which includes a bank, a savings and loan association, an insurance company or a registered investment adviser, or (ii) an “accredited investor” as defined under Rule 501(a) of the Act.
		
	 ̈	  	A broker/dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934.
		
	 ̈	  	A “private business development company” as defined in the Investment Advisers Act of 1940.
		
	 ̈	  	An investment company registered under, or a “business development company” as defined in, the Investment Company Act of 1940.
		
	 ̈	  	A Small Business Investment Company licensed by the U.S. Small Business Administration under the Small Business Investment Act of 1958.
		
	 ̈	  	A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and
having total assets in excess of $5,000,000.
		
	 ̈	  	Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business Trust, or partnership, not formed for the specific purpose of
investing in the Interest and having total assets in excess of $5,000,000.
		
	 ̈	  	Any entity in which all of the equity owners are “accredited investors.”

  
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INTENTIONALLY LEFT BLANK] 
  

 7 

 [Company Signature Page to Series C Preferred Stock Purchaser Agreement] 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Series C Preferred
Stock Purchase Agreement as of March 31, 2005. 
  

			
	Seller:
	
	ARROWHEAD RESEARCH CORPORATION
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 8 

 [Purchaser Signature Page to Series C Preferred Stock Purchaser Agreement] 
  
 I HEREBY REPRESENT THAT I HAVE READ AND UNDERSTOOD THE SERIES C PREFERRED STOCK PURCHASE
AGREEMENT. 
  
 Dated: March 31, 2005 
  
 Purchase Price:
                     
  
 Total Series C Shares:                      
  

							
	Print Name:	 	  

	 	Print Name:	 	  

	 	 	 	 	 	 	(Joint Owner)
	Signature:	 	  

	 	Signature:	 	  

	 	 	 	 	 	 	(Joint Owner)
		
	Social Security # or Tax Id#:	 	Social Security # or Tax Id#: (Joint Owner)
		
	
	 	

		
	Address: (include city, state & zip)	 	If Joint Ownership, check one:
	  

	 	     Joint Tenants (Right of Survivorship)
	  

	 	     Tenants in Common
	  

	 	     Community Property
				
	Telephone #:	 	  

	 	 	 	 
	Facsimile #:	 	  

	 	 	 	 
	E-mail:	 	  

	 	 	 	 

  

 9 

 SCHEDULE 2.3 
  
 CAPITALIZATION 
  

											
	 Holder

	  	 Common
 Stock

	  	 Series A
 Preferred
Stock

	  	 Series B
 Preferred
Stock

	  	 Series C
 Preferred
Stock

	  	 Warrants
 For
 Common

	 Caltech
	  	1,060,000	  	—  	  	1,224,828	  	—  	  	—  
	 Arrowhead
	  	7,375,000	  	—  	  	24,496,533	  	—  	  	—  
	 Mark Davis
	  	5,375,000	  	—  	  	—  	  	—  	  	—  
	 John Petrovich
	  	1,395,000	  	—  	  	—  	  	—  	  	50,000
	 Other Investors
	  	1,706,522	  	—  	  	—  	  	—  	  	—  
	 Option Plan
	  	6,300,000	  	—  	  	—  	  	—  	  	—  

  
 Pro Forma, assuming the sale of
5,000,000 shares of Series C Preferred Stock: 
  

											
	 Holder

	  	 Common
 Stock

	  	 Series A
 Preferred
Stock

	  	 Series B
 Preferred
Stock

	  	 Series C
 Preferred
Stock

	  	 Warrants
 For
 Common

	 Caltech
	  	1,060,000	  	—  	  	1,224,828	  	—  	  	—  
	 Arrowhead
	  	7,375,000	  	—  	  	19,496,533	  	—  	  	—  
	 Mark Davis
	  	5,375,000	  	—  	  	—  	  	—  	  	—  
	 John Petrovich
	  	1,395,000	  	—  	  	—  	  	—  	  	50,000
	 Other Investors
	  	1,706,522	  	—  	  	—  	  	—  	  	—  
	 New Buyers
	  	—  	  	—  	  	—  	  	5,000,000	  	—  
	 Option Plan
	  	6,300,000	  	 	  	 	  	 	  	—  

  

 Schedule 2.3

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