Document:

QuickLinks
 -- Click here to rapidly navigate through this document
  

Exhibit 4.2  

 
 

PROMETHEUS LABORATORIES INC.
  
    AMENDED AND RESTATED
  SHAREHOLDERS' AGREEMENT    
    

        THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (this  "Agreement") is dated
effective as of the 30th day of April, 2001 by and among PROMETHEUS
LABORATORIES INC., a California corporation (the "Company"), the undersigned holders of the Company's Common Stock (the  "Employee
Holders"), the undersigned holders (the "Preferred Stock Investors") of the Company's
Series A, Series B, Series C, Series D and Series E Preferred Stock (collectively, the "Preferred Stock") and the
undersigned holders of the Warrants (as defined below) (the "Warrant Investors"; the Preferred Stock Investors and the Warrant Investors are
collectively referred to as the "Investors"). 

WITNESSETH:  

        WHEREAS, certain of the Preferred Stock Investors are purchasing shares of the Company's Series E Preferred
Stock pursuant to that certain Series E Preferred Stock Purchase Agreement (the "Series E Purchase Agreement") of even date herewith; 

        WHEREAS, the Warrant Investors are purchasing certain warrants exercisable for the Company's Common Stock (as further defined in the
Securities Purchase Agreements referred to below, the "Warrants") pursuant to those certain Securities Purchase Agreements (as amended, modified and
supplemented from time to time, the "Securities Purchase Agreements") of even date herewith; 

        WHEREAS, the obligations in the Series E Purchase Agreement and Securities Purchase Agreements are conditioned upon the execution
and delivery of this Agreement; 

        WHEREAS, effective September 15, 1999, the Company, the Employee Holders and certain of the Investors (the  "Prior Investors") entered into that certain
Amended and Restated Shareholders' Agreement (the "Prior
Agreement"), setting forth certain rights and restrictions related to the ownership, voting and disposition of their respective shares of stock of the Company; 

        WHEREAS, the parties desire to amend and restate the Prior Agreement in its entirety and to include certain purchasers of the Company's
Series E Preferred Stock, under the terms and conditions set forth herein; 

        NOW, THEREFORE, in consideration of the premises and the mutual promises set forth in this Agreement, the parties agree as follows: 

        1.     Restrictions on Transfer of Shares. Except in compliance with the terms and conditions of this Agreement or pursuant to a
QIPO (as defined below) or any other offering of equity securities registered under the Securities Act of 1933, as amended (the "Securities Act") by the
Company (provided that in no event shall the Company register any shares of the Employee Holders or of any other employees of the Company prior to registering shares for an offering that has been made
generally on behalf of the Investors), the Employee Holders and Investors will not sell, assign, transfer, pledge, hypothecate, or otherwise encumber or dispose of in any way, all or any part of or
interest in any Equity Securities (as defined below) of the Company now owned or hereinafter acquired. Any sale, assignment, transfer, pledge, hypothecation or other encumbrance or disposition of
shares not made in compliance with this Agreement shall be null and void, shall not be recorded on the books of the Company and shall not be recognized by the Company. For purposes of this Agreement,
a "QIPO" means a consummated firmly underwritten public offering of the Company's Common Stock, registered with the Securities and Exchange Commission
(the "SEC") under the Securities Act, with respect to 

1

 

which
the Company receives net proceeds of at least $35,000,000 and the per share price (subject to adjustment, as set forth in the Company's Articles of Incorporation, for any stock split, reverse
stock split or other similar event) to the public is at least $6.74. 

        2.     Permitted Transfers.

        2.1   Notwithstanding any other provision of this Agreement, any Employee Holder may transfer any or all of such Employee
Holder's shares to a member of his or her immediate family (defined to include such Employee Holder's parents, children, spouse, siblings and the children of siblings) and/or a trust established by
the Employee Holder for the benefit of the Employee Holder or his immediate family. After any such transfer, the shares shall remain subject to the terms of this Agreement. The Company has received
from each Employee Holder a Consent of Spouse (in substantially the form attached
hereto as Exhibit 2.1) and will require each additional Employee Holder to deliver the same upon such Employee Holder's receipt of any Equity Securities. 

        2.2   Notwithstanding any other provision of this Agreement, 

        (a)   each of the Investors and any of their Permitted Transferees (as defined below) may, without the consent of the Company,
the Employee Holders and any of the other Investors and without compliance with Sections 1 and 4 hereof, at any time transfer any or all of its Equity Securities to one or more Permitted Transferees,
and 

        (b)   each of the Warrant Investors and any of their Permitted Transferees may, without the consent of the Company, the
Employee Holders and any of the other Investors and without compliance with Sections 1 and 4 hereof, (i) at any time transfer any or all of its Warrants and/or Warrant Shares to any other
person or persons if, in the case of this clause (i), in connection with such transfer such Warrant Investor (or Permitted Transferee) shall be also disposing of a pro rata portion of its Notes
issued pursuant to (and as defined in) the Securities Purchase Agreements and (ii) at any time transfer any or all of its Warrants and/or Warrant Shares to any other person or persons if, in
the case of this clause (ii), an Event of Default (as defined in the Securities Purchase Agreements) shall have occurred and be continuing; 

        provided that, in the case of any transfer pursuant to clause (a) or (b), (i) such transfer is not in violation of
applicable U.S. federal or state securities laws, or other similar laws, (ii) the Company receives written notice of such transfer, and (iii) such transferee shall have agreed to be
bound by the terms of this Agreement on the same terms as the transferor generally. 

        2.3   For purposes of this Agreement, a "Permitted Transferee" means, in each
case as applicable to a specific Investor, (i) any corporation, partnership, limited liability company or other entity which is an Affiliate (as defined below) of such Investor or any other
person or entity for whom such Investor (or any of such Investor's Affiliates) acts as investment manager or investment advisor, (ii) any managing director, general partner, director, member,
manager, limited partner, officer or employee of such Investor or of any Affiliate of such Investor, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of the
foregoing persons referred to in this clause (ii) (collectively, "Investor Associates"), (iii) any trust, the beneficiaries of which, or
any corporation, limited liability company or partnership, the shareholders, members or general or limited partners of which, include such Investor, one or more of such Investor's Affiliates, Investor
Associates, their spouses or their lineal descendants and (iv) a voting trustee for such Investor or one or more of such Investor's Affiliates or Investor Associates under the terms of a voting
trust. For purposes of this Agreement, "Affiliate" means, with respect to any person or entity, any person or entity controlling, controlled by or under
common control with such person or entity. For purposes of the definition of Affiliate, "control" means the possession of power to direct or cause 

2

 

the
direction of management and policies of such person or entity, whether through ownership of voting securities, by contract or otherwise. 

        3.     Preemptive Right

        3.1   Definitions.

        (a)   Equity Securities. For purposes of this Agreement, the term "Equity
Securities" shall mean any securities having voting rights in the election of the Board of Directors of the Company (the "Board of
Directors") not contingent upon default, or any securities evidencing an ownership interest in the Company, or any securities convertible into or exercisable for any shares of
the foregoing, or any agreement or commitment to issue any of the foregoing. 

        (b)   Holders. For purposes of this Section 3, the term "Holders" shall
mean (i) the Investors, (ii) any Permitted Transferees, and (iii) any other persons or entities that have acquired Equity Securities from any Investor or its transferee in a
transaction not involving a public offering and that is in compliance with this Agreement. 

        (c)   Calculations of Share Amounts. For purposes of this Agreement, (i) in each instance where a number or percentage
of shares is used as an index for the applicability of rights or duties of the beneficial owner thereof (except those rights to sell, issue or transfer a specific number or percentage of shares
described in Sections 3.5(vi) and 4.3(a)), such number or percentage of shares shall be as adjusted in the case of any stock splits, stock dividend and stock combinations and
(ii) in each instance where a number or percentage of shares is used as an index for the applicability of rights or duties of the beneficial
owner thereof and such index is stated as a number or percentage of the Company's Common Stock, the shares of the Preferred Stock and the Warrants shall be considered on an as-converted
and as-exercised basis, respectively, for purposes thereof. 

        3.2   The Right. If, at any time prior to termination of this Agreement the Company shall propose to issue or sell any Equity
Securities, it shall offer to sell to each Holder the Holder's Ratable Portion of such Equity Securities on the same terms and conditions and at the lowest price as such Equity Securities are offered
for issuance or sale. "Ratable Portion" shall mean, with respect to each Holder, the ratio of (a) the number of shares of Common Stock held by
the Holder (including the number of shares of Common Stock into which all Equity Securities held by the Holder are then convertible, exercisable or exchangeable) to (b) the Outstanding Common
Shares immediately prior to the issuance or sale of the Equity Securities. "Outstanding Common Shares" means all shares of Common Stock then outstanding
and all shares of Common Stock issuable upon conversion of all convertible securities then outstanding or issuable upon exercise of options and warrants then outstanding. 

        3.3   Notice. The Company shall give notice of the proposed issuance of Equity Securities to each Holder not later than twenty
(20) business days before the closing of the proposed issuance. Such notice shall contain all material terms and conditions of the issuance and of the Equity Securities to be issued. Each
Holder may elect to exercise all or any portion of its rights under this Section 3 by giving written notice to the Company within fifteen (15) business days of the receipt of the
Company's notice. If the consideration paid by others for the Equity Securities is not cash, the value of non-cash consideration shall be determined in good faith by the Board of
Directors, and any electing Holder may, at such Holder's election, pay for the Equity Securities it is purchasing by the payment of cash in immediately available funds, including by check or wire
transfer, or in the form of the consideration otherwise proposed to be paid for the Equity Securities. All payments shall be delivered by electing Holders to the Company not later than the date
specified by the Company in its notice, which shall in no event be earlier than thirty (30) business days after the Company's notice. 

3

 

        3.4   Issuance of Equity Securities to Other Persons. If the Holders fail to exercise the rights set forth in
Section 3.2 with respect to any portion of the Equity Securities, the Company shall have ninety (90) days thereafter to sell such portion of the Equity Securities in respect of which the
Holder's rights were not exercised, at a price and upon terms and conditions no more favorable in any material respect to the purchasers thereof than specified in the Company's notice to the Investors
pursuant to Section 3.3 hereof. If the Company has not sold such Equity Securities within ninety (90) days of the notice provided pursuant to Section 3.3, the Company shall not
thereafter issue or sell any Equity Securities, without first offering such securities to the Holders in the manner provided above. 

        3.5   Limitation. The provisions of this Section 3 shall not apply to (i) issuances of shares of Common Stock
(and options or warrants to purchase shares of Common Stock) to employees, officers, directors or consultants for the primary purpose of solicitation or retaining their employment,  provided that such
transaction is approved by the Board of Directors; (ii) issuances pursuant to a bona fide firmly
underwritten public offering registered under the Securities Act; (iii) issuances of Equity Securities in connection with the acquisition or merger of another business entity or majority
ownership thereof, provided that such transaction is approved by a majority of the disinterested members of the Board of Directors;
(iv) issuances of Common Stock upon conversion of Preferred Stock, exercise of the Warrants or exercise of options or other warrants outstanding as of the date hereof; (v) the issuances
of warrants to purchase Common Stock (and shares of Common Stock upon exercise thereof) to commercial lending institutions and equipment lessors,  provided that (a) such issuances are for other than
equity financing purposes and (b) such transaction is approved by the Board of
Directors; (vi) any Equity Securities issued in a single transaction or series of transactions that total less than 150,000 shares in the aggregate during any consecutive twelve month period;
and (vii) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution
arrangements or technology transfer or development arrangements, provided that (a) such transaction is approved by the Board of Directors and
(b) to the extent the aggregate issuance of Equity Securities in connection with transactions set forth in this Section 3.5(vii) has exceeded, or will exceed with respect to a
proposed transaction, ten percent (10%) of the number of fully diluted shares of Common Stock outstanding as of the date hereof, such transaction, and the issuance of Equity Securities with respect
thereto, must be approved by the director elected to the Board of Directors pursuant to Section 5.1(e) hereof. 

        3.6   Termination. The rights of Holders under this Section 3 shall terminate (i) as to any Holder who (together
with its Permitted Transferees and/or Affiliates) beneficially owns less than 100,000 shares of Common Stock (including the shares of Common Stock into which any Preferred Stock or Warrants are then
convertible or exercisable), (ii) as to all Holders immediately prior to the closing of a QIPO, (iii) as to all Holders immediately prior to the closing of a merger or an acquisition or
consolidation of the Company into any publicly traded entity; and (iv) as to all Holders immediately prior to the sale, transfer or lease (but not including a transfer or lease by pledge or
mortgage to a bona fide tender) of all or substantially all of the assets of the Company to an unaffiliated third party. 

        3.7   Assignment. The rights of Holders under this Section 3 shall be assignable only to any Permitted Transferee or
their Affiliates or any other transferee or assignee who (together with its Permitted Transferees and/or Affiliates including any person for whom such Holding (or any of its affiliates) acts as
investment advisor or investment manager), following such transfer or assignment, beneficially owns at least 100,000 shares of Common Stock (including the shares of Common Stock into which any
Preferred Stock or Warrants are then convertible or exercisable). 

        4.     Agreements Among the Company, the Investors and the Employee Holders.

4

 

        4.1   Right of First Refusal Upon Transfers by Employee Holders.

        (a)   The Right. If at any time any of the Employee Holders proposes to sell or transfer any Equity Securities, other than as
set forth in Section 2.1 of this Agreement, to one or more third parties pursuant to an understanding with such third parties in a transaction not registered under the Securities Act (the  "Transfer"), then the Employee Holder shall give the Company and each Investor (as defined below) written notice of his intention (the  "Transfer Notice"), describing the offered shares ("Offered Shares"), the identity of the prospective
transferee, and the consideration and the material terms and conditions upon which the proposed Transfer is to be made. The Transfer Notice shall certify that the Employee Holder has received a firm
offer from the prospective transferee and in good faith believes a binding agreement for Transfer is obtainable on the terms set forth, and shall also include a copy of any written proposal or letter
of intent or other agreement relating to the proposed Transfer. The Company, upon request of the Employee Holder, will provide a list of the addresses of the Investors. 

        (b)   Investors. For purposes of this Section 4, the term "Investors"
shall mean (i) the Investors, (ii) any Permitted Transferees, and (iii) any other persons or entities that have acquired Equity Securities from any Investor or its transferee in a
transaction not involving a public offering and that is in compliance with this Agreement. 

        (c)   Investor Option. The Investors shall have an option for a period of thirty (30) days from receipt of the Transfer
Notice to purchase their respective pro rata shares (described below) of the Offered Shares at the same price and subject to the same material terms and conditions as described in the Transfer Notice.
Each of the Investors may exercise such purchase option and, thereby, purchase all or any portion of such Investor's pro rata share (with any reallotments as provided below) of the Offered Shares,
only by notifying the Employee Holder and the Company in writing, before expiration of the initial thirty (30) day period as to the number of such shares which such Investor wishes to purchase
(the "Right of First Refusal"). Each Investor's pro rata share of the Offered Shares shall be a fraction of the Offered Shares, of which the number of
shares of Common Stock held and issued to such Investor and/or issuable upon conversion of Preferred Stock or exercise of Warrants held by such Investor on the date of the Transfer Notice (the  "Notice
Date") shall be the numerator and the total number of shares of Common Stock issued or issuable upon conversion of the Preferred Stock or
exercise of Warrants held by all Investors on the Notice Date shall be the denominator. Following expiration of the initial thirty (30) day period, the Employee Holder shall provide written
notice to the participating Investors stating the number of shares that the other Investors have failed to purchase pursuant to their Right of First Refusal and each Investor shall have a right of
overallotment such that, if any other Investor fails to exercise the right to purchase its full pro rata share of the Offered Shares, the other participating Investors may, before the date ten
(10) days following receipt of such written notice from the Employee Holder, exercise an additional right to purchase, on a pro rata basis, the Offered Shares not previously purchased by so
notifying the Employee Holder and the Company, in writing, within such ten (10) day period. Each Investor shall be entitled to apportion Offered Shares to be purchased among its partners and
affiliates, provided that (a) such Investor notifies the Employee Holder of such allocation and (b) such allocation does not require such
transaction to be registered or qualified under the Securities Act or any applicable state securities laws. If an Investor gives the Employee Holder notice that it desires to purchase its share and,
as the case may be, its overallotment, then payment for the Offered Shares shall be by check or wire transfer, or in such other form as is consistent with the consideration described in the Transfer
Notice, against delivery of the Offered Shares to be purchased at a place agreed upon between the parties and at the time of the scheduled closing therefor. 

5

 

        (d)   Failure to Notify. If the Investors fail to purchase all of the Offered Shares by exercising the options granted in this
Section 4.1 within the periods provided, the Employee Holder shall be entitled for a period of ninety (90) days thereafter to complete the proposed Transfer of the balance of such shares
not purchased by the Investors upon the terms and conditions specified in the Transfer Notice. If the Employee Holder has not so transferred the Offered Shares during such period, the Employee Holder
shall not thereafter make a Transfer of Shares without again first offering such shares to the other parties in the manner provided in this Section 4.1. 

        4.2   Right of Co-Sale.

        (a)   The Right. If at any time any of the Employee Holders or the Investors (the "Selling
Shareholder") proposes to sell or transfer any Equity Securities other than as set forth in Sections 2.1 and 2.2 of this Agreement in a transaction (the  "Transaction") not registered under the Securities Act and the Investors do not exercise their Right of First Refusal as to the full amount of the
Offered Shares pursuant to Section 4.1, then any Investor who does not exercise its Right of First Refusal (a "Selling Investor" for purposes of
this Section 4.2) and which notifies the Selling Shareholder in writing within thirty (30) days after receipt of the Transfer Notice referred to in Section 4.1(a), shall have the
opportunity to sell a pro rata portion of Equity Securities which the Selling Shareholder proposes to sell to such third party in the Transaction at the same price per share and on the same terms and
conditions as are applicable to the proposed sale or transfer by the Selling Shareholder; provided that no Investor shall be required in connection with
any such Transaction to make any representation, warranty or covenant other than those relating to such Investor's power and authority to effect such transfer without contravention of any of its
organizational documents or any agreement, document, instrument, judgment, decree, order, law, statute, rule or regulation applicable to it or to any of its properties, and as to such Investor's title
to the securities to be transferred by it being free and clear of all liens and encumbrances (other than those created hereby or those of general applicability under applicable securities laws);  provided, further,
 that notwithstanding the foregoing, each Investor shall be obligated to indemnify the third party purchaser upon the same terms and
conditions as are applicable to the indemnification given by the Selling Shareholder in connection with such transfer so long as (x) all indemnification
obligations are several, and not joint and several, among all transferors in proportion to the consideration paid to each transferor and (y) the maximum
indemnification obligation of any Investor shall not exceed the net cash proceeds actually received by it as a result of such transfer. In such instance, the Selling Shareholder shall assign so much
of his interest in the proposed agreement of sale as the Selling Investor shall be entitled to and shall request hereunder, and the Selling Investor shall assume such part of the obligations of the
Selling Shareholder under such agreement as shall relate to the sale of the securities by the Selling Investor. For the purposes of this Section 4.2, the "pro rata
portion" which the Selling Investor shall be entitled to sell shall be the number of shares proposed to be sold in the Transaction multiplied by the quotient equal to
(1) the number of shares of Common Stock issued to the Selling Investor and/or issuable upon conversion or exercise of the Selling Investor's Preferred Stock and/or Warrants divided by
(2) the total number of shares of Common Stock issued to all Investors and/or issuable upon conversion and exercise of all Investors' Preferred Stock and Warrants. Each Selling Investor shall
notify the Selling Shareholder whether it elects to sell an amount equal to or less than its pro rata portion of the Equity Securities so offered. Each Selling Investor shall be entitled to apportion
Equity Securities to be sold among its partners and affiliates, provided that (i) such Selling Investor notifies the Selling Shareholder of such
allocation and (ii) such allocation does not require such Transaction to be registered or qualified under the Securities Act or any applicable state securities laws. The Selling Shareholder
shall not consummate the Transaction unless each 

6

 

Selling
Investor who shall have timely elected to sell its pro rata portion (or any lesser amount) in such Transaction shall be permitted by the purchasing party to effect such sale. 

        (b)   Failure to Notify. If within thirty (30) days after receipt of the Transfer Notice referred to in
Section 4.1(a) from the Selling Shareholder, the Investors do not notify the Selling Shareholder that they desire to sell Equity Securities as part of the Transaction for the price and on the
terms and conditions set forth therein, then the Selling Shareholder may, subject to Section 4.1 hereof, sell during the period available for the completion of the Transfer set forth in
Section 4.1(d) such Equity Securities as to which the Investors do not elect to sell. Any such sale shall be made only to persons identified in
the Selling Shareholder's notice and at the same price and upon the same terms and conditions as those set forth in the notice. In the event the Selling Shareholder has not sold the Equity Securities
or entered into an agreement to sell the Equity Securities within the period available for completion of the Transfer set forth in Section 4.1(d) all Equity Securities held by such Selling
Shareholder shall be subject to the provisions of Section 4. l and this Section 4.2. 

        4.3   Limitations to Rights of First Refusal and Co-Sale. Without regard and not subject to the provisions of
Section 4. l and Section 4.2: 

        (a)   In addition to any transfers pursuant to Section 2.1 and Section 2.2, each Employee Holder and Investor may
sell, assign or otherwise transfer, with or without consideration, but subject to applicable securities laws or an exemption thereto, in any twelve (12) month period after the date of this
Agreement up to 150,000 shares of the Equity Securities owned by the Employee Holder and Investor as of such date and such transferred securities shall be free of the provisions of this Agreement; 

        (b)   Each Employee Holder or Investor may sell Equity Securities to the Company upon exercise by the Company of its rights to
repurchase Common Stock issued pursuant to stock purchase or option agreements entered into between the Company and the Employee Holder and Investor,  provided that the aggregate amount paid by the
Company pursuant to all such Transactions shall not exceed $500,000 during the term of this Agreement;
and 

        (c)   Each Investor may sell Equity Securities to the Company upon exercise of its rights to cause the Company to repurchase
Equity Securities as set forth in Article Three.C.3 of the Company's Articles of Incorporation. 

        4.4   Assignment. The rights granted under this Section 4 shall be assignable only to any Permitted Transferee or their
Affiliates or any other transferee or assignee who (i) together with its Permitted Transferees and/or Affiliates including any person for whom such Holding (or any of its affiliates) acts as
investment advisor or investment manager, following such transfer or assignment, beneficially owns at least 100,000 shares of Common Stock (including the shares of Common Stock into which any
Preferred Stock or Warrants are then convertible or exercisable) and (ii) agrees to become subject to the obligations of the Investors hereunder. 

        5.     Voting Agreements

        5.1   Board of Directors. Each Employee Holder and each Investor agrees irrevocably to vote all shares of capital stock of the
Company now or hereafter directly or indirectly owned (of record or beneficially) by such Employee Holder and Investor or their affiliates, and otherwise to take such action, and the Company and each
Employee Holder and Investor agrees to nominate 

7

 

candidates
for election to the Board of Directors as shall be necessary to elect and appoint to the Board of Directors and to maintain as members of the Board of Directors, the following persons: 

        (a)   three individuals designated by the holders of the Company's outstanding Common Stock, elected pursuant to
Article 3.C.4(e) of the Company's Amended and Restated Articles of Incorporation; 

        (b)   one individual designated by the holders of the Company's outstanding Series B Preferred Stock, elected pursuant
to Article 3.C.4(e) of the Company's Amended and Restated Articles of Incorporation; 

        (c)   one individual designated by the holders of the Company's outstanding Series C Preferred Stock, elected pursuant
to Article 3.C.4(e) of the Company's Amended and Restated Articles of Incorporation; 

        (d)   one individual designated by Patricof & Co. Ventures, Inc., which individual shall be a member of the
Company's Compensation Committee, elected pursuant to Article 3.C.4(e) of the Company's Amended and Restated Articles of Incorporation; 

        (e)   one individual designated by DLJ Merchant Banking Funding III, L.P. and its Permitted Transferees, elected pursuant to
Article 3.C.4(e) of the Company's Amended and Restated Articles of Incorporation; 

        (f)    one individual from the medical industry designated by a majority of the members of the Board of Directors, which
majority shall include the directors elected by the Series B, Series C, Series D and Series E Preferred Stock pursuant to Article 3.C.4(e) of the Company's Amended
and Restated Articles of Incorporation; and 

        (g)   one individual from the pharmaceutical industry designated by a majority of the members of the Board of Directors, which
majority shall include the directors elected by the holders of the Series B, Series C, Series D and Series E Preferred Stock pursuant to Article 3.C.4(e) of the
Company's Amended and Restated Articles of Incorporation. 

        5.2   Changes in Board Seats. If, from time to time, any party authorized herein to designate or nominate an individual to
serve on the Board of Directors under Section 5.1 (the "Electing Party") elects to: 

        (a)   remove from the Board of Directors an individual who was designated or nominated for election to the Board of Directors
under Section 5.1(a); and/or 

        (b)   designate a different individual to occupy the Board seat or to fill a vacancy in such Board seat; 

then
each Employee Holder and Investor shall vote all shares of the capital stock of the Company then directly or indirectly owned (of record or beneficially) by them or their affiliates to cause the
individual designated by such Electing Party to be removed from, or elected to, the Board of Directors, as the case may be. 

        5.3   Notice. The Company shall promptly give each Employee Holder and Investor written notice of any election to or
appointment of or change in composition of the Board of Directors. 

        5.4   Further Assurances. Each of the Employee Holders and Investors and the Company agree not to vote any shares of the
Company's stock, or to take any actions, in any manner that would defeat, impair or adversely effect the stated goals and mentions of the parties under this Section 5. The provisions of this
Section 5 will be binding on all Employee Holders and the Investors and their transferees. 

8

 

        5.5   Expenses. The Company shall reimburse members of the Board of Directors for reasonable expenses incurred in connection
with their Board participation, or their participation on a committee thereof. 

        5.6   Visitation Rights. Brentwood Associates VII, LP ("Brentwood"), First
Union Capital Partners, Inc. ("First Union"), Capital Resource Partners IV, LP ("Capital"),
Teachers Insurance and Annuity Association of America ("Teachers") and John Hancock Life Insurance Company
("Hancock") shall each have the right to designate one individual to attend and observe any regular or special meeting of the Board of Directors, or any
committee thereof, at all times until the completion of an initial public offering of the Company's common stock and the expiration of all restrictions and limitations (whether statutory, regulatory,
contractual or otherwise) on the sale of securities of the Company held by Brentwood, First Union, Capital, Teachers, Hancock or any of their respective affiliates, as the case may be;  provided, however,
 that the Company reserves the right to exclude such representative from access to any material or meeting or portion thereof if the
Company believes upon advice of counsel
that such exclusion is reasonably necessary to preserve the attorney-client privilege or to protect highly confidential proprietary information. The Company shall reimburse Brentwood, First Union,
Capital, Teachers and Hancock for all reasonable travel and accommodation expenses incurred by such individual. 

        6.     Transactions with Affiliates. The Company will not, and will not permit any of its subsidiaries to, enter into directly or
indirectly any material transaction or material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any
service) with any affiliate (other than the Company or a wholly-owned subsidiary of the Company) unless such transaction is approved by a majority of the disinterested members of the Board of
Directors. 

        7.     Legend. Each existing or replacement certificate for shares now owned by an Employee Holder and Investor shall bear the
following legend upon its face: 

"The
ownership, transfer, encumbrance, pledge, assignment, or other disposition of this certificate and the share of stock represented thereby, are subject to the restrictions contained in an Amended
and Restated Shareholders' Agreement dated April 30, 2001, as the same may be amended, modified or supplemented from time to time, a copy of which is on file at the office of the Company." 

        8.     Effect of Change in Company's Capital Structure. Appropriate adjustments shall be made in the number, exercise price and
class of shares in the event of a stock dividend, stock split, reverse stock split, combination, reclassification or like change in the capital structure of the Company. If, from time to time, there
is any stock dividend, stock split or other change in the character or amount of any of the outstanding stock of the Company, then in such event any and all new, substituted or additional securities
to which the Employee Holders and Investors are entitled by reason of the Employee Holders' and Investors' ownership of the stock shall be subject to the rights set forth in Section 4 to the
same extent as the stock held by such holder immediately before such event was subject to such rights. 

        9.     Notices. Any notice required or permitted by any provision of this Agreement shall be given in writing, and shall be
delivered either personally or by registered, certified mail, courier or express delivery service, addressed (i) in the case of the Employee Holders and the Investors, to their addresses as set
forth on the attached Exhibit A or such other addresses as are designated in writing from time to time by any such party in a notice given in
compliance with this Section 9 to the Company and each other party, (ii) in the case of the Company, to its principal office, and (iii) in the case of any permitted transferee of
a party to this Agreement or its transferee, to such transferee at its address as designated in writing by such transferee in a notice given in compliance with this Section 9 to the Company and
each other party from time to time. 

9

 

        10.   Binding Effect. This Agreement and each and every term, covenant and condition thereof, including all restrictions herein
contained upon the sale, transfer, assignment, encumbrance or other disposition of Equity Securities, shall be binding upon and inure to the benefit of the transferees, legatees, donees, heirs,
executors, administrators, personal representatives, successors and assigns of each of the parties. 

        11.   Term. The term of this Agreement shall expire upon the first to occur of: (i) a QIPO, (ii) upon shareholder
approval of any merger or consolidation of the Company with any other corporation in which more than 50% of the voting control of the Company is transferred to a third party, or (iii) the
dissolution, liquidation or winding-up of the Company. 

        12.   Governing Law. This instrument contains the entire understanding of the parties with respect to the subject matter
hereof, supersedes all other agreements between any of the parties with respect to the subject matter hereof and cannot be altered or otherwise amended except as provided in Section 15. This
Agreement shall be interpreted under the laws of the State of California, without reference to its principles of conflicts of law. 

        13.   Severability. The invalidity or unenforceability of any provision hereof shall not in any way affect the validity or
enforceability of any other provision. 

        14.   Ownership. Each Employee Holder and Investor represents and warrants severally as to itself to each of the other parties
hereto that (i) it is the sole legal and beneficial owner of the Equity Securities owned by it and subject to this Agreement, (ii) no other person has any interest in or right with
respect to such Equity Securities, including, without limitation, any lien, preemptive right, right of first refusal, co-sale right, tag-along right or right to vote (or
restriction upon voting of) such Equity Securities, but excluding, in the case of any Employee Holder, a community property interest of such Employee Holder's spouse, (iii) this Agreement is
its legal, valid and binding obligation enforceable against it in accordance with the terms hereof, and (iv) the execution, delivery and performance of this Agreement by it will not violate,
and will not require any consent, filing or other action by any other person or entity pursuant to, any agreement, document, instrument, judgment, decree, order, law, statute, rule or regulation to
which it or any of its properties or assets is subject, other than (in the case of First Union and its Affiliates) notices to and filings with federal bank regulatory authorities required to be given
or made after the date hereof (which notices and filings will be so given or made on a timely basis). 

        15.   Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and (i) the holders of a majority of the Common
Stock issued and outstanding, (ii) for so long as a total of 2,000,000 shares of Series A, Series B, and Series C Preferred Stock (on an as-converted basis)
remain outstanding, the holders of a majority of Series A, Series B, and Series C Preferred Stock (on as as-converted basis), (iii) for so long as four million
five hundred thousand (4,500,000) shares of Series D Preferred Stock remain outstanding, the holders of a majority of the Series D Preferred Stock (on an as-converted basis),
(iv) for so long as 2,077,151 shares of Series E Preferred Stock remain outstanding, the holders of a majority of the Series E Preferred Stock (on an as-converted
basis) and (v) for so long as the aggregate number of Warrant Shares issued and/or issuable upon exercise of the Warrants is at least 456,000, the holders of a majority of the Warrants (on an
as-exercised basis) and Warrant Shares, provided that (1) in no event may any amendment or waiver affect any Investor in a manner
differently from all other Investors without the prior written consent of such first-mentioned Investor and (2) each of the aforementioned numbers of shares, Warrants and Warrant Shares in this
Section 15 shall be appropriately adjusted for stock splits, stock dividends, and the like. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party
to this Agreement and its transferees. 

10

 

        16.   No Modification of Transaction Documents. No waiver, consent or approval given by any Warrant Investor pursuant to this
Agreement, no transfer of Equity Securities permitted hereunder and no transaction with affiliates permitted hereunder shall be deemed to affect any of the rights and obligations of any of the parties
to the Securities Purchase Agreements or amend, modify or change any of the terms of the Securities Purchase Agreement Agreements or any of the other Transaction Documents (as defined in the
Securities Purchase Agreements). Each of the parties hereto acknowledges and consents to the terms of the Transaction Documents, Section 8 of the Securities Purchase Agreements and
Section 4 of the Warrants. 

        17.   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. 

11

        IN WITNESS WHEREOF, this Agreement has been duly executed effective as of the date and year first above written. 

	THE COMPANY:	 	PROMETHEUS LABORATORIES INC.
	

 	
 	

By:	

/s/ Michael J. Walsh
 Michael J. Walsh, Chairman
	    	 	 	 	 
	THE INVESTORS:	 	 	 	 
	

 	
 	

ST. PAUL VENTURE CAPITAL V, LLC
	

 	
 	

By:	

/s/ Patrick A. Hopt

	 	 	Name:	Patrick A. Hopt

	 	 	Title:	Managing Member

	

 	
 	
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
	

 	
 	

By	

/s/ Patrick A. Hopt

	 	 	Name:	Patrick A. Hopt

	 	 	Title:	Authorized Representative

	

 	
 	
ST. PAUL VENTURE CAPITAL VI, LLC
	

 	
 	

By:	

SPVC Management VI, LLC

Its Managing Member
	

 	
 	

By:	

/s/ Patrick A. Hopt

	 	 	Its:	Senior Managing Director

	

 	
 	
WINDAMERE II, LLC
	

 	
 	

By:	

/s/ Scott L. Glenn

	 	 	Name:	Scott L. Glenn

	 	 	Title:	General Partner

	

 	
 	
DLJ CAPITAL CORP.
	

 	
 	

By:	

/s/ Robert E. Curry
 Robert E. Curry

Managing Director
	

 	
 	
DLJ ESC II, L.P.
	

 	
 	

By:	

DLJ LBO Plans Management Corporation

Manager
	

 	
 	

By:	

/s/ Robert E. Curry
 Robert E. Curry

Attorney In Fact
	

 	
 	
THE SPROUT CEO FUND, L.P.
	

 	
 	

By:	

DLJ Capital Corp

General Partner
	

 	
 	

 	

By:	

/s/ Robert E. Curry
 Robert E. Curry

Managing Director
	 	 	 	 	 

	

 	
 	
BRENTWOOD ASSOCIATES VIII, L.P.
	

 	
 	

By:	

Brentwood Ventures VIII, LLC,

Its General Partner
	

 	
 	

By:	

/s/ Brian Atwood

	 	 	Name:	Brian Atwood

	 	 	Title:	Managing Member

	

 	
 	
BRENTWOOD AFFILIATES FUND II, L.P.
	

 	
 	

By:	

Brentwood Ventures VIII, LLC,

Its General Partner
	

 	
 	

By:	

/s/ Brian Atwood

	 	 	Name:	Brian Atwood

	 	 	Title:	Managing Member

	

 	
 	
FIRST UNION CAPITAL PARTNERS, INC.
	

 	
 	

By:	

/s/ D. Neal Morrison

	 	 	Name:	D. Neal Morrison

	 	 	Title:	Senior Vice President

	

 	
 	
FIRST UNION CAPITAL PARTNERS 2001, INC.
	

 	
 	

By:	

/s/ D. Neal Morrison

	 	 	Name:	D. Neal Morrison

	 	 	Title:	Senior Vice President

	

 	
 	
APA EXCELSIOR V, L.P.
	 	 	By:	APA Excelsior V Partners, L.P.

Its General Partner
	 	 	By:	Patricof & Co. Managers, Inc.

Its General Partner
	

 	
 	

By:	

/s/ Janet Effland

	 	 	Name:	Janet Effland

Its: VP
	

 	
 	
PATRICOF PRIVATE INVESTMENT CLUB II, L.P.
	

 	
 	

By:	

APA Excelsior V Partners, L.P.

Its General Partner
	 	 	By:	Patricof & Co. Managers, Inc.

Its General Partner
	

 	
 	

By:	

/s/ Janet Effland

	 	 	Name:	Janet Effland

Its: VP
	

 	
 	
DLJ MERCHANT BANKING PARTNERS III, L.P.
	

 	
 	

By:	

DLJ Merchant Banking III, Inc., as

Managing General Partner
	

 	
 	

By:	

/s/ Michael Isikow

	 	 	Name:	Michael Isikow

	 	 	Title:	Attorney-In-Fact
	 	 	 	 	 

	

 	
 	
DLJ OFFSHORE PARTNERS III, C.V.
	

 	
 	

By:	

DLJ Merchant Banking III, Inc., as

Managing General Partner
	

 	
 	

By:	

/s/ Michael Isikow

	 	 	Name:	Michael Isikow

	 	 	Title:	Attorney-In-Fact
	

 	
 	
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, as nominee for:
	

 	
 	
CREDIT SUISSE FIRST BOSTON PRIVATE

EQUITY, INC.;

DLJ FIRST ESC, L.P.;

EMA 2001 PLAN, L.P.;

OFFSHORE 2001 PLAN HOLDINGS, L.P.; AND

CSFB 2001 INVESTORS, L.P.
	

 	
 	

By:	

/s/ Michael Isikow

	 	 	Name:	Michael Isikow

	 	 	Title:	Attorney-In-Fact
	

 	
 	
EASTON ASSOCIATES, L.L.C.
	

 	
 	

By:	

/s/ [illegible]

	 	 	Name:	Easton

	

 	
 	
CAPITAL RESOURCE PARTNERS IV, LP
	

 	
 	

By:	

CRP Partners IV, LLC
	

 	
 	

By:	

/s/ William N. Holm
 William N. Holm, Jr., Partner
	

 	
 	
CRP INVESTMENT PARTNERS IV, LLC
	

 	
 	

By:	

/s/ William N. Holm
 William N. Holm, Jr., Manager
	

 	
 	
JOHN HANCOCK LIFE INSURANCE COMPANY
	

 	
 	

By:	

/s/ Stephen J. Blewitt

	 	 	Name:	Stephen J. Blewitt

	 	 	Title:	Managing Director

	

 	
 	
INVESTORS PARTNER LIFE INSURANCE COMPANY
	

 	
 	

By:	

/s/ Stephen J. Blewitt

	 	 	Name:	Stephen J. Blewitt

	 	 	Title:	Authorized Signatory

	

 	
 	
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
	

 	
 	

By:	

/s/ Stephen J. Blewitt

	 	 	Name:	Stephen J. Blewitt

	 	 	Title:	Authorized Signatory

	

 	
 	
SIGNATURE 5 L.P.
	

 	
 	

By:	

John Hancock Life Insurance Company,

as Portfolio Advisor
	

 	
 	

By:	

/s/ Stephen J. Blewitt

	 	 	Name:	Stephen J. Blewitt

	 	 	Title:	Managing Director

	

 	
 	
CREDIT SUISSE FIRST BOSTON
	

 	
 	

By:	

/s/ [illegible]

	 	 	Name:	 	 
	 	 	 	

	 	 	Title:	 	 
	 	 	 	

	

 	
 	
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
	

 	
 	

By:	

/s/ Richard J. Tanner

	 	 	Name:	Richard J. Tanner

	 	 	Title:	Associate Director

	
EMPLOYEE HOLDERS:	
 	

/s/ Scott L. Glenn
 Scott L. Glenn
	

 	
 	

/s/ Jonathan Braun
 Jonathan Braun
	

 	
 	

/s/ Stephan Targan
 Stephan Targan

Exhibit 2.1  

CONSENT OF SPOUSE  

        I acknowledge that I have read the foregoing Amended and Restated Shareholders' Agreement (the "Agreement") and
that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of Prometheus Laboratories Inc. held of record by either or both of us,
including my community interest in such shares, if any, rights of first refusal and co-sale rights (as described in the Agreement) must be granted to certain shareholders by the seller. I
hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operation of, or violate, the
Agreement. 

	 	/s/  LYNN K. GORDON      
 (Signature)

CONSENT OF SPOUSE  

        I acknowledge that I have read the foregoing Amended and Restated Shareholders' Agreement (the "Agreement") and
that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of Prometheus Laboratories Inc. held of record by either or both of us,
including my community interest in such shares, if any, rights of first refusal and co-sale rights (as described in the Agreement) must be granted to certain shareholders by the seller. I
hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operation of, or violate, the
Agreement. 

	 	/s/  [ILLEGIBLE]      
 (Signature)

CONSENT OF SPOUSE  

        I acknowledge that I have read the foregoing Amended and Restated Shareholders' Agreement (the "Agreement") and
that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of Prometheus Laboratories Inc. held of record by either or both of us,
including my community interest in such shares, if any, rights of first refusal and co-sale rights (as described in the Agreement) must be granted to certain shareholders by the seller. I
hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operation of, or violate, the
Agreement. 

	 	/s/  JANNE D. TARGAN      
 (Signature)

EXHIBIT A  

SCHEDULE OF INVESTORS  

St. Paul Venture Capital V, LLC

St. Paul Venture Capital VI, LLC

St. Paul Fire and Marine Insurance Company
  c/o Nancy Olson

Three Lagoon Drive, Suite 130

Redwood City, CA 94065-1566 

Windamere, LLC

Windamere II, LLC
  c/o Scott L. Glenn

12230 El Camino Real, Suite 300

San Diego, CA 92310 

DLJ Capital Corp

DLJ ESC II, L.P.

Sprout Capital VII, L.P.

The Sprout CEO Fund, L.P.
  c/o Robert E. Curry, Ph.D.

3000 Sand Hill Road, Building 3, Suite 170

Menlo Park, CA 94025-7114 

Brentwood Associates VIII, LP

Brentwood Affiliates Fund II, LP
  c/o Brian G. Atwood

3000 Sand Hill Road, Building 1, Suite 260

Menlo Park, CA 94025-7116 

First Union Capital Partners, Inc.

First Union Capital Partners 2001, LLC
  c/o Neal Morrison

One First Union Center

301 South College Street, 12th Floor

Charlotte, NC 28288 

APA Excelsior V. L.P.

Patricof Private Investment Club II, L.P.
  c/o Janet Effland

2100 Geng Road, Suite 150

Palo Alto, CA 94303 

DLJ Merchant Banking Partners III, L.P.

DLJ Offshore Partners III, C.V.

Donaldson, Lufkin & Jenrette Securities Corporation, as nominee

Easton Associates, L.L.C.
  c/o David Durkin

Credit Suisse First Boston

277 Park Avenue

New York, NY 10172 

CAPITAL RESOURCE PARTNERS IV, LP

CRP INVESTMENT PARTNERS IV, LLC
  85 Merrimac Street, Suite 200

Boston, MA 02114

Attn: William N. Holm, Jr. 

and

85
Merrimac Street, Suite 200

Boston, MA 02114

Attn: John P. Collins 

JOHN HANCOCK LIFE INSURANCE COMPANY

INVESTORS PARTNER LIFE INSURANCE COMPANY

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SIGNATURE 5 L.P.
  200 Clarendon Street, 30th Floor

Boston, MA 02117

Attn: Investment Law Division, T-50 

and 

200
Clarendon Street, 30th Floor

Boston, MA 02117

Attn: Bond and Corporate Finance Group, T-57 

CREDIT SUISSE FIRST BOSTON
  11 Madison Avenue, 13th Floor

New York, NY 10010

Attn: Angela Huger 

and

11
Madison Avenue, 13th Floor

New York, NY 10010

Attn: John Hanlon 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
  730 Third Avenue, 4th Floor

New York, NY 10017

Attn: Securities Division 

SCHEDULE OF EMPLOYEE HOLDERS  

SCOTT L. GLENN
  Windamere Venture Partners

12230 El Camino Real, Suite 300

San Diego, CA 92130 

JONATHAN BRAUN, M.D.
  UCLA, School of Medicine

CHS 13-222 Dept. Path. & Lab Management

Los Angeles, CA 90024-1732 

STEPHAN TARGAN, M.D.
  Cedars Sinai Medical, IBD Center

8700 Beverly Boulevard, Suite D4063

Los Angeles, CA 90048-0750 

QuickLinks

PROMETHEUS LABORATORIES INC. AMENDED AND RESTATED SHAREHOLDERS' AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 4.3  

 
 

PROMETHEUS LABORATORIES INC.    
    
    REGISTRATION RIGHTS AGREEMENT    
    

        THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered
into as of the 30th day of April 2001, by and among PROMETHEUS LABORATORIES INC., a California corporation (the
"Company") and the investors listed on Exhibit A hereto (as the same may be amended and supplemented from time to time), referred to hereinafter
as the "Investors" and each individually as an "Investor." 

Recitals  

        WHEREAS, certain of the Investors are purchasing shares of the Company's Series E Preferred Stock pursuant
to that certain Series E Preferred Stock Purchase Agreement (the "Series E Purchase Agreement") of even date herewith; 

        WHEREAS, certain of the Investors are purchasing warrants (as further defined in the Securities Purchase Agreements referred to below, the
"Warrants") to purchase shares of the Company's common stock, par value $0.001 per share (the "Common
Stock"), pursuant to those certain Securities Purchase Agreements (as amended, modified and supplemented from time to time, the "Securities Purchase
Agreements") of even date herewith; 

        WHEREAS, the obligations in the Series E Purchase Agreement and the Securities Purchase Agreements are conditioned upon the
execution and delivery of this Agreement; 

        WHEREAS, the Company and certain of the Investors are parties to that certain Series B Preferred Stock Purchase Agreement dated
December 27, 1996, as amended on September 14, 1999 (the "Series B Purchase Agreement"); 

        WHEREAS, the Company and certain of the Investors are parties to that certain Series C Preferred Stock Purchase Agreement dated
March 11, 1998, as amended on September 14, 1999 (the "Series C Purchase Agreement"); 

        WHEREAS, the Company and certain of the Investors are parties to that certain Series D Preferred Stock Purchase Agreement dated as
of September 15, 1999 (the "Series D Purchase Agreement"); 

        WHEREAS, the parties to the Series B Purchase Agreement and the Series C Purchase Agreement and the Series D Purchase
Agreement (collectively, the "Prior Agreements") desire to terminate certain provisions of such agreements and accept the rights and covenants hereof in
lieu of their rights and covenants under the Prior Agreements; and 

        NOW, THEREFORE, in consideration of these premises and for other good and valid consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: 

 
TABLE OF CONTENTS  

	 
	 	 
	 	PAGE

	SECTION 1.	 	REGISTRATION	 	1
	 	1.1	 	Definitions	 	1
	 	1.2	 	Requested Registration	 	1
	 	1.3	 	Company Registration	 	3
	 	1.4	 	Shelf Registration	 	4
	 	1.5	 	Expenses of Registration	 	5
	 	1.6	 	Registration Procedures	 	5
	 	1.7	 	Indemnification	 	6
	 	1.8	 	Information by Holder	 	8
	 	1.9	 	Sale Without Registration	 	8
	 	1.10	 	Rule 144 Reporting	 	8
	 	1.11	 	Transfer of Registration Rights	 	9
	 	1.12	 	Limitations on Subsequent Registration Rights	 	9
	 	1.13	 	"Market Stand-Off Agreement"	 	9
	 	1.14	 	Expiration of Rights	 	9
	SECTION 2.	 	MISCELLANEOUS	 	10
	 	2.1	 	Governing Law	 	10
	 	2.2	 	Successors and Assigns	 	10
	 	2.3	 	Entire Agreement; Termination of Prior Agreements	 	10
	 	2.4	 	Severability	 	10
	 	2.5	 	Amendment and Waiver	 	10
	 	2.6	 	Delays or Omissions	 	10
	 	2.7	 	Notices	 	10
	 	2.8	 	Attorneys' Fees	 	11
	 	2.9	 	Titles and Subtitles	 	11
	 	2.10	 	Additional Investors	 	11
	 	2.11	 	Counterparts	 	11
	 	2.12	 	Aggregation of Stock	 	11

i

   SECTION 1.    REGISTRATION.  

        1.1    Definitions.    As used in this Agreement: 

        (a)   The term "Preferred Shares" shall mean, collectively, the Company's
Series A, Series B, Series C, Series D and Series E Preferred Stock held by the Investors and their permitted assigns. 

        (b)   The terms "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. 

        (c)   The term "Registrable Securities" means, at such time at which the
determination of Registrable Securities is to be made: (i) any Common Stock issued upon, or that may be issued upon, conversion of the Preferred Shares, (ii) the Warrant Shares, and
(iii) any other Common Stock issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the Preferred Shares or the Warrant Shares. For purposes
hereof, a holder of any Warrants shall be deemed to be the holder of the Warrant Shares issuable upon exercise thereof, but for avoidance of doubt, the Warrants themselves are not Registrable
Securities. 

        (d)   The term "Holder" means any holder of outstanding Registrable Securities
who acquired such Registrable Securities in a transaction or series of transactions not involving any registered public offering. 

        (e)   The term "Initiating Holders" means any Holder or Holders making a
request for registration pursuant to the provisions of Section 1.2(a)(i). 

        (f)    The term "Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities Act. 

        (g)   The term "Securities Act" means the Securities Act of 1933, as amended. 

        (h)   The term "SEC" means the Securities and Exchange Commission. 

        (i)    The term "Substantial Amount of Registrable Securities" means at least
twenty percent (20%) of the Registrable Securities that have not been resold to the public in a registered public offering. 

        (j)    The term "Warrant Shares" means the Common Stock (or any other
securities) issuable upon exercise of the Warrants or otherwise in respect of the Warrants. 

        1.2    Requested Registration.    

        (a)   Request for Registration.

        (i)    The Company shall be required to proceed with the registration requirements of Section 1.2(a)(ii) below if,
at any time after the date that is the earlier of two (2) years after the date hereof and six (6) months after the first registration effected by the Company of any of its securities,
the Company receives a written request for a registration: 

        (A)  From the Holder or Holders of a Substantial Amount of Registrable Securities;  provided, however, that the
Company shall not be obligated to take any action to effect any such
registration pursuant to this Section 1.2(a)(i)(A) after the Company has effected two (2) registrations initiated pursuant to this Section 1.2(a)(i)(A). 

        (B)  After the Company has effected two (2) registrations initiated pursuant to clause (A) above, from the
Holder or Holders of a majority of the Series E Preferred Stock; provided, however, that the
Company shall not be obligated to take any action to effect any registration pursuant to this Section 1.2(a)(i)(B) after the Company has effected one (1) registration initiated pursuant
to this clause (B). 

1

 

        (C)  After the Company has effected two (2) registrations initiated pursuant to clause (A) above, from the
Holder or Holders of a majority of the Warrant Shares; provided, however, that the Company shall not be
obligated to take any action to effect any such registration pursuant to this Section 1.2(a)(i)(C) after the Company has effected one (1) registration initiated pursuant to this
clause (C). 

        (ii)   If, pursuant to Section 1.2(a)(i) above, the Company is required to proceed with the registration
requirements, the Company will (A) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and (B) as soon as practicable, use its
diligent best efforts to effect all such registrations, qualifications and compliances (including, without limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under the applicable state securities laws, and appropriate compliance with exemptive regulations issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit the sale and distribution of such portion of such Holders' Registrable Securities as are specified in such request, together with such portion
of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written notice given to the Company within thirty (30) days after receipt of the
written notice from the Company that is required under this Section 1.2(a)(ii); provided that if a registration effected pursuant to this
Section 1.2 covers less than eighty percent (80%) of the Registrable Securities requested to be included by the Initiating Holders (together with such portion of the Registrable Securities of
any other Holder or Holders joining in such request) or if the request for registration is subsequently withdrawn by the Initiating Holders (and the Holders of the Registrable Securities pay for the
expenses incurred by the Company pursuant to such withdrawn registration request to the extent they may be required pursuant to Section 1.5(a) hereof), then such registration shall not count as
a registration for purposes of this Section 1.2; and further provided, that the Company shall not be obligated to take any action to effect any
such registration, qualification or compliance pursuant to this Section 1.2 within three (3) months after the filing date of any other registration filed under the Securities Act (other
than registration statements relating to employee stock or stock purchase plans or relating solely to transactions under Rule 145 of the General Rules and Regulations promulgated under the
Securities Act or to debt securities) in which the holders of Registrable Shares shall have been permitted to participate pursuant to the foregoing provisions of this Section 1.2(a) or
Section 1.3. 

        (iii) For purposes hereof, a registration will be deemed not to have been effected (i) unless and until the
registration statement related to such request is declared effective by the SEC and remains effective for a period of at least 180 days or until all the securities registered pursuant thereto
have been sold, whichever is the first to occur, (ii) if, after such registration statement has become effective, it is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason not attributable to the Holders, unless all stop orders, injunctions and orders shall have been lifted or rescinded, all
requirements shall have been satisfied or waived, and the registration statement has thereafter become effective again and remains effective for the period described in clause (i) of this
Section 1.2(a)(iii) and (iii) if the customary conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure on the part of any Holder. 

        (b)    Underwriting.    If the Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 1.2(a) and the Company
shall include such information 

2

 

in
the written notice referred to in Section 1.2(a)(ii). The right of any Holder to registration pursuant to Section 1.2 shall be conditioned upon the inclusion of such Holder's
Registrable Securities in the underwriting. The Company shall (together with all Holders proposing to distribute their securities) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company and approved by a majority of the Holders electing to be included in the underwriting. Notwithstanding any other provision of
this Section 1.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities that would otherwise be registered and underwritten pursuant thereto, and the number of shares included in the registration and
underwriting shall be allocated among the Holders of Registrable Securities requesting registration in proportion, as nearly as practicable, to the total number of Registrable Securities held by such
Holders at the time of filing of the registration statement. In no event, except in the Company's initial public offering, however, shall any Registrable Shares be eliminated from the registration
until any and all shares being sold for the account of the Company and for the account of shareholders who are not Holders are first eliminated. If any Holder disapproves of the terms of the
underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The Registrable Securities so withdrawn shall also be withdrawn
from registration. 

        (c)    Delay of Registration.    The Company shall not be required to
effect a registration pursuant to this Section 1.2 if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the registration statement for a period of not more than ninety (90) days after the receipt of the request of the Holder or Holders under this
Section 1.2; provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period. 

        1.3    Company Registration.    

        (a)    Notice of Registration.    If, at any time or from time to
time, the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders (other than a registration relating solely to employee
stock option or purchase plans or relating solely to a Rule 145 transaction or to debt securities), the Company will: 

        (i)    promptly give to each Holder written notice thereof; and 

        (ii)   include in such registration (and any related qualification under state securities laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a written request or requests, received within thirty (30) days after such written notice from the Company, by any
Holder or Holders, except as set forth in Section 1.3(b). 

        (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 Holders as a part of the written notice given pursuant to
Section 1.3(a)(i). In such event, the right of any Holder to registration pursuant to Section 1.3 shall be conditioned upon the inclusion of such Holder's Registrable Securities in the
underwriting. All Holders proposing to distribute their Registrable Securities shall (together with the Company and other holders distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 1.3, if the
underwriter determines that marketing factors require a limitation of the number of Registrable Securities to be included in the registration, such Registrable Securities shall be reduced on a pro
rata basis based on the total number of the 

3

 

Registrable
Securities held by the Holders and based on the total number of securities (other than Registrable Securities) entitled to registration held by other persons or organizations selling
securities pursuant to registration rights granted them by the Company, provided, however, that if the managing underwriter for the offering shall
advise the Company in writing that the total amount of securities, including Registrable Securities, requested by holders of securities to be included in such offering exceeds the amount of securities
to be sold other than by the Company that marketing factors allow, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities,
which the managing underwriter believes marketing factors allow (the securities so included to be reduced as follows: (a) all securities which stockholders other than the Company and the
Holders seek to include in the offering shall be excluded from the offering to the extent limitation on the number of shares included in the underwriting is required, and (b) if further
limitation on the number of shares to be included in the underwriting is required, then the number of shares held by Holders that may be included in the underwriting shall be reduced so that the
number of shares included in the underwriting are pro rata in accordance with the number of shares of Registrable Securities held by each such Holder), but in no event shall the amount of Registrable
Securities of the selling Holders included in the offering be reduced below thirty percent (30%) of the total amount of securities included in such offering, unless such offering is the initial public
offering of the Company's securities in which case the selling Holders may be excluded if the managing underwriter makes the determination described above and no securities other than those of the
Company are included. 

        1.4    Shelf Registration.    

        (a)    Registration.    Within forty-five (45) days
after delivery of a written notice by Holders of a Substantial Amount of Registrable Securities, which notice may be delivered at any time and from time to time after the date on which the Company
becomes eligible to prepare and file a shelf
registration statement (the "Shelf Registration") on Form S-3 (or such other successor form to Form S-3 as the
Company may at the time be eligible to use), the Company shall (A) promptly give written notice of the proposed registration to all other Holders, and (B) file a registration
statement on Form S-3 for the registration of securities under the Securities Act providing for the sale from time to time by such Holders of a Substantial Amount of Registrable
Securities and by each Holder who shall have joined in such request by written notice to such effect given to the Company within twenty (20) days after receipt by such Holder of the written
notice from the Company, in each case of all of their Registrable Securities then outstanding and all Registrable Securities issuable thereafter. The Company may include in the Shelf Registration
shares of Common Stock sold for the account of the Company, but no other person. 

        (b)    Conditions.    The registration rights of the Holders under
this Section 1.4 and the ability to offer and sell Registrable Securities pursuant to a Shelf Registration are subject to the following conditions and limitations: 

        (i)    the Company shall not be obligated to effect any such Shelf Registration if the Holders propose to sell Registrable
Securities at an aggregate price to the public of less than $500,000; and 

        (ii)   each of the Holders agrees with the Company that if the board of directors of the Company determines in its good faith
judgment, at any time prior to or during the effectiveness of the filing of a Shelf Registration pursuant to this Section 1.4, that the Company possesses material non-public
information relating to a pending or imminent event or announcement or is engaged in confidential negotiations or other confidential business activities that are material to its business and that
would be interfered with in any material respect by such Shelf Registration (including, without limitation, information related to any 

4

 

pending
or proposed consolidation, merger, reorganization, recapitalization or other similar transaction and any pending discussions related thereto), upon written notice of such determination by the
board of directors of the Company delivered to the Holders (evidenced by its resolution to such effect), the rights of each of the Holders to publicly offer, publicly sell or publicly distribute any
Registrable Securities pursuant to such Shelf Registration or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to such Shelf
Registration (including any action contemplated by Section 1.6 hereof) will be suspended until the Company notifies the Holders in writing that suspension of such rights for the grounds set
forth in this Section 1.4 is no longer necessary; provided, however, that the Company shall not be permitted to suspend the rights of the Holders
pursuant to this Section 1.4 for more than ninety (90) days after receipt of the request by the Holders under this Section 1.4; provided,
further, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period. 

        1.5    Expenses of Registration.    All expenses incurred in connection with any registration, qualification or
compliance pursuant to this Section 1, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and one (1) counsel
for the Holders, and
expenses of any special audits incidental to such registration, shall be borne by the Company; provided, however: 

        (a)   The Company shall not be required to pay for expenses of any registration proceeding begun pursuant to
Section 1.2, the request of which has been subsequently withdrawn by the Initiating Holders, in which case, such expenses shall be borne by the Holders of securities (including Registrable
Securities) requesting or causing such withdrawal, provided that, if such request is withdrawn on account of any act or omission of the Company, its
agents, employees or representatives, then the Company shall pay all such expenses and such registration shall not count as a registration for purposes of Section 1.2; and 

        (b)   The Company shall not be required to pay underwriters' discounts, commissions, or stock transfer taxes relating to
Registrable Securities. 

        1.6    Registration Procedures.    In the case of each registration, qualification or compliance effected by the
Company pursuant to Section 1, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will keep such registration statement effective for up to 180 days or until such earlier time at which such Holders have informed the Company in
writing that the distribution of their securities has been completed (such 180-day or shorter period, the "Effectiveness Period"). In
addition, the Company shall: 

        (a)   Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration
statement during the Effectiveness Period. 

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

        (c)   Use its best efforts to register or qualify the securities covered by such registration statements under such other
securities or Blue Sky laws of such states and jurisdictions as shall be reasonably requested by the Holders; provided that, the Company shall not be
required in 

5

 

connection
therewith or as a condition thereto to qualify to do business, subject itself to taxation or file a general consent to service of process in any such state or jurisdiction. 

        (d)   In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an underwriting
agreement, including furnishing any opinion of counsel or entering into a usual and customary lock-up agreement reasonably requested by the managing underwriter,  provided that such lock-up agreement
complies with the provisions of Section 1.13. 

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

        (f)    Use its best efforts to furnish on the date that such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date
that the registration statement with respect to such securities becomes effective, (i) an opinion or opinions, dated such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given by Company counsel to the underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter
dated such date, from the independent certified public accountant of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters. 

        (g)   Apply for listing and list the Registrable Securities being registered on any national securities exchange on which a
class of the Company's equity securities is listed or if the Company does not have a class of equity securities listed on a national securities exchange, apply for qualification and use its best
efforts to qualify the Registrable Securities being registered for inclusion on the automated quotation system of the National Association of Securities Dealers. 

        1.7    Indemnification.    

        (a)    Indemnification by the Company.    The Company will indemnify
each Holder of Registrable Securities, each of its officers, directors, members and partners, and each person controlling such Holder, with respect to which registration, qualification or compliance
has been effected pursuant to this Section 1 and each underwriter, if any, and each person who controls any underwriter of the Registrable Securities held by or issuable to such Holder, against
all claims, losses, damages, costs, expenses and liabilities whatsoever (or actions in respect thereof) 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 documents (including any related registration, statement, notification or the like) incident to any such registration,
qualification or compliance, 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 not misleading,
or any violation by the Company of the Securities Act or any state securities law or of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the
Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers,
directors, members and partners and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss, damage, 

6

 

cost,
expense, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, cost,
expense, or liability arises out of or is based on any untrue statement or omission contained in (or omitted from) such registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or underwriter and stated to be specifically for use therein. 

        (b)    Indemnification by the Holders.    Each Holder will, severally
and not jointly with any other Holder, if Registrable Securities held by or issuable to 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 who sign such registration statement, each underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company within the meaning of the Securities Act, and each other Holder, each of such other Holder's officers, directors and partners and each person
controlling such other Holder, against all claims, losses, damages, costs, expenses and liabilities whatsoever (or actions in respect thereof) 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 documents (including any related registration statement, notification
or the like) incident to any such registration, qualification or compliance, 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 not misleading, and will reimburse the Company, such other Holders, such directors, officers, partners, persons or underwriters for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such claim, loss, damage, cost, expense, liability or action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is made in (or omitted from) such registration statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein; provided,
however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in (or omitted from) the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the registration statement becomes effective or the amended prospectus filed with the SEC pursuant to Rule 424(b) of the
General Rules and Regulations promulgated under the Securities Act (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of
any underwriter or any Holder, if there is no underwriter, if a copy of the Final Prospectus was furnished to the person or entity asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act; and provided, further, the total amount for which
any Holder shall be liable under this Section 1.7(b) shall not in any event exceed the aggregate net proceeds received by such Holder from the sale of Registrable Securities held by such Holder
in such registration. 

        (c)    Notice.    Each party entitled to indemnification under this
Section 1.7 (the "Indemnified Party") shall give 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 by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided, further that the failure or delay of any Indemnified Party to give notice as provided herein shall
relieve the Indemnifying Party of its obligations under this Section 1.7 only to the extent, if at all, that it is actually prejudiced by such failure or delay. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent 

7

 

of
each Indemnified Party, 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 an unconditional release from all liability in respect to such claim or litigation. If any such Indemnified Party shall have been advised by counsel chosen by it that there may be
one or more legal defenses available to such Indemnified Party which are different from or additional to those available to the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action on behalf of such Indemnified Party and will reimburse such Indemnified Party and any person controlling such Indemnified Party for the reasonable fees and expenses
of any counsel retained by the Indemnified Party, it being understood that the Indemnifying Party shall not, in connection with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for such Indemnified Party or
controlling person, which firm shall be designated in writing by the Indemnified Party to the Indemnifying Party. 

        1.8    Information by Holder.    The Holder or Holders of Registrable Securities included in any registration shall
furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance referred to in this Section 1. 

        1.9    Sale Without Registration.    If at the time of any transfer (other than a transfer not involving a change in
beneficial ownership) of any Preferred Shares or Registrable Securities, such Preferred Shares or Registrable Securities shall not be registered under the Securities Act, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee furnish to the Company (a) such information as is necessary in order to establish that such transfer may be made without
registration under the Securities Act; and (b) at the expense of the Holder or transferee, an opinion by legal counsel designated by such Holder or transferee and satisfactory to the Company
(which shall include in-house legal counsel of such Holder), reasonably satisfactory in form and substance to the Company, to the effect that such transfer may be made without registration
under the Securities Act; provided that nothing contained in this Section 1.9 shall relieve the Company from complying with any request for
registration, qualification or compliance made pursuant to the other provisions of this Section 1; and provided further that the Company shall
not require an opinion by legal counsel for transfers pursuant to Rule 144 ("Rule 144") or Regulation S of the General Rules and
Regulations promulgated under the Securities Act. 

        1.10    Rule 144 Reporting.    With a view to making available to the Investors the benefits of certain rules
and regulations of the SEC that may permit the sale of the Preferred Shares or Registrable Securities to the public without registration, the Company agrees to: 

        (a)   make and keep public information available, as those terms are understood and defined in Rule 144, at all times
after ninety (90) days after the effective date of the first registration filed by the Company that involves a sale of securities of the Company to the general public; 

        (b)   file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); 

        (c)   furnish to any Investor, so long as such Investor owns any Preferred Shares or Registrable Securities, forthwith upon
request a written statement by the Company that it has complied with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of said
first registration statement filed by the Company) and of the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the 

8

 

Company
as such Investor may reasonably request in availing itself of any rule or regulation of the SEC permitting the selling of any such securities without registration. 

        1.11    Transfer of Registration Rights.    The rights to cause the Company to register securities, granted by the
Company under Sections 1.2, 1.3 and 1.4 may be assigned by an Investor to (i) any Permitted Transferee and (ii) any transferee or assignee who acquires, at the time of such transfer or
assignment, 100,000 or more (such figure to be appropriately adjusted for stock splits, stock dividends and the like) of the Registrable Securities,  provided that the Company is given written notice by
the Investor at the time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and identifying the securities with respect to which such registration rights are being
assigned. For purposes hereof, "Permitted Transferee" shall have the meaning ascribed thereto in the Amended and Restated Shareholders' Agreement, dated as of the date hereof, by and among the
Company, certain holders of the Company's Common Stock, the holders of the Preferred Shares and the holders of the Warrants. 

        1.12    Limitations on Subsequent Registration Rights.    From and after the date hereof, the Company shall not enter
into any agreement with any prospective holder of any securities of the Company that would allow such prospective holder (a) to include such securities in any registration filed under Sections
1.2, 1.3 or 1.4 unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of or the projected price to the public of the Registrable Securities of the Holders that are included; or (b) to make a demand registration that could
result in such registration statement being declared effective prior to the earlier of either of the dates set forth in Section 1.2 or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Section 1.3. From and after the date hereof, the Company shall not permit any of its Subsidiaries to register or agree to register any
securities of such Subsidiary under the Securities Act. 

        1.13    "Market Stand-Off Agreement".    Each Holder hereby agrees that, during the period of duration
specified by the Company and by an underwriter of common stock or other securities of the Company (such period shall not exceed one hundred eighty (180) days) following the effective date of a
registration statement of the Company filed under the Securities Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included in such registration; provided, however, that: 

        (a)   such agreement shall be applicable only to the first such registration statement of the Company which covers Common Stock
(or other securities) to be sold on its behalf to the public in an underwritten offering; and 

        (b)   such agreement shall not be required unless all officers and directors of the Company and all other persons with
registration rights (whether or not pursuant to this Agreement) or purchasing Common Stock of the Company enter into similar agreements. 

        In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares of
securities of every other person subject to the foregoing restriction) until the end of such period. 

        1.14    Expiration of Rights.    All registration rights shall expire and not apply to any Holder upon the date ten
(10) years from the date hereof. In addition, a Holder's registration rights shall expire if such Holder (together with its affiliates (including any other person or entity for which such
Holder (or any
of its affiliates) is investment advisor or investment manager)) holds (including by virtue of holding any Warrants)——less than 1% of the Company's outstanding Common Stock
(treating all shares of convertible Preferred Stock on an as converted basis) and less than 100,000 shares of Common Stock (on an as-converted and as-exercised basis and
appropriately adjusted for stock splits; combinations of shares, and the like). 

9

   SECTION 2.    MISCELLANEOUS.  

        2.1    Governing Law.    This Agreement shall be governed by and construed under the laws of the State of New York
without regard to the conflict of laws principles thereon. 

        2.2    Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall
be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the
transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the
absolute owner and holder of such shares for all purposes. 

        2.3    Entire Agreement; Termination of Prior Agreements.    This Agreement shall constitute the full and entire
understanding and agreement between the parties with regard to the subjects hereof. Section 7 of the Series B Purchase Agreement, as amended, is hereby terminated in its entirety and
restated herein. Section 7 of the Series C Purchase Agreement, as amended, is hereby terminated in its entirety and restated herein. Section 7 of the Series D Purchase
Agreement is hereby terminated in its entirety and restated herein. 

        2.4    Severability.    In the event one or more of the provisions of this Agreement should, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never been contained herein. 

        2.5    Amendment and Waiver.    

        (a)   This Agreement may be amended or modified and the obligations of the Company and the rights of the Holders under this
Agreement may be waived, in each case only with the written consent of (i) the
Company, (ii) the holders of at least sixty-six and two-thirds percent (662/3%) of the Registrable Securities issued or issuable upon conversion of the
Preferred Shares and (iii) the holders of at least sixty-six and two-thirds percent (662/3%) of the Registrable Securities issued or issuable upon
exercise of the Warrants, provided that in no event may any such amendment, modification or waiver affect any holder of Registrable Securities in a
manner differently from all other holders of Registrable Securities without the prior written consent of such first-mentioned holder of Registrable Securities. 

        (b)   For the purposes of determining the number of Holder or Investors entitled to vote or exercise any rights hereunder, the
Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company. 

        2.6    Delays or Omissions.    It is agreed that no delay or omission to exercise any right, power, or remedy accruing
to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of
any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and
not alternative. 

        2.7    Notices.    All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed 

10

 

electronic
mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on Exhibit A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto. 

        2.8    Attorneys' Fees.    In the event that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to
this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 

        2.9    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. 

        2.10    Additional Investors.    Notwithstanding anything to the contrary contained herein, if the Company shall issue
additional shares of its Preferred Stock pursuant to the Series E Purchase Agreement, any purchaser of such shares of Preferred Stock may become a party to this Agreement by executing and
delivering an additional counterpart signature page to this Agreement and shall be deemed an "Investor," a
"Holder" and a party hereunder. 

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

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

11

 

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

	 	 	THE COMPANY:
	 	 	 	 
	 	 	PROMETHEUS LABORATORIES INC.
	 	 	 	 
	 	 	By:	/s/ Michael J. Walsh
 Michael J. Walsh, Chairman
	 	 	 	 
	 	 	THE INVESTORS:
	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL V, LLC
	 	 	 	 
	 	 	By:	/s/ Patrick A. Hopt

	 	 	Name:	Patrick A. Hopt

	 	 	Title:	Managing Member

	 	 	 	 
	 	 	ST. PAUL FIRE AND MARINE INSURANCE COMPANY
	 	 	 	 
	 	 	By:	/s/ Patrick A. Hopt

	 	 	Name:	Patrick A. Hopt

	 	 	Title:	Authorized Representative

	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL VI, LLC
	 	 	 	 
	 	 	By:	SPVC Management VI, LLC
	 	 	Its Managing Member
	 	 	 	 
	 	 	By:	/s/ Patrick A. Hopt

	 	 	Its:	Senior Managing Director

	 	 	 	 
	 	 	WINDAMERE II, LLC
	 	 	 	 
	 	 	By:	/s/ Scott L. Glenn

	 	 	Name:	Scott L. Glenn

	 	 	Title:	General Partner

	 	 	 	 
	 	 	DLJ CAPITAL CORP
	 	 	 	 
	 	 	By:	/s/ Robert E. Curry
 Robert E. Curry

Managing Director

[SIGNATURE
PAGES TO REGISTRATION RIGHTS AGREEMENT] 

12

 

	 	 	DLJ ESC II, L.P.
	 	 	 	 	 
	 	 	By:	 	DLJ LBO Plans Management Corporation Manager
	 	 	 	 	 
	 	 	By:	 	/s/ Robert E. Curry
 Robert E. Curry

Attorney In Fact
	 	 	 	 	 
	 	 	SPROUT CAPITAL VII, L.P.
	 	 	 	 	 
	 	 	By:	 	DLJ Capital Corp.

Managing General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Robert E. Curry
 Robert E. Curry

Managing Director
	 	 	 	 	 
	 	 	THE SPROUT CEO FUND, L.P.
	 	 	 	 	 
	 	 	By:	 	DLJ Capital Corp.

General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Robert E. Curry
 Robert E. Curry

Managing Director
	 	 	 	 	 
	 	 	BRENTWOOD ASSOCIATES VIII, LP
	 	 	 	 	 
	 	 	By:	 	Brentwood Ventures VIII, LLC,

Its: General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Brian Atwood

	 	 	Name:	 	Brian Atwood

	 	 	Title:	 	Managing Member

	 	 	 	 	 
	 	 	BRENTWOOD AFFILIATES FUND II, LP
	 	 	 	 	 
	 	 	By:	 	Brentwood Ventures VIII, LLC,

Its General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Brian Atwood

	 	 	Name:	 	Brian Atwood

	 	 	Title:	 	Managing Member

	 	 	 	 	 
	 	 	 	 	 

13

 

	 	 	FIRST UNION CAPITAL PARTNERS, INC.
	 	 	 	 	 
	 	 	By:	 	/s/ D. Neal Morrison

	 	 	Name:	 	D. Neal Morrison

	 	 	Title:	 	Senior Vice President

	 	 	 	 	 
	 	 	FIRST UNION CAPITAL PARTNERS 2001, LLC
	 	 	 	 	 
	 	 	By:	 	/s/ D. Neal Morrison

	 	 	Name:	 	D. Neal Morrison

	 	 	Title:	 	Senior Vice President

	 	 	 	 	 
	 	 	APA EXCELSIOR V, L.P.
	 	 	 	 	 
	 	 	By:	 	APA Excelsior V Partners, L.P.

Its General Partner
	 	 	By:	 	Patricof & Co. Managers, Inc.

Its General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Janet Effland
 Janet Effland

Its: V.P.
	 	 	 	 	 
	 	 	PATRICOF PRIVATE INVESTMENT CLUB II, L.P.
	 	 	 	 	 
	 	 	By:	 	APA Excelsior V Partners, L.P.

Its General Partner
	 	 	By:	 	Patricof & Co. Managers, Inc.

Its General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Janet Effland
 Janet Effland

Its: V.P.

14

 

	 	 	DLJ MERCHANT BANKING PARTNERS III, L.P.
	 	 	 	 	 
	 	 	By:	 	DLJ Merchant Banking III, Inc., as Managing General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Michael Isikow

	 	 	Name:	 	Michael Isikow

	 	 	Title:	 	Attorney-In-Fact
	 	 	 	 	 
	 	 	DLJ OFFSHORE PARTNERS III, C.V.
	 	 	 	 	 
	 	 	By:	 	DLJ Merchant Banking III, Inc., as Managing General Partner
	 	 	 	 	 
	 	 	By:	 	/s/ Michael Isikow

	 	 	Name:	 	Michael Isikow

	 	 	Title:	 	Attorney-In-Fact
	 	 	 	 	 
	 	 	DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, as nominee for:
	 	 	 	 	 
	 	 	CREDIT SUISSE FIRST BOSTON PRIVATE EQUITY, INC.;

DLJ FIRST ESC, L.P.;

EMA 2001 PLAN, L.P.;

OFFSHORE 2001 PLAN HOLDINGS, L.P.; AND

CSFB 2001 INVESTORS, L.P.
	 	 	 	 	 
	 	 	By:	 	/s/ Michael Isikow

	 	 	Name:	 	Michael Isikow

	 	 	Title:	 	Attorney-In-Fact
	 	 	 	 	 
	 	 	EASTON ASSOCIATES, L.L.C.
	 	 	 	 	 
	 	 	By:	 	/s/ [illegible] Easton

	 	 	Name:	 	Easton

	 	 	Title:	 	Chairman

	 	 	 	 	 
	 	 	JOHN HANCOCK LIFE INSURANCE COMPANY
	 	 	 	 	 
	 	 	By:	 	/s/ Stephen J. Blewitt

	 	 	Name:	 	Stephen J. Blewitt

	 	 	Title:	 	Managing Director

	 	 	 	 	 
	 	 	 	 	 

15

 

	 	 	CRP INVESTMENT PARTNERS IV, LLC
	 	 	 	 	 
	 	 	By:	 	/s/ William N. Holm
 William N. Holm, Jr., Manager
	 	 	 	 	 
	 	 	CAPITAL RESOURCE PARTNERS IV, LP
	 	 	 	 	 
	 	 	By:	 	CRP Partners IV, LLC
	 	 	 	 	 
	 	 	By:	 	/s/ William N. Holm
 William N. Holm, Jr., Manager
	 	 	 	 	 
	 	 	JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
	 	 	 	 	 
	 	 	By:	 	/s/ Stephen J. Blewitt

	 	 	Name:	 	Stephen J. Blewitt

	 	 	Title:	 	Authorized Signatory

	 	 	 	 	 
	 	 	INVESTORS PARTNER LIFE INSURANCE COMPANY
	 	 	 	 	 
	 	 	By:	 	/s/ Stephen J. Blewitt

	 	 	Name:	 	Stephen J. Blewitt

	 	 	Title:	 	Authorized Director

	 	 	 	 	 
	 	 	SIGNATURE 5 L.P.
	 	 	 	 	 
	 	 	By:	 	John Hancock Life Insurance Company,

as Portfolio Advisor
	 	 	 	 	 
	 	 	By:	 	/s/ Stephen J. Blewitt

	 	 	Name:	 	Stephen J. Blewitt

	 	 	Title:	 	Managing Director

	 	 	 	 	 
	 	 	CREDIT SUISSE FIRST BOSTON
	 	 	 	 	 
	 	 	By:	 	/s/ [illegible]

	 	 	 	 	 
	 	 	TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
	 	 	 	 	 
	 	 	By:	 	/s/ Richard J. Tanner

	 	 	Name:	 	Richard J. Tanner

	 	 	Title:	 	Associate Director

[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 

16

   EXHIBIT A  

 SCHEDULE OF INVESTORS  

St. Paul Venture Capital V, LLC

St. Paul Venture Capital VI, LLC

St. Paul Fire and Marine Insurance Company
  c/o Nancy Olson

Three Lagoon Drive, Suite 130

Redwood City, CA 94065-1566 

Windamere, LLC

Windamere II, LLC
  c/o Scott L. Glenn

12230 El Camino Real, Suite 300

San Diego, CA 92310 

DLJ Capital Corp

DLJ ESC II, L.P.

Sprout Capital VII, L.P.

The Sprout CEO Fund, L.P.
  c/o Robert E. Curry, Ph.D.

3000 Sand Hill Road, Building 3, Suite 170

Menlo Park, CA 94025-7114 

Brentwood Associates VIII, LP

Brentwood Affiliates Fund II, LP
  c/o Brian G. Atwood

3000 Sand Hill Road, Building 1, Suite 260

Menlo Park, CA 94025-7116 

First Union Capital Partners, Inc.

First Union Capital Partners 2001, LLC
  c/o Neal Morrison

One First Union Center

301 South College Street, 12th Floor

Charlotte, NC 28288 

APA Excelsior V. L.P.

Patricof Private Investment Club II, L.P.

c/o Janet Effland

2100 Geng Road, Suite 150

Palo Alto, CA 94303 

DLJ Merchant Banking Partners III, L.P.

DLJ Offshore Partners III, C.V.

Donaldson, Lufkin & Jenrette Securities Corporation, as nominee

Easton Associates, L.L.C.
  c/o David Durkin

Credit Suisse First Boston

277 Park Avenue

New York, NY 10172 

A-1

 

CAPITAL RESOURCE PARTNERS IV, LP

CRP INVESTMENT PARTNERS IV, LLC
  85 Merrimac Street, Suite 200

Boston, MA 02114

Attn: William N. Holm, Jr. 

and 

85
Merrimac Street, Suite 200

Boston, MA 02114

Attn: John P. Collins 

JOHN HANCOCK LIFE INSURANCE COMPANY

INVESTORS PARTNER LIFE INSURANCE COMPANY

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SIGNATURE 5 L.P.
  200 Clarendon Street, 30th Floor

Boston, MA 02117

Attn: Investment Law Division, T-50 

and 

200
Clarendon Street, 30th Floor

Boston, MA 02117

Attn: Bond and Corporate Finance Group, T-57 

CREDIT SUISSE FIRST BOSTON
  11 Madison Avenue, 13th Floor

New York, NY 10010

Attn: Angela Huger 

and

11
Madison Avenue, 13th Floor

New York, NY 10010

Attn: John Hanlon 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
  730 Third Avenue, 4th Floor

New York, NY 10017

Attn: Securities Division 

A-2

QuickLinks

PROMETHEUS LABORATORIES INC. REGISTRATION RIGHTS AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]