Document:

Exhibit 99.1

Exhibit 99.1

PROPERTY OPTION AGREEMENT

THIS AGREEMENT dated for reference the 18th day of March, 2004

BETWEEN:

NEVADA SUNRISE, LLC, a limited liability company incorporated under the laws of Nevada and having a head office located at 6121 Lakeside Drive, Suite 260, Reno, Nevada, U.S.A., 89511 (as to an undivided 55% interest) (hereinafter referred to as "Nevada Sunrise")

ROBERT & SHARON WEICKER doing business as KLEINEBAR RESOURCES LTD., 3000 Walton Avenue, Coquitlam, British Columbia, Canada, V3B 6V6 and KURT & TAMI SCHENDEL, 4020 S.W. Holly Street, Seattle, Washington, U.S.A., 98136 (collectively as to an undivided 45% interest)

(collectively referred to as the "Optionors")

OF THE FIRST PART

AND:

ABERDENE MINES LTD., a company incorporated under the laws of Nevada and having a head office located at 101 Convention Centre Drive, Suite 700, Las Vegas, Nevada, 89109

(the "Optionee")

OF THE SECOND PART

WHEREAS:

A.   The Optionors are or will become the beneficial owners of an undivided 100% right, title, and interest in certain mineral claims known as the New York Canyon Copper Project located in Mineral County, Nevada, as more particularly described in the attached Schedule "A";

B.   The Optionee wishes to acquire the right to earn an undivided 100% interest in and to the mineral claims comprised in the New York Canyon Copper Project on the terms and subject to the conditions set out in this Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1.       INTERPRETATION

1.1   For the purposes of this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and expressions have the following meanings:

 

 

(a)   "After Acquired Properties" mean any and all mineral interests staked, located, granted or acquired by or on behalf of any party during the currency of this Agreement which are located, in whole or in part, within 5 miles of the perimeter of the Property;

(b)   "Agreement" means this Agreement, as amended from time to time;

(c)   "Commercial Production" means the operation of the Property or any portion of the Property as a producing mine and the production of mineral products from the Property (excluding bulk sampling, pilot plant, or test operations);

(d)   "Environmental Claims" means any and all administrative, regulatory, or judicial actions, suits, demands, claims, liens, notices of non-compliance or violation, investigations, or proceedings relating in any way to any Environmental Law or any permit issued under any Environmental Law, including, without limitation:

(i)   any and all claims by government or regulatory authorities for enforcement, clean-up, removal, response, remedial, or other actions or damages under any applicable Environmental Law; and

(ii)   any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation, or injunctive or other relief resulting from hazardous materials, including any release of those claims, or arising from alleged injury or threat of injury to human health or safety (arising from environmental matters) or the environment;

(e)   "Environmental Law" means all requirements of the common law, civil code, or of environmental, health, or safety statutes of any agency, board, or governmental authority including, but not limited to, those relating to (i) noise, (ii) pollution or protection of the air, surface water, ground water, or land, (iii) solid, gaseous, or liquid waste generation, handling, treatment, storage, disposal, or transportation, (iv) exposure to hazardous or toxic substances, or (v) the closure, decommissioning, dismantling, or abandonment of any facilities, mines, or workings and the reclamation or restoration of lands;

(f)   "Expenditures" mean all cash, expenses, obligations and liabilities, other than for personal injury or property damage, of whatever kind or nature spent or incurred directly or indirectly in connection with the exploration, development or equipping of the Property or any portion thereof for Commercial Production including, without limiting the generality of the foregoing, monies expended in constructing, leasing or acquiring all facilities, buildings, machinery and equipment in connection with Mining Work, in paying any taxes, fees, charges, payments or rentals (including payments in lieu of assessment work) or otherwise to keep the Property or any portion thereof in good standing (including any payment to or in respect of acquiring any agreement or confirmation from any holder of surface rights respecting the Property or any portion thereof), in carrying out any survey of the Property or any portion thereof, in doing geophysical, geochemical and geological surveys, in drilling, assaying, metallurgical testing, bulk sampling and pilot plant operations, in paying the fees, wages, salaries, travelling expenses, fringe benefits (whether or not required by law) of all persons engaged in work with respect to and for the benefit of the Property or any portion thereof, in paying for the food, lodging and other reasonable needs of such persons, in preparing any reports and in supervising and managing any work done with respect to and for the benefit of the Property or any portion thereof, or in any other respects necessary for the due carrying out of Mining Work, but the cost attributed to such supervision and management shall not exceed 10% of the total annual expenditures described herein;

 

 

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(g)   "Mining Work" means every kind of work done on or regarding the Property or the products of the Property by or on behalf of a party and, without limitation, includes assessment work, geophysical, geochemical, and geological surveying, studies and mapping, investigating, drilling, designing, examining, equipping, improving, surveying, shaft sinking, raising, crosscutting, and drifting, searching for, digging, trucking, sampling, working, and procuring minerals, ores, metals and concentrates, surveying and bringing any mineral claims or other interests to lease or patent, reporting and all other work usually considered to be prospecting, exploration, development, and mining work;

(h)   "Net Smelter Returns" has the meaning attributed to it in the attached Schedule "B";

(i)   "Option" means the option granted by the Optionors to the Optionee under section 3.1 of this Agreement;

(j)   "Property" means those mineral properties more particularly described in Schedule "A" hereto together with the surface rights, mineral rights, personal property and permits associated therewith, and will include any renewal thereof and any other form of successor or substitute title thereto;

(k)   "Royalty" means a royalty of 2% of Net Smelter Returns reserved by the Optionors;

(l)   "Securities Act" means the United States Securities Act of 1933, as amended;

(m)   "Shares" means the shares of common stock of the Optionee as constituted on the date of this Agreement.

1.2   In this Agreement, all dollar amounts are expressed in lawful currency of United States.

1.3   The titles to the respective Articles are used for convenience only and are not a part of this Agreement.

1.4   Words importing the singular number will include the plural and vice-versa, and words importing the masculine gender will include the feminine and neuter genders and vice-versa, and words importing persons will include firms, partnerships, and corporations.

2.       REPRESENTATIONS AND WARRANTIES

2.1   The Optionee represents and warrants to the Optionors that:

(a)   it is a company duly incorporated, validly subsisting, and in good standing under the laws of Nevada;

(b)   it has full power and authority to carry on its business and to enter into this Agreement and any other agreement contemplated by this Agreement and to carry out and perform all of its obligations and duties under this Agreement; and

(c)   the signing, delivery, and performance of this Agreement will not conflict with any other agreement to which it is a party or by which it is currently bound, and will not contravene any applicable laws.

2.2   The Optionors jointly and severally represent, warrant and covenant to and with the Optionee that:

(a)   Nevada Sunrise is a company duly organized, validly subsisting, and in good standing under the laws of Nevada;

(b)   they have full power and authority to carry on their business and to enter into this Agreement and any other agreement contemplated by this Agreement and to carry out and perform all of their obligations and duties under this Agreement;

(c)   they have full power and authority for the signing, delivery, and performance of this Agreement and the signing, delivery, and performance of this Agreement will not conflict with any other agreement to which they are a party or by which they are bound, and will not contravene any applicable laws;

 

 

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(d)   they are, or will become within 30 days of the date of this Agreement, the sole beneficial owners of and hold good and marketable title to an undivided 100% right, title, and interest in and to the Property;

(e)   the Property is accurately described in Schedule "A" and is in good standing under the laws of the jurisdiction in which the Property is located, up to and including at least the expiry dates set forth in Schedule "A", and the conditions on and relating to the Property respecting all past and current operations are in compliance with all applicable laws, including all Environmental Laws;

(f)   the Property (including all ores, concentrates, minerals, metals, or products in, on, or under the Property or which may be removed or extricated from the Property) is free and clear of any and all liens, charges, and encumbrances and is not subject to any right, claim, or interest of any other person;

(g)   they have made all taxes, assessment, rentals, levies, or other payments relating to the Property required to be made to any federal, state, or municipal government instrumentality;

(h)   they have complied with all laws in effect in the jurisdiction in which the Property is located regarding the Property and the Property has been duly and properly staked and recorded in accordance with these laws;

(i)   there have been no material spills, discharges, leaks, emissions, ejections, escapes, dumpings, or other releases of any kind of any toxic or hazardous substances in, on, or under the Property or the surrounding environment;

(j)   they have not received from any government instrumentality any notice of or communication relating to any actual or alleged Environmental Claims, and there are no outstanding work orders or actions required to be taken relating to environmental matters respecting the Property or any operations carried out on the Property;

(k)   they will make available to the Optionee all information in their possession or control relating to work done on or regarding the Property that could possibly be considered to be materially significant in indicating whether the Property might or might not have the potential for economic mineralization;

 

 

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(m)   the Optionee may enter in, under, or on the Property for all purposes of this Agreement without making any payment to and without accounting to or obtaining the permission of any other person, other than any payment required to be made under this Agreement; and

(n)   to the best of their knowledge, after diligent inquiry, there is no adverse claim or challenge against or to the ownership of or title to the Property, or any portion of the Property, nor is there any basis for any adverse claim or challenge, and there are no outstanding agreements or options to acquire, purchase, or explore the Property or any portion of the Property and no person has any royalty or interest in production or profits from the Property or any portion of the Property, other than the Royalty.

2.3   These representations and warranties are conditions on which the parties have relied in entering into this Agreement, are to be construed as both conditions and warranties, and will, regardless of any investigation that may have been made by or for any party as to the accuracy of these representations and warranties, survive the closing of the transaction contemplated by this Agreement.  Each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions, and suits arising out of or in connection with any breach of any representation or warranty contained in this Agreement, and each party will be entitled, in addition to any other remedy to which it may be entitled, to set-off any loss, damage, or costs suffered by it as a result of any breach against any payment required to be made by it to another party.

3.       OPTION

3.1   The Optionors irrevocably grant to the Optionee the sole and exclusive right and option to acquire an undivided 100% interest in and to the Property, free and clear of all liens, charges, encumbrances, claims, rights, or interest of any person, other than the Royalty reserved by the Optionors, which option is to be exercisable by the Optionee:

(a)   paying to the Optionors an aggregate $460,000 cash as follows:

	
 
	
(i)
	
$30,000 in cash on signing this Agreement; 

	
 
	
(ii)
	
$60,000 on the first anniversary date of this Agreement; 

	
 
	
(iii)
	
$120,000 on the second anniversary date of this Agreement; and

	
 
	
(iv)
	
$250,000 on the third anniversary date of this Agreement; 

or, at the sole option and election of the Optionors, issuing Shares in lieu of any of the cash payments in (ii) to (iv) above in the following amounts:

 

 

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(v)
	
100,000 Shares on the first anniversary date of this Agreement;

	
 
	
(vi)
	
200,000 Shares on the second anniversary date of this Agreement;

	
 
	
(vii)
	
300,000 Shares on the third anniversary date of this Agreement; and

(b)   issuing an aggregate 1,000,000 Shares to the Optionors as follows:

	
 
	
(i)
	
250,000 Shares on signing this Agreement;

	
 
	
(ii)
	
250,000 Shares on the first anniversary date of this Agreement; 

	
 
	
(iii)
	
250,000 Shares on the second anniversary date of this Agreement; and

	
 
	
(iv)
	
250,000 Shares on the third anniversary date of this Agreement; and

(c)   incurring Expenditures of not less than an aggregate $2,250,000 as follows:

	
 
	
(ii)
	

$500,000 by December 31, 2004; 

	

 
	
(iii)
	

$750,000 by December 31, 2005; and

	

 
	
(iv)
	

$1,000,000 by December 31, 2006.

3.2   The Optionee acknowledges that, on commencement of Commercial Production, the Property will be subject to the Royalty.

3.3   The Optionors acknowledge that there will be restrictions on the transfer of the Shares as follows:

(a)   Restrictions on Transfer.  The Optionors agrees that it will not sell, assign, pledge, give, transfer, or otherwise dispose of the Shares or any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Shares under the Securities Act and all applicable state securities laws or in a transaction that is exempt from the registration provisions of the Securities Act and all applicable state securities laws.

Any attempted sale, assignment, or other transfer of the Shares without compliance with the provisions of this Agreement will be void.

(b)   Legend.  The following legend will be affixed on the certificates representing the Shares owned by the Optionors and the Optionee will affix this legend on each share certificate subsequently issued to the Optionors:

"The Securities Represented Hereby HAve not been registered under United States federal or state securities laws and may not be offered for sale, sold or otherwise transferred or assigned for value, directly or indirectly, nor may The securities be transferred on the books of the corporation, without registration under all applicable UNITed States federal or state securities laws or compliance with an applicable exemption therefrom, such compliance, at the option of the corporation, to be evidenced by an opinion of THE HOLDER'S counsel, in form acceptable to the corporation, that no violation of such registration provisions would result from any proposed transfer or assignment."

 

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4.       OPTIONEE'S RIGHTS

4.1   Except as otherwise provided in this Agreement, until the Option is exercised or terminated in accordance with the terms of this Agreement, the Optionee, its servants, and agents will have the sole and exclusive right to:

(a)   enter in, under, or on the Property and conduct Mining Work;

(b)   exclusive and quiet possession of the Property;

(c)   bring on the Property and to erect on the Property any mining facilities that it may consider advisable; and

(d)   remove from the Property and dispose of, for its own account, ore or mineral products for the purpose of bulk sampling, pilot plant, or test operations, but subject to the Royalty.

5.       OPTIONEE'S POWERS, DUTIES, AND OBLIGATIONS

5.1   Until the Option is exercised or terminated in accordance with the terms of the Agreement, the Optionee will have full right and authority to do everything necessary or desirable to carry out an exploration program on the Property and to determine the manner of exploration and development of the Property and without limitation the right and authority to:

(a)   regulate access to the Property, subject only to the right of the Optionors and their representatives to have access to the Property at all reasonable times for the purpose of inspecting work being done on the Property but at their own risk and expense;

(b)   employ and engage any employees, agents, and independent contractors that it may consider necessary or advisable to carry out its duties and obligations under this Agreement and to delegate any of its powers and rights to perform its duties and obligations under this Agreement;

(c)   sign all documents and do all other things necessary to maintain valid title to the Property, and each party irrevocably constitutes the Optionee its lawful attorney to give effect to the foregoing and agrees to indemnify and save the Optionee harmless from any costs, loss, or damage sustained without the Optionee's gross negligence or bad faith, directly or indirectly, as a result of its exercise of its powers under this section 5.1(c); and

(d)   conduct any title examinations and cure any title defects that may be advisable in the Optionee's reasonable judgment; provided, however, if the Optionors' title to the Property is deficient in any way, the Optionors, on receiving written notice from the Optionee, will have 60 days to remedy the deficiency and, if the Optionors fail to remedy any deficiency within this 60-day period, the Optionee will be entitled to terminate this Agreement and have all amounts paid by it and Shares issued by it returned to it or take the necessary steps to remedy any deficiency, in which event the cost and related expenses of the remedy may, at the Optionee's discretion, be deducted from any payments that may be or become due to the Optionors or otherwise seek reimbursement by way of a claim for a debt owing by the Optionors.

5.2   Until the Option is exercised or terminated in accordance with the terms of this Agreement, the Optionee will have the duties and obligations to:

 

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(a)   keep the Property free and clear of all liens and encumbrances arising from its operations (except liens contested in good faith by the Optionee) and in good standing by the doing and filing, or payment in lieu thereof, of all necessary assessment work and payment of all taxes required to be paid, and by the doing of all other acts and the making of all other payments required to be made;

(b)   permit the Optionors and its representatives, duly authorized by it in writing, at their own risk and expense, access to the Property at all reasonable times and to all records prepared by the Optionee in connection with Mining Work.  The Optionee will prepare and deliver to the Optionors at reasonable intervals, but in any event not less frequently than once each calendar quarter, reports on all Mining Work conducted by the Optionee;

(c)   conduct all work on or regarding the Property in a careful and minerlike manner and in accordance with the laws of the jurisdiction in which the Property is located, and indemnify and save the Optionors harmless from any claims, suits, or actions brought against the Optionors as a result of work done by the Optionee on or regarding the Property; and

(d)   obtain and maintain or cause any contractor engaged by it hereunder to obtain and maintain, during any period in which active work is carried out hereunder, not less than the following:

	
 
	
(i)
	

employer's liability insurance covering each employee engaged in the operations hereunder to the extent of $1,000,000 where such employee is not covered by Worker's Compensation;

	

 

	
 
	
(ii)
	

comprehensive general liability insurance in such form as may be customarily carried by a prudent operator for similar operations with a bodily injury, death and property damage limit of $1,000,000 inclusive;

	

 

	
 
	
(iii)
	

vehicle, aircraft and watercraft insurance covering all aircraft, vehicles and watercraft owned and non-owned, operated and/or licensed by the Optionee, with a bodily injury, death and property damage limit of $5,000,000 inclusive;

and will forward to the Optionors, a certificate of insurance for each of such amounts showing the Optionors as a named insured, and will give the Optionors advance written notice of any reduction or termination of such coverage;

(e)   arrange for and maintain Worker's Compensation or equivalent coverage for all eligible employees engaged by the Optionee in accordance with local statutory requirements;

(f)   maintain true and correct books, accounts, and records of operations.

6.       VESTING OF INTEREST

6.1   Forthwith on the Optionee exercising the Option by performing the requirements of section 3.1, an undivided 100% right, title, and interest in and to the Property, subject only to the Royalty, will vest in the Optionee.

 

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6.2   The Optionors covenant and agree to, forthwith on signing of this Agreement, deliver to its counsel, Harris & Thompson, of 6121 Lakeside Drive, Suite 260, Reno, Nevada, 89511, "in trust", a duly signed transfer or transfers, or any other instrument that may be required, in favour of the Optionee, in recordable form (the "Transfer" or "Transfers"), of an undivided 100% right, title, and interest in and to the Property, together with irrevocable written instructions to Harris & Thompson to hold the Transfers in trust and to not deal with the Transfers otherwise than to deliver the Transfers to the Optionee forthwith on receipt of written notice from the Optionee that it has exercised the Option and, on receipt of the Transfers, the Optionee will be entitled forthwith to record the Transfers in the appropriate offices in the jurisdiction in which the Property is located.  The Transfer(s) shall specifically reserve the Royalty described on Schedule B.

6.3   Immediately following execution of this Agreement, the parties will execute and record a Memorandum of Agreement in Mineral County, Nevada to reflect the existence of this Agreement.

7.       TERMINATION OF OPTION

7.1   In the event of default in the performance of the requirements of section 3.1, then, subject to the provisions of sections 7.3 and 17.1 of this Agreement, the Option and this Agreement will terminate.

7.2   The Optionee will have the right to terminate this Agreement by giving 30 days' written notice of termination to the Optionors and, on the effective date of termination, this Agreement will be of no further force and effect except the Optionee will be required to satisfy any requirements that have accrued under the provisions of this Agreement and that it has not satisfied.

7.3   Despite any other provisions of this Agreement, if this Agreement terminates, the Optionee will:

(a)   deliver to the Optionors any and all reports, samples, drill cores, and engineering data of any kind pertaining to the Property or related to Mining Work that have not been previously delivered to the Optionors;

(b)   on notice from the Optionors, remove all materials, supplies, and equipment from the Property; provided, however, that the Optionors may retain ore and, at the Optionee's cost, dispose of any materials, supplies, or equipment not removed from the Property within 180 days of receipt of notice by the Optionee; and

(c)   perform or secure the performance of all reclamation and environmental rehabilitation as may be required by all Environmental Laws and other applicable legislation; and

(d)   ensure that, at the effective date of termination of this Agreement, the Property is free and clear of all liens and encumbrances arising from its operations (except liens contested in good faith by the Optionee) and in good standing for at least the next 12 months, whether by having done and filed, or paid in lieu thereof, all assessment work necessary for that purpose.

8.       CONFIDENTIALITY

8.1   All information and data concerning Mining Work will be confidential and, except to the extent required by law or by regulation of any securities commission, stock exchange, or other regulatory body, will not be disclosed to any person other than a party's professional advisors without the prior written consent of the other party or parties, which consent will not unreasonably be withheld.

 

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8.2   The text of any news releases or other public statements which a party desires to make with respect to the Property shall be made available to the other party or parties prior to publication and the other party or parties shall have the right to make suggestions for changes therein within forty-eight (48) hours of delivery.

9.       RESTRICTIONS ON ALIENATION

9.1   No party (the "Selling Party") may sell, transfer, convey, assign, mortgage or grant an option in respect of or grant a right to purchase or in any manner transfer or alienate all or any portion of its interest or rights under this Agreement without the prior consent in writing, within 30 days of receipt of notice thereof, of the other parties, such consent not to be unreasonably withheld, and the failure to notify the Selling Party within the said 30 days that such consent has been withheld will be deemed to constitute the consent of the other parties.

9.2   Before the completion of any sale or other disposition by any party of its interests or rights or any portion thereof under this Agreement, the Selling Party will require the proposed acquirer to enter into an agreement with the party or parties not selling or otherwise disposing on the same terms and conditions as set out in this Agreement.

9.3   The provisions of sections 9.1 and 9.2 will not prevent a party from entering into an amalgamation or corporate reorganization which will have the effect in law of the amalgamated or surviving company possessing all the property, rights and interests and being subject to all the debts, liabilities and obligations of each amalgamating or predecessor company, or prevent a party from assigning its interest to an affiliate of such party provided that the affiliate first complies with section 9.2 and agrees in writing with the other parties to re-transfer such interest to the originally assigning party immediately before ceasing to be an affiliate of such party.

10.       AFTER ACQUIRED PROPERTIES

10.1   The parties covenant and agree, each with the others, any and all After Acquired Properties will be subject to the terms and conditions of this Agreement and will be added to and deemed, for all purposes hereof, to be included in the Property.  Any costs incurred by the Optionee in staking, locating, recording or otherwise acquiring any After Acquired Properties will be included in the calculation of its Expenditures hereunder.

11.       NOTICE

11.1   Any notices to be given by either party to the other will be sufficiently given if delivered personally or transmitted by facsimile or if sent by registered mail, postage prepaid, to the parties at their respective addresses shown on the first page of this Agreement, or to any other addresses as the parties may notify to the other from time to time in writing.  This notice will be deemed to have been given at the time of delivery, if delivered in person or transmitted by facsimile, or within five business days from the date of posting if mailed.

12.       FURTHER ASSURANCES

12.1   Each of the parties covenants and agrees, from time to time and at all times, to do all other acts and execute and deliver all such further deeds, documents and assurances that may be reasonably required to fully perform and carry out the terms and intent of this Agreement.

 

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13.       RULE AGAINST PERPETUITIES

13.1   If any right, power, or interest of any party in property under this Agreement would violate the rule against perpetuities, then this right, power, or interest will terminate at the expiration of 20 years after the death of the last survivor of all the lineal descendants of Her Majesty, Queen Elizabeth II of England, living on the date of the signing of this Agreement.

14.       TIME OF THE ESSENCE

14.1   Time will be of the essence of this Agreement.

15.       ENUREMENT

15.1   This Agreement will enure to the benefit of and be binding on the parties and their respective heirs, executors, administrators, and permitted assigns.

16.       FORCE MAJEURE

16.1   No party will be liable for its failure to perform any of its obligations under this Agreement due to a cause beyond its reasonable control including, but not limited to, acts of God, fire, storm, flood, explosion, strikes, lockouts or other industrial disturbances, acts of public enemy, war, riots, laws, rules and regulations or orders of any duly constituted governmental authority, or non-availability of materials or transportation (each an "Intervening Event"), except the obligation to make cash payments pursuant to Section 3.1(a) above.

16.2   All time limits imposed by this Agreement will be extended by a period equivalent to the period of delay resulting from an Intervening Event.

16.3   A party relying on the provisions of section 16.1, insofar as possible, will promptly give written notice to the other party of the particulars of the Intervening Event, will give written notice to the other party as soon as the Intervening Event ceases to exist, will take all reasonable steps to eliminate any Intervening Event, and will perform its obligations under this Agreement as far as practicable, but nothing in this Agreement will require this party to settle or adjust any labour dispute or to question or to test the validity of any law, rule, regulation, or order of any constituted governmental authority or to complete its obligations under this Agreement if an Intervening Event renders completion impossible.

17.       DEFAULT

17.1   If a party (the "Defaulting Party") is in default of any requirement of this Agreement, the party affected by the default (the "Non-Defaulting Party") will give written notice to the Defaulting Party, within 30 days of becoming aware of the default, specifying the default, and the Defaulting Party will not lose any rights under this Agreement, nor will the Agreement or the Option terminate, nor will the Non-Defaulting Party have any rights, remedies, or cause of action under this Agreement or otherwise as a result of the default unless, within 30 days after the Non-Defaulting Party gives notice of default, the Defaulting Party has failed to cure the default, in which case the Non-Defaulting Party will have the right to (1) prepare and record a Notice of Termination in Mineral County, Nevada, (2) request and obtain a Quitclaim Deed from the Defaulting Party with respect to the Property, if appropriate, (3) require performance of any obligations set forth in Section 7.3, and (4) seek any other remedies available under this Agreement or the laws of the State of Nevada.

 

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18.       SSEVERABILITY

18.1   If any one or more of the provisions contained in this Agreement is invalid, illegal, or unenforceable in any respect in any jurisdiction, the validity, legality, and enforceability of this provision will not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality, and enforceability of the remaining provisions contained in this Agreement will not in any way be affected or impaired thereby.

19.       AMENDMENT

19.1   This Agreement may be changed only by a written agreement signed by the parties.

20.       ENTIRE AGREEMENT

20.1   This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements, whether oral or written, express or implied, statutory or otherwise, between the parties.

21.       OPTION ONLY

21.1   This Agreement provides for an option only and, except as otherwise provided, nothing in this Agreement will be construed as obligating the Optionee to do any acts or make any payments and any act(s) or payment(s) made under this Agreement will not be construed as obligating the Optionee to do any further act or make any further payment.

22.       CONDITION PRECEDENT

22.1   The Optionee's obligations under this Agreement are first subject to the approval of this Agreement by the Optionee's Board of Directors.

22.2   If the above condition precedent is not satisfied within 60 days from the date of this Agreement, the Optionors may terminate this Agreement on 30 days' written notice to the Optionee.

23.       GOVERNING LAW

23.1   This Agreement and the rights and obligations and relations of the parties will be governed by and construed in accordance with the laws of Nevada and the federal laws of the United States applicable therein (but without giving effect to any conflict of law rules).  The parties agree that the courts of Nevada will have the jurisdiction to entertain any action or other legal proceedings based on any provisions of this Agreement.  Each party attorns to the jurisdiction of the courts of Nevada.

24.       SIGNING IN COUNTERPARTS

24.1   The parties may sign this Agreement in one or more counterparts, each of which will be deemed an original but all of which will constitute one and the same instrument.

IN WITNESS WHEREOF the parties have signed this Agreement as of the date written on the first page of this Agreement.

 

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THE CORPORATE SEAL OF
	

)

	

NEVADA SUNRISE, LLC
	

)

	

was affixed in the presence of:
	

)

	

 
	
)

	

 
	
)

	

/s/ William B. Henderson
	

)
	

c/s

	

Authorized Signatory
	

)

	

 
	
)

	

/s/ William B. Henderson, Manager
	

)

	

Authorized Signatory
	

)

	

 

	
/s/ William B. Henderson

	

Robert & Sharon Weicker

	

dba Kleinebar Resources Ltd.

	

 

	
/s/ William B. Henderson
	

 
	
/s/ William B. Henderson

	

Kurt Schendel
	
 
	
Tami Schendel

	

 

	
THE CORPORATE SEAL OF
	

)

	

ABERDENE MINES LTD.
	

)

	

was affixed in the presence of:
	

)

	

 
	
)

	

 
	
)

	

/s/ Brent Jardine
	

)
	

c/s

	

Authorized Signatory
	

)

	

 
	
 

)

	

___________________________
	

)

	

Authorized Signatory
	

)

 

 

 

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SCHEDULE "A"

Description of Property

	
First Owner Of Record
	

Property
	

Claim Name
	

BLM Serial Nr
	

Loc Date
	

County

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 1
	

798825
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 3
	

798827
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 4
	

798828
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 5
	

798829
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 6
	

798830
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 7
	

798831
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 8
	

798832
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC # 9
	

798833
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #11
	

798835
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #13
	

798837
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #36
	

798840
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #38
	

798842
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #39
	

798843
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #40
	

798844
	

17-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #15
	

798845
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #16
	

798846
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #17
	

798847
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #18
	

798848
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #19
	

798849
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #20
	

798850
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #23
	

798853
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #24
	

798854
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #25
	

798855
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #26
	

798856
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #27
	

798857
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #28
	

798858
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #29
	

798859
	

16-Oct-98
	

Mineral

	

SCHENDEL KURT
	

New York Canyon
	

NYC #31
	

798861
	

16-Oct-98
	

Mineral

 

 

 

 - 14 - 

SCHEDULE "B"

Net Smelter Returns

 

1.   As additional consideration, the Optionee acknowledges and agrees that its interest in the Property will, on Commercial Production, be subject to a royalty of 2% of Net Smelter Returns in favour of the Optionor.  The Optionee may at any time purchase 1% of the Net Smelter Returns by payment to the Optionor of $1,000,000.

2.   For the purposes of this Agreement, "Net Smelter Returns" means the actual proceeds received by the Optionee from a smelter or other place of sale or treatment for all ore removed by the Optionee from the Property on Commercial Production, as evidenced by its returns or settlement sheets, after deducting from the proceeds all loading, freight, or other transportation costs from the shipping point to the smelter or other place of sale or treatment but without any other deduction.

3.   The Optionee will pay Net Smelter Returns due and payable to the Optionor within 30 days after the Optionee's receipt of the actual proceeds.

4.   Within 90 days after the end of each financial year of the Optionee during which the Property is in Commercial Production, the records relating to the calculation of Net Smelter Returns during that financial year will be audited and any adjustments will be made forthwith.  The audited statements will be delivered to the Optionor who will have 60 days after receipt of these statements to question in writing their accuracy and, failing any questions, the statements will be deemed correct.

5.   The Optionor or its representatives appointed in writing will have the right at all reasonable times, on written request, to inspect the books and financial records of the Optionee that are relevant to the determination of Net Smelter Returns and, at their own expense, to make copies of those books and records.

 

 

 

 

 

 

 - 15 - 

AGREEMENT

THIS AGREEMENT is made this 18th day of March, 2004 between NEVADA SUNRISE LLC, a Nevada limited liability company ("Nevada Sunrise"); ROBERT AND SHARON WEICKER, doing business as KLEINEBAR RESOURCES LTD. (collectively "Weicker"); and KURT AND TAMI SCHENDEL ("Schendel").

1.    The parties have previously entered into a "Quitclaim Deed and Agreement" dated December 27, 2001 in which (a) eicker and Schendel conveyed an undivided 55% interest in the NYC claim group located in Mineral County, Nevada to Nevada Sunrise, (b) Nevada Sunrise agreed to pay federal claim maintenance fees and record a county affidavit for 2001-2002 and all subsequent years, and (c) Nevada Sunrise acquired an option to purchase the retained 45% of Weicker and Schendel for $250,000.00.

2.    Nevada Sunrise, Weicker, and Schendel propose to enter into a "Property Option Agreement" with Aberdene Mines Ltd., a Nevada corporation.  Aberdene will make an initial cash payment of $30,000.00 to the parties, and thereafter will make additional payments and stock distributions so long as the Aberdene Agreement remains in effect. The parties hereby agree that these payments and stock distributions from Aberdene shall be divided among the parties as follows (unless and until Nevada Sunrise exercises its option to purchase):

Nevada Sunrise      55%

Weicker                  22.5%

Schendel                 22.5%

3.    Weicker and Schendel hereby agree to Nevada Sunrise the authority to execute the Aberdene Agreement on their behalf and to act as their representative in all further dealings with Aberdene.

4.    This Agreement is intended to clarify, but not to modify, the rights and obligations of the parties as set forth in the Quitclaim Deed and Agreement dated December 27, 2001.

	
 
	
NEVADA SUNRISE, LTD. a Nevada limited liability company

	

 

	
 
	
___________________
	

By: 
	

__________________________

	

 
	

DATE
	

 
	

WILLIAM HENDERSON, MANAGER

	

 

	
 
	
___________________
	

 
	
__________________________

	

 
	

DATE
	

 
	

ROBERT WEICKER

	

 

	

 
	

___________________
	

 
	

__________________________

	

 
	

DATE
	

 
	

SHARON WEICKER

 

 

 - 16 - 

	

 
	

KLEINEBAR LTD., a British Columbia

corporation

	

 

	

 
	

___________________
	

By: 
	

___________________________

	

 
	

DATE
	

 
	

ROBERT WEICKER, President

	

 

	

 
	

3/23/2004
	

 
	

/s/ Kurt Schendel

	

 
	

DATE
	

 
	

KURT SCHENDEL

	

 

	

 
	

3/23/2004
	

 
	

/s/ Tamara Schendel

	

 
	

DATE
	

 
	

TAMARA SCHENDEL

 

 

 

 

 

 

 

 - 17 -QuickLinks
 -- Click here to rapidly navigate through this document
Exhibit 4.2  

 

 

FAVRILLE, INC.  

 AMENDED AND RESTATED

INVESTOR RIGHTS AGREEMENT  

 MARCH 26, 2004  

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	PAGE

	 SECTION 1.    REGISTRATION RIGHTS	 	1
	 	1.1	 	Definitions	 	1
	 	1.2	 	Demand Registration	 	2
	 	1.3	 	Company Registration	 	3
	 	1.4	 	Obligations of the Company	 	4
	 	1.5	 	Furnish Information	 	5
	 	1.6	 	Expenses of Demand Registration	 	5
	 	1.7	 	Expenses of Company Registration	 	6
	 	1.8	 	Underwriting Requirements	 	6
	 	1.9	 	Delay of Registration	 	6
	 	1.10	 	Indemnification	 	6
	 	1.11	 	Reports Under the 1934 Act	 	8
	 	1.12	 	Form S-3 Registration	 	9
	 	1.13	 	Assignment of Registration Rights	 	9
	 	1.14	 	"Market Stand-Off" Agreement	 	9
	 	1.15	 	Termination of Registration Rights	 	10
	 SECTION 2.    COVENANTS OF THE COMPANY	 	11
	 	2.1	 	Delivery of Financial Statements	 	11
	 	2.2	 	Inspection	 	11
	 	2.3	 	Annual Budget	 	11
	 	2.4	 	Termination of Information and Inspection Covenant	 	11
	 	2.5	 	Right of First Offer	 	11
	 	2.6	 	Pay to Play	 	13
	 	2.7	 	Reimbursement of Expenses	 	13
	 	2.8	 	Committees	 	13
	 SECTION 3.    MISCELLANEOUS	 	14
	 	3.1	 	Successors and Assigns	 	14
	 	3.2	 	Governing Law	 	14
	 	3.3	 	Counterparts	 	14
	 	3.4	 	Titles and Subtitles	 	14
	 	3.5	 	Notices	 	14
	 	3.6	 	Expenses	 	14
	 	3.7	 	Amendments and Waivers	 	14
	 	3.8	 	Severability	 	15
	 	3.9	 	Aggregation of Stock	 	15
	 	3.10	 	Entire Agreement; Amendment; Waiver	 	15

i

  

 
 

FAVRILLE, INC.    
    
    AMENDED AND RESTATED
  INVESTOR RIGHTS AGREEMENT    
    

        THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this  "Agreement") is made and
entered into as of March 26, 2004, by and among FAVRILLE, INC., a
Delaware corporation (the "Company"), and the investors listed on Schedule A attached hereto
(each of which is referred to herein as an "Investor" and all of which are collectively referred to herein as the  "Investors"). 

 
 

RECITALS    
    

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

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

        WHEREAS, certain of the Investors (the "Prior Investors") are holders of the Company's
Series A Preferred Stock (the "Series A Stock"), Series B Preferred Stock (the "Series B
Stock") and/or Series B-2 Preferred Stock (the "Series B-2 Stock" and, together with the
Series A Stock, the Series B Stock and the Series C Stock, the "Preferred Stock"); 

        WHEREAS, the Prior Investors and the Company are parties to that certain Amended and Restated Investor Rights Agreement entered into as of
June 25, 2003 (the "Prior Agreement"); 

        WHEREAS, the parties to the Prior Agreement desire to terminate the Prior Agreement and accept the rights and covenants hereof in lieu of
their rights and covenants under the Prior Agreement; and 

        WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration rights,
information rights and other rights as set forth below. 

 
 

AGREEMENT    
    

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

SECTION 1. REGISTRATION RIGHTS.  

        The Company covenants and agrees as follows: 

        1.1    Definitions.    For purposes of this Section 1: 

        (a)   The term "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended. 

        (b)   The term "Act" shall mean the Securities Act of 1933, as amended. 

        (c)   The term "Form S-3" shall mean such form under the Act
as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC (as defined below) which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC. 

        (d)   The term "Holder" shall mean any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with Section 1.13 hereof. 

1

 

        (e)   The terms "register," "registered," and  "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or document. 

        (f)    The term "Registrable Securities" shall mean the common stock of the
Company (the "Common Stock") issuable or issued upon conversion of the Preferred Stock. 

        (g)   The number of shares of "Registrable Securities then outstanding" shall
mean the number of shares of Common Stock outstanding which are Registrable Securities, and the number of shares of Common Stock issuable upon conversion of the outstanding shares of Preferred Stock
which are Registrable Securities. 

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

        1.2    Demand Registration.    

        (a)   If the Company shall receive at any time not earlier than the earlier of (i) June 23, 2006 and
(ii) one year after the effective date of the Company's initial public offering of its securities registered under the Act a written request from the Holders of 25% of the Registrable
Securities then outstanding that the Company register for sale under the Act all or any portion of the shares of Registrable Securities then held by all Holders, the Company will: 

        (i)    within ten days after the receipt thereof, give written notice of such request to all Holders; and 

        (ii)   use its reasonable best efforts to cause the registration under the Act of all Registrable Securities which the Holders
request to be registered, subject to the limitations of Section 1.2(b) below. 

        (b)   If the Holders initiating the registration request hereunder (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) above and the Company shall include such information in the written notice referred to in Section 1.2(a). The underwriter will be selected by the Company and
shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as
provided in Section 1.4(e) below) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such 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 which would otherwise be underwritten pursuant to this Agreement, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated in the following manner. First, the securities to be included in such registration that do not constitute Registrable Securities shall be reduced to the extent
required by the underwriter. If, following the reduction in the securities not constituting Registrable Securities to be included in such registration, a further reduction in the number of shares to
be included in such registration is required, the number of Registrable Securities issued or issuable upon conversion of the Series A Stock, Series B Stock and
Series B-2 Preferred Stock shall be reduced to the extent required by the underwriter, and such reduction shall be allocated among all Holders of Registrable Securities issued or
issuable upon conversion of the Series A Stock, Series B Stock and Series B-2 Preferred Stock in proportion, as nearly as practicable, to the respective aggregate 

2

 

amounts
of such Registrable Securities held by each such Holder at the time of the filing of the Registration Statement. If, following the reduction in the Registrable Securities issued or issuable
upon conversion of the Series A Stock, Series B Stock and Series B-2 Stock to be included in the Registration Statement, a further reduction in the number of shares to
be included in such underwriting and registration is required, the number of shares of Registrable Securities issued or issuable upon conversion of the Series C Stock shall be reduced to the
extent required by the underwriter, and such reduction shall be allocated among all Holders of Registrable Securities issued or issuable upon conversion of the Series C Stock in proportion, as
nearly as practicable, to the respective aggregate amounts of such Registrable Securities held by each such Holder at the time of the filing of the Registration Statement. 

        (c)   Notwithstanding the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to
this Section 1.2 a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company (the  "Board"), it would
be detrimental to the Company and its stockholders for such registration statement to be filed and the filing of such registration
statement should therefore be delayed, the Company shall have the right to delay taking action with respect to such filing for one periods of not more than 90 days each in any
12-month period after receipt of the request of the Initiating Holders. If the Company delivers such a notice or otherwise does not take steps to effect a Registration in reliance upon
this Section 1.2, any Holder of Registrable Securities that had requested to be included in such Registration shall be entitled to withdraw from such Registration and such Registration shall
not count as not count as a registration pursuant to Section 1.2 for purposes of Section 1.2(d)(i). 

        (d)   In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to
this Section 1.2: 

        (i)    after the Company has effected two registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective; 

        (ii)   during the period starting with the date 90 days prior to the Company's good faith estimate of the date of filing
of, and ending on a date 180 days after the effective date of, a registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause the Section 1.3 registration statement to become effective; or 

        (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on
Form S-3 pursuant to a request made pursuant to Section 1.12 below (and such registration will not count as a registration pursuant to Section 1.2 for purposes of
Section 1.2(d)(i)). 

        1.3    Company Registration.    If (but without any obligation to do so) the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration on any form which does not include substantially
the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities or a registration in which the only Common Stock being registered
is Common Stock issuable upon conversion of debt securities which are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the
written request of any Holder given within 20 days after the giving of such notice by the Company in accordance with Section 3.5 below, the Company shall, subject to the provisions of
Section 1.8 below, cause to be registered under the Act all of the Registrable Securities that such Holder has requested to be registered. 

3

 

        1.4    Obligations of the Company.    Whenever required under this Section 1 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably practicable: 

        (a)   Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to 120 days or until the distribution
contemplated in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for
a period of time equal to the period the Holders refrain from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities of the
Company), and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such
120-day period shall be extended, if necessary, to keep the registration statement effective until the majority of such Registrable Securities are sold, provided that Rule 415 under
the Act, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 3 of the Act or
(II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to
be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the registration statement. 

        (b)   Prepare and file, as expeditiously as reasonably practicable and in any event within 90 days, 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 Act with
respect to the disposition of all securities covered by such registration statement. 

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

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

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

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

4

 

        (g)   Cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange on
which similar securities issued by the Company are then listed. 

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

        (i)    Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Agreement, on
the date that such Registrable Securities are delivered for sale in connection with a registration pursuant to this Agreement, (i) a copy of any opinion provided by the counsel representing the
Company to the underwriters in connection with such registration, and (ii) a copy of any letter from the independent certified public accountants of the Company to the underwriters in
connection with such registration. 

        (j)    Notify each seller of Registrable Securities under such registration statement of (i) the effectiveness of such
registration statement, (ii) the filing of any post-effective amendments to such registration statement, or (iii) the filing of a supplement to such registration statement. 

        (k)   Make available for inspection upon reasonable notice during the Company's regular business hours by each seller of
Registrable Securities, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter,
all material financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement. 

        1.5    Furnish Information.    

        (a)   It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. 

        (b)   The Company shall have no obligation with respect to any registration requested pursuant to Section 1.2 or
Section 1.12 hereof if the number of shares or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the number of
shares or the anticipated aggregate offering price, if any, required to originally trigger the Company's obligation to initiate such registration as specified in Section 1.2(a) or
clause (2) of Section 1.12(b) hereof, whichever is applicable. 

        1.6    Expenses of Demand Registration.    All expenses, other than underwriting discounts and commissions relating to
Registrable Securities, incurred in connection with registrations, filings or qualifications pursuant to Section 1.2 hereof, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of one special counsel for the selling stockholders and another counsel for the Company shall be borne by the Company;  provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.2
hereof if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating holders shall
bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 1.2 hereof;  provided further, however,
 that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business or
prospects of the Company not previously known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be 

5

 

required
to pay any of such expenses and shall retain their rights pursuant to Section 1.2 hereof; provided further, however, that the Company
shall pay all expenses in connection with any registration begun pursuant to Section 1.2 that is subsequently withdrawn by the Company. 

        1.7    Expenses of Company Registration.    The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 1.3 hereof for each Holder (which right may be assigned as provided in
Section 1.13 hereof), including (without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto, but excluding underwriting
discounts and commissions relating to Registrable Securities. 

        1.8    Underwriting Requirements.    In connection with any offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required under Section 1.3 hereof to include any
of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons
entitled to select the underwriters) and approved by the Board. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds
the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to
include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering
(the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall the amount of securities of the
selling Holders included in the offering be reduced below 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 stockholders may be excluded if the underwriters make the determination described above. For purposes of the preceding parenthetical concerning apportionment, for
any selling stockholder which is a holder of Registrable Securities and which is a partnership or corporation, the partners, retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling stockholder", and any  pro rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling stockholder", as defined in this sentence. 

        1.9    Delay of Registration.    No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1. 

        1.10    Indemnification.    In the event any Registrable Securities are included in a registration statement under
this Section 1: 

        (a)   To the extent permitted by applicable federal and state law, the Company will indemnify and hold harmless each Holder,
each of its officers, directors and partners, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or
the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject, insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a material fact required 

6

 

to
be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will pay to each such Holder, each of its officers, directors and partners, underwriter
or controlling person, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action;  provided, however, that
the indemnity agreement contained in this Section 1.10(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person. 

        (b)   To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in
such registration statement, each of its officers, directors and partners, and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 1.10(b) in connection with investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in
no event shall any indemnity under this Section 1.10(b) exceed the proceeds from the offering received by such Holder, net of any applicable underwriting discounts or commissions. 

        (c)   Promptly after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party, to the extent prejudiced, of any liability to the indemnified party
under this Section 1.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than
under this Section 1.10. 

7

 

        (d)   If the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage,
or expense as well as any other relevant equitable considerations; provided, however, that in no event shall any contribution by a Holder under this
Section 1.10(d) exceed the proceeds from the offering received by such Holder, net of any applicable underwriting discounts or commissions. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or
omission. 

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

        (f)    The obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and otherwise. 

        1.11    Reports Under the 1934 Act.    With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act ("Rule 144") and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a registration on Form S-3, 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 90 days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public; 

        (b)   use commercially reasonable efforts to take such action as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first Registration Statement
filed by the Company for the offering of its securities to the general public is declared effective; 

        (c)   file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934
Act; and 

        (d)   furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by
the Company), the Act and the 1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form. 

8

   
        1.12    Form S-3 Registration.    In case the Company shall receive from Holders of at least 15% of
the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect
to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: 

        (a)   promptly give written notice of the proposed registration, and any related qualification or compliance, to all other
Holders; and 

        (b)   as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and
as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after giving such written notice by the Company;  provided,
however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this
Section 1.12: (1) if Form S-3 is not available for such offering by the Holders; (2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $2,500,000; (3) if
the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Company's Board, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of
the Form S-3 registration statement for one period of not more than 90 days after receipt of the request of the Holder or Holders under this Section 1.12 in any
12-month period; (4) if the Company has already effected three registrations on Form S-3 for the Holders pursuant to this Section 1.12; or (5) in
any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or
compliance. 

        (c)   Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. All expenses incurred in connection with a registration requested
pursuant to this Section 1.12, including (without limitation) all registration, filing, qualification, printer's and accounting fees and the reasonable fees and disbursements of one counsel for
the selling Holder or Holders and counsel for the Company, shall be borne by the Company. Registrations effected pursuant to this Section 1.12 shall not be counted as demands for registration
or Company registrations effected pursuant to Sections 1.2 or 1.3 hereof, respectively. 

        1.13    Assignment of Registration Rights.    The rights to cause the Company to register Registrable Securities
pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to (i) any partner or retired partner of such Holder which is a partnership,
(ii) any affiliate of such Holder, (iii) any family member of such Holder or trust for the benefit of such individual Holder or such Holder's family member, or (iv) any transferee
or assignee who acquires at least 5,000 shares of Registrable Securities, provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 1.15 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. 

        1.14    "Market Stand-Off" Agreement.    Each Investor hereby agrees that, during the period of duration
specified by the Company and an underwriter of Common Stock or other securities of the 

9

 

Company,
following the effective date of a registration statement of the Company filed under the 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 donees who agree to be similarly
bound, effective immediately upon the transfer of securities to any such donees) 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 not exceed one hundred eighty (180) days for 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; 

        (b)   such agreement shall not exceed ninety (90) days for any subsequent 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 in which such Investor is entitled to participate; and 

        (c)   all executive officers and directors of the Company then holding Common Stock and each stockholder of the Company holding
in the aggregate at least one percent (1%) of the Company's equity securities on a fully-diluted basis (whether or not pursuant to this Agreement) are required to enter into similar agreements. 

        In
order to enforce the foregoing covenant, the Company may place restrictive legends on the certificates representing, and impose stop-transfer instructions with respect to,
the
Registrable Securities of the participating Investor (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. 

        Notwithstanding
the foregoing, the obligations described in this Section 1.14 shall not apply to a registration relating solely to employee benefit plans on a registration
statement on Form S-l or Form S-8 or similar form which may be promulgated in the future, or a registration relating solely to an SEC Rule 145 transaction
on a registration statement on Form S-4 or similar forms which may be promulgated in the future. 

        1.15    Termination of Registration Rights.    

        (a)   No Holder shall be entitled to exercise any right provided for in this Section 1 after five (5) years
following the consummation of the sale of securities pursuant to a registration statement filed by the Company under the Act in connection with the initial underwritten offering of its securities to
the general public. 

        (b)   In addition, the right of any Holder to request registration or inclusion in any registration pursuant to
Section 1.3 above shall terminate on the closing of the first Company-initiated registered public offering of Common Stock if all shares of Registrable Securities held or entitled to be held
upon conversion by such Holder may immediately be sold under Rule 144 (other than Rule 144(k)) during any 90-day period, or on such date after the closing of the first
Company-initiated registered public offering of Common Stock as all shares of Registrable Securities held or entitled to be held upon conversion by such Holder may immediately be sold under
Rule 144 (other than Rule 144(k)) during any 90-day period. 

10

 

SECTION 2. COVENANTS OF THE COMPANY.  

        2.1    Delivery of Financial Statements.    Subject to Section 2.4 below, so long as an Investor holds a
minimum aggregate of 500,000 shares of Preferred Stock or Common Stock issued upon conversion thereof, the Company shall deliver to such Investor as soon as practicable: 

        (a)   but not later than 120 days following the end of each fiscal year of the Company, an income statement for such
fiscal year, a balance sheet of the Company and statement of stockholder's equity as of the end of such year, and a schedule as to the sources and applications of funds for such year, such
year-end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles, and audited and certified by independent public accountants
selected by the Company; and 

        (b)   but not later than 30 days following the end of each calendar month of the Company commencing with the month
ending on March 31, 2004, unaudited financial statements of the Company for such month. 

        2.2    Inspection.    Subject to Section 2.4 below, the Company shall permit each Investor, at such Investor's
expense, to visit and inspect the Company's properties, to examine its books of account and records and to discuss the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that the Company may require that such Investor enter into a confidentiality
agreement reasonably acceptable to the Company and such investor before the Company is obligated pursuant to this Section 2.2 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information and provided, further, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information the disclosure of which would be detrimental to the Company's competitive interests, as determined in good faith by a majority of the Board. 

        2.3    Annual Budget.    Subject to Section 2.4 below, so long as an Investor holds a minimum aggregate of
500,000 shares of Preferred Stock or Common Stock issued upon conversion thereof, the Company shall deliver to such Investor, no later than 30 days prior to the commencement of each fiscal
year, an annual fiscal operating plan and budget approved by the Board. 

        2.4    Termination of Information and Inspection Covenant.    The covenants set forth in Sections 2.1, 2.2 and 2.3
above shall terminate as to the Investors and be of no further force or effect upon the first to occur of (i) the sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the firm commitment underwritten offering of its securities to the general public, (ii) the date the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act and (iii) the consummation of a bona fide business acquisition of or by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, which results in the holders of the Company's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Company's Board immediately prior to such business acquisition shall no longer to own the Company's outstanding capital stock possessing
the voting power (under ordinary circumstances) to elect a majority of the Company's Board of Directors. 

        2.5    Right of First Offer.    Subject to the terms and conditions specified in this Section 2.5, the Company
hereby grants to each Investor other than such Investors set forth on Schedule B attached hereto (the "Eligible
Investor") a right of first offer with respect to future sales by the Company of its Shares (as defined below). An Eligible Investor shall be entitled to apportion the right of
first offer granted under this Agreement among itself and its partners and affiliates in such proportions as it deems appropriate. 

11

 

        Each
time the Company proposes to offer any shares of, or securities convertible into or exercisable for any shares of, any class of its capital stock (the  "Shares"), the Company shall first make an
offering of such Shares to each Eligible Investor in accordance with the following provisions: 

        (a)   The Company shall deliver a notice in accordance with Section 3.5 below (the  "Notice") to the Eligible Investors stating (i) its
bona fide intention to offer such Shares,
(ii) the number of such Shares to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such Shares. 

        (b)   By written notification received by the Company within 20 calendar days after giving the Notice, each Eligible Investor
may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Shares which equals the proportion that the number of shares of Common Stock issued
and held, including all shares of Common Stock issuable upon conversion of the Preferred Stock then held, by such Eligible Investor bears to the total number of shares of Common Stock of the Company
then outstanding, assuming full conversion and exercise of all outstanding Preferred Stock and other convertible or exercisable securities of the Company (the "Pro Rata
Portion"). The Company shall promptly, in writing, inform each Eligible Investor which purchases all the shares available to it (a "Fully-Exercising
Eligible Investor") of any other Eligible Investor's failure to do likewise (including as a result of no longer having the right to purchase such shares pursuant to
Section 2.6) (a "Non-Fully Exercising Eligible Investor"). During the ten-day period commencing after such information is
given, each Fully-Exercising Eligible Investor shall be entitled to obtain that portion of the Shares not subscribed for by each Non-Fully Exercising Eligible Investor (including as a
result of no longer having the right to purchase such shares pursuant to Section 2.6) which is equal to the proportion that the number of shares of Common Stock held, assuming full conversion
and exercise of all outstanding Preferred Stock and other convertible or exercisable securities of the Company by such Fully-Exercising Eligible Investor, bears to the total number of shares of Common
Stock held, assuming full conversion and exercise of all outstanding Preferred Stock and other convertible or exercisable securities of the Company, by all Fully-Exercising Eligible Investors who wish
to purchase any of the unsubscribed shares. 

        (c)   If all Shares are not elected to be obtained as provided in Section 2.5(b) above, the Company may, for 120
business days following the expiration of the period provided in Section 2.5(b) above, offer the remaining unsubscribed portion of such Shares to any person or persons at a price not less than,
and upon terms no more favorable to the offeree than, those specified in the Notice. If the Company does not enter into an agreement for the sale of all of the Shares within such period, the right
provided
under this Section 2.5 shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Investors in accordance with this Section 2.5. 

        (d)   The right of first offer in this Section 2.5 shall not be applicable to the issuance or sale of shares of capital
stock, options, warrants or other securities or rights (i) to employees, officers, directors or consultants for the primary purpose of soliciting or retaining their employment or services for
benefit of the Company, if approved by a minimum two-thirds (2/3) majority of the Board, (ii) upon or after consummation of a bona
fide, firmly underwritten public offering of shares of Common Stock, registered under the Act pursuant to a registration statement on Form S-1,
(iii) pursuant to the conversion or exercise of convertible or exercisable securities, (iv) to sellers in connection with a bona fide
business acquisition by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, (v) to persons or entities for services rendered, if approved by a
minimum two-thirds (2/3) majority of the Board, (vi) pursuant to a stock option or stock purchase plan or (vii) in connection with any stock split, stock
dividend or recapitalization effected by the Company. 

12

 

        (e)   The right of first offer set forth in this Section 2.5 may be assigned (but only with all related obligations) by
a Holder to (i) any partner or retired partner of such Holder which is a partnership, (ii) any affiliate of such Holder, (iii) any family member of such Holder or trust for the
benefit of such individual Holder or such Holder's family member, or (iv) any transferee or assignee who acquires at least 5,000 shares of Registrable Securities, provided: (a) the
Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such
registration rights are being assigned and (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.15 above. 

        2.6    Pay to Play.    

        (a)   Except as provided in Section 2.6(b) below, any Non-Fully Exercising Eligible Investor (and any
transferee or assignee of such Non-Fully Exercising Eligible Investor's shares) shall forfeit its right of first offer under Section 2.5 above with respect to future sales by the
Company of any offered Shares subsequent to the offering in which such Non-Fully Exercising Eligible Investor failed to purchase at least its Pro Rata Portion, unless such failure was in
response to a specific, written request by the Company (as agreed to by the Board) that such Eligible Investor purchase less than its Pro Rata Portion. 

        (b)   Notwithstanding the provisions of Section 2.6(a) above, in connection with the first sale of Shares by the Company
under Section 2.5 hereof to occur after the date hereof (the "First Sale"), each Eligible Investor listed on Schedule C attached hereto
("Schedule C") shall be deemed a Fully-Exercising
Investor for purposes of Section 2.5 and Section 2.6(a) hereof with respect to the First Sale if: (i) the sum of (x) the amount invested by such Eligible Investor to
purchase Shares in the First Sale, if any, and (y) the amount listed opposite such Eligible Investor's name on Schedule C equals or exceeds the aggregate purchase price of such Eligible
Investor's Pro Rata Portion of the Shares sold in the First Sale; or (ii) such Eligible Investor purchases that portion of the Shares sold in the First Sale which equals the proportion that the
number of shares of Common Stock issued and held, including all shares of Common Stock issuable upon conversion of the Preferred Stock other than the number of shares of Series C Preferred set
forth opposite such Eligible Investor's name on Schedule C, by such Eligible Investor bears to the total number of shares of Common Stock of the Company then outstanding, assuming full
conversion and exercise of all outstanding Preferred Stock and other convertible or exercisable securities of the Company. 

        2.7    Reimbursement of Expenses.    The Company shall reimburse the Company's directors for their customary and
reasonable expenses incurred in attending meetings of the Board and any committee thereof. 

        2.8    Committees.    

        (a)   Any audit committee, compensation committee, nominating and corporate governance committee or pricing committee of the
Board, or any committee of the Board performing similar functions that may be formed from time to time (each, a "Committee"), shall be composed of three
members of the Board; provided that (i) at any time the Company is subject to the reporting requirements of the 1934 Act, the authorized number
of committee members serving on such committee or committees shall comply with the rules and regulations of the 1934 Act, as they may be amended from time to time; and (ii) at any time the
Common Stock is included in The Nasdaq National Market, Inc. ("Nasdaq"), the authorized number of committee members serving on such committee or
committees shall comply with the rules and regulations of Nasdaq, as they may be amended from time to time. 

13

 

        (b)   Unless prohibited by the rules and regulations of the 1934 Act or Nasdaq, at least one member of each Committee shall be
a Series C Director (as such term is defined in the Company Amended and Restated Certificate of Incorporation). 

SECTION 3. MISCELLANEOUS.  

        3.1    Successors and Assigns.    Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement. 

        3.2    Governing Law.    This Agreement shall be governed by and construed under the laws of the State of California
as applied to agreements among California residents entered into and to be performed entirely within California. 

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

        3.4    Titles and Subtitles.    The titles and subtitles used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement. 

        3.5    Notices.    All notices or other communications required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail, with verification of receipt, or facsimile, in either
case if sent during normal business hours of the recipient; if not, then on the next business day; (iii) three days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications
shall be sent (a) if to an Investor, at such Investor's address set forth on the signature page hereof or at such other address, electronic or otherwise, as such Investor shall designate by ten
days' advance written notice to the Company, or (b) if to any other holder or offeree of any shares of capital stock of the Company, at such address, electronic or otherwise, as such holder or
offeree shall have furnished to the Company in writing, and, if such holder has not furnished an address to the Company, then to and at the address of the last holder of such capital stock that has so
furnished an address to the Company, or (c) if to the Company, at its address set forth on the signature page hereof addressed to the attention of the Corporate Secretary, or at such other
address as the Company shall designate by ten days' advance written notice to the Investors and any other holder of capital stock of the Company. 

        3.6    Expenses.    If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 

        3.7    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 (i) the Company, (ii) the holders of a
majority of the Registrable Securities then outstanding, (iii) the holders of 662/3% of the Series A Stock then outstanding, (iv) the holders of
662/3% of the Series B Stock and the Series B-2 Stock then outstanding, voting together as a single class, and (v) the holders of 51% of the
Series C Stock then outstanding. Any amendment or waiver effected in accordance with this Section 3.7 shall be binding upon each holder of any Registrable Securities then outstanding,
each future holder of all such Registrable Securities and the Company. 

14

 

        3.8    Severability.    If one or more provisions of this Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 

        3.9    Aggregation of Stock.    All shares of Preferred Stock, and Common Stock issued upon conversion thereof, held
or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 

        3.10    Entire Agreement; Amendment; Waiver.    This Agreement and the Purchase Agreement, and the documents
contemplated hereby and thereby, constitute the full and entire understanding and agreement between the parties hereto with regard to the subject matter hereof and thereof, and supersede any and all
prior negotiations, correspondence, understandings and agreements among the parties respecting the subject matter hereof and thereof. Upon the execution and delivery of this Agreement by the Company
and the requisite number of stockholders of the Company under the Prior Agreement, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and
terminated in their entirety and shall have no further force and effect. 

[SIGNATURE
PAGES FOLLOW] 

15

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

	 	FAVRILLE, INC.
	

 	

By:	
 	

/s/  JOHN P. LONGENECKER      
 John P. Longenecker

President and Chief Executive Officer
	

 	

Address:	
 	

10421 Pacific Center Court

Suite 150

San Diego, CA 92121
	 	Fax:	 	(858) 450-5948
	

 	
INVESTORS:
	

 	
WILLIAM BLAIR CAPITAL PARTNERS VII, L.P.
	

 	

By:	
 	

William Blair Capital Management VII, L.P.
	 	Its:	 	General Partner
	

 	

By:	
 	

William Blair Capital Management VII, L.L.C.
	 	Its:	 	General Partner
	

 	

By:	
 	

/s/  A.M. MINOCHERHOMJEE      

	 	Name:	 	Arda Minocherhomjee
	 	Its:	 	Managing Director
	

 	

Address:	
 	

227 West Monroe Street

Suite 3500

Chicago, Illinois 60606
	 	Fax:	 	(312) 236-5782
	

 	
WILLIAM BLAIR CAPITAL PARTNERS VII QP, L.P.
	

 	

By:	
 	

William Blair Capital Management VII, L.P.
	 	Its:	 	General Partner
	

 	

By:	
 	

William Blair Capital Management VII, L.L.C.
	 	Its:	 	General Partner
	

 	

By:	
 	

/s/  A.M. MINOCHERHOMJEE      

	 	Name:	 	Arda Minocherhomjee
	 	Its:	 	Managing Director
	

 	

Address:	
 	

227 West Monroe Street

Suite 3500

Chicago, Illinois 60606
	

 	

Fax:	
 	

(312) 236-5782
	 	 	 	 

	

 	
ALLOY PARTNERS 2000, L.P.

ALLOY VENTURES 2000, L.P.

ALLOY CORPORATE 2000, L.P.

ALLOY INVESTORS 2000, L.P.
	

 	

By:	
 	

Alloy Ventures 2000, LLC
	 	Their:	 	General Partner
	

 	

 	
 	

 
	 	/s/  DOUGLAS E. KELLY      
 Managing Member of Alloy Ventures 2000, LLC
	

 	

Address:	
 	

480 Cowpers Street

2nd Floor

Palo Alto, CA 94301
	 	Fax:	 	(650) 687-5010
	

 	
ALLOY ANNEX I, L.P.
	

 	

By:	
 	

Alloy Annex I, LLC
	 	Its:	 	General Partner
	

 	

/s/  DOUGLAS E. KELLY      
 Managing Member of Alloy Annex I, LLC
	

 	

Address:	
 	

480 Cowpers Street, 2nd Floor

Palo Alto, CA 94301
	

 	
DE NOVO VENTURES I, LP

DE NOVO (Q) VENTURES I, LPQL
	

 	

By:	
 	

De Novo Management LLC
	 	Their:	 	General Partner
	

 	

 	
 	

 
	 	/s/  FRED DOTZLER      
 Fred Dotzler, Managing Director
	

 	

Address:	
 	

1550 El Camino Real

Suite 150

Menlo Park, CA 94025
	 	Fax:	 	(650) 329-1315
	 	 	 	 

	

 	
SANDERLING VENTURE PARTNERS V, L.P.

SANDERLING V BIOMEDICAL, L.P.

SANDERLING V LIMITED PARTNERSHIP

SANDERLING V BETEILIGUNGS GMBH & CO. KG

SANDERLING VENTURE PARTNERS V CO-INVESTMENT FUND, L.P.

SANDERLING V BIOMEDICAL CO-INVESTMENT FUND, L.P.
	

 	

By:	
 	

Middleton, McNeil & Mills Associates V, LLC
	

 	

 	
 	

 
	 	/s/  FRED A. MIDDLETON      
 Fred A. Middleton

Managing Director
	

 	

Address:	
 	

400 South El Camino Real

Suite 1200

San Mateo, CA 94402
	 	Fax:	 	(650) 375-7077
	

 	
SANDERLING V VENTURES MANAGEMENT
	

 	

 	
 	

 
	 	/s/  FRED A. MIDDLETON      
 Fred A. Middleton

Owner
	

 	

Address:	
 	

400 South El Camino Real

Suite 1200

San Mateo, CA 94402
	 	Fax:	 	(650) 375-7077
	

 	
FORWARD VENTURES III INSTITUTIONAL PARTNERS L.P.
	

 	

By:	
 	

Forward III Associates, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IVOR ROYSTON      

	 	Name:	 	 
	 	 	 	Ivor Royston, M.D.

	 	Title:	 	 
	 	 	 	Managing Member

	

 	

Address:	
 	

9393 Towne Centre Drive

Suite 200

San Diego, CA 92121
	 	Fax:	 	(858) 452-8799
	 	 	 	 

	

 	
FORWARD VENTURES III L.P.
	

 	

By:	
 	

Forward III Associates, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IVOR ROYSTON      

	 	Name:	 	 
	 	 	 	Ivor Royston, M.D.

	 	Title:	 	 
	 	 	 	Managing Member

	 	Address:	 	9393 Towne Centre Drive

Suite 200

San Diego, CA 92121
	 	Fax:	 	(858) 452-8799
	

 	
FORWARD VENTURES IV B L.P.
	

 	

By:	
 	

Forward IV Associates, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IVOR ROYSTON      

	 	Name:	 	 
	 	 	 	Ivor Royston, M.D.

	 	Title:	 	 
	 	 	 	Managing Member

	

 	

Address:	
 	

9393 Towne Centre Drive

Suite 200

San Diego, CA 92121
	 	Fax:	 	(858) 452-8799
	

 	
FORWARD VENTURES IV L.P.
	

 	

By:	
 	

Forward IV Associates, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IVOR ROYSTON      

	 	Name:	 	 
	 	 	 	Ivor Royston, M.D.

	 	Title:	 	 
	 	 	 	Managing Member

	

 	

Address:	
 	

9393 Towne Centre Drive

Suite 200

San Diego, CA 92121
	 	Fax:	 	(858) 452-8799
	 	 	 	 

	

 	
JACOBS INVESTMENT COMPANY, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  GARY E. JACOBS      

	 	Name:	 	 
	 	 	 	Gary E. Jacobs

	 	Title:	 	 
	 	 	 	Manager

	

 	

Address:	
 	

13974 Boquito Drive

Del Mar, CA 92014
	

 	
STEPHEN J. KANDEL SSB ROTH CONVERSION IRA CUST.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Name:	 	Stephen J. Kandel
	 	Title:	 	Beneficial Owner
	

 	

Address:	
 	

1021 Muirlands Drive

La Jolla, CA 92037
	

 	

 	
 	

 
	 	
 SANDEN KANDEL
	

 	

Address:	
 	

1021 Muirlands Drive

La Jolla, CA 92037
	

 	
EBR HOLDINGS II LTD.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Name:	 	 
	 	 	 	

	 	Title:	 	 
	 	 	 	

	

 	

Address:	
 	

3366 N. Torrey Pines Ct.

Suite 210

La Jolla, CA 92037
	

 	

 	
 	

 
	 	
 ELLIOT FEUERSTEIN
	

 	

Address:	
 	

8588 Ruette Monte Carlo

La Jolla, CA 92037
	

 	
MICHAEL M. BERNS LIVING TRUST

DATED 10/16/90, MICHAEL M. BERNS, TRUSTEE
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	
 Michael M. Berns

Trustee
	

 	

Address:	
 	

1617 Emerald Bay

Laguna Beach, CA 92651
	 	 	 	 

	

 	
THE PAYNE FAMILY TRUST DATED 1/23/85, ERROL G. PAYNE AND NAOMI F. PAYNE, TRUSTEES
	

 	

By:	
 	

 
	 	 	 	
 Errol G. Payne and Naomi F. Payne

Trustees
	

 	

Address:	
 	

21 Ritz Cove Drive

Dana Point, CA 92629
	

 	

 	
 	

 
	 	
 JOSHUA COHEN AND LITA COHEN
	

 	

Address:	
 	

8010 Frost Street, Suite 408

San Diego, CA 92123
	

 	
MICHAEL S. GROSSMAN UBS IRA ROLLOVER DG87091-68
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  MICHAEL S. GROSSMAN      

	 	Name:	 	Michael S. Grossman
	 	Title:	 	Owner
	

 	

Address:	
 	

310 Forward Street

La Jolla, CA 92037
	

 	
MARGARET GROSSMAN UBS IRA DG44753
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  MARGARET GROSSMAN      

	 	Name:	 	Margaret Grossman
	 	Title:	 	Owner
	

 	

Address:	
 	

310 Forward Street

La Jolla, CA 92037
	

 	

 	
 	

 
	 	
 GUILIO WASSMER
	

 	

Address:	
 	

Schlyffistrasse 15

8806 Bäch

Switzerland
	

 	

 	
 	

 
	 	/s/  CHRISTOPH DIETSCHE      
 CHRISTOPH DIETSCHE
	

 	

Address:	
 	

Jurastrasse 27

CH-5000 Aarau

Switzerland
	 	 	 	 

	

 	
WARNKE BROADLEY KENNEDY FAMILY TRUST DATED 3/29/89, JOSEPH F. KENNEDY, TRUSTEE, GERIANN WARNKE, TRUSTEE
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  JOSEPH F. KENNEDY      

	 	Name:	 	Joseph F. Kennedy
	 	Title	 	Trustee
	

 	

Address:	
 	

6390 Cardeno Drive

La Jolla, CA 92037
	

 	
IRA M. LECHNER & WINIFRED EILEEN HAAG FAMILY TRUST DATED 1/21/00: IRA M. LECHNER & WINIFRED EILEEN HAAG TRUSTEES
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IRA M. LECHNER      

	 	Name:	 	 
	 	 	 	Ira M. Lechner

	 	Title:	 	 
	 	 	 	Trustee

	

 	

Address:	
 	

19811 4th Place

Escondido, CA 92029
	

 	
MORGAN STANLEY DW INC. CUSTODIAN FOR IRA M. LECHNER (MSDW TAX ID #94-1671384)
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  IRA M. LECHNER      

	 	Name:	 	Ira M. Lechner
	 	Title:	 	Trustee
	

 	

Address:	
 	

19811 4th Place

Escondido, CA 92029
	

 	

 	
 	

 
	 	
 NEVINS MCBRIDE
	

 	

Address:	
 	

 
	 	 	 	

	

 	

 	
 	

 
	 	 	 	

	

 	
ALFRED AND ADELE SALEH FAMILY TRUST
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  FRED SALEH      

	 	Name:	 	Fred Saleh
	 	Title:	 	 
	 	 	 	Trustee

	

 	

Address:	
 	

14845 Caminito Lorren

Del Mar, CA 92014
	

 	

 	
 	

 
	 	
 LAWRENCE BIER
	

 	

Address:	
 	

13 Blueberry Ridge Court

Rockville, MD 20854

	 	DENNIS FAMILY TRUST DATED 3/29/93, EDWARD A. DENNIS, TRUSTEE, MARTHA G. DENNIS, TRUSTEE
	

 	

By:	
 	

 
	 	 	 	/s/  EDWARD A. DENNIS, TTEE,    

/s/  MARTHA G. DENNIS, TTEE      
 Edward A. Dennis and

Martha G. Dennis

Trustees
	

 	

Address:	
 	

1921 Hypatia Way

La Jolla, CA 92037
	

 	

 	
 	

 
	 	/s/  ELLIOTT ROYSTON      
 ELLIOTT ROYSTON
	

 	

Address:	
 	

1634 Ponce de Leon Ave., #207

Atlanta, GA 30307
	

 	

 	
 	

 
	 	
 DAVID W. ODMARK
	

 	

Address:	
 	

 
	 	 	 	

	

 	

 	
 	

	

 	
INDOFIN, NV
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Name:	 	Pieter van Dongen
	 	Title:	 	Director
	

 	

Address:	
 	

c/o Avobone S.A.

9, Place du Bourg-de-Four

1204 Geneva

Switzerland

1204
	

 	

 	
 	

 
	 	
 HOWARD ALTMANN
	

 	

Address:	
 	

P.O. Box 1965

New York, NY 10013
	

 	
LOTUS BIOSCIENCE INVESTMENT HOLDINGS LIMITED
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  WONG KEN LUM, MONG CHEUK WAI      

	 	Name:	 	Wong Ken Lum and Mong Cheuk Wai
	 	Title:	 	Directors
	

 	

Address:	
 	

9th Floor, Central Building

Pedder Street, Hong Kong
	 	 	 	 

	

 	
MERCER REVOCABLE FAMILY TRUST DTD 7/13/89
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Name:	 	Thomas Mercer
	 	Title:	 	Trustee
	

 	

Address:	
 	

P.O. Box 842

Rancho Santa Fe, CA 92067
	

 	
WEIL FAMILY TRUST OF 1980, CHRISTOPHER WEIL AND PATRICIA WEIL
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  CHRISTOPHER WEIL      

	 	Name:	 	Christopher Weil
	 	Title:	 	Trustee
	

 	

Address:	
 	

 
	

 	
GC&H INVESTMENTS
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  JOHN L. CARDOZA      

	 	Name:	 	John L. Cardoza
	 	Title:	 	Executive Partner
	

 	

Address:	
 	

One Maritime Plaza

20th Floor

San Francisco, CA 94111
	

 	
GC&H INVESTMENTS, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  JOHN L. CARDOZA      

	 	Name:	 	John L. Cardoza
	 	Title:	 	Executive Partner
	

 	

Address:	
 	

One Maritime Plaza

20th Floor

San Francisco, CA 94111
	

 	
GRAY GHOST, LLC
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  PHILIP GOELET      

	 	Name:	 	 
	 	 	 	Philip Goelet

	 	Title:	 	Manager
	

 	

Address:	
 	

c/o Red Abbey, LLC

2330 West Joppa Road

Suite 330

Lutherville, MD 21093
	 	Fax:	 	(410) 494-4247
	 	 	 	 

	

 	
HELLER FINANCIAL LEASING, INC.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  FRANK A. VAN DE      

	 	Name:	 	Frank A. Van De
	 	Title:	 	Vice President
	

 	

Address:	
 	

500 W. Monroe Street

Chicago, IL 60661

Attn: GE Technology Finance —

Portfolio Management
	 	Fax:	 	(312) 876-2593
	

 	
PRIVATE EQUITY HOLDING-FAVRILLE, L.L.C.
	

 	

By:	
 	

Howard Hughes Medical Institute
	 	Its:	 	Sole Member and Manager
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  STEPHEN M. KITSOULAS      

	 	Name:	 	 
	 	 	 	Stephen M. Kitsoulas

	 	Title:	 	 
	 	 	 	Managing Director—Fixed Income & Currencies

	

 	

Address:	
 	

4000 Jones Bridge Road

Chevy Chase, MD 20815
	 	Fax:	 	(301) 215-8691
	

 	
SFP BIOTECH PARTNERS
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  STEVEN LEE YAMSHON      
 Steven Lee Yamshon

Managing Partner
	

 	

Address:	
 	

1851 E. First Street #150

Santa Ana, CA 92705
	

 	
STEPHEN J. KANDEL SSB ROTH CONVERSION IRA CUST.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  STEPHEN J, KANDEL      

	 	Name:	 	Stephen J. Kandel
	 	Title:	 	Beneficial Owner
	

 	

Address:	
 	

1021 Muirlands Drive

La Jolla, CA 92037
	

 	

 	
 	

 
	 	/s/  STEPHEN J. KANDEL      
 STEPHEN AND GENEVIEVE KANDEL
	

 	

Address:	
 	

P.O. Box 1891

Rancho Santa Fe, CA 92067
	 	 	 	 

	

 	
OAKWOOD MEDICAL MANAGEMENT IV (QP), L.L.C.
	

 	

By:	
 	

Oakwood Medical Management IV, L.L.C.
	 	Its:	 	Manager
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  RAUL E. PEREZ      

	 	Name:	 	Raul E. Perez, M.D.
	 	Title:	 	President
	

 	

Address:	
 	

439 Kirkwood Road, Suite 208

St. Louis, Missouri 63122
	

 	
OAKWOOD MEDICAL INVESTORS IV, L.L.C.
	

 	

By:	
 	

Oakwood Medical Management IV, L.L.C.
	 	Its:	 	Manager
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  RAUL E. PEREZ      

	 	Name:	 	Raul E. Perez, M.D.
	 	Title:	 	President
	

 	

Address:	
 	

439 Kirkwood Road, Suite 208

St. Louis, Missouri 63122
	

 	
COMMUNITY INVESTMENT PARTNERS V L.P., LLLP
	

 	

By:	
 	

CIP Management L.P., LLLP
	 	Its:	 	Managing General Partner
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  D. BURKHARDT      

	 	Name:	 	Daniel A. Burkhardt
	 	Title:	 	Chairman of CIP Management, Inc.,

Managing General Partner of CIP

Management L.P., LLLP
	

 	

Address:	
 	

12555 Manchester Road

St. Louis, Missouri 63131
	

 	
PIPER JAFFRAY HEALTHCARE FUND IV, L.P.
	

 	

By:	
 	

Piper Jaffray Healthcare

Management IV, LLC
	 	Its:	 	General Partner
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  HEATH LUKATCH      
 Heath Lukatch, Managing Director of Piper Jaffray Ventures Inc., its General
Partner
	

 	

Address:	
 	

100 Spear Street, Suite 1600

San Francisco, CA 94105
	 	Fax:	 	(415) 979-9488
	 	 	 	 

	

 	
AVTECH PORTFOLIO, L.P.
	

 	

By:	
 	

AVTech Ventures II, LLC
	 	Its:	 	General Partner
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  GARY L. SHIELDS      
 Gary L. Shields, Managing Member
	

 	

Address:	
 	

1201 Camino Del Mar, Suite 215

Del Mar, CA 92014
	 	Fax:	 	(858) 356-3563
	

 	
MATTHEW C. & IRIS LYNN STRAUSS, CO-TRUSTEES OF STRAUSS FAMILY TRUST DTD. 6/5/92
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  MATTHEW STRAUSS      

	 	Name:	 	Matthew C. Strauss
	 	Title	 	Co-Trustee
	

 	

Address:	
 	

c/o MC Strauss Company

990 Highland Drive, Suite 200

Solana Beach, CA 92075
	 	Fax:	 	(858) 792-7834
	

 	
BOSTON LIFE SCIENCE VENTURE CORP.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  KENNETH LO      

	 	Name:	 	Kenneth C.M. Lo
	 	Title:	 	Chairman
	

 	

Address:	
 	

5th Fl. No. 420

Fu-Hsin N. Road

Taipei, Taiwan
	

 	
THOMAS A. SHIFTAN AND MAUREEN E. SHIFTAN, CO-TRUSTEES OF SHIFTAN FAMILY TRUST DTD. 3/23/98
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  THOMAS SHIFTAN      

	 	Name:	 	Thomas A. Shiftan
	 	Title	 	Co-Trustee
	

 	

Address:	
 	

7040 Neptune Place

La Jolla, CA 92037
	 	 	 	 

	

 	
NEEDHAM CAPITAL SBIC III, L.P.

NEEDHAM CAPITAL PARTNERS IIIA, L.P.

NEEDHAM CAPITAL PARTNERS III (BERMUDA), L.P.
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  JOHN PRIOR      

	 	Name:	 	 
	 	 	 	John J. Prior, Jr.

	 	Title:	 	 
	 	 	 	General Partner

	

 	

Address:	
 	

Needham Asset Management

445 Park Avenue

New York, NY 10022
	

 	
1998 CO-INVESTING LLC

EIN 43-1831139
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  JEFF MCDONNELL      

	 	Name:	 	Jeff McDonnell
	 	Title	 	Manager
	

 	

Address:	
 	

1034 S. Brentwood, Suite 1860

St. Louise, MO 63117
	

 	
SCHRODERS & CO. BANK SA
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	/s/  SAMUEL MOULIN      

	 	Name:	 	 
	 	 	 	Samuel Moulin

	 	Title:	 	 
	 	 	 	Director

	 	Address:	 	8, Rue D'Italie

Geneve, Switzerland
	

 	

 	
 	

 
	 	/s/  ERIC ROBERTS      
 ERIC W. ROBERTS
	

 	

Address:	
 	

205 E 78th St., #4H

New York, NY 10022
	

 	
SCHEIBLER-LEHENY FAMILY LIVING TRUST U/D/T

JUNE 6, 2001
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Names:	 	Edward G. Scheibler, Trustee

A. Rachel Leheny, Trustee
	

 	

Address:	
 	

 
	 	 	 	

	

 	

 	
 	

 
	 	 	 	

	

 	

 	
 	

 
	 	 	 	

	 	 	 	 

	

 	
THE NICHOLAS & PADDI ARTHUR TRUST DATED            
	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	

 	

 	
 	

 
	 	By:	 	 
	 	 	 	

	 	Names:	 	Nicholas Arthur, Co-Trustee

Paddi Arthur, Co-Trustee
	

 	

Address:	
 	

 
	 	 	 	

	

 	

 	
 	

 
	 	 	 	

	

 	

 	
 	

 
	 	 	 	

SCHEDULE A
  INVESTORS  

	INVESTOR	 	 
	

William Blair Capital Partners VII, L.P.	
 	

 
	

William Blair Capital Partners VII QP, L.P.	
 	

 
	

Alloy Partners 2000, L.P.	
 	

 
	

Alloy Ventures 2000, L.P.	
 	

 
	

Alloy Corporate 2000, L.P.	
 	

 
	

Alloy Investors 2000, L.P.	
 	

 
	

Alloy Annex I, L.P.	
 	

 
	

De Novo Ventures I, LP	
 	

 
	

De Novo (Q) Ventures I, LP	
 	

 
	

Sanderling Venture Partners V, L.P.	
 	

 
	

Sanderling V Biomedical, L.P.	
 	

 
	

Sanderling V Limited Partnership	
 	

 
	

Sanderling V Beteiligungs GmbH & Co. KG	
 	

 
	

Sanderling V Ventures Management	
 	

 
	

Sanderling Venture Partners V Co-Investment Fund, L.P.	
 	

 
	

Sanderling V Biomedical Co-Investment Fund, L.P.	
 	

 
	

Forward Ventures III Institutional Partners L.P.	
 	

 
	

Forward Ventures III L.P.	
 	

 
	

Forward Ventures IV B L.P.	
 	

 
	

Forward Ventures IV L.P.	
 	

 
	

Jacobs Investment Company, LLC	
 	

 
	

Stephen J. Kandel SSB Roth Conversion IRA Cust.	
 	

 
	

Sanden Kandel	
 	

 
	

EBR Holdings II Ltd.	
 	

 
	

Elliot Feuerstein	
 	

 
	

Michael M. Berns Living Trust Dated 10/16/90, Michael M. Berns, Trustee	
 	

 
	

The Payne Family Trust Dated 1/23/85, Errol G. Payne and Naomi F. Payne, Trustees	
 	

 
	

Joshua Cohen and Lita Cohen	
 	

 
	

Michael S. Grossman UBS IRA Rollover DG87091-68	
 	

 
	

Margaret Grossman UBS IRA DG44753	
 	

 
	

Guilio Wassmer	
 	

 
	

Christoph Dietsche	
 	

 
	 	 	 

	

Warnke Broadley Kennedy Family Trust Dated 3/29/89, Joseph F. Kennedy, Trustee, Geriann Warnke, Trustee	
 	

 
	

Ira M. Lechner & Winifred Eileen Haag Family Trust Dated 1/21/00: Ira M. Lechner & Winifred Eileen Haag Trustees	
 	

 
	

Morgan Stanley DW Inc. Custodian for Ira M. Lechner (MSDW Tax ID #94-1671384)	
 	

 
	

Nevins McBride	
 	

 
	

Alfred and Adele Saleh Family Trust	
 	

 
	

Lawrence Bier	
 	

 
	

Dennis Family Trust Dated 3/29/93, Edward A. Dennis, Trustee, Martha G. Dennis, Trustee	
 	

 
	

Elliott Royston	
 	

 
	

David W. Odmark	
 	

 
	

Indofin, NV	
 	

 
	

Howard Altmann	
 	

 
	

Lotus Bioscience Investment Holdings Limited	
 	

 
	

Mercer Revocable Family Trust DTD 7/13/89	
 	

 
	

Weil Family Trust of 1980, Christopher Weil and Patricia Weil	
 	

 
	

GC&H Investments	
 	

 
	

GC&H Investments, LLC	
 	

 
	

Gray Ghost, LLC	
 	

 
	

Heller Financial Leasing, Inc.	
 	

 
	

SFP Biotech Partners	
 	

 
	

Schroders & Co. Bank SA	
 	

 
	

Antonio J. Grillo-Lopez and Maria S. Grillo Trustees Grillo-Marxuach Family Trust dated 6-28-95	
 	

 
	

Private Equity Holding-Favrille, L.L.C.	
 	

 
	

Stephen Kandel CGM Roth Conversion IRA CUST A/C #119-51879-17-380	
 	

 
	

Stephan and Genevieve Kandel	
 	

 
	

Oakwood Medical Investors IV (QP), L.L.C.	
 	

 
	

Oakwood Medical Investors IV, L.L.C.	
 	

 
	

Community Investment Partners V L.P., LLLP	
 	

 
	

Piper Jaffray Healthcare Fund IV, L.P.	
 	

 
	

AVTech Portfolio, L.P.	
 	

 
	

Matthew C. & Iris Strauss, co-trustees of Strauss Family Trust dtd. 6/5/92	
 	

 
	

Boston Life Science Venture Corp.	
 	

 
	

Thomas A. Shiftan and Maureen E. Shiftan, co-trustees of Shiftan Family Trust dated 3/23/98	
 	

 

Schedule C  

 Series C Preferred Over-Subscription Amount  

	ELIGIBLE INVESTOR
 
	 	NUMBER OF SHARES
	 	PURCHASE PRICE

	Forward Ventures III Institutional Partners L.P. and its affiliates	 	1,115,216	 	$	1,538,998
	Sanderling Venture Partners V, L.P. and its affiliates	 	1,787,729	 	$	2,467,066
	De Novo Ventures I, LP and its affiliates	 	500,783	 	$	691,081

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FAVRILLE, INC. AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

RECITALS

AGREEMENT

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