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EXHIBIT 10.2
LIFE MEDICAL SCIENCES, INC.
INVESTOR RIGHTS AGREEMENT
December 15, 2000
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INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is made and
entered into as of December 15, 2000 by and among Life Medical Sciences, Inc., a
Delaware corporation (the "Company") and the investors listed on the signature
pages hereto (the "Investors").
RECITALS
WHEREAS, the Company desires the Investors to purchase shares
of the Company's Series A Convertible Preferred Stock ("Series A Preferred")
pursuant to a Stock Purchase Agreement dated of even date herewith (the
"Purchase Agreement"); and
WHEREAS, as an inducement for the Investors to enter into the
Purchase Agreement, the Company desires to enter into this Agreement with the
Investors.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1. DEFINITIONS.
(a) "AS-CONVERTED BASIS" means assuming the
conversion into Common Stock or exercise for Common Stock of all securities
directly or indirectly convertible into, or exercisable for, Common Stock.
(b) "COMMON STOCK" means the Company's Common
Stock, par value $0.001 per share.
(c) "EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended.
(d) "FORM S-3" means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(e) "HOLDER" means any person owning of record
Registrable Securities that have not been sold to the public or pursuant to Rule
144 promulgated under the Securities Act or any assignee of record of such
Registrable Securities to whom rights under this Section have been duly assigned
in accordance with this Agreement.
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(f) "INITIATING HOLDER" means any Holder or
Holders who in the aggregate are Holders of not less than 50% of the
then-outstanding Registrable Securities which have not been sold to the
public.
(g) "REGISTER," "REGISTERED" and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
(h) "REGISTRABLE SECURITIES" means: (i) all
shares of Common Stock issued or issuable pursuant to the conversion of
Series A Preferred, and (ii) any shares of Common Stock or other securities
issued in connection with any stock split, stock dividend, recapitalization,
reorganization, merger, sale of assets or similar event relating to the
foregoing; excluding in all cases, however, any securities that would
otherwise be Registrable Securities that have been sold by a person in a
transaction in which rights under this Agreement are not assigned in
accordance with this Agreement, any securities that would otherwise be
Registrable Securities that have been sold to the public or sold pursuant to
Rule 144 promulgated under the Securities Act, and, solely for the purposes
of a registration under Section 1.2, Registrable Securities eligible for sale
pursuant to Rule 144(k) promulgated under the Securities Act..
(i) "REGISTRATION EXPENSES" means all
expenses incurred by the Company in complying with Sections 1.2 and 1.3
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, fees and expenses of one counsel for all the Holders, blue sky fees
and expenses and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company).
(j) "SECURITIES ACT" means the Securities Act
of 1933, as amended.
(k) "SELLING EXPENSES" means all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities.
1.2. REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION BY INITIATING
HOLDERS. If the Company shall receive from an Initiating Holder, at any time
following conversion of Series A Preferred into Common Stock, a written
request that the Company effect any registration with respect to all or a
part of the Registrable Securities, the Company will:
(i) promptly give written notice of
the proposed registration to all other Holders of Registrable Securities; and
(ii) use its best efforts to effect,
as soon as practicable but in any event within 90 days of receipt of the
Initiating Holder's request for registration, such registration of the sale
of the Registrable Securities requested by the Initiating Holder, together
with all or such
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portion of the Registrable Securities of any other Holder or Holders joining
in such request as are specified in written requests received by the Company
within 30 days after written notice from the Company is given under Section
1.2(a)(i)above; provided, however, that the Company shall not be obligated to
effect, or take any action to effect, any such registration pursuant to this
Section 1.2:
(1) In any particular
jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such registration, unless the
Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act or applicable rules or regulations
thereunder; or
(2) After the Company has
effected one such registration pursuant to this Section 1.2 and such
registration has been declared or ordered effective and the sales of such
Registrable Securities shall have closed.
(b) UNDERWRITING; REQUEST BY INITIATING
HOLDERS. If the Initiating Holder intends to distribute the Registrable
Securities covered by its request by means of an underwriting, it shall so
advise the Company as a part of its request and the Company shall include
such information in the written notice referred to in Section 1.2(a)(i). In
such event, the right of any Holder to include such Holder's 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 the Initiating Holder 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 1.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Initiating Holder and reasonably
acceptable to the Company. Notwithstanding the foregoing, if the managing
underwriter advises the Company and the Initiating Holder in writing that
marketing factors require a limitation of the number of shares to be included
in the registration, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in
the underwriting shall be allocated among all Holders who sought to include
Registrable Securities in the registration, in such proportion (as nearly as
practicable) among such Holders PRO RATA based on the amount of Registrable
Securities owned by each of them (calculated on an As-Converted Basis). For
any Holder 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 "Holder," and any
pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence. In
connection with a registration under this Section 1.2, the Company may
include securities to be sold for its own account, or the account of other
persons; provided, however, that if a registration under this Section 1.2 is
to be effected through an underwriting, the right of the Company and such
other persons to include securities in such registration shall be conditioned
upon the Company's and such other persons' participation in such underwriting
and the inclusion of such securities in the underwriting (unless otherwise
mutually agreed by the Initiating Holder and the Company, in the case of
securities to be registered for the
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account of the Company, or by the Initiating Holder and each such other
person, in the case of securities to be registered for the account of such
other persons) to the extent provided herein. Notwithstanding the foregoing,
if the managing underwriter advises the Company, such other persons and the
Initiating Holder in writing that marketing factors require a limitation of
the number of shares to be included in the registration, then (i) all
securities that the Company sought to be included in the registration shall
be removed from the registration before any Registrable Securities are
removed from the registration, (ii) all securities of any such other person
that do not have registration rights pursuant to a Subscription Agreement
entered into with the Company in connection with the Company's private
placement of 1,505,003 shares of Common Stock completed in June, 1999 (the
"Private Placement") or pursuant to the Company's Warrant No. W-1 dated May
8, 1996 (the "Warrant") shall be removed from the registration before any
Registrable Securities are removed from the registration and (iii) to the
extent that any such other person holds securities that have registration
rights pursuant to the Private Placement ("Private Placement Securities") or
the Warrant ("Warrant Securities", and with the Private Placement Securities,
"Other Registrable Securities"), then notwithstanding anything in this
Section 1.2(b) to the contrary, the number of shares of Registrable
Securities and Other Registrable Securities that may be included in the
underwriting shall be allocated among the Holders and such other persons who
sought to include their respective securities in the registration, in such
proportion (as nearly as practicable) among such Holders and such other
persons PRO RATA based on the amount of Registrable Securities and Other
Registrable Securities owned by each of them (calculated on an As-Converted
Basis); provided, that notwithstanding anything in the foregoing to the
contrary, the rights of the Holders of Registrable Securities to have such
Registrable Securities included in any such registration shall be subordinate
to the rights of the holders of "Warrants" and "Warrant Securities," as such
terms are defined as of the date hereof in the Company's Warrant No. W-1
dated May 8, 1996 issued to Wedbush Morgan Securities, Inc. Any securities
excluded from an underwriting under this section shall be withdrawn from the
registration.
(c) Notwithstanding the foregoing, if the
Company shall furnish to the Initiating Holder a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, then the Company shall have the right
to defer such filing for a period of not more than 60 days after receipt of
the request of the Initiating Holder; provided, however, that the Company may
not utilize this right more than once in any nine-month period.
(d) Except for registration statements on
Form S-4, Form S-8 or successor forms thereto, the Company will not file with
the Commission any other registration statement, whether for its own account
or that of other stockholders, from the date of receipt of a notice from the
Initiating Holders requesting registration pursuant to this Section 1.2 until
three months after the declaration of effectiveness of a registration
statement filed under this Section 1.2 (or the earlier termination of such
requested registration or the related distribution), except where the Company
is contemplating a registration solely for its own account and defers the
registration requested by the
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Initiating Holders under Section 1.2(c) to permit the Company to complete
such registration for its own account.
1.3. PIGGYBACK REGISTRATIONS.
(a) NOTICE. The Company shall notify all
Holders of Registrable Securities in writing at least 25 days prior to filing
any registration statement under the Securities Act for purposes of effecting
a public offering of securities of the Company whether for its own account or
the account of other stockholders or both (excluding any registration
statements on Form S-4, Form S-8 or successor forms thereto, and a
registration under Section 1.2) and will afford each such Holder an
opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within 15 days after receipt of the
above-described notice from the Company, so notify the Company in writing,
and in such notice shall inform the Company of the number of Registrable
Securities such Holder wishes to include in such registration statement. If a
Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities
in any subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all upon
the terms and conditions set forth herein.
(b) UNDERWRITING. If a registration
statement under which the Company gives notice under Section 1.3(a) is for an
underwritten offering, then the Company shall so advise the Holders of
Registrable Securities in the notice delivered under Section 1.3(a). In such
event, the right of any such Holder's Registrable Securities to be included
in a registration pursuant to this Section 1.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting agreement in
customary form with the managing underwriter or underwriter(s) selected for
such underwriting. Notwithstanding any other provision of this Agreement, if
the managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of shares to be underwritten, then the
managing underwriter(s) may exclude shares (including Registrable Securities)
from the registration and the underwriting, and the number of shares that may
be included in the registration and the underwriting shall be allocated,
first, to the Company, second, to each of the Holders of Registrable
Securities requesting inclusion of their Registrable Securities in such
registration statement and to holders of Private Placement Securities, to be
allocated among such persons PRO RATA based on the amount of Registrable
Securities and Private Placement Securities (calculated on an As-Converted
Basis) owned by each person and third, to any other holders of the Company's
securities; provided, that notwithstanding anything in the foregoing to the
contrary, the rights of the Holders of Registrable Securities to have such
Registrable Securities included in any such registration shall be subordinate
to the rights of the holders of "Warrants" and "Warrant Securities," as such
terms are defined as of the date hereof in the Company's Warrant No. W-1
dated May 8, 1996 issued to Wedbush Morgan Securities, Inc. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
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withdrawn from the registration. For any Holder 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 "Holder," and any pro rata reduction with respect to
such "Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
1.4. EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with one demand registration (pursuant to Section 1.2)
and all piggyback registrations (pursuant to Section 1.3) shall be borne by
the Company, and all Selling Expenses shall be borne by the Holders of the
securities so registered PRO RATA on the basis of the number of their shares
so registered.
1.5. OBLIGATIONS OF THE COMPANY. Whenever required to
effect the registration of any Registrable Securities under this Agreement,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective,
and keep such registration statement effective and the related prospectus
current until the distribution is completed, but not more than 180 days,
provided that such 180-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any Registrable
Securities included in such registration statement due to circumstances
described in Section 1.5(f).
(b) Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Holders such number of
copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and all amendments and
supplements thereto, and such other documents as they may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
them that are included in such registration.
(d) Use its 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, however, 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 unless the Company is already subject to
service in such jurisdiction and except as may be required by the Securities
Act or applicable rules or regulations thereunder.
(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
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managing underwriter(s) 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 thereto is required to be delivered under the Securities
Act if 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 and, following such
notification, promptly deliver to each Holder copies of all amendments or
supplements referred to in paragraphs (b) and (c) of this Section 1.5.
(g) Furnish, at the request of any Holder
registering Registrable Securities, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or on the date that the registration
statement becomes effective, if such securities are not being sold through
underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering addressed to the underwriters, if any, and if there are no
underwriters, to the Holders requesting registration of Registrable
Securities and (ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if there are no
underwriters, to the Holders requesting registration of Registrable
Securities.
(h) Use its best efforts to list the
Registrable Securities covered by such registration statement with any
securities exchange or interdealer quotation system on which the Common Stock
is then listed or quoted.
(i) Make available for inspection 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 (an
"Advisor"), all 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. Such seller will keep, and will cause its Advisors to
keep, such information confidential subject to Section 3.14.
1.6. FURNISH INFORMATION. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to Sections 1.2
and 1.3 that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them,
and the intended method of disposition of such securities as shall be
required to timely effect the registration of Registrable Securities.
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1.7. INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under Sections 1.2 or 1.3:
(a) BY THE COMPANY. To the extent permitted
by law, the Company will indemnify and hold harmless each Holder, the
partners, members, officers and directors of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act
or the Exchange Act against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, 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 or incorporated by reference 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 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 Securities Act, the Exchange Act, any federal
or state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, member, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection 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 in writing and expressly stated for use in connection
with such registration by such Holder, partner, member, officer, director,
underwriter or controlling person of such Holder.
(b) BY SELLING HOLDERS. To the extent
permitted by law, each selling Holder will, severally and not jointly, if
Registrable Securities held by such Holder are included in the securities as
to which such registration is being effected, indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter (as defined in the
Securities Act) and any other Holder selling securities under such
registration statement or any of such other Holder's partners, members,
directors or officers or any person who controls such underwriter or other
Holder within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any
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such director, officer, controlling person, underwriter or other such Holder,
or a member, partner, director, officer or controlling person of such
underwriter or other Holder may become subject under the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or
state securities law in connection with the offering covered by such
registration statement, 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 by an instrument duly executed by such Holder and
stated to be specifically for use in such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, controlling person, underwriter or other
Holder, partner, member, officer, director or controlling person of such
other Holder or underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 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 the total
amounts payable in indemnity by a Holder under this Section 1.7(b) in respect
of any Violation shall not exceed the net proceeds received by such Holder in
the registered offering out of which such Violation arises.
(c) NOTICE. Promptly after receipt by an
indemnified party 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 1.7,
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 shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if the defendants
include both the indemnifying party and the indemnified party and the
indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of
the indemnifying party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 1.7, 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 Section 1.7.
(d) CONTRIBUTION. If the indemnification
provided for in this Section 1.7 is unavailable to a party entitled to
indemnification, then the indemnifying party shall contribute to the
aggregate losses, claims, damages or liabilities of the indemnified party as
is appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a
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material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action; PROVIDED, HOWEVER, that, in any such case, (1) no Holder shall be
required to contribute any amount in excess of the public offering price of
all Registrable Securities offered and sold by such Holder pursuant to such
registration statement; and (2) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) SURVIVAL. The obligations of the Company
and Holders under this Section 1.7 shall survive the completion of any
offering of Registrable Securities in a registration statement.
1.8. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From
and after the date of this Agreement, so long as any Registrable Securities
are outstanding, without the consent of the Holders of a majority of the
Registrable Securities, the Company shall not enter into any agreement with
any holder or prospective holder of any securities of the Company that would
allow such holder or prospective holder (a) to make a demand registration to
the Company at any point in time when holders of Registrable Securities are
entitled to request registration under Section 1.2, or (b) to have
registration rights superior to, or which limit in any way (including by
reducing the number of Registrable Securities that may be included in an
underwritten offering), the registration rights of the Holders granted hereby.
2. LEGENDS. The Investors understand that the share
certificates evidencing any Registrable Securities shall be endorsed with the
following legends (in addition to any legends required under applicable state
securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
3. MISCELLANEOUS.
3.1. SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted transferees and permitted assigns of the parties.
3.2. GOVERNING LAW. This Agreement shall be governed
in all respects by the laws of the State of New York as applied to contracts
made and to be performed entirely within that state between residents of that
state.
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3.3. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and
all of which together shall constitute one instrument.
3.4. TITLES AND SUBTITLES. The titles of the
paragraphs and subparagraphs of this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.
3.5. STOCK SPLITS, ETC. All share numbers used in this
Agreement are subject to adjustment in the case of any stock split, reverse
stock split, combination or similar events.
3.6. NOTICES. Any notice required or permitted to be
given to a party pursuant to the provisions of this Agreement will be in
writing and will be effective on (a) the date of delivery in person, or the
date of delivery by facsimile with confirmation receipt, (b) the business day
after deposit with a nationally-recognized courier or overnight service,
including Express Mail, for United States deliveries or (c) five (5) business
days after deposit in the United States mail by registered or certified mail
for United States deliveries. All notices not delivered personally or by
facsimile will be sent with postage and other charges prepaid and properly
addressed to the party to be notified at the address set forth below such
party's signature on this Agreement or at such other address as such party
may designate by ten (10) days advance written notice to the other parties
hereto. All notices for delivery outside the United States will be sent by
facsimile, or by nationally recognized courier or overnight service. Any
notice given hereunder to more than one person will be deemed to have been
given, for purposes of counting time periods hereunder, on the date given to
the last party required to be given such notice. Notices to the Company will
be marked to the attention of the President, with a copy to Keith Moskowitz,
Greenberg Traurig, 200 Park Avenue, New York, NY 10166. Notices shall be sent
to the addresses on the signature pages hereto, or such other addresses as a
party may provide to the other parties from time to time.
3.7. ATTORNEYS' FEES. 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.
3.8. AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the party against whom
enforcement of such amendment or waiver is sought; provided, however that
with respect to any Investor, the consent of the holders of more than fifty
percent (50%) of the Registrable Securities shall be sufficient to bind any
and all Investors.
3.9. SEVERABILITY. If any provision of this Agreement is
held to be unenforceable under applicable law, then such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision was so excluded and shall be enforceable in
accordance with its terms.
-11-
<PAGE>
3.10. ENTIRE AGREEMENT. This Agreement and the Purchase
Agreement constitute the full and entire understanding and agreement between
the parties with respect to the subject matter hereof and supersedes all
prior negotiations, correspondence, agreements, understandings, duties or
obligations among the parties with respect to the subject matter hereof.
3.11. FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of a party, the other parties shall execute and
deliver such instruments, documents or other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
3.12. ASSIGNMENT. Rights under this Agreement may be
assigned in connection with any transfer or assignment of Registrable
Securities provided that: (a) such transfer may otherwise be effected in
accordance with applicable securities laws, and (b) such other party agrees
in writing with the Company to be bound by all of the provisions of this
Agreement to the same extent as the transferor.
3.13. CHANGES IN STOCK. If, and as often as, there is any
change in the Common Stock or Series A Preferred by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made to the provisions hereof so that the
rights granted hereby shall continue with respect to the Common Stock or
Series A Preferred as so changed.
3.14. CONFIDENTIALITY. Information that an Investor has
agreed to keep confidential pursuant to this Agreement shall not be
considered to be confidential, and may therefore be disclosed by the Investor
free of restrictions hereunder, if such information (i) is or becomes
generally available to the public other than by disclosure in violation of
this Agreement, (ii) was properly within such Investor's possession prior to
its being furnished by the Company to such Investor, or (iii) becomes
available to such Investor through disclosure by third parties who have the
right to disclose such information.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-12-
<PAGE>
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE 1
IN WITNESS WHEREOF, the parties hereto have executed this
Investor Rights Agreement as of the date first above written.
LIFE MEDICAL SCIENCES, INC.
By: /s/ Robert Hickey
------------------------
Robert Hickey
Chairman, President and CEO
Address: P.O. Box 219
Little Silver, New Jersey 07739
<PAGE>
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE 2
VANGELIS LTD.
By: /s/ Dr. Hans-Rudolf Staiger
-------------------------------
Name: Dr. Hans-Rudolf Staiger
Title: Director
Address: Genferstrasse 24, P.O. Box 677,
CH-8027 Zurich
Switzerland
CAMBO HOLDINGS LTD.
By: /s/ Sven-Erik Nilsson
-------------------------------
Name: Sven-Erik Nilsson
Title: Director
Address: 11 Jaillet
CH-1277 Borex, Switzerland
ORACLE OPPORTUNITIES LTD.
By: /s/ John O'Kelly-Lynch
-------------------------------
Name: John O'Kelly Lynch
Title: Director
Address: Warner Building
85 Reid Street
Hamilton
HM 12
Bermuda
VENTURA, INC.
By: /s/ V. Stephanie Cox
-------------------------------
Name: V. Stephanie Cox
Title: Director
Address: P.O. Box F-43I22
Freeport, Bahamas
<PAGE>
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE 3
DECTON LIMITED
IPC Management Trust reg.
By: /s/ Dr. Erik Moller /s/ Hans-Jorg Gatt
-------------------------------------------
Name: Dr. Erik Moller Hans-Jorg Gatt
Title:
Address: Road Town
Tortola
British Virgin Islands
SIMON HODSON
By: /s/ Simon Hodson
-------------------------------------------
Address: 404, 23 Armenias Street
Strovolos 2003, Nicosia, Cyprus
SCHWEIZERISCHE GESELLSCHAFT FUR
AKTIENHANDEL UND RESEARCH AG
By: /s/ J. Kohler /s/ Reto A. Garzetti
---------------------------------------
Name: J. Kohler Reto A. Garzetti
Title: Partner Partner
Address: Kirchstrasse 6
8807 Freienbach
Switzerland
