-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FDksekjSKldWSCEHceG3qBOznQxAJnExm0ZtXbeh3yZfUi/LnPNWe/2DW+MsBNou RvFvbvRGdCkEAUsT5A/F3g== 0000903423-05-000390.txt : 20050517 0000903423-05-000390.hdr.sgml : 20050517 20050517161822 ACCESSION NUMBER: 0000903423-05-000390 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050517 DATE AS OF CHANGE: 20050517 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CREDIT SUISSE FIRST BOSTON/ CENTRAL INDEX KEY: 0000824468 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: PO BOX 900 STREET 2: FHLS CITY: ZURICH SWITZERLAND MAIL ADDRESS: STREET 1: PO BOX 900 CITY: ZURICH SWITZERLAND FORMER COMPANY: FORMER CONFORMED NAME: CREDIT SUISSE DATE OF NAME CHANGE: 19921119 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AUXILIUM PHARMACEUTICALS INC CENTRAL INDEX KEY: 0001182129 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 233016883 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-79973 FILM NUMBER: 05838985 BUSINESS ADDRESS: STREET 1: 160 WEST GERMANTOWN PIKE STREET 2: SUITE D-5 CITY: NORRISTOWN STATE: PA ZIP: 19401 BUSINESS PHONE: 610-239-8850 MAIL ADDRESS: STREET 1: 160 WEST GERMANTOWN PIKE STREET 2: SUITE D-5 CITY: NORRISTOWN STATE: PA ZIP: 19401 SC 13D 1 auxilium13d_0506.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 AUXILIUM PHARMACEUTICALS, INC. (Name of Issuer) Common Stock, $0.01 par value (Title of Class of Securities) 05334D 10 7 (CUSIP Number) Ivy B. Dodes Credit Suisse First Boston Eleven Madison Avenue New York, New York 10010 (212) 325-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 27, 2004 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. |_| Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). USIP No. 090676 10 7 13D 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Credit Suisse First Boston, on behalf of the Credit Suisse First Boston business unit 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [X] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland 7 SOLE VOTING POWER See Item 5. NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY See Item 5. EACH REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH See Item 5. 10 SHARED DISPOSITIVE POWER See Item 5. 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON See Item 5. 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) See Item 5. 14 TYPE OF REPORTING PERSON* BK, HC *SEE INSTRUCTIONS BEFORE FILLING OUT! Item 1. Security and Issuer. ------------------- This Statement on Schedule 13D (the "Statement") relates to the Common Stock, $0.01 par value (the "Shares"), of Auxilium Pharmaceuticals Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 160 West Germantown Pike, Norristown, PA 19401. Item 2. Identity and Background. ----------------------- In accordance with Securities and Exchange Commission Release No. 34-39538 (January 12, 1998), this Statement is being filed by Credit Suisse First Boston (the "Bank"), a Swiss bank, on behalf of itself and its subsidiaries, to the extent that they constitute the Credit Suisse First Boston business unit (the "CSFB business unit") excluding Asset Management (as defined below) (the "Reporting Person"). The CSFB business unit is also comprised of an asset management business principally conducted under the brand name Credit Suisse Asset Management ("Asset Management"). The Reporting Person provides financial advisory and capital raising services, sales and trading for users and suppliers of capital around the world and invests in and manages private equity and venture capital funds. Asset Management provides asset management and investment advisory services to institutional, mutual fund and private investors worldwide. The address of the Bank's principal business and office is Uetlibergstrasse 231, P.O. Box 900, CH 8070 Zurich, Switzerland. The address of the Reporting Person's principal business and office in the United States is Eleven Madison Avenue, New York, New York 10010. The Bank owns directly a majority of the voting stock, and all of the non-voting stock, of Credit Suisse First Boston, Inc. ("CSFBI"), a Delaware corporation. The address of CSFBI's principal business and office is Eleven Madison Avenue, New York, New York 10010. The ultimate parent company of the Bank and CSFBI, and the direct owner of the remainder of the voting stock of CSFBI, is Credit Suisse Group ("CSG"), a corporation formed under the laws of Switzerland. CSFBI owns all of the voting stock of Credit Suisse First Boston (USA), Inc. ("CSFB-USA"), a Delaware corporation and holding company. CSFB-USA is the sole member of Credit Suisse First Boston LLC ("CSFB LLC"), a Delaware limited liability company and a registered broker-dealer that effects trades in many companies, including the Company. CSFB LLC is the successor company of Credit Suisse First Boston Corporation ("CSFBC"), and all references hereinafter to CSFBC shall be deemed to refer to CSFB LLC. The address of the principal business and office of each of CSFB-USA and CSFB LLC is Eleven Madison Avenue, New York, New York 10010. CSG is a global financial services company with three distinct business units. In addition to the CSFB business unit, CSG is comprised of the Credit Suisse business unit (the "Credit Suisse business unit") and the Winterthur business unit (the "Winterthur business unit"). The Credit Suisse business unit offers global private banking and corporate and retail banking services in Switzerland. The Winterthur business unit provides life and non-life insurance and pension products to private and corporate clients worldwide. CSG's business address is Paradeplatz 8, P.O. Box 1, CH 8070 Zurich, Switzerland. CSG, for purposes of the federal securities laws, may be deemed ultimately to control the Bank and the Reporting Person. CSG, its executive officers and directors, and its direct and indirect subsidiaries (including Asset Management, the Credit Suisse business unit and the Winterthur business unit) may beneficially own the Shares of the Company to which this Statement relates, and such Shares are not reported in this Statement. CSG disclaims beneficial ownership of Shares beneficially owned by its direct and indirect subsidiaries, including the Reporting Person. Each of Asset Management, the Credit Suisse business unit and the Winterthur business unit disclaims beneficial ownership of Shares beneficially owned by the Reporting Person. The Reporting Person disclaims beneficial ownership of Shares beneficially owned by CSG, Asset Management, the Credit Suisse business unit and the Winterthur business unit. Sprout Capital IX, L.P. ("Sprout IX"), and Sprout Entrepreneurs Fund, L.P. ("SEF") are Delaware limited partnerships which make investments for long term appreciation. DLJ Capital Corporation ("DLJCC"), a Delaware corporation and a wholly-owned subsidiary of CSFB-USA, acts as a venture capital partnership management company. DLJCC is also the general partner of SEF and the managing general partner of Sprout IX and, as such, is responsible for their day-to-day management. DLJCC makes all of the investment decisions on behalf of SEF and Sprout IX. DLJ Associates IX, L.P. ("Associates IX"), a Delaware limited partnership, is a general partner of Sprout IX and in accordance with the terms of the relevant partnership agreement, does not participate in investment decisions made on behalf of Sprout IX. DLJ Capital Associates IX, Inc. ("DLJCA IX"), a Delaware corporation and wholly-owned subsidiary of DLJCC, is the managing general partner of Associates IX. The address of the principal business and office of each of DLJCC, DLJCA IX, Associates IX, Sprout IX and SEF is Eleven Madison Avenue, New York, New York 10010. James Niedel is a consultant to the Sprout Group division of Credit Suisse First Boston Private Equity, Inc., a subsidiary of CSFB-USA. Dr. Phillipe O. Chambon is a managing director of DLJCC. Sprout IX, SEF and DLJCC are collectively referred to as the "Purchasers." The Purchasers, Associates IX, and DLJCA IX are collectively referred to as the "CSFB Entities." The Reporting Person, CSFBI, CSFB-USA and CSFB LLC may be deemed for purposes of this Statement to beneficially own shares of Common Stock held in client accounts with respect to which CSFB LLC or its employees have voting or investment discretion, or both ("Managed Accounts"). The Reporting Person, CSFBI, CSFB-USA and CSFB LLC disclaim beneficial ownership of shares of Common Stock held in Managed Accounts. In addition, the Reporting Person, CSFBI, CSFB-USA and DLJCC may be deemed to beneficially own 25,000 Shares subject to options that are currently exercisable or exercisable within 60 days held by Dr. Chambon and 32,000 Shares and 9,609 New Warrants (as defined below) held by Dr. Niedel. The Reporting Person disclaims beneficial ownership of securities owned by Drs. Chambon and Niedel. The name, business address, citizenship, present principal occupation or employment, and the name and business address of any corporation or organization in which each such employment is conducted, of each executive officer or director of the Reporting Person, CSFBI, CSFB-USA, CSFB LLC and those CSFB Entities that are corporations are set forth on Schedules A-1 through A-6 attached hereto, each of which is incorporated by reference herein. Except as otherwise provided herein, during the past five years none of the Reporting Person, CSFBI, CSFB-USA, CSFB LLC, the CSFB Entities nor, to the best knowledge of the Reporting Person, any of the other persons listed on Schedules A-1 through A-6 attached hereto, has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to United States federal or state securities laws or finding any violation with respect to such laws. On January 22, 2002, CSFBC, without admitting or denying any alleged violation, entered into coordinated settlements with NASD Regulation, Inc. ("NASDR") and the Securities and Exchange Commission ("SEC") resolving all outstanding investigations of CSFBC into the allocation of shares in initial public offerings ("IPOs"). CSFB-USA was then the sole stockholder of CSFBC. CSFBC consented to these settlements without admitting or denying any of the allegations made in the SEC's Complaint or the Letter of Acceptance, Waiver and Consent ("AWC") filed with the NASDR. The SEC and NASDR alleged that, between April 1999 and June 2000, certain CSFBC employees allocated many shares in IPOs to over 100 customers with whom they had improper profit-sharing arrangements. The NASDR and SEC alleged that certain employees allocated "hot" IPO shares to certain customers who paid the Firm a portion of the profits (between 33 and 65 percent) that they made when they sold their IPO stock, by paying inflated brokerage commissions on transactions unrelated to the IPO shares. Under the terms of the coordinated settlement: o CSFBC paid a total of $100 million. This amount included $30 million in fines and civil penalties divided evenly between the SEC and NASDR, and a total of $70 million in disgorgement, $35 million of which was paid to the U.S. Treasury and $35 million of which was paid to the NASDR, representing the monies obtained as a result of the conduct described by the SEC and NASDR. The SEC determined in this case that it was appropriate and in the public interest to pay funds to the U.S. Treasury rather than to any third parties. o CSFBC has adopted and implemented revised policies and procedures for allocating IPOs in its broker-dealer operations. The SEC and NASD have reviewed these policies and procedures. These included the establishment of an IPO Allocation Review Committee, a process for the pre-qualification of accounts before they are eligible to receive IPO allocations and enhanced supervisory procedures, which includes the review of commissions paid by certain accounts receiving allocations around the time of the IPO. CSFBC also agreed to retain an independent consultant to review the implementation of these policies and procedures one year from the date of the settlement. In the NASDR settlement, CSFBC, without admitting or denying any findings, consented to a censure and findings that it violated NASD Rules 2110, 2330, 2710, 3010 and 3110. These Rules (a) require broker-dealers to adhere to just and equitable principles of trade, (b) prohibit broker-dealers from sharing in the profits of client accounts except as specifically provided, (c) require a managing underwriter to file certain information that may have a bearing on the NASDR's review of underwriting arrangements, (d) require members to establish, maintain and enforce a reasonable supervisory system, and (e) require broker-dealers to maintain certain books and records. The NASDR AWC also found violations of Section 17(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and SEC Rule 17a-3, thereunder, which are incorporated by NASD Rule 3110 and similarly impose certain record keeping requirements on CSFBC as a broker-dealer. In the SEC settlement, CSFBC, without admitting or denying the allegations of the Complaint, consented to entry by the District Court for the District of Columbia of a final judgment that: (1) permanently enjoined CSFBC, directly or indirectly, from violations of NASD Conduct Rules 2110 and 2330 and Section 17(a)(1) of the Exchange Act and SEC Rule 17a-3; and (2) ordered CSFBC to comply with certain undertakings. Neither the SEC nor NASDR made any allegations or findings of fraudulent conduct by CSFBC. Further, neither the SEC nor NASDR alleged that any IPO prospectus was rendered false or misleading by CSFBC's conduct or that this conduct affected either the offering price of an IPO or the price at which any IPO stock traded in the aftermarket. On August 13, 2002, Mr. John A. Ehinger, an executive officer of CSFB-USA and board member of CSFB LLC, without admitting or denying any alleged violation, entered into a settlement with the NASD resolving outstanding investigations of Mr. Ehinger into his alleged failure to supervise with a view toward preventing CSFBC's violations of NASD Rules 2110, 2330, 2710 and 3110, and Section 17(a) of the Exchange Act and SEC Rule 17a-3 thereunder. Under the terms of the settlement, Mr. Ehinger agreed to (1) the payment of a fine of $200,000, (2) a suspension form associating with a member firm in any and all capacities for 30 calendar days, and (3) a suspension from acting in any supervisory capacity for 30 additional calendar days, such supervisory suspension beginning after the suspension in all capacities had been served. On October 31, 2003, the U.S. District Court for the Southern District of New York (the "SDNY") approved the global settlement among a number of Wall Street firms, including CSFB LLC, and a coalition of state and federal regulators and self-regulatory organizations (the "Global Settlement"). CSFB LLC, without admitting or denying any alleged violation, consented to the Global Settlement and thereby resolved a Securities and Exchange Commission's ("SEC") complaint filed on April 28, 2003, in the SDNY. In this complaint, the SEC alleged that, from July 1998 to December 2001, CSFB LLC engaged in acts and practices that created or maintained inappropriate influence over research analysts, thereby imposing conflicts of interest on research analysts that CSFB LLC failed to manage in an adequate or appropriate manner. The SEC's complaint also alleged that CSFB LLC engaged in inappropriate "spinning" of "hot" IPO allocations in violation of New York Stock Exchange ("NYSE") and NASD Inc. ("NASD") rules requiring adherence to high business standards and just and equitable principles of trade, and that CSFB LLC's books and records relating to certain transactions violated the broker-dealer record-keeping provisions of Section 17(a) of the Securities Exchange Act of 1934, NYSE Rules 401, 440 and 476(a)(6) and NASD Rules 2110 and 3110. Under the terms of the Global Settlement: o CSFB LLC agreed to pay the following amounts: $75 million as a penalty, $75 million as disgorgement of commissions and other monies for restitution for investors, and $50 million to be used to fund independent research. This $50 million to fund independent research is payable over a five year period. o CSFB LLC is required, among other things, to: (i) separate its research and investment banking departments and make independent research available to investors, (ii) prohibit its analysts from receiving compensation for investment banking activities and prohibit analysts' involvement in investment banking "pitches" and "roadshows," (iii) contract, for a five-year period, with no fewer than three independent research firms that will make available independent research to CSFB's customers, and (iv) make its analysts' historical price targets (among other things) publicly available. o CSFB LLC is permanently restrained and enjoined from violating Sections 15(c) and 17(a) of the Exchange Act, Exchange Act Rules 15c1-2 and 17a-3, NASD Rules 2110, 2210, 3010, and 3110, and NYSE Rules 342, 401, 440, 472, and 476. Other Wall Street firms were subject to similar requirements. Item 3. Source and Amount of Funds. -------------------------- On October 31, 2003, pursuant to a stock purchase agreement between the Company and the Purchasers, the Company issued and the Purchasers acquired 10,506,666 shares of Series D Preferred Stock, par value $.01 per share (the "Series D Preferred Stock"), and warrants (the "Series D Warrants") to purchase 3,155,155 shares of Series D Preferred Stock at an initial exercise price of $1.50 per share for an aggregate purchase price of $15,759,999 (the "Series D Transaction"). The following chart breaks out the Series D Transaction by Purchaser, showing the amount of Series D Preferred Stock and Series D Warrants acquired by each Purchasing Entity and the aggregate amount (exclusive of commission) paid by each Entity for its indicated preferred stock and warrants: - -------------------------------------------------------------------------------- Purchaser Series D Series D Warrants Purchase Price Preferred Stock - -------------------------------------------------------------------------------- Sprout Capital IX, L.P. 10,443,625 3,136,224 $15,665,437.50 - -------------------------------------------------------------------------------- Sprout Entrepreneurs Fund, L.P. 41,158 12,360 $61,737.00 - -------------------------------------------------------------------------------- DLJ Capital Corporation 21,883 6,571 $32,824.50 - -------------------------------------------------------------------------------- The Purchasers purchased the Series D Preferred Stock at price of $1.50 per share, along with the Series D Warrants at an exercise price of $1.50 per warrant. Additionally, on October 31, 2003, James Niedel purchased 160,000 shares of the Series D Preferred Stock and 48,048 Series D Warrants at an aggregate price (exclusive of commission) of $240,000. James Niedel purchased the Series D Preferred Stock at a price of $1.50 per share, along with the Series D Warrants at an exercise price of $1.50 per warrant. In April 2004, the Series D Warrants were amended to remove the variable pricing features by fixing the exercise price of the Series D Warrants at $1.125 per share. In connection with the Company's initial public offering that was consummated on July 28, 2004 (the "IPO"), the Purchasers purchased 200,000 Shares for an aggregate purchase price (exclusive of commission) of $1,500,000. The following chart breaks out this acquisition by Purchaser and the amount paid by such entity for its acquisition. - -------------------------------------------------------------------------------- Purchaser Common Shares Purchase Price - -------------------------------------------------------------------------------- Sprout Capital IX, L.P. 198,800 $1,491,000.00 - -------------------------------------------------------------------------------- Sprout Entrepreneurs Fund, L.P. 783 $5,872.50 - -------------------------------------------------------------------------------- DLJ Capital Corporation 417 $3,127.50 - -------------------------------------------------------------------------------- Also in connection with the IPO, all Series D Preferred Stock held by the Purchasers was converted on a five-for-one basis into 2,101,332 Shares, and the Series D Warrants held by the Purchasers were converted on a five-for-one basis into warrants (the "New Warrants") to purchase 631,030 Shares at an exercise price of $5.625 per Share. Additionally, in connection with the IPO, 160,000 shares of the Series D Preferred Stock held by James Niedel were converted on a five-for-one basis into 32,000 Shares and 48,048 Series D Warrants held by James Niedel were converted on a five-for-one basis into New Warrants to purchase 9,609 Shares at an exercise price of $5.625 per Share. The Reporting Person disclaims beneficial ownership of all Shares and New Warrants owned by Dr. Niedel. The shares held by Dr. Chambon discussed above were received by Dr. Chambon in connection with his services as a member of the Board of Directors of the Company. The funds used by the Purchasers to make these acquisitions, and the acquisitions described in Schedule B attached hereto, came from working capital. Item 4. Purpose of the Transaction. -------------------------- The Purchasers made their purchases from the Series D Transaction and subsequent purchase in connection with the IPO for investment purposes and, through representation on the Company's board of directors, to influence the management policies and control of the Issuer with the aim of increasing the value of the Company and the Purchasers' investment. CSFB LLC has acquired 900 Shares as part of statistical trading strategies. The Purchasers and CSFB LLC intend to optimize the value of their investments and, therefore, will review from time to time the Company's business affairs and financial position. Based on such evaluation and review, as well as general economic and industry conditions existing at the time, the Purchasers may consider from time to time various alternative courses of action. Such actions may include the acquisition of additional Shares or other securities through open market purchases, privately negotiated transactions, a tender offer, an exchange offer or otherwise. Alternatively, such actions may involve the sale of all or a portion of the Shares or other securities in the open market, in privately negotiated transactions, through a public offering or otherwise. Except as set forth herein, each of the Reporting Person and the Purchasers has no present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) As of July 28, 2004, the Reporting Person may be deemed to beneficially own an aggregate of 2,932,362 Shares, consisting of (i) 2,287,525 Shares held directly by Sprout IX, (ii) 9,014 Shares held directly by SEF, (iii) 4,793 Shares held by DLJCC, (iv) 627,244 New Warrants held directly by Sprout IX, (v) 2,472 New Warrants held directly by SEF and (vi) 1,314 New Warrants held directly by DLJCC. In addition, as of July 28, 2004, Dr. Chambon held 25,000 Shares subject to options that were currently exercisable or exercisable within 60 days, and Dr. Niedel held 32,000 Shares and 9,609 New Warrants. The Reporting Person disclaims beneficial ownership of securities owned by Drs. Chambon and Niedel. Accordingly, the Reporting Person may be deemed to beneficially own 13.8% of the outstanding Shares on such date based on fully-diluted common shares then outstanding. As of May 17, 2005, the Reporting Person may be deemed to own beneficially an aggregate of 2,933,262 Shares, consisting of (i) 2,287,525 Shares held directly by Sprout IX, (ii) 9,014 Shares held directly by SEF, (iii) 4,793 Shares held by DLJCC, (iv) 900 Shares held directly by CSFB LLC, (v) 627,244 New Warrants held directly by Sprout IX, (vi) 2,472 New Warrants held directly by SEF and (vii) 1,314 New Warrants held directly by DLJCC. In addition, as of May 17, 2005, Dr. Chambon held 25,000 Shares subject to options currently exercisable or exercisable within 60 days, and Dr. Niedel held 32,000 Shares and 9,609 New Warrants. The Reporting Person disclaims beneficial ownership of securities owned by Drs. Chambon and Niedel. Accordingly, the Reporting Person may be deemed to beneficially own 13.8% of the outstanding Shares on such date based on fully-diluted common shares outstanding. To the best knowledge of the Reporting Person, and except as described herein, neither the Reporting Person, CSFBI, CSFB-USA, CSFB LLC, the CSFB Entities, nor, to the best knowledge of the Reporting Person, any other persons listed on Schedules A-1 through A-6 attached hereto, beneficially owns any additional Shares. (b) With respect to any rights or powers to vote, or to direct the vote of, or to dispose of, or direct the disposition of, the Shares referenced in paragraph 5(a), there is shared power to vote, or to direct the vote of, and to dispose of, or to direct the disposition of, such Shares among the Reporting Person, CSFBI, CSFB-USA, CSFB LLC and the CSFB Entities. (c) Schedule B, which is incorporated herein by reference, sets forth the transactions, other than those described in Item 3, in the Shares effected by the Reporting Person and its subsidiaries during the period beginning May 28, 2004 and ending May 17, 2005, inclusive. (d) No other person is known by the Reporting Person to have the right to receive or power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares beneficially owned by the Reporting Person, CSFBI, CSFB-USA, CSFB LLC, or the CSFB Entities. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships --------------------------------------------------------- with Respect to Securities of the Issuer. ---------------------------------------- Investor Rights Agreement Under the terms of the Third Amended and Restated Investor Rights Agreement between the Company and the Purchasers, entered into as of October 31, 2003 (the "Investor Rights Agreement") and in connection with the Series D Transaction, the Purchasers were granted certain registration rights which include: (i) an unlimited number of piggyback registration rights that require the Company to register sales of the Purchasers' shares when it undertakes a public offering, other than the IPO, subject to the discretion of the managing underwriter of the offering to decrease the amount that the Purchasers may register; (ii) two demand registration rights that the Purchasers may exercise no sooner than six months after the IPO, if a defined percentage of the holders of registration rights request registration of shares with an aggregate offering price of at least $5.0 million, subject to the discretion of the Company's board of directors to delay the registration in specified circumstances; and (iii) an unlimited number of rights (but only one per 12-month period) to require the Company to register sales of shares of its Shares on Form S-3, which the Purchasers may exercise if it requests registration of the sale of more than $1.0 million of Shares following the time the Company first qualifies for the use of such form of registration with the Securities and Exchange Commission. Item 7. Material to be filed as Exhibits. -------------------------------- A copy of the Investor Rights Agreement is attached hereto as Exhibit 99-1 and is incorporated herein by reference. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 17, 2005 CREDIT SUISSE FIRST BOSTON, on behalf of the CREDIT SUISSE FIRST BOSTON BUSINESS UNIT. By: /s/ Ivy B. Dodes --------------------------------- Name: Ivy B. Dodes Title: Managing Director SCHEDULE A-1 EXECUTIVE OFFICERS OF THE REPORTING PERSON The following sets forth the name, business address, present principal occupation and citizenship of each executive officer of the Reporting Person. The business address of the Reporting Person is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- Brady W. Dougan Eleven Madison Avenue Chief Executive Officer United States New York, NY 10010 USA Paul Calello Eleven Madison Avenue Chairman and Chief Executive Officer United States New York, NY 10010 of the Asia-Pacific Region USA Marc D. Granetz Eleven Madison Avenue Co-Head of the Global Corporate and United States New York, NY 10010 Investment Banking Division USA and Head of the Global Mergers and Acquisition Group Brian D. Finn Eleven Madison Avenue President United States New York, NY 10010 USA Tony Ehinger Eleven Madison Avenue Co-Head of the Equity Division United States New York, NY 10010 USA John S. Harrison Eleven Madison Avenue Managing Director United States New York, NY 10010 USA James P. Healy Eleven Madison Avenue Head of the Fixed Income Division United States New York, NY 10010 USA Michael E. Kenneally Eleven Madison Avenue Chairman and Global Chief Executive United States New York, NY 10010 Officer of CSAM USA James E. Kreitman Eleven Madison Avenue Co-Head of the Equity Division United States New York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Executive Vice Chairman and Global United States New York, NY 10010 General Counsel USA Neil Moskowitz Eleven Madison Avenue Chief Financial Officer United States New York, NY 10010 USA Eileen K. Murray Eleven Madison Avenue Head of Global Technology, Operations United States New York, NY 10010 and Product Control USA Adebayo O. Ogunlesi Eleven Madison Avenue Executive Vice Chairman and Chief Nigeria New York, NY 10010 Client Officer USA Joanne Pace Eleven Madison Avenue Global Head of Human Resources United States New York, NY 10010 USA Michael Philipp One Cabot Square Chairman and Chief Executive United States London E14 4QJ Officer of CSFB Europe, United Kingdom Middle East and Africa Richard E. Thornburgh Eleven Madison Avenue Executive Vice Chairman United States New York, NY 10010 USA Eric M. Varvel Eleven Madison Avenue Co-Head of Global Corporate and United States New York, NY 10010 Investment Banking USA
SCHEDULE A-2 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON, INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston, Inc. The business address of Credit Suisse First Boston, Inc. is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- Brady W. Dougan Eleven Madison Avenue Board Member, President and Chief United States New York, NY 10010 Executive Officer USA Neil Moskowitz Eleven Madison Avenue Board Member and Managing Director United States New York, NY 10010 USA Eileen K. Murray Eleven Madison Avenue Board Member and Managing Director United States New York, NY 10010 USA Frank J. DeCongelio Eleven Madison Avenue Bank Account Officer United States New York, NY 10010 USA D. Wilson Ervin Eleven Madison Avenue New Managing Director United States York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Managing Director and General Counsel United States New York, NY 10010 USA Robert C. O'Brien Eleven Madison Avenue Managing Director and Chief Credit Officer United States New York, NY 10010 USA Adebayo O. Ogunlesi Eleven Madison Avenue Managing Director Nigeria New York, NY 10010 USA Carlos Onis Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Neil Radey Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Jeffrey H. Salzman Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Managing Director and Treasurer United States New York, NY 10010 USA Paul C. Wirth Eleven Madison Avenue Managing Director and Chief Accounting United States New York, NY 10010 Officer and Controller USA
SCHEDULE A-3 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON (USA), INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston (USA), Inc. The business address of Credit Suisse First Boston (USA), Inc. is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- Brady W. Dougan Eleven Madison Avenue Board Member, President and Chief United States New York, NY 10010 Executive Officer USA Neil Moskowitz Eleven Madison Avenue Board Member and Managing Director United States New York, NY 10010 USA Eileen K. Murray Eleven Madison Avenue Board Member and Managing Director United States New York, NY 10010 USA Luther L. Terry, Jr. Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Frank J. DeCongelio Eleven Madison Avenue Managing Director and Bank Account Officer United States New York, NY 10010 USA John A. Ehinger Eleven Madison Avenue Managing Director United States New York, NY 10010 USA D. Wilson Ervin Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Andrew B. Federbusch Eleven Madison Avenue Managing Director United States New York, NY 10010 USA James P. Healy Eleven Madison Avenue Managing Director United States New York, NY 10010 USA James E. Kreitman Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Gary G. Lynch Eleven Madison Avenue Managing Director and General Counsel United States New York, NY 10010 USA Elizabeth W. Millard Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Robert C. O'Brien Eleven Madison Avenue Chief Credit Officer United States New York, NY 10010 USA Adebayo O. Ogunlesi Eleven Madison Avenue Managing Director Nigeria New York, NY 10010 USA JoAnne Pace Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Neil Radey Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Jeffrey H. Salzman Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Managing Director and Treasurer United States New York, NY 10010 USA David C. Fisher Eleven Madison Avenue Chief Financial and Accounting Officer United States New York, NY 10010 USA
SCHEDULE A-4 EXECUTIVE OFFICERS AND DIRECTORS OF CREDIT SUISSE FIRST BOSTON LLC The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of Credit Suisse First Boston LLC. The business address of Credit Suisse First Boston LLC is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- Brady Dougan Eleven Madison Avenue Board Member, President and Chief United States New York, NY 10010 Executive Officer USA John A. Ehinger Eleven Madison Avenue Board Member United States New York, NY 10010 USA James P. Healy Eleven Madison Avenue Board Member United States New York, NY 10010 USA Frank J. DeCongelio Eleven Madison Avenue Managing Director, Head of United States New York, NY 10010 Operations and Bank Account Officer USA Gary G. Lynch Eleven Madison Avenue Managing Director and General United States New York, NY 10010 Counsel USA Paul J. O'Keefe Eleven Madison Avenue Chief Financial Officer United States New York, NY 10010 USA Lewis H. Wirshba Eleven Madison Avenue Treasurer United States New York, NY 10010 USA
SCHEDULE A-5 EXECUTIVE OFFICERS AND DIRECTORS OF DLJ CAPITAL CORPORATION The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of DLJ Capital Corporation. The business address of DLJ Capital Corporation is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- Raymond M. Disco Eleven Madison Avenue Board Member and Treasurer United States New York, NY 10010 USA Robert Finzi Sprout-Menlo Park Board Member and Co-Chairman United States 2400 Hanover St. Palo Alto, CA 94304, USA Janet A. Hickey One Madison Avenue Board Member and Co-Chairman United States New York, NY 10010, USA Nicole S. Arnaboldi Eleven Madison Avenue Managing Director United States New York, NY 10010 USA Philippe O. Chambon One Madison Avenue Managing Director French New York, NY 10010, USA Jeani Delagardelle 3000 Sand Hill Road Managing Director United States Building 3 Menlo Park, CA 940245, USA Kathleen LaPorte 3000 Sand Hill Road Managing Director United States Building 3 Menlo Park, CA 940245, USA Ronald M. Hunt One Madison Avenue Director United States New York, NY 10010, USA Vijay Lathi 3000 Sand Hill Road Director United States Building 3 Menlo Park, CA 940245, USA Wayne Nemeth One Madison Avenue Director United States New York, NY 10010, USA George R. Hornig Eleven Madison Avenue President United States New York, NY 10010 USA Lori Russo Eleven Madison Avenue New York, NY Secretary United States 10010, USA Frank J. DeCongelio Eleven Madison Avenue Vice President and United States New York, NY 10010 Bank Account Officer USA Ivey B. Dodes Eleven Madison Avenue Vice President United States New York, NY 10010 USA Edward S. Nadel Eleven Madison Avenue Vice President United States New York, NY 10010 USA William L. Spiro Eleven Madison Avenue Vice President and United States New York, NY 10010 Assistant Treasurer USA Kenneth J. Lohsen Eleven Madison Avenue Vice President United States New York, NY 10010 USA John S. Ficarra Eleven Madison Avenue Vice President United States New York, NY 10010 USA Thomas Prevost Eleven Madison Avenue Vice President and United States New York, NY 10010 Director of Taxes USA Amy M. Yeung Eleven Madison Avenue Vice President United States New York, NY 10010 USA Mina Yu Eleven Madison Avenue Vice President United States New York, NY 10010 USA Craig L. Slutzkin One Madison Avenue New York, NY Vice President United States 10010, USA
SCHEDULE A-6 EXECUTIVE OFFICERS AND DIRECTORS OF DLJ CAPITAL ASSOCIATES IX, INC. The following sets forth the name, business address, present principal occupation and citizenship of each director and executive officer of DLJ Capital Associates IX, Inc. The business address of DLJ Capital Associates IX, Inc. is Eleven Madison Avenue, New York, New York 10010. Name Business Address Title Citizenship - ----------------------- --------------------------- ---------------------------- --------------- George R. Hornig Eleven Madison Avenue Board Member and President United States New York, NY 10010 USA Robert Finzi Sprout-Menlo Park Board Member and Vice President United States 2400 Hanover Street Palo Alto, CA 94304, USA Janet A. Hickey One Madison Avenue Board Member and Vice President United States New York, NY 10010, USA Philippe O. Chambon One Madison Avenue Vice President French New York, NY 10010, USA Lori Russo Eleven Madison Avenue Secretary United States New York, NY 10010, USA Craig L. Slutzkin One Madison Avenue Vice President United States New York, NY 10010, USA Thomas Prevost Eleven Madison Avenue Vice President and United States New York, NY Director of Taxes 10010, USA Amy M. Yeung Eleven Madison Avenue Vice President United States New York, NY 10010, USA
Schedule B The following table lists all trades effected by the Reporting Person through NASDAQ in the Company's Shares, other than those transactions described in Item 3 of the Statement, between May 28, 2004 and May 17, 2005. Entity Purchases Sales Price ($) Trade Date ------ --------- ----- --------- ---------- CSFB LLC 2,900 $7.54 7/29/04 CSFB LLC 9,000 $7.54 7/29/04 CSFB LLC 200 $7.54 7/29/04 CSFB LLC 11,200 $7.50 7/30/04 EX-99.1 2 auxilium13dex99-1_0506.txt Exhibit 99-1 ------------ AUXILIUM PHARMACEUTICALS, INC. THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of October 31, 2003, by and among Auxilium Pharmaceuticals, Inc., a Delaware corporation (the "Company"), the holders of the Company's Series A Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), set forth on EXHIBIT A (the "Series A Investors"), the holders of the Company's Series B Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock"), set forth on EXHIBIT B (the "Series B Investors"), the holders of the Company's Series C Preferred Stock, par value $0.01 per share (the "Series C Preferred Stock"), set forth on EXHIBIT C (the "Series C Investors") and the holders of the Company's Series D Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock"), set forth on EXHIBIT D (the "Series D Investors"). RECITALS WHEREAS, the Company, the Series A Investors, the Series B Investors and the Series C Investors entered into an Amended and Restated Investor Rights Agreement, dated as of June 21, 2003 (the "Prior Investor Rights Agreement"), in connection with the Company's sale of up to 10,283,336 shares of its Series C Preferred Stock to the Series C Investors and warrants to purchase 3,085,001 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"); WHEREAS, the Company and the Series D Investors have entered into the Series D Preferred Stock Purchase Agreement, dated of even date herewith (the "Purchase Agreement"), providing for, among other things, the sale and issuance of an aggregate of 28,752,365 shares of the Series D Preferred Stock and warrants to purchase up to 8,634,339 shares of the Series D Preferred Stock in accordance with the terms and conditions set forth in the Purchase Agreement; WHEREAS, Section 5.6 of the Prior Investor Rights Agreement provides that such agreement may be amended by the written agreement of the Company, the holders of at least a majority of the shares of the Series A Preferred Stock, the holders of at least a majority of the shares of the Series B Preferred Stock, and the holders of at least a majority of the shares of the Series C Preferred Stock; WHEREAS, the Series A Investors that are signatories hereto own at least a majority of the Series A Preferred Stock necessary to amend the Investors' Rights Agreement; WHEREAS, the Series B Investors that are signatories hereto own at least a majority of the Series B Preferred Stock necessary to amend the Investors' Rights Agreement; WHEREAS, the Series C Investors that are signatories hereto own at least a majority of the Series C Preferred Stock necessary to amend the Investors' Rights Agreement; WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the Series D Investors to invest funds in the Company pursuant to the Purchase Agreement, the Series A Investors, the Series B Investors, the Series C Investors and the Company hereby desire to amend and restate the Prior Investor Rights Agreement, such that this Agreement shall govern the rights of the Series A Investors, the Series B Investors, the Series C Investors and the Series D Investors (the Series A Investors, the Series B Investors, the Series C Investors and the Series D Investors hereinafter collectively referred to as the "Investors") to cause the Company to register its shares of Common Stock issuable to the Investors upon conversion of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock and to address certain other matters as set forth herein; and WHEREAS, the execution and delivery of this Agreement by the Company and the Investors is a condition to the closing of the issuance, sale and purchase of the Series D Preferred Stock pursuant to the Purchase Agreement. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and the investment of the Series D Investors in the Series D Preferred Stock, the parties, intending to be legally bound hereby, mutually agree as follows: SECTION 1. GENERAL 1.1 Definitions. As used in this Agreement the following terms shall have the following respective meanings: "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FORM S-3" means such form under the Securities Act as 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. "HOLDER" means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.9. "INITIAL PUBLIC OFFERING" means the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act. "LITIGATION" means the litigation resulting from the complaints filed against the Company, Auxilium Holdings, Inc., and Geraldine Henwood in the Superior Court of Delaware in April 2002 (C.A. No. 02C-03-208). "QUALIFIED PUBLIC OFFERING" means an underwritten, firm commitment public offering registered under the Securities Act covering the offer and sale by the Company of its Common Stock in which (i) the aggregate proceeds to the Company equal or exceed $40,000,000 (calculated after deducting underwriters' discounts and commissions and other offering expenses), and (ii) at a price per share to the public that is at least two times the then applicable conversion price of the Series D Preferred Stock. "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 or document. "REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued or issuable upon conversion of the Shares; (b) any Common Stock of the Company issued or issuable upon exercise and conversion, if applicable, of the warrants issued to the Investors under the Series A Preferred Stock Purchase Agreement, dated July 18, 2000, by and among the Company and the Series A Investors, the Series B Preferred Stock Purchase Agreement, dated October 12, 2001, by and among the Company and the Series B Investors, the Series C Preferred Stock Purchase Agreement, dated June 21, 2003, by and among the Company and the Series C Investors and the Purchase Agreement (collectively, the "Warrants"); and (c) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above described securities. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public pursuant to a registration statement or Rule 144 or sold in a private transaction in which the transferor's rights under Section 2 of this Agreement are not assigned. "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares determined by calculating the total number of shares of the Company's Common Stock that are Registrable Securities and are then issued, outstanding or issuable pursuant to then exercisable or convertible securities. "REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4, including all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements of a single special counsel for 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). "SEC" or "COMMISSION" means the Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SELLING EXPENSES" shall mean all underwriting discounts and selling commissions applicable to the sale. "SHARES" shall mean the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock issued to the Investors and their permitted assigns, and the shares of Series D Preferred Stock issued or issuable upon the exercise and conversion, if applicable, of the warrants to purchase Series D Preferred Stock issued to the Investors under the Purchase Agreement. SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER 2.1 RESTRICTIONS ON TRANSFER. (a) In addition to the restriction of transfer contained in the Third Amended and Restated Stockholders Agreement, dated as of the date hereof, no Holder shall make any disposition of all or any portion of the Shares or Registrable Securities unless and until: (i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; (ii) Such disposition is made pursuant to and in compliance with Rule 144; or (iii) (A) The proposed transferee has agreed in writing to be bound by the terms of this Agreement by executing a counterpart signature page in the form attached as ANNEX A (the "Counterpart Signature Page") (which shall not be deemed to be an amendment hereto), (B) such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. Notwithstanding the provisions of paragraphs (i), (ii) and (iii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder which is: (A) a Holder's transfer of any or all shares held either during such Holder's lifetime or on death by will or intestacy to such Holder's immediate family or to any custodian or trustee for the account of such Holder or such Holder's immediate family ("immediate family" as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the Holder making such transfer); (B) a Holder's transfer of any or all of such Holder's shares to the Company or to any other stockholder of the Company; (C) a Holder's transfer of any or all of such Holder's shares to a person who, at the time of such transfer, is an officer or director of the Company; (D) a corporate Holder's transfer of any or all of its shares pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate Holder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate Holder; (E) a corporate Holder's transfer of any or all of its shares to any or all of its stockholders; (F) a transfer by a Holder which is a limited or general partnership to any or all of its partners or former partners in connection with a liquidation or withdrawal event; (G) a transfer by a Holder to a limited partnership (or other similar entity) in which at least 90% of the general and limited partnership interests are held by, or in trust for, the Holder's immediate family; (H) a transfer by a limited liability company to its members or former members in accordance with their interest in the limited liability company; (I) a transfer by a Holder to an affiliate; and (J) a transfer by a Holder to a retirement plan (regardless of form) created by a Holder for the primary benefit of, or in trust for, the Holder and/or such Holder's immediate family or a transfer from such retirement plan to the designated beneficiary or beneficiaries thereof; PROVIDED that in each of the cases provided above the transferee has agreed in writing to be bound by the terms of this Agreement by executing a Counterpart Signature Page (which shall not be deemed to be an amendment hereto), and such transfer is in compliance with all applicable federal and state securities laws. (b) Each certificate representing Shares or Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. (c) The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be unlegended may lawfully be so disposed of without registration, qualification or legend. (d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 2.2 DEMAND REGISTRATION. (a) Subject to the conditions of this Section 2.2, if the Company receives a request from the Holders of at least 50% of the Registrable Securities then outstanding (the "Initiating Holders") that the Company file a Registration Statement under the Securities Act then the Company shall, within 15 days of the receipt thereof, give notice of such request to all Holders. The Holders shall have the right, by giving written notice to the Company within 15 days after the Company provides its notice, to elect to have included in such registration such of their Registrable Shares as such Holders may request in such notice of election, and the Company shall use its best efforts to effect, as soon as practicable, the registration of all Registrable Securities that the Holders request to be registered in such notice of election (and shall promptly notify in writing the Holders registering Registrable Securities registered under any such Registration Statement once any such Registration Statement has been declared effective). (b) If the Initiating Holders intend to distribute the Registrable Securities by means of an underwriting, they shall so advise the Company as a part of their demand pursuant to this Section 2.2 or Section 2.4 and the Company shall include such information in the notice referred to in Section 2.2(a) or Section 2.4(a), as applicable. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon participation in such underwriting. The underwriter or underwriters for such offering shall be selected by a majority in interest of the Holders participating in such offering, subject to the approval of the Board of Directors of the Company (the "Board"), which approval shall not be unreasonably withheld. Notwithstanding any other provision of this Section 2.2 or Section 2.4, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all participating Holders, and the number of shares that may be included in the underwriting and registration shall be allocated pro rata to the participating Holders based on the number of Registrable Securities held; PROVIDED, HOWEVER, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company proposed to be included in such underwriting and registration by holders of the Company's securities are first entirely excluded from the underwriting and registration. If all of the Registrable Securities so requested for registration by the Holders requesting registration are excluded from an offering under Section 2.2(a) by the underwriter or underwriters for such offering (a "Reload Event"), then such Holders shall have the right to one additional Demand Registration under Section 2.2(a) upon the occurrence of each Reload Event. (c) The Company shall not be required to effect any such registration pursuant to this Section 2.2: (i) prior to the earlier of (A) the second anniversary of the date of this Agreement or (B) six months following the effective date of the registration statement pertaining to an Initial Public Offering; (ii) the aggregate offering price of the proposed underwriting and registration is less than $5.0 million; (iii) after the Company has effected two registrations pursuant to this Section 2.2, and such registrations have been declared or ordered effective, and the securities offered pursuant to such registrations have been sold; (iv) during the period starting with the date of filing of, and ending on the date six months following the effective date of a registration statement pertaining to the Initial Public Offering or to any other underwritten public offering made pursuant to this Section 2.2 or Section 2.4 or in which the Holders were given the opportunity to participate pursuant to Section 2.3 and no more than 25% of the Registrable Securities so requested to be registered by the Holders were excluded from any such registration; PROVIDED that the Company makes reasonable and diligent good faith efforts to cause such registration statement to become effective; (v) if within 15 days of receipt of a written request from the Initiating Holders pursuant to Section 2.2(a), the Company gives notice to the Holders of the Company's intention to make its Initial Public Offering within 120 days; (vi) if the Company shall furnish to the Initiating Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than 120 days after receipt of the request of the Initiating Holders; PROVIDED that such right to delay a request shall be exercised by the Company not more than once in any 12-month period; or (vii) 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 2.4 below. (d) If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders delivered at least 15 days prior to the effective date of the Registration Statement; PROVIDED, HOWEVER, that if the number of Registrable Securities withdrawn in accordance herewith would result in the registration of less than 20% of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price would exceed $5,000,000), then the Company shall not be required to effect a registration pursuant to this Section 2.2, and the Company shall not be required to pay the Registration Expenses incurred to date. The securities so withdrawn shall also be withdrawn from the Registration Statement. 2.3 PIGGYBACK REGISTRATIONS. Following the Company's Initial Public Offering, the Company shall notify all Holders at least 30 days prior to the filing of any registration statement under the Securities Act for a public offering of securities of the Company (including registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to employee benefit plans or corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity to include in such registration statement all or part of the Registrable Securities held by such Holder. Each Holder desiring to include Registrable Securities in any such registration statement shall notify the Company within 15 days after the notice from the Company. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement 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, all upon the terms and conditions set forth herein. (a) UNDERWRITING. If the registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders. In such event, the right of any Holder to be included in a registration pursuant to this Section 2.3 shall be conditioned upon the Holder's participation in the underwriting. Notwithstanding any other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders pro rata based on the total number of Registrable Securities held by the Holders; and third, to any stockholder of the Company (other than a Holder) on a pro rata basis. Notwithstanding the foregoing, no such reduction shall reduce the amount of securities of the selling Holders included in the registration below 25% of the total amount of securities included in such registration, unless such offering is the Initial Public Offering. (b) RIGHT TO TERMINATE REGISTRATION. The Company shall give written notice of its determination to terminate or withdraw any registration initiated by it under this Section 2.3 promptly after the occurrence thereof. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5. (c) If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company and the underwriter delivered at least fifteen days prior to the effective date of the Registration Statement. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration. 2.4 FORM S-3 REGISTRATION. (a) If the Company shall receive from any Holder or Holders a request that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short form registration statement, 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: (i) promptly give notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and (ii) as soon as practicable, effect such registration and all such qualifications and compliances as would permit or facilitate the sale and distribution of the Registrable Securities specified in such request, together with the Registrable Securities of any other Holder or Holders joining in such request by notice to the Company given within 15 days after receipt of such notice from the Company; PROVIDED, HOWEVER, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4: (1) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders, or (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 $1,000,000, or (3) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board of Directors, 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 a period of not more than 120 days after receipt of the request of the Holder or Holders under this Section 2.4; PROVIDED, that such right to delay a request shall be exercised by the Company not more than once in any 12-month period, or (4) if the Company has, within the 12-month period preceding the date of such request, already effected a registration on Form S-3 for the Holders pursuant to this Section 2.4, 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. (b) Subject to the foregoing, the Company shall file a Form S-3 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. Registrations effected pursuant to this Section 2.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 2.2 or 2.3, respectively. If the Initiating Holders intend to distribute Registrable Shares pursuant to an underwriting, they shall so advise the Company in the demand pursuant to Section 2.2(a). (c) After the Company's Initial Public Offering, the Company will use its commercially reasonable efforts to qualify for the registration of its shares of Common Stock on Form S-3. 2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the Company or the stockholders selling the securities on a pro-rata basis, as the case may be. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.2, the request of which has been subsequently withdrawn by the Initiating Holders unless the withdrawal is based upon material adverse information concerning the Company (including a material drop in the market price of the Company's common stock) of which the Initiating Holders were not aware at the time of such request. If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. Notwithstanding the foregoing, the Holders shall be solely responsible for the fees and expenses of any counsel retained by such Holders on a pro-rata basis in connection with such withdrawn registration (other than a withdrawal which is based upon material adverse information concerning the Company, including a material drop in the market price of the Company's common stock, of which the Initiating Holders were not aware at the time of such request) and any transfer taxes or Selling Expenses incurred by the Holders in connection therewith. 2.6 OBLIGATIONS OF THE COMPANY. Whenever required to register any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415 promulgated under the Securities Act for a registration pursuant to Section 2.4, and use all reasonable 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 up to six months for a registration pursuant to Section 2.2 and for up to twenty-four months for a registration pursuant to Section 2.4 or, if earlier, until the Holder or Holders have completed the distribution related thereto; PROVIDED, HOWEVER, that (x) before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall provide counsel selected by the Holders holding a majority of the Registrable Securities being registered in such registration ("Holders' Counsel") with an adequate and appropriate opportunity to review and comment on such Registration Statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the SEC, subject to such documents being under the Company's control, and (y) the Company shall notify the Holders' Counsel and each seller of Registrable Securities of any stop order issued or threatened by the SEC and take all action required to prevent the entry of such stop order or to remove it if entered or of the receipt of any SEC comment letter (a copy of which shall be provided to Holders' Counsel). (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 for the period set forth in paragraph (a) above. (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 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(s) of such offering. (f) Notify in writing 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 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. (g) Use its reasonable best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are 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 (ii) a 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 addressed to the underwriters. (h) Keep Holders' Counsel advised in writing as to the initiation and progress of any registration under Sections 2.2, 2.3 and 2.4 hereunder. (i) Take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby. 2.7 FURNISHING INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 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 and such other information as shall be required to effect the registration of their Registrable Securities as the Company may reasonably request in writing. 2.8 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder and the partners, officers, directors, stockholders and Affiliates (as defined below) 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") by the Company: (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 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 state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will pay as incurred to each such Holder, partner, officer, director, stockholder, underwriter, Affiliate or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action (subject to recoupment if this indemnification is determined to be inapplicable); PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 2.8(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 such Holder, partner, officer, director, stockholder, underwriter, Affiliate or controlling person of such Holder. The term "Affiliate" for purposes of this Section 2.8 shall mean, with respect to any person, any other person that, directly or indirectly, controls, is controlled by, or is under common control with, such person. (b) To the extent permitted by law, each Holder, will severally and not jointly, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder's partners, directors, officers, stockholders, Affiliates or any person who controls such Holder, against any losses, claims, damages or liabilities to which the Company or any such person 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 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 under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder, severally and not jointly, will pay as incurred any legal or other expenses reasonably incurred by the Company or any such person in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, HOWEVER, that the indemnity agreement contained in this Section 2.8(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; PROVIDED FURTHER, that in no event shall any indemnity under this Section 2.8 exceed the net proceeds from the offering received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 2.8 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 2.8, 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 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 materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, 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 2.8. (d) If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability 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 Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law 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; PROVIDED, that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder. The parties hereto hereby acknowledge that it would not be just and equitable if contribution pursuant to this Section 2.8(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations. 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) The obligations of the Company, Holders under this Section 2.8 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of Registrable Securities which (a) is a subsidiary, parent, general partner, limited partner, retired partner, member, retired member or affiliate of a Holder, (b) is a Holder's immediate family member or trust for the benefit of an individual Holder or immediate family members or (c) any third party purchaser; PROVIDED, HOWEVER, (i) the transferor shall, within 10 days after such transfer, furnish to the Company 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, (ii) such transferee or assignee receives in such transfer or assignment at least 800,000 shares, PROVIDED, HOWEVER, if the transferee or assignee is a subsidiary, parent, general partner, limited partner, retired partner, member, retired member or affiliate of a Holder, or is a Holder's immediate family member or trust for the benefit of an individual Holder or immediate family members no such minimum amount of shares shall be required for the assignment of the registration rights; (iii) such transferee shall agree to be subject to all restrictions set forth in this Agreement by executing a Counterpart Signature Page (which shall not be deemed to be an amendment hereto), and (iv) such assignment or transfer shall be in compliance with all federal and state securities laws. 2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of at least a majority of the Registrable Securities held by the Series A Investors then outstanding, at least a majority of the Registrable Securities held by the Series B Investors then outstanding, at least a majority of the Registrable Securities held by the Series C Investors then outstanding and at least a majority of the Registrable Securities held by the Series D Investors then outstanding, each voting as a separate class. Any amendment or waiver effected in accordance with this Section 2.10 shall be binding upon each Holder and the Company. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder. 2.11 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding held by the Series A Investors, a majority of the Registrable Securities then outstanding held by the Series B Investors, a majority of the Registrable Securities then outstanding held by the Series C Investors and a majority of the Registrable Securities then outstanding held by the Series D Investors, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights pari passu or senior to those granted to the Holders hereunder. 2.12 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. No Holder shall sell or otherwise transfer (other than transfers by a Holder to an affiliate of such Holder) or dispose of any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed 180 days following the effective date of a registration statement of the Company filed under the Securities Act; PROVIDED that: (i) such agreement shall apply only to the Company's Initial Public Offering; (ii) all officers, directors and 5% stockholders of the Company enter into similar agreements; and (iii) each Holder shall execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within 10 days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 2.12 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said 180-day period. 2.13 RULE 144 REPORTING. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company shall use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public; (b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents so filed by the Company, and such other information as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. SECTION 3. COVENANTS OF THE COMPANY 3.1 BASIC FINANCIAL INFORMATION AND REPORTING. (a) The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied, and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied. (b) As soon as practicable after the end of each fiscal year of the Company, and in any event within 90 days thereafter, the Company will furnish each Investor with audited financial statements of the Company prepared by a major accounting firm selected by the Board and in accordance with generally accepted accounting principles consistently applied. (c) As soon as practicable, and in any event not later at the Company's December Board meeting, the Company will furnish each Investor with an annual budget for the next fiscal year approved by the Board (and as soon as available, any subsequent revisions thereto) including projected income statements, cash flows and balance sheets on a quarterly basis for the ensuing fiscal year. (d) As soon as practicable after the end of each calendar month, and in any event within 30 days thereafter, consolidated balance sheets of the Company as of the end of each calendar month, and consolidated statements of income and cash flows of the Company for such month and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles consistently applied, excluding footnotes and year-end adjustments, and a narrative discussion and analysis, of the results of operations and financial condition of the Company and setting forth in each case in comparative form the figures for such month and the figures from the most recent budget approved by the Board, and an analysis of the Company's compliance with applicable loan covenants, if any, all in reasonable detail. Such financial statements shall include a narrative discussion and analysis of the financial condition of the Company prepared by the Chief Financial Officer of the Company summarizing the foregoing. (e) In the event that the Company fails to provide the financial statements and/or monthly reports required by Sections 3.1(b) and 3.1(d), the Investors may, at the Company's expense, request an audit by an accounting firm of their own choice such that such financial statements and/or monthly reports are produced to the Investors' satisfaction. (f) Within 10 days after discovery of any default in the performance of the covenants and agreements contained in this Section 3.1, the Company shall furnish each Investor a statement outlining such default or event, and management's proposed response to such default or event. 3.2 INSPECTION RIGHTS. Each Investor shall have the right to visit and inspect any of the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and to review such information as is reasonably requested all during normal business hours following reasonable notice and as often as may be reasonably requested; PROVIDED, HOWEVER, that the Company shall not be obligated under this Section 3.2 with respect to any Investor that is a competitor of the Company. 3.3 CONFIDENTIALITY OF RECORDS. Each Investor shall use, and shall use its reasonable best efforts to cause its authorized representatives to use, the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to it which the Company identifies in writing as being confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information to any partner, subsidiary, affiliate or parent of such Investor for the purpose of evaluating its investment in the Company as long as such partner, subsidiary, affiliate or parent is advised of the confidentiality provisions of this Section 3.3. Notwithstanding the foregoing, information shall not be deemed confidential if (a) at the time of disclosure it is generally available to and known by the public (other than as a result of a disclosure directly by the recipient or any of its representatives), (b) was available to the recipient on a non-confidential basis from a source that is not and was not prohibited from disclosing such information to the recipient by a contractual, legal or fiduciary obligation or (c) is known to the recipient prior to or independently of its relationship with the Company. 3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the exercise of the Warrants, all shares of Common Stock issuable from time to time upon such conversion and exercise. 3.5 STOCK VESTING. Unless otherwise approved by the Board, all stock options and other stock equivalents issued after the date of this Agreement to employees, directors, consultants and other service providers shall be subject to vesting over four years. With respect to any shares of stock purchased by any such person pursuant to the exercise of any stock options, the Company shall have the following rights (to the extent permissible under applicable securities laws and other laws): (a) until the Company's Initial Public Offering, the Company or its assignee shall have a right of first refusal to purchase such shares of stock should the holder thereof desire to sell any such shares; and (b) the Company's repurchase option shall provide that upon such person's termination of employment or service with the Company, with or without cause, the Company or its assignee (to the extent permissible under applicable securities laws and other laws) shall have the option until the Initial Public Offering, to purchase at fair market value (as determined in good faith by the Board) any vested shares of stock held by such person. 3.6 EMPLOYEE NON-DISCLOSURE, ASSIGNMENT OF DEVELOPMENTS AND NON-SOLICITATION AGREEMENT. The Company shall require all employees and consultants to execute and deliver an Employee Non-Disclosure, Assignment of Developments and Non-Solicitation Agreement substantially in the form attached as Exhibit 3.15 to the Purchase Agreement. 3.7 BOARD OBSERVATION. (a) Prior to a Qualified Public Offering, the following Holders shall have the right to have a representative attend all meetings of the Board of Directors (whether in person, by telephone or otherwise) in a non-voting observer capacity and shall be entitled to receive, concurrently with the members of the Board, and in the same manner, notice of such meeting and a copy of all materials, consents and resolutions provided to such members of the Board: (i) The Sprout Group, beginning on the date on which Sprout Capital IX, L.P. and its affiliates are not represented on the Board and ending on the date that Sprout Capital IX, L.P. and its affiliates owns less than 20% of the Series D Preferred Stock purchased by Sprout Capital IX, L.P. and its affiliates on the date hereof or Common Stock issuable upon conversion of such series of Preferred Stock; (ii) Perseus-Soros Biopharmaceutical Fund, L.P. ("PSBF"), beginning on the date on which PSBF is not represented on the Board and ending on the date that PSBF owns less than 20% of the Series B Preferred Stock purchased by it on October 12, 2001 and the Series C Preferred Stock purchased by it on June 21, 2002 or Common Stock issuable upon conversion of such series of Preferred Stock; (iii) Orbimed Advisors, LLC, beginning on the date on which Caduceus Private Investments II, LP ("Caduceus") and its affiliates are not represented on the Board and ending on the date that Caduceus and its affiliates own less than 20% of the Series D Preferred Stock purchased by it on the date hereof or Common Stock issuable upon conversion of such series of Preferred Stock; (iv) BB Biotech ("BB"), or an affiliate thereof, until such time as BB and its affiliates own less than 20% of the Series D Preferred Stock purchased by BB on the date hereof or Common Stock issuable upon conversion of such series of Preferred Stock; (v) SCP Private Equity Partners II, L.P. ("SCP"), beginning on the date on which SCP is not represented on the Board and ending on the date that SCP and its affiliates own less than 1.0 million shares of the capital stock of the Company; (vi) Lehman Brothers Healthcare Venture Capital L.P. ("Lehman"), or an affiliate thereof, until such time as Lehman and its affiliates own less than 20% of the Series C Preferred Stock purchased by Lehman and its affiliates on June 21, 2002 or the Common Stock issuable upon conversion thereof; and (vii) Schroder Ventures Life Sciences Fund II LPI ("Schroders"), or an affiliate thereof, until such time as Schroders and its affiliates own less than 20% of the Series C Preferred Stock purchased by Schroders and its affiliates on June 21, 2002 or the Common Stock issuable upon conversion thereof. (b) The Company shall hold meetings of the Board not less than quarterly. (c) After the date hereof the Company shall create a search committee to initiate a search for a President/Chief Operating Officer, which search committee shall include at least one director designated by the holders of a majority of the shares of Series D Preferred Stock. 3.8 DIRECTORS' EXPENSES. The Company shall reimburse each member of the Board for all reasonable expenses incurred by the director to attend board meetings and any other expenses incurred in connection with the Company's business approved by the Chief Executive Officer or President of the Company. 3.9 DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's Fourth Restated Certificate of Incorporation and By-laws shall provide (a) for elimination of the liability of directors to the maximum extent permitted by law and (b) for indemnification of directors for acts on behalf of the Company to the maximum extent permitted by law. 3.10 INDEMNIFICATION. The Company will indemnify members of the Board to the broadest extent permitted by applicable law and will indemnify each Investor for any claims brought against the Investors by any third party (including any other stockholder of the Company) as a result of this financing. 3.11 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it will operate in a manner such that it will not become a "United States real property holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder ("FIRPTA"). The Company shall make determinations as to its status as a USRPHC, and will file statements concerning those determinations with the Internal Revenue Service, in the manner and at the times required under Reg. ss. 1.897-2(h), or any supplementary or successor provision thereto. Within 30 days of a request from an Investor or any of its partners, the Company will inform the requesting party, in the manner set forth in Reg. ss. 1.897-2(h)(1) (but in any event, one business day prior to the close of any sale of an interest in the Company by such Investor) or any supplementary or successor provision thereto, whether that party's interest in the Company constitutes a United States real property interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the regulations thereunder) and whether the Company has provided to the Internal Revenue Service all required notices as to its USRPHC status. 3.12 SETTLEMENT OF LITIGATION. If the Company is adjudged liable in connection with the Litigation in an amount that is less than $2.0 million, the Company promptly shall give The Sprout Group written notice of such judgement promptly after the Company receives notice that such judgement was entered. The Company shall not appeal any such judgment without the written approval of The Sprout Group; PROVIDED, that The Sprout Group delivers written notice of its objection to any such appeal at least five calendar days prior to the last date on which the Company may enter a notice of appeal with respect to such judgment. If the Company negotiates the terms of a settlement agreement with the plaintiffs in the Litigation for an amount less than $2.0 million, then the Company shall promptly deliver written notice thereof to The Sprout Group, which notice shall include the specific terms thereof. The Sprout Group shall have five business days from the date of its receipt of such notice to require the Company to consummate such settlement agreement. If The Sprout Group fails to notify the Company in writing of its approval within such five-business day period, then The Sprout Group shall be deemed to have waived its rights under this Section 3.12 as to requiring the Company to consummate any such settlement agreement. Additionally, the Company shall promptly notify The Sprout Group in writing of any settlement proposal relating to the Litigation. 3.13 TERMINATION OF COVENANTS. Except for the covenants contained in Section 3.3, 3.4 and 3.10, all covenants of the Company contained in Section 3 of this Agreement shall expire and terminate as to each Holder upon the earlier of (i) the effective date of the registration statement pertaining to the Initial Public Offering or (ii) upon an acquisition of the Company by another corporation or entity by consolidation, merger or other reorganization in which the holders of the Company's outstanding voting stock immediately prior to such transaction, together with their affiliates, own immediately after such transaction securities representing less than 50% of the voting power of the corporation or other entity surviving such transaction. SECTION 4. RIGHT OF FIRST REFUSAL 4.1 SUBSEQUENT OFFERINGS. The Holders shall have Pro Rata, a right of first refusal to purchase all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.6 The term "Equity Securities" shall mean (i) any Common Stock or Preferred Stock of the Company, (ii) any security convertible, with or without consideration, into any of the Common Stock or the Company's Preferred Stock, par value $0.01 per share (the "Preferred Stock") (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock or Preferred Stock or (iv) any such warrant or right. The term "Pro Rata" means the number quotient determined by dividing the (x) the sum of the number of shares of Common Stock held by each Holder immediately prior to the issuance of the Equity Securities, assuming full exercise and/or conversion of all shares of Preferred Stock, all other Company securities exercisable and/or convertible into the Company's Common Stock held by all Holders, by the total number of common shares held by all Holders, assuming full exercise and/or conversion of all Preferred Stock, and all other Company securities exercisable and/or convertible into the Company's Common Stock held by all Holders. 4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity Securities, it shall give the Holders notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Holder shall have 20 days from the date of delivery of any such notice to agree to purchase the Equity Securities for the price and upon the terms and conditions specified in the notice by giving notice to the Company and stating therein the quantity of Equity Securities it agrees to purchase. Such 20 day limited period is subject to the Company then being in compliance with its covenants in Sections 3.1 and 3.2. If some but not all of the Holders elect to purchase their Pro Rata share of the offered Equity Securities, those electing Holders shall have 10 additional days to agree to purchase any or all of the offered Equity Securities that were available for purchase by the non-electing Holders, allocated Pro Rata among the electing Holders who choose to purchase such additional offered Equity Securities, based on the number of common shares held by each electing Holder assuming conversion of all shares of Preferred Stock held by such Holder. 4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the Holders fail to exercise in full the rights of first refusal, the Company shall have 90 days thereafter to sell all such Equity Securities to any other person(s), at the same price and upon general terms and conditions materially no more favorable to the purchasers thereof than were offered to the Holders pursuant to Section 4.2, and shall have no obligation to sell any such equity securities to the Holders. 4.4 TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The right of first refusal established by this Section 4 shall not apply to, and shall terminate upon the effective date of the registration statement pertaining to the Company's first Qualified Public Offering. The provisions of this Section 4 may be amended or waived only by the agreement of the Company and the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock of the Company and 66 2/3% of the Series D Preferred Stock of the Company each voting as a separate class. 4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. Each Holder may assign its right of first refusal under this Section 4 in whole or in part to one or more of the following: any subsidiary, parent, general partner, limited partner, retired partner, member, retired member, general partner of a general partner, affiliate or family trust of such Holder, who shall agree to be bound by this Agreement in connection with and following such assignment by executing a Counterpart Signature Page (which shall not be deemed to be an amendment hereto). 4.6 EXCLUDED SECURITIES. The rights of first refusal established by this Section 4 shall have no application to any of the following Equity Securities: (a) shares of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to compensation plans, agreements, or other arrangements that are approved by the Board, including the Company's 2000 Equity Compensation Plan, as amended from time to time. (b) stock issued pursuant to convertible securities outstanding as of the date of this Agreement or issued pursuant to the Purchase Agreement; (c) any Equity Securities issued pursuant to the acquisition of another business entity by the Company by merger, purchase of substantially all of the assets or shares or other reorganization whereby the Company will own not less than a majority of the voting power of the surviving or successor corporation; (d) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization by the Company; (e) shares of Common Stock issued upon conversion of the Shares or upon exercise of the Warrants issued pursuant to the Purchase Agreement; (f) any Equity Securities not to exceed 1.0% of the outstanding capital stock of the Company on a fully diluted and as-converted basis on the date of issuance issued pursuant to any equipment leasing arrangement, or debt financing from a bank or similar financial institution; (g) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including (i) joint ventures, manufacturing, marketing or distribution arrangements or (ii) technology transfer or development arrangements; PROVIDED that such strategic transactions and the issuance of shares therein has been approved by the Board; or (h) any Series D Preferred Stock sold pursuant to the Purchase Agreement. SECTION 5. MISCELLANEOUS 5.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Delaware, regardless of the conflicts of laws principles thereof. 5.2 SURVIVAL. Except as expressly provided herein, the representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 5.4 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 5.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 5.6 AMENDMENT AND WAIVER. (a) Except as otherwise expressly provided, this Agreement may be amended or modified only upon the consent of (i) the Company, and (ii) the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock and 66 2/3% of the Series D Preferred Stock, each voting as a separate class. (b) Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the consent of the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock and 66 2/3% of the Series D Preferred Stock, each voting as a separate class. 5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 5.8 NOTICES AND CONSENTS. All notices and consents required or permitted hereunder must be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages or Exhibit A or at such other address as such party may designate by 10 days advance written notice to the other parties hereto. 5.9 FORUM SELECTION. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against any of the parties in the Chancery Court of the State of Delaware, if permitted, or in such other appropriate court of the State of Delaware, County of New Castle or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. 5.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts (delivery of which may occur via facsimile), each of which shall be an original, but all of which together shall constitute one instrument. The parties hereto confirm that any facsimile copy of another party's executed counterpart of this Agreement (or the signature page thereof) shall be deemed to be an executed original thereof. 5.11 ADJUSTMENTS. All references to numbers of shares, per share price or other share amounts in this Agreement, the Purchase Agreement or in any of the agreement delivered in connection herewith or therewith shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement. 5.12 INTERPRETATION. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) "including" has the inclusive meaning frequently identified with the phrase "but not limited to" and (d) references to "hereunder" or "herein" relate to this Agreement. The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect. Section, subsection, Annex, Schedule and Exhibit and similar references are to this Agreement unless otherwise specified. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP. Any reference to a party's being satisfied with any particular item or to a party's determination of a particular item presumes that such standard will not be achieved unless such party shall be satisfied or shall have made such determination in its sole or complete discretion. 5.13 AGGREGATION. All shares of Series A Preferred Stock held by Series A Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series A Investors. All shares of Series B Preferred Stock held by Series B Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series B Investors. All shares of Series C Preferred Stock held by Series C Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series C Investors. All shares of Series D Preferred Stock held by Series D Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series D Investors. 5.14 NEGOTIATED AGREEMENT. The parties hereto hereby acknowledge that the terms and language of this Agreement were the result of negotiations among the parties and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any particular party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation. 5.15 PRIOR INVESTOR RIGHTS AGREEMENT. The Prior Investor Rights Agreement is hereby amended and restated in full to read as set forth herein. [SIGNATURE PAGES TO FOLLOW] IN WITNESS WHEREOF, the parties hereto have executed this THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof. AUXILIUM PHARMACEUTICALS, INC. By: ----------------------------- Name: Jane H. Hollingsworth Title: Executive Vice President 160 W. Germantown Pike, Suite D-5 Norristown, PA 19401 AS A SERIES D INVESTOR: SPROUT ENTREPRENEURS FUND, L.P. By: DLJ Capital Corporation Its: General Partner By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SPROUT CAPITAL IX, L.P. By: DLJ Capital Corporation Its: Managing General Partner By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DLJ CAPITAL CORPORATION By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT CADUCEUS PRIVATE INVESTMENTS II, L.P. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT CADUCEUS PRIVATE INVESTMENTS II (QP), L.P. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT UBS JUNIPER CROSSOVER FUND, L.L.C. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT BIOTECH GROWTH N.V. By: Name: Title: Address: Asset Managment BAB N.V. A.Mendes Chumaceiro Boulevard 11 Curacoa, Netherlands Antilles Attention: Jon Bootsma SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES A, SERIES B, SERIES C INVESTOR AND SERIES D INVESTOR: SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its General Partner By: SCP Private Equity II, LLC By: Name: Title: Address: 435 Devon Park Drive, Building 300 Wayne, PA 19087 Attention: Winston J. Churchill Fax: 610.975.9546 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES A, SERIES C AND SERIES D INVESTOR: CIP CAPITAL, L.P. By: CIP Capital Management, Inc. By: ------------------------------- Name: Joseph L. Jackson Title: President Address: 435 Devon Park Drive, Building 300 Wayne, PA 19087 Attention: Joseph L. Jackson Fax: 610.975.9546 AS A SERIES B, SERIES C AND SERIES D INVESTOR: PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP By: Perseus-Soros Partners, LLC, Its General Partner By: SFM Participation, L.P., Its Managing Member By: SFM AH, Inc., Its General Partner By: Soros Private Funds Management LLC Its Managing Member - ----------------------------------- By: Title: Attorney-in-Fact Address: Perseus-Soros Biopharmaceutical Fund, L.P. 888 Seventh Avenue, 29th Floor New York, NY 10106 Attention: Christopher D. Earl with a copy to: Perseus-Soros Biopharmaceutical Fund, L.P. C/O Soros Fund Management LLC 888 Seventh Avenue, 31st Floor New York, NY 10106 Attention: Richard D. Holahan, Jr., Esq. and Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Bruce A. Gutenplan, Esq. SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS P.A. LLC By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. By: LB I Group Inc., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. By: Lehman Brothers Offshore Partners Ltd., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SITCO NOMINEES LTD. VC01903 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: Attention: Therese Maguire Barfield House St. Julian's Avenue St. Peter Port, Guernsey CHANNEL ISLANDS SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. By: Lehman Brothers HealthCare Venture Capital Associates L.P., its General Partner By: LB I Group Inc., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES C AND SERIES D INVESTOR: INTERNATIONAL BIOTECHNOLOGY TRUST PLC By: Name: Title: Address: F.A.O. Nick Coleman Schroder Ventures Life Sciences First Floor 71 Kingsway London WC2B 6ST UNITED KINGDOM SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES B AND SERIES C INVESTOR: C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. By: UTCM, LLC, its General Partner By: ---------------------------- Name: Thomas I. Unterberg Title: A Managing Member Address: 350 Madison Avenue New York, NY 10017 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS, L.P. By: UTCM, LLC, its General Partner By: ---------------------------- Name: Thomas I. Unterberg Title: A Managing Member Address: 350 Madison Avenue New York, NY 10017 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES C INVESTOR: MERRILL LYNCH VENTURES L.P. 2001 By: Merrill Lynch Ventures LLC, as General Partner By: --------------------------- Name: Edward J. Higgins Title: Vice President and Co-Chief Investment Officer Address: 95 Greene Street, 7th Floor Jersey City, NJ 07302 Attention: Robert F. Tully PH: 201.671.0400 FAX: 201.671.4527 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT EXHIBIT A SERIES A INVESTORS NAME SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. EXHIBIT B SERIES B INVESTORS NAME PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. LB I GROUP INC. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED EXHIBIT C SERIES C INVESTORS NAME PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED INTERNATIONAL BIOTECHNOLOGY TRUST PLC MERRILL LYNCH VENTURES L.P. 2001 EXHIBIT D SERIES D INVESTORS NAME SPROUT ENTREPRENEURS FUND, L.P. SPROUT CAPITAL IX, L.P. DLJ CAPITAL CORPORATION UBS JUNIPER CROSSOVER FUND, L.L.C. CADUCEUS PRIVATE INVESTMENTS II, LP CADUCEUS PRIVATE INVESTMENTS II (QP), LP BIOTECH GROWTH N.V. PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED INTERNATIONAL BIOTECHNOLOGY TRUST PLC ANNEX A COUNTERPART SIGNATURE PAGE TO AUXILIUM PHARMACEUTICALS, INC. THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT The undersigned, as a purchaser of shares of Series C Preferred Stock, par value $0.01 per share, of Auxilium Pharmaceuticals, Inc., a Delaware corporation (the "Company"), hereby adopts and agrees to be bound by all of the terms and provisions of, and shall be entitled to all of the benefits and privileges of an Investor as defined in, the Second Amended and Restated Prior Investor Rights Agreement by and among the Company, and the investors listed on EXHIBIT A, EXHIBIT B and EXHIBIT C thereto (the "Prior Investor Rights Agreement"), and further authorizes the Company to attach this signature page to the Prior Investor Rights Agreement in order to make the undersigned a party to the Prior Investor Rights Agreement. [Investor Name] Dated: _____________, 200__ Common Stock issuable upon conversion of such series of Preferred Stock; (iv) BB Biotech ("BB"), or an affiliate thereof, until such time as BB and its affiliates own less than 20% of the Series D Preferred Stock purchased by BB on the date hereof or Common Stock issuable upon conversion of such series of Preferred Stock; (v) SCP Private Equity Partners II, L.P. ("SCP"), beginning on the date on which SCP is not represented on the Board and ending on the date that SCP and its affiliates own less than 1.0 million shares of the capital stock of the Company; (vi) Lehman Brothers Healthcare Venture Capital L.P. ("Lehman"), or an affiliate thereof, until such time as Lehman and its affiliates own less than 20% of the Series C Preferred Stock purchased by Lehman and its affiliates on June 21, 2002 or the Common Stock issuable upon conversion thereof; and (vii) Schroder Ventures Life Sciences Fund II LPI ("Schroders"), or an affiliate thereof, until such time as Schroders and its affiliates own less than 20% of the Series C Preferred Stock purchased by Schroders and its affiliates on June 21, 2002 or the Common Stock issuable upon conversion thereof. (b) The Company shall hold meetings of the Board not less than quarterly. (c) After the date hereof the Company shall create a search committee to initiate a search for a President/Chief Operating Officer, which search committee shall include at least one director designated by the holders of a majority of the shares of Series D Preferred Stock. 3.8 DIRECTORS' EXPENSES. The Company shall reimburse each member of the Board for all reasonable expenses incurred by the director to attend board meetings and any other expenses incurred in connection with the Company's business approved by the Chief Executive Officer or President of the Company. 3.9 DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's Fourth Restated Certificate of Incorporation and By-laws shall provide (a) for elimination of the liability of directors to the maximum extent permitted by law and (b) for indemnification of directors for acts on behalf of the Company to the maximum extent permitted by law. 3.10 INDEMNIFICATION. The Company will indemnify members of the Board to the broadest extent permitted by applicable law and will indemnify each Investor for any claims brought against the Investors by any third party (including any other stockholder of the Company) as a result of this financing. 3.11 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it will operate in a manner such that it will not become a "United States real property holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder ("FIRPTA"). The Company shall make determinations as to its status as a USRPHC, and will file statements concerning those determinations with the Internal Revenue Service, in the manner and at the times required under Reg. ss. 1.897-2(h), or any supplementary or successor provision thereto. Within 30 days of a request from an Investor or any of its partners, the Company will inform the requesting party, in the manner set forth in Reg. ss. 1.897-2(h)(1) (but in any event, one business day prior to the close of any sale of an interest in the Company by such Investor) or any supplementary or successor provision thereto, whether that party's interest in the Company constitutes a United States real property interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the regulations thereunder) and whether the Company has provided to the Internal Revenue Service all required notices as to its USRPHC status. 3.12 SETTLEMENT OF LITIGATION. If the Company is adjudged liable in connection with the Litigation in an amount that is less than $2.0 million, the Company promptly shall give The Sprout Group written notice of such judgement promptly after the Company receives notice that such judgement was entered. The Company shall not appeal any such judgment without the written approval of The Sprout Group; PROVIDED, that The Sprout Group delivers written notice of its objection to any such appeal at least five calendar days prior to the last date on which the Company may enter a notice of appeal with respect to such judgment. If the Company negotiates the terms of a settlement agreement with the plaintiffs in the Litigation for an amount less than $2.0 million, then the Company shall promptly deliver written notice thereof to The Sprout Group, which notice shall include the specific terms thereof. The Sprout Group shall have five business days from the date of its receipt of such notice to require the Company to consummate such settlement agreement. If The Sprout Group fails to notify the Company in writing of its approval within such five-business day period, then The Sprout Group shall be deemed to have waived its rights under this Section 3.12 as to requiring the Company to consummate any such settlement agreement. Additionally, the Company shall promptly notify The Sprout Group in writing of any settlement proposal relating to the Litigation. 3.13 TERMINATION OF COVENANTS. Except for the covenants contained in Section 3.3, 3.4 and 3.10, all covenants of the Company contained in Section 3 of this Agreement shall expire and terminate as to each Holder upon the earlier of (i) the effective date of the registration statement pertaining to the Initial Public Offering or (ii) upon an acquisition of the Company by another corporation or entity by consolidation, merger or other reorganization in which the holders of the Company's outstanding voting stock immediately prior to such transaction, together with their affiliates, own immediately after such transaction securities representing less than 50% of the voting power of the corporation or other entity surviving such transaction. SECTION 4. RIGHT OF FIRST REFUSAL 4.1 SUBSEQUENT OFFERINGS. The Holders shall have Pro Rata, a right of first refusal to purchase all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.6 The term "Equity Securities" shall mean (i) any Common Stock or Preferred Stock of the Company, (ii) any security convertible, with or without consideration, into any of the Common Stock or the Company's Preferred Stock, par value $0.01 per share (the "Preferred Stock") (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock or Preferred Stock or (iv) any such warrant or right. The term "Pro Rata" means the number quotient determined by dividing the (x) the sum of the number of shares of Common Stock held by each Holder immediately prior to the issuance of the Equity Securities, assuming full exercise and/or conversion of all shares of Preferred Stock, all other Company securities exercisable and/or convertible into the Company's Common Stock held by all Holders, by the total number of common shares held by all Holders, assuming full exercise and/or conversion of all Preferred Stock, and all other Company securities exercisable and/or convertible into the Company's Common Stock held by all Holders. 4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity Securities, it shall give the Holders notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Holder shall have 20 days from the date of delivery of any such notice to agree to purchase the Equity Securities for the price and upon the terms and conditions specified in the notice by giving notice to the Company and stating therein the quantity of Equity Securities it agrees to purchase. Such 20 day limited period is subject to the Company then being in compliance with its covenants in Sections 3.1 and 3.2. If some but not all of the Holders elect to purchase their Pro Rata share of the offered Equity Securities, those electing Holders shall have 10 additional days to agree to purchase any or all of the offered Equity Securities that were available for purchase by the non-electing Holders, allocated Pro Rata among the electing Holders who choose to purchase such additional offered Equity Securities, based on the number of common shares held by each electing Holder assuming conversion of all shares of Preferred Stock held by such Holder. 4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the Holders fail to exercise in full the rights of first refusal, the Company shall have 90 days thereafter to sell all such Equity Securities to any other person(s), at the same price and upon general terms and conditions materially no more favorable to the purchasers thereof than were offered to the Holders pursuant to Section 4.2, and shall have no obligation to sell any such equity securities to the Holders. 4.4 TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The right of first refusal established by this Section 4 shall not apply to, and shall terminate upon the effective date of the registration statement pertaining to the Company's first Qualified Public Offering. The provisions of this Section 4 may be amended or waived only by the agreement of the Company and the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock of the Company and 66 2/3% of the Series D Preferred Stock of the Company each voting as a separate class. 4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. Each Holder may assign its right of first refusal under this Section 4 in whole or in part to one or more of the following: any subsidiary, parent, general partner, limited partner, retired partner, member, retired member, general partner of a general partner, affiliate or family trust of such Holder, who shall agree to be bound by this Agreement in connection with and following such assignment by executing a Counterpart Signature Page (which shall not be deemed to be an amendment hereto). 4.6 EXCLUDED SECURITIES. The rights of first refusal established by this Section 4 shall have no application to any of the following Equity Securities: (a) shares of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to compensation plans, agreements, or other arrangements that are approved by the Board, including the Company's 2000 Equity Compensation Plan, as amended from time to time. (b) stock issued pursuant to convertible securities outstanding as of the date of this Agreement or issued pursuant to the Purchase Agreement; (c) any Equity Securities issued pursuant to the acquisition of another business entity by the Company by merger, purchase of substantially all of the assets or shares or other reorganization whereby the Company will own not less than a majority of the voting power of the surviving or successor corporation; (d) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization by the Company; (e) shares of Common Stock issued upon conversion of the Shares or upon exercise of the Warrants issued pursuant to the Purchase Agreement; (f) any Equity Securities not to exceed 1.0% of the outstanding capital stock of the Company on a fully diluted and as-converted basis on the date of issuance issued pursuant to any equipment leasing arrangement, or debt financing from a bank or similar financial institution; (g) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including (i) joint ventures, manufacturing, marketing or distribution arrangements or (ii) technology transfer or development arrangements; PROVIDED that such strategic transactions and the issuance of shares therein has been approved by the Board; or (h) any Series D Preferred Stock sold pursuant to the Purchase Agreement. SECTION 5. MISCELLANEOUS 5.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Delaware, regardless of the conflicts of laws principles thereof. 5.2 SURVIVAL. Except as expressly provided herein, the representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 5.4 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 5.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 5.6 AMENDMENT AND WAIVER. (a) Except as otherwise expressly provided, this Agreement may be amended or modified only upon the consent of (i) the Company, and (ii) the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock and 66 2/3% of the Series D Preferred Stock, each voting as a separate class. (b) Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the consent of the holders of at least a majority of the Series A Preferred Stock, a majority of the Series B Preferred Stock, a majority of the Series C Preferred Stock and 66 2/3% of the Series D Preferred Stock, each voting as a separate class. 5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 5.8 NOTICES AND CONSENTS. All notices and consents required or permitted hereunder must be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages or Exhibit A or at such other address as such party may designate by 10 days advance written notice to the other parties hereto. 5.9 FORUM SELECTION. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against any of the parties in the Chancery Court of the State of Delaware, if permitted, or in such other appropriate court of the State of Delaware, County of New Castle or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. 5.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts (delivery of which may occur via facsimile), each of which shall be an original, but all of which together shall constitute one instrument. The parties hereto confirm that any facsimile copy of another party's executed counterpart of this Agreement (or the signature page thereof) shall be deemed to be an executed original thereof. 5.11 ADJUSTMENTS. All references to numbers of shares, per share price or other share amounts in this Agreement, the Purchase Agreement or in any of the agreement delivered in connection herewith or therewith shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement. 5.12 INTERPRETATION. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) "including" has the inclusive meaning frequently identified with the phrase "but not limited to" and (d) references to "hereunder" or "herein" relate to this Agreement. The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect. Section, subsection, Annex, Schedule and Exhibit and similar references are to this Agreement unless otherwise specified. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP. Any reference to a party's being satisfied with any particular item or to a party's determination of a particular item presumes that such standard will not be achieved unless such party shall be satisfied or shall have made such determination in its sole or complete discretion. 5.13 AGGREGATION. All shares of Series A Preferred Stock held by Series A Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series A Investors. All shares of Series B Preferred Stock held by Series B Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series B Investors. All shares of Series C Preferred Stock held by Series C Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series C Investors. All shares of Series D Preferred Stock held by Series D Investors that are affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement to such Series D Investors. 5.14 NEGOTIATED AGREEMENT. The parties hereto hereby acknowledge that the terms and language of this Agreement were the result of negotiations among the parties and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any particular party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation. 5.15 PRIOR INVESTOR RIGHTS AGREEMENT. The Prior Investor Rights Agreement is hereby amended and restated in full to read as set forth herein. [SIGNATURE PAGES TO FOLLOW] IN WITNESS WHEREOF, the parties hereto have executed this THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof. AUXILIUM PHARMACEUTICALS, INC. By: - ----------------------------- Name: Jane H. Hollingsworth Title: Executive Vice President 160 W. Germantown Pike, Suite D-5 Norristown, PA 19401 AS A SERIES D INVESTOR: SPROUT ENTREPRENEURS FUND, L.P. By: DLJ Capital Corporation Its: General Partner By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SPROUT CAPITAL IX, L.P. By: DLJ Capital Corporation Its: Managing General Partner By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DLJ CAPITAL CORPORATION By: Philippe O. Chambon Its: Managing Director Address: 11 Madison Avenue 26th Floor New York, NY 10010 Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT CADUCEUS PRIVATE INVESTMENTS II, L.P. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT CADUCEUS PRIVATE INVESTMENTS II (QP), L.P. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT UBS JUNIPER CROSSOVER FUND, L.L.C. By: Title: Partner Address: Attention: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT BIOTECH GROWTH N.V. By: Name: Title: Address: Asset Managment BAB N.V. A.Mendes Chumaceiro Boulevard 11 Curacoa, Netherlands Antilles Attention: Jon Bootsma SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES A, SERIES B, SERIES C INVESTOR AND SERIES D INVESTOR: SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its General Partner By: SCP Private Equity II, LLC By: Name: Title: Address: 435 Devon Park Drive, Building 300 Wayne, PA 19087 Attention: Winston J. Churchill Fax: 610.975.9546 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES A, SERIES C AND SERIES D INVESTOR: CIP CAPITAL, L.P. By: CIP Capital Management, Inc. By: ------------------------------- Name: Joseph L. Jackson Title: President Address: 435 Devon Park Drive, Building 300 Wayne, PA 19087 Attention: Joseph L. Jackson Fax: 610.975.9546 AS A SERIES B, SERIES C AND SERIES D INVESTOR: PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP By: Perseus-Soros Partners, LLC, Its General Partner By: SFM Participation, L.P., Its Managing Member By: SFM AH, Inc., Its General Partner By: Soros Private Funds Management LLC Its Managing Member - ----------------------------------- By: Title: Attorney-in-Fact Address: Perseus-Soros Biopharmaceutical Fund, L.P. 888 Seventh Avenue, 29th Floor New York, NY 10106 Attention: Christopher D. Earl with a copy to: Perseus-Soros Biopharmaceutical Fund, L.P. C/O Soros Fund Management LLC 888 Seventh Avenue, 31st Floor New York, NY 10106 Attention: Richard D. Holahan, Jr., Esq. and Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Bruce A. Gutenplan, Esq. SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS P.A. LLC By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. By: LB I Group Inc., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. By: Lehman Brothers Offshore Partners Ltd., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SITCO NOMINEES LTD. VC01903 By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: 22 Church Street Hamilton HM 11 Bermuda SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED By: Schroder Venture Managers Inc., as General Partner By: Name: Title: Address: Attention: Therese Maguire Barfield House St. Julian's Avenue St. Peter Port, Guernsey CHANNEL ISLANDS SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. By: Lehman Brothers HealthCare Venture Capital Associates L.P., its General Partner By: LB I Group Inc., its General Partner By: ------------------------------ Name: Steven Berkenfeld Its: Senior Vice President Address: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Fred Steinberg SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES C AND SERIES D INVESTOR: INTERNATIONAL BIOTECHNOLOGY TRUST PLC By: Name: Title: Address: F.A.O. Nick Coleman Schroder Ventures Life Sciences First Floor 71 Kingsway London WC2B 6ST UNITED KINGDOM SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES B AND SERIES C INVESTOR: C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. By: UTCM, LLC, its General Partner By: ---------------------------- Name: Thomas I. Unterberg Title: A Managing Member Address: 350 Madison Avenue New York, NY 10017 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS, L.P. By: UTCM, LLC, its General Partner By: ---------------------------- Name: Thomas I. Unterberg Title: A Managing Member Address: 350 Madison Avenue New York, NY 10017 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT AS A SERIES C INVESTOR: MERRILL LYNCH VENTURES L.P. 2001 By: Merrill Lynch Ventures LLC, as General Partner By: --------------------------- Name: Edward J. Higgins Title: Vice President and Co-Chief Investment Officer Address: 95 Greene Street, 7th Floor Jersey City, NJ 07302 Attention: Robert F. Tully PH: 201.671.0400 FAX: 201.671.4527 SIGNATURE PAGE TO THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT EXHIBIT A SERIES A INVESTORS NAME SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. EXHIBIT B SERIES B INVESTORS NAME PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. LB I GROUP INC. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED EXHIBIT C SERIES C INVESTORS NAME PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II-Q, L.P. C.E. UNTERBERG, TOWBIN PRIVATE EQUITY PARTNERS II, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED INTERNATIONAL BIOTECHNOLOGY TRUST PLC MERRILL LYNCH VENTURES L.P. 2001 EXHIBIT D SERIES D INVESTORS NAME SPROUT ENTREPRENEURS FUND, L.P. SPROUT CAPITAL IX, L.P. DLJ CAPITAL CORPORATION UBS JUNIPER CROSSOVER FUND, L.L.C. CADUCEUS PRIVATE INVESTMENTS II, LP CADUCEUS PRIVATE INVESTMENTS II (QP), LP BIOTECH GROWTH N.V. PERSEUS-SOROS BIOPHARMACEUTICAL FUND L.P. SCP PRIVATE EQUITY PARTNERS II, L.P. C.I.P. CAPITAL L.P. LEHMAN BROTHERS HEALTHCARE VENTURE CAPITAL L.P. LEHMAN BROTHERS P.A. LLC LEHMAN BROTHERS PARTNERSHIP ACCOUNT 2000/2001, L.P. LEHMAN BROTHERS OFFSHORE PARTNERSHIP ACCOUNT 2000/2001, L.P. SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP1 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP2 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II LP3 SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES FUND II STRATEGIC PARTNERS LP SITCO NOMINEES LTD. VC01903 SV (NOMINEES) LIMITED AS NOMINEE OF SCHRODER VENTURES INVESTMENTS LIMITED INTERNATIONAL BIOTECHNOLOGY TRUST PLC ANNEX A COUNTERPART SIGNATURE PAGE TO AUXILIUM PHARMACEUTICALS, INC. THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT The undersigned, as a purchaser of shares of Series C Preferred Stock, par value $0.01 per share, of Auxilium Pharmaceuticals, Inc., a Delaware corporation (the "Company"), hereby adopts and agrees to be bound by all of the terms and provisions of, and shall be entitled to all of the benefits and privileges of an Investor as defined in, the Second Amended and Restated Prior Investor Rights Agreement by and among the Company, and the investors listed on EXHIBIT A, EXHIBIT B and EXHIBIT C thereto (the "Prior Investor Rights Agreement"), and further authorizes the Company to attach this signature page to the Prior Investor Rights Agreement in order to make the undersigned a party to the Prior Investor Rights Agreement. [Investor Name] Dated: _____________, 200__ -----END PRIVACY-ENHANCED MESSAGE-----