EXHIBIT
10.3
LOCK-UP AND STANDSTILL
AGREEMENT
This LOCK-UP AND STANDSTILL
AGREEMENT (the “ Agreement ”) is made as of
April 20, 2007, by and between Arrowhead Research Corporation,
a Delaware corporation (the “ Company ”), and
the undersigned (the “ Securityholder
”).
WITNESSETH:
WHEREAS, on the date hereof, the Company and the
Securityholder are consummating a stock purchase transaction (the
“ Stock Purchase Transaction ”);
WHEREAS, pursuant to the Stock Purchase Transaction, the
Securityholder will be the holder of record of that number of
shares (the “ Shares ”) of Company Common Stock,
par value $0.001 per share (the “ Common Stock
”).
WHEREAS, the Shares will be registered for resale
pursuant to a registration statement on Form S-3 (or similar form)
to be filed by the Company with the Securities and Exchange
Commission in accordance with the terms and conditions of a certain
Registration Rights Agreement dated as of the date hereof by and
among the Company and the Investors named therein; and
WHEREAS, as a condition to the consummation of the Stock
Purchase Transaction, the Company has required that the
Securityholder agree to refrain from certain sales of the Shares
and other securities of the Company, and the Securityholder has
agreed to so refrain, pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE,
in consideration of the foregoing
premises and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
Securityholder hereby agrees as follows:
1. Standstill
Provision . Securityholder agrees that from the date of
this Agreement through the earlier of (i) the second
anniversary of the expiration of the Lock-Up Period (as defined
below), and (ii) the date that the Securityholder (together
with its Affiliates (as defined below)) no longer beneficially owns
Common Stock (including shares underlying options or warrants)
representing, on an as converted basis, in the aggregate, at least
10% of the Company’s outstanding Common Stock (making
equitable adjustments for any conversions, reclassifications,
reorganizations, stock dividends, stock splits, reverse splits and
similar events which occur with respect to the Common Stock),
neither the Securityholder nor its Affiliates will, directly or
indirectly, without the prior written consent of a majority of the
Board of Directors of the Company (excluding any nominees or
designees of the Securityholder on the Board of Directors), in the
directors’ sole and absolute discretion, acquire, agree to
acquire, make any proposal to acquire, or in any way participate in
a “group” (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, (the “
Exchange Act ”)) to do any of the foregoing, equity
securities (including convertible debt instruments and preferred
stock or any shares of capital stock issuable upon the conversion
or exercise thereof) of the Company representing more than 20% of
the voting power of all voting securities of the Company on a fully
diluted basis. “ Affiliate ” means, with respect
to any specified person, a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by,
or is
under common control with, the specified person,
where “control” (including the terms
“controlling,” “controlled by” and
“under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether
through the ownership of voting securities, by contract, or
otherwise.
2. General
Lock-Up of Securities . Subject to the provisions of
Section 1 hereof and the last sentence of this Section 2,
and subject in all events to the consummation of the Stock Purchase
Transaction, during the period commencing on the date of this
Agreement and ending on the One Hundred and Eighty-First
(181 st
) day following
the date of this Agreement (such period is referred to herein as
the “ Lock-Up Period ”), the Securityholder
shall not (a) sell, transfer, assign, offer, pledge, contract
to sell, transfer or assign, sell an
