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EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
CYBERONICS, INC.
March 28, 1997
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TABLE OF CONTENTS
PAGE
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1. Certain Definitions.................................................1
2. Notice of Proposed Transfers........................................2
2.1 Restriction on Transfer.................................2
2.2 Permitted Transfers.....................................3
2.3 Stockholder Covenant....................................3
2.4 Restrictive Legend......................................3
3. Registration Rights.................................................3
3.1 Requested Registration..................................3
3.2 Company Registration....................................5
3.3 Underwriting............................................5
3.4 Expenses of Registration................................6
3.5 Registration Procedures.................................6
3.6 Indemnification.........................................7
3.7 Information by Holder..................................10
3.8 Transfer of Registration Rights........................10
3.9 Holdback Agreements....................................10
4. Miscellaneous......................................................11
4.1 Governing Law..........................................11
4.2 Successors and Assigns.................................11
4.3 Termination............................................11
4.4 Amendment..............................................11
4.5 Entire Agreement.......................................11
4.6 Notices, etc...........................................11
4.7 Counterparts...........................................11
4.8 Severability...........................................12
4.9 Titles and Subtitles...................................12
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of this
28th day of March, 1997, by and among Cyberonics, Inc., a Delaware Corporation
(the "Company") and the stockholders whose names are set forth on Exhibit A
hereto (the "Stockholders").
Recitals
WHEREAS, the Company and the Stockholders are parties to a Common Stock
Purchase Agreement dated the date hereof pursuant to which the Stockholders are
purchasing an aggregate of up to 1,700,000 shares of the Company's Common Stock
(the "Shares");
WHEREAS, the Company has agreed to provide the Stockholders with
certain rights to register the Shares as provided herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any Stockholder holding Registrable
Securities and any Person holding Registrable Securities to whom the rights
under this Agreement have been transferred in accordance with Section 3.8
hereof.
"Initiating Holders" shall mean any Stockholders or
transferees of Stockholders under Section 3.8 hereof who in the aggregate are
Holders of not less than 50% of the then outstanding Registrable Securities.
"Person" shall mean an individual, corporation, partnership,
limited liability company, association, joint-stock company, trust where the
interests of the beneficiaries are evidenced by a security, unincorporated
organization, estate, governmental or political subdivision thereof or
governmental agency.
"Public Offering" shall mean the closing of an underwritten
public offering of Common Stock registered with the Commission under the
Securities Act.
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"Registrable Securities" means (i) the Shares and (ii) any
Common Stock of the Company issued or issuable in respect of the Shares upon any
stock split, stock dividend, recapitalization, or similar event; excluding in
all cases, however, any Registrable Securities sold by a Holder including a sale
pursuant to a registration statement under this Agreement, a transaction
pursuant to Rule 144 or any other transaction in which registration rights are
not transferred pursuant to Section 3.8 hereof.
"Registration Statement" shall mean a registration statement
provided for in Section 6 of the Securities Act under which securities are
registered under the Securities Act, together with any preliminary, final or
summary prospectus contained therein, any amendment or supplement thereto, and
any document incorporated by reference therein.
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, other than
Selling expenses (as defined below), incurred by the Company in complying with
Sections 3.1 or 3.2 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, 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) and the reasonable fees and disbursements
of one counsel for all Holders.
"Rule 144" shall mean Rule 144 promulgated under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth in the definition of
"Registration Expenses" above, all fees and disbursements of counsel for any
Holder.
2. Notice of Proposed Transfers.
2.1 Restriction on Transfer. The Shares shall not be sold,
assigned, transferred or pledged except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each Stockholder will cause any proposed
purchaser, assignee, transferee, or pledgee of the Shares to agree to take and
hold such securities subject to the provisions and upon the conditions specified
in this Agreement. If a Holder wishes to sell Registrable Securities (other than
in a registered offering pursuant to Section 3 hereof, pursuant to Rule 144 or
pursuant to a permitted transfer pursuant to Section 2.2 below), it shall
deliver a written notice to the Company disclosing in reasonable detail the
terms and conditions of the proposed sale and shall provide to the Company, at
such Holder's expense either (i) a written opinion of legal counsel who
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shall be, and whose legal opinion shall be, reasonably satisfactory to the
Company, addressed to the Company, to the effect that the proposed transfer of
the Shares may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Commission to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Commission that action be taken with respect thereto.
2.2 Permitted Transfers. Notwithstanding Section 2.1
hereof, any Holder may transfer the whole or any part of the Registrable
Securities and all rights provided in this Agreement with respect thereto (a) to
any entity or Person whose affairs are under common management with a
Stockholder, (b) to any partners, or retired partners, or to the estate of any
partners or retired partners of a Stockholder which is a partnership, and (c) to
any stockholder, parent or subsidiary corporation of a Stockholder which is a
corporation; provided that the Transferee enters into an Agreement with the
Stockholders and the Company in which the Transferee shall be bound by and
entitled to the benefit of the provisions of this Agreement.
2.3 Stockholder Covenant. No Holder shall mortgage,
pledge, charge, hypothecate, grant a security interest in, or otherwise
encumber, or allow or permit any charge, security interest, encumbrance, pledge,
mortgage, hypothecation, lien or adverse claim to attach to, affect or encumber,
his or its Registrable Securities or any part thereof, or any interest therein.
2.4 Restrictive Legend. Each certificate representing
Registrable Securities shall be stamped or otherwise imprinted with legends
substantially in the following form (in addition to any legend required under
applicable state securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
ACT."
Each Stockholder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Common Stock in
order to implement the restrictions on transfer established in this Agreement.
3. Registration Rights.
3.1 Requested Registration.
(a) In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to a proposed registration of Shares (a
"Requested Registration") with an aggregate offering price to the public of (x)
at
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least $1,000,000 if such registration may be effected pursuant to a Registration
Statement on Form S-3 (or a successor form) or (y) at least $5,000,000 if such
registration is effected pursuant to a Registration Statement on a form other
than Form S-3, the Company will:
(i) promptly give written notice of the
proposed registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best
lawful efforts to effect such registration, qualification or compliance
(including, without limitation, appropriate qualification under applicable blue
sky or other state securities law and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested by the Initiating Holders
and as would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holders
joining in such request as are specified in a written request received by the
Company within 20 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 3.1:
(A) In any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act;
(B) During the period starting
with the date sixty (60) days prior to the Company's estimated date of filing
of, and ending on the date three (3) months immediately following the effective
date of, any registration statement pertaining to securities of the Company
(other than a registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), providing that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective (and provided, further, that the Company cannot
pursuant to this Section 3.l(a)(ii)(B) delay implementation of a demand for
registration more than once in any 12-month period);
(C) After the Company has
effected two such registrations pursuant to this subsection 3.1(a); provided,
that a registration will only be counted for purposes of this Section
3.1(a)(ii)(C) if (x) such registration has been declared or ordered effective,
and (y) no stop order, injunction or the like has been entered barring sales of
securities thereunder (other than a stop order, injunction or the like which is
promptly resolved, in which case the Company shall use its best lawful efforts
to keep the Registration Statement effective for an additional period equal to
the period during which the stop order, injunction or the like barred sales); or
(D) If the Company shall
furnish to such Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best lawful efforts to register, qualify or
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comply under this Section 3.1 shall be deferred once (with respect to any demand
for registration hereunder) for a period not to exceed ninety (90) days from the
date of receipt of written request from the Initiating Holders, provided that
the Company may, by furnishing another certificate pursuant to this Section
3.1(a)(ii)(D), delay implementation of a demand for registration for one
additional period of up to ninety (90) days. In the event of such a delay by the
Company, the Initiating Holders will be entitled to withdraw their request for
such Requested Registration, in which case such right of Requested Registration
shall be restored under Section 3.1(a)(C) hereof.
Subject to the foregoing clauses (A) through
(D), the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable, after receipt
of the request or requests of the Initiating Holders.
(b) The Company may register securities for sale
for its own account in any registration requested pursuant to this Section 3.1
and may also register restricted securities held by other stockholders;
provided, however, that in the event that the number of shares to be included in
a registration is to be limited, then securities to be sold for the Company's
own account and restricted securities held by other stockholders shall be
eliminated from the registration prior to reducing the number of Shares included
in such registration.
3.2 Company Registration.
(a) Notice of Registration. If at any time or
from time to time the Company shall determine to register any of its securities,
either for its own account or the account of a security holder or holders, other
than (i) a registration relating solely to employee benefit plans, or (ii) a
registration relating solely to a Commission Rule 145 transaction, the Company
will:
(i) promptly give to each Holder written
notice thereof; and
(ii) include in such registration (and
any related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such written
notice from the Company, by any Holder (a "Piggyback Registration").
(b) Right to Terminate Registration. The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Section 3.2 (but not its obligation to pay registration
expenses pursuant to Section 3.4 hereof) prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such
registration.
(c) Survival of Requested Registration. No
registration of Registrable Securities effected under Section 3.2(a) shall
relieve the Company of its obligation to effect any Requested Registration under
Section 3.1(a) hereof.
3.3 Underwriting. In the event that a registration
pursuant to Section 3.1 or 3.2 is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as part
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of the notice given to Holders. In such event, the Company shall (together with
all Holders and other holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting (x) by the Company if
such registration is initiated by the Company or (y) by a majority in interest
of the Holders initially requesting registration if such registration is
initiated by Holders; provided, however, that underwriters selected by Holders
shall be subject to the Company's reasonable approval. Notwithstanding any other
provision of this Section 3.3, if the managing underwriter advises the Company
and the Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten on behalf of stockholders, then the Company
shall so advise all Holders, and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated as
follows: (i) any shares which were to be included in such registration that are
not "Registrable Securities" under this Agreement would first be eliminated from
the offering; (ii) if further reduction in the number of shares is required,
then the number of shares to be included on behalf of Holders would be allocated
among all Holders requesting registration of Shares in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder of Registrable Securities (or other holder
distributing its securities through the underwriting) disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. The Registrable Securities
and/or other securities so withdrawn shall also be withdrawn from registration.
3.4 Expenses of Registration. All Registration Expenses
incurred in connection with the registrations pursuant to Section 3.1 and all
registrations pursuant to Section 3.2 shall be borne by the Company. All Selling
Expenses relating to securities registered on behalf of the Holders or other
holders registering securities shall be borne by the Holders or holders of such
securities pro rata on the basis of the number of shares so registered.
3.5 Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Agreement, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense, the Company will:
(a) Prepare and file with the Commission a
Registration Statement (including amendments and supplements thereto) with
respect to such securities and use its best lawful efforts to cause such
Registration Statement to become and remain effective for at least ninety (90)
days or until the distribution described in the Registration Statement has been
completed;
(b) Furnish to each underwriter 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 such
underwriter may reasonably request in order to facilitate the public sale of the
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shares by such underwriter. In addition, the Company will promptly furnish to
each underwriter and Holder notice of any NASDAQ listing, and notice of any
stop-order or similar notice issued by the Commission or any state agency
charged with the regulation of securities, and use commercially reasonable
efforts to promptly obtain the withdrawal of any order suspending the
effectiveness of such Registration Statement or sales of securities thereunder;
and
(c) At any time when a prospectus relating
thereto is required to be delivered under the Securities Act, notify each seller
of Registrable Securities covered by such Registration Statement promptly after
the Company discovers that 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, in the light of the circumstances under which they
were made, not misleading, and at the request of any such seller promptly
prepare and furnish to such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Each
holder of Registrable Securities agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in this Section
3.5(c), such holder will discontinue immediately such holder's disposition of
securities pursuant to the Registration Statement until such holder receives
copies of the supplemented or amended prospectus contemplated by this Section
3.5(c) and, if so directed by the Company, will deliver to the Company all
copies, other than permanent file copies, then in such holder's possession of
the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
3.6 Indemnification.
(a) To the extent permitted by law, the Company
will indemnify each Holder participating in a registration pursuant to this
Agreement, each of such Holder's officers, directors, partners and trustees, and
each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder or
holder, each of its officers, directors, partners and trustees, and each person
controlling such Holder or holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss,
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damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Holder, controlling person or
underwriter specifically for use therein. Notwithstanding the foregoing, insofar
as the foregoing indemnity relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
final prospectus filed with the Commission pursuant to Rule 424(b) of the
Commission, the indemnity agreement herein shall not inure to the benefit of any
underwriter or (if there is no underwriter) any Holder if a copy of the final
prospectus filed pursuant to Rule 424(b) was delivered to such underwriter or
Holder, but was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act.
(b) To the extent permitted by law, each Holder
or holder will, if Registrable Securities or other securities held by such
Holder or holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder or holder, each of its officers,
directors, partners and trustees and each person controlling such Holder or
holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, and will reimburse the Company, such Holders or holders, such
directors, officers, partners, trustees, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder or holder specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder or holder under this
subsection (b) shall be limited in an amount equal to the net proceeds from the
sale of the shares sold by such Holder or holder, unless such liability arises
out of or is based on willful misconduct by such Holder or holder. In addition,
insofar as the foregoing indemnity relates to any such untrue statement (or
alleged untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended prospectus on
file with the Commission at the time the registration statement becomes
effective or in the final prospectus filed pursuant to Rule 424(b) of the
Commission, the indemnity agreement herein shall not inure to the benefit of the
Company, any underwriter or (if there is no underwriter) any Holder if a copy of
the final prospectus filed pursuant to Rule 424(b) was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act.
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(c) Each party entitled to indemnification under
this Section 3.6 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate or different defenses. 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. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each Indemnifying
Party.
(d) If the indemnification provided for in this
Section 3.6 is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities, in a proportion which reflects the relative
fault of the Company on the one hand and of the stockholders offering securities
in the offering (the "Selling Stockholders") on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and the Selling Stockholders on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied in writing by
the Company or by the Selling Stockholders and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Selling Stockholders agree that it
would not be just and equitable if contribution pursuant to this Section 3.6(d)
were based solely upon the number of entities from whom contribution was
requested or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 3.6(d). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to above in this Section 3.6(d) shall
be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim, subject to the provisions of Section 3.6(c) hereof. Notwithstanding
the provisions of this Section 3.6(d), no Selling Stockholder shall be required
to contribute any amount or make any other payments under this Agreement which
in the aggregate exceed the proceeds received by such Selling Stockholder. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
of the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
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3.7 Information by Holder.
(a) The Holder or Holders of Registrable
Securities included in any registration and the holder or holders of any other
securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, holder or holders, the Registrable
Securities or other securities held by them and the distribution proposed by
such Holder or Holders, holder or holders as the Company may request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to in Section 3.
(b) The failure of any Holder or Holders of
Registrable Securities or any holder or holders of other securities to be
included in a registration to furnish the information requested pursuant to
Section 3.7(a) shall not affect the obligation of the Company under Section 3 to
the remaining Holder(s) or holder(s) who furnish such information unless, in the
reasonable opinion of counsel to the Company or the underwriters, such failure
impairs or may impair the legality of the Registration Statement or the
underlying offering.
3.8 Transfer of Registration Rights. The rights granted
to a Stockholder under this Agreement may be assigned to a transferee or
assignee in connection with any transfer or assignment of Registrable Securities
by a purchaser provided that: (i) such transfer may otherwise be effected in
accordance with applicable securities laws, (ii) such assignee or transferee
acquires at least 100,000 shares of Registrable Securities (subject to
appropriate adjustment for stock splits, dividends, subdivisions, combinations,
recapitalization and the like) and (iii) the Stockholder notifies the Company in
writing of the transfer or assignment and the assignee or transferee agrees in
writing to be bound by the provisions of this Agreement.
3.9 Holdback Agreements.
(a) Each Holder of Common Stock party hereto
agrees by acquisition of such Common Stock not to effect any public sale or
distribution of any equity securities of the Company during the seven days prior
to and the 120 days after any Public Offering, Requested Registration or
Piggyback Registration has become effective, except as part of such Public
Offering, Requested Registration or Piggyback Registration, as the case may be,
unless the managing underwriter of the Public Offering, Requested Registration
or Piggyback Registration otherwise agrees to such sale or distribution.
(b) The Company agrees (x) not to effect any
public sale or distribution of its equity securities or securities convertible
into or exchangeable or exercisable for any of such securities during the seven
days prior to and the 120 days after any Public Offering, Requested Registration
or Piggyback Registration has become effective, except as part of such Public
Offering, Requested Registration or Piggyback Registration, as the case may be,
and except pursuant to registrations on Form X-0, X-0 or any successor or
similar forms thereto unless the managing underwriter otherwise agrees to such
sale or distribution.
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4. Miscellaneous.
4.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE OF DELAWARE.
4.2 Successors and Assigns. Except as otherwise 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.
4.3 Termination. The provisions of this Agreement shall
terminate as to each Holder, at such time as such Holder may sell all Shares
held by it in any single three-month period. In addition this Agreement shall
terminate in its entirety upon the earliest to occur of the following:
(a) three years from the date hereof;
(b) the effective date of a corporate
reorganization of the Company which results in the then current stockholders of
the Company owning less than 50% of the equity securities of the surviving
company, or the sale of all or substantially all of the assets of the Company;
and
(c) the sale of all or substantially all of the
assets of the Company.
4.4 Amendment. This Agreement may be amended, waived,
discharged or terminated by a written instrument signed by the Company and by
the holders of at least sixty percent (60%) in interest of the aggregate of the
then outstanding Registrable Securities; provided, however, that any amendment,
waiver, discharge or termination of any provision hereof which would have the
effect of altering the rights of any Holder or Holders in relation to the rights
of any other Holder or Holders shall not be effective unless approved by Holders
of a majority in interest of the adversely affected Registrable Securities.
4.5 Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject hereof.
4.6 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger including Federal Express or similar courier service, addressed (a)
if to a Stockholder, at such Stockholder's address set forth on Exhibit A
hereto, or at such other address as such Stockholder shall have furnished to the
Company in writing, or (b) if to the Company, to Cyberonics, Inc., 00000 Xxxxxxx
0, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attn: President, or at such other address as
the Company shall have furnished to the Stockholders. Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
upon receipt.
4.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
Stockholders, each of which shall be enforceable
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against the parties actually executing such counterparts, and all of which
together shall constitute one instrument.
4.8 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
4.9 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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15
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this Agreement effective
upon the date first set forth above.
"COMPANY"
CYBERONICS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
THE FERNLEIGH FOUNDATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
THE XXXXX FOUNDATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
THE XXXXXXX FOUNDATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
-13-
16
THE XXXX XXXXXXX XXXXXXX HOSPITAL-SCC
RESEARCH FUND
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
THE FARMERS' MUSEUM, INC.
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
ANNUITY TRUST FOR XXXXXXX X. XXXXX u/w
XXXXXXX X. XXXXX, XX. ART 18
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
TRUST FOR XXXXXX XXXXXX, 1976
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Trustee
TRUST FOR XXXX X. XXXXXX, 1944
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
-14-
17
XXXXXX X. XXXXXXX III
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Attorney in Fact
TRUST FOR XXXXXXX XXXXXX XXXXXXXX
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
TRUST FOR XXXXX XXXXX XXXXXXX, 1946
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
THE XXXXXXX FOUNDATION - M FUND
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
THE XXXX XXXXXXX XXXXXXX HOSPITAL-
TRUSTEE FUND
By:
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
-15-
18
XXX X. XXXXXXXXX
By:
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Attorney in Fact
NEW YORK STATE HISTORICAL
ASSOCIATION - XXXXXXX X. XXXXX FUND
By:
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
XXXX XXXXXX XXXXX
By:
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Attorney in Fact
TRUST FOR XXXXXXX X. XXXXXX
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
TRUST FOR XXXXX X. XXXXXX
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
-16-
19
TRUST FOR XXXXX X. XXXXXXXXXX
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
TRUST FOR XXXX X. XXXXXXXXXX
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
RESIDUARY TRUST FOR XXXX XXXXXX XXXXX XX
By:
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Trustee
XXXXX XXXXX THANKSGIVING HOME, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
RESIDUARY TRUST u/w XXXXX XXXXX XXXXXXX
By:
---------------------------------------
Name: Xxxx Xxxxxx Xxxxx
Title: Trustee
-17-
20
XXXXX X. XXXXXXX
By:
---------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Attorney in Fact
Capital Research and Management Company on behalf of
SMALLCAP World Fund, Inc.
By:
---------------------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Senior Vice President
AEOW 96, LLC
By:
---------------------------------------------------
Name: Will X. Xxxxxxxxx
Title: Managing Member
XXXXXXX X. XXXXX, M.D.
By:
---------------------------------------------------
XXXXXX X. XXXXXXX
By:
---------------------------------------------------
-18-
21
XXXXXXX XXXXXX
By:
--------------------------------------------
XXXXXXX X. XXXXXXX, XX.
By:
--------------------------------------------
XXX FBO XXXXXX X. XXXXXXX, DLJSC AS CUSTODIAN
By:
--------------------------------------------
Name:
Title:
XXXXXX X. XXXXXXX AS CUSTODIAN FOR XXXXX
X. XXXXXXX UNDER THE TEXAS UNIFORM
TRANSFERS TO MINORS ACT
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Custodian
-19-
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EXHIBIT A
SCHEDULE OF PURCHASERS
NUMBER OF
REGISTRABLE
NAME AND ADDRESS OF PURCHASER SECURITIES
----------------------------- ---------------
THE FERNLEIGH FOUNDATION 16,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE XXXXX FOUNDATION 347,408
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE XXXXXXX FOUNDATION 82,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE XXXX XXXXXXX XXXXXXX HOSPITAL - SCC RESEARCH 15,000
FUND
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE FARMERS' MUSEUM, INC. 60,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
ANNUITY TRUST FOR XXXXXXX X. XXXXX u/w XXXXXXX X. 10,000
XXXXX, JR. ART. 18
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXXXX XXXXXX, 1976 6,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXX X. XXXXXX, 1944 20,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
23
NUMBER OF
REGISTRABLE
NAME AND ADDRESS OF PURCHASER SECURITIES
---------------------------------------------------------------------- ----------------
XXXXXX X. XXXXXXX III 20,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXXXXX XXXXXX XXXXXXXX 12,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXXX XXXXX XXXXXXX, 1946 14,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE XXXXXXX FOUNDATION - M FUND 70,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
THE XXXX XXXXXXX XXXXXXX HOSPITAL - TRUSTEE FUND 22,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
XXX X. XXXXXXXXX 30,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
NEW YORK STATE HISTORICAL ASSOCIATION - XXXXXXX X. 30,000
XXXXX FUND
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
XXXX XXXXXX XXXXX 70,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXXXXX X. XXXXXX 4,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
-2-
24
NUMBER OF
REGISTRABLE
NAME AND ADDRESS OF PURCHASER SECURITIES
---------------------------------------------------------------------- ----------------
TRUST FOR XXXXX X. XXXXXX 4,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXXX X. XXXXXXXXXX 4,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
TRUST FOR XXXX X. XXXXXXXXXX 4,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
RESIDUARY TRUST FOR XXXX XXXXXX XXXXX XX 35,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
XXXXX XXXXX THANKSGIVING HOME, INC. 4,000
x/x Xxx Xxxxx Xxxxxxx
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
RESIDUARY TRUST u/w XXXXX XXXXX XXXXXXX 20,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
XXXXX X. XXXXXXX 2,000
c/o The Xxxxx Estates
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
SMALLCAP WORLD FUND, INC. 494,000
(Registered in the name of Xxxx & Co.)
c/o Capital Research & Management Company
Attn: Xxxxx X. Xxxx
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
AEOW 96, LLC 56,339
c/o Genesis Merchant Group
Attn: Will X. Xxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, #000
Xxx Xxxxxxxxx, XX 00000
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NUMBER OF
REGISTRABLE
NAME AND ADDRESS OF PURCHASER SECURITIES
---------------------------------------------------------------------- ----------------
XXXXXXX X. XXXXX, M.D. 40,000
c/o Baylor College of Medicine
0 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
XXXXXX X. XXXXXXX 22,750
c/o Cyberonics, Inc.
00000 Xxxxxxx 0, Xxxxx 000
Xxxxxxx, XX 00000
XXXXXXX XXXXXX 6,000
c/o Cyberonics, Inc.
Attn: Xxxxx Xxxxxx
00000 Xxxxxxx 0, Xxxxx 000
Xxxxxxx, XX 00000
XXXXXXX X. XXXXXXX, XX. 1,127
c/o Cyberonics, Inc.
00000 Xxxxxxx 0, Xxxxx 000
Xxxxxxx, XX 00000
XXX FBO XXXXXX X. XXXXXXX, 7,750
DLJSC AS CUSTODIAN
c/o Pershing
Attn: ______________________
0 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
XXXXXX X. XXXXXXX AS CUSTODIAN 5,000
FOR XXXXX X. XXXXXXX UNDER THE
TEXAS UNIFORM TRANSFERS TO
MINORS ACT
c/o Cyberonics, Inc.
Attn: Xxxxxx X. Xxxxxxx
00000 Xxxxxxx 0, Xxxxx 000
Xxxxxxx, XX 00000
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