EXHIBIT 10.13
ENDOCARDIAL SOLUTIONS, INC.
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
TABLE OF CONTENTS
Page
I. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
1.1 Amendment of Prior Agreement . . . . . . . . . . . . . . . . . . . 2.
II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
III. REGISTRATION: RESTRICTIONS OF TRANSFER . . . . . . . . . . . . . . . . 3.
3.1 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . 3.
3.2 Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . 4.
3.3 Piggyback Registrations . . . . . . . . . . . . . . . . . . . . . 5.
3.4 Form S-3 Registration . . . . . . . . . . . . . . . . . . . . . . 6.
3.5 Expenses of Registration . . . . . . . . . . . . . . . . . . . . . 7.
3.6 Obligations of the Company . . . . . . . . . . . . . . . . . . . . 7.
3.7 Termination of Registration Rights . . . . . . . . . . . . . . . . 8.
3.8 Delay of Registration. . . . . . . . . . . . . . . . . . . . . . . 9.
3.9 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 9.
3.10 Assignment of Registration Rights. . . . . . . . . . . . . . . . .11.
3.11 Amendment of Registration Rights . . . . . . . . . . . . . . . . .11.
3.12 Limitation on Subsequent Registration Rights . . . . . . . . . . .11.
3.13 "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . .12.
IV. COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . .12.
4.1 Basic Financial Information and Reporting. . . . . . . . . . . . .12.
4.2 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . .13.
4.3 Confidentiality of Records . . . . . . . . . . . . . . . . . . . .13.
4.4 Reservation of Common Stock. . . . . . . . . . . . . . . . . . . .14.
4.5 Limitation on Future Issuances . . . . . . . . . . . . . . . . . .14.
4.6 Stock Vesting . . . . . . . . . . . . . . . . . . . . . . . . . .14.
4.7 Proprietary Information and Inventions Agreement . . . . . . . . .14.
4.8 Real Property Holding Corporation . . . . . . . . . . . . . . . .14.
4.9 Termination of Covenants . . . . . . . . . . . . . . . . . . . . .14.
V. RIGHTS OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . .15.
5.1 Subsequent Offerings . . . . . . . . . . . . . . . . . . . . . . .15.
5.2 Exercise of Rights . . . . . . . . . . . . . . . . . . . . . . . .15.
5.3 Issuance of Equity Securities to Other Persons . . . . . . . . . .15.
5.4 Termination of Rights of First Refusal . . . . . . . . . . . . . .15.
5.5 Transfer of Rights of First Refusal. . . . . . . . . . . . . . . .16.
5.6 Excluded Securities. . . . . . . . . . . . . . . . . . . . . . . .16.
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VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17.
6.1 Certain Additional Restrictions. . . . . . . . . . . . . . . . . .17.
6.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .18.
6.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18.
6.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . .18.
6.5 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . .18.
6.6 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . .19.
6.7 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . . .19.
6.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19.
6.9 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . .19.
6.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .19.
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AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the "Agreement")
is entered into as of January 31, 1995, by and among Endocardial Solutions,
Inc., a Delaware corporation (the "Company"), and the other undersigned
parties for the purpose of amending certain rights previously granted to the
holders of the Company's outstanding shares of Series A Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock"), and to the holders of
the Company's outstanding shares of Series B Preferred Stock, par value $.01
per share (the "Series B Preferred Stock"), and to grant similar rights to
additional purchasers of the Company's Series B Preferred Stock (such holders
of Series A and Series B Preferred Stock and purchasers of Series B Preferred
Stock pursuant to the Purchase Agreement (as defined below) are listed on
Exhibit A hereto and shall be referred to collectively as the "Purchasers"
and each individually as a "Purchaser") as more fully set forth below.
RECITALS
A. The Company is the surviving corporation of a merger (the "Merger")
with Endocardial Solutions, Inc., a Minnesota corporation (the
"Predecessor"), pursuant to the terms of a Merger Agreement dated as of
January 30, 1995 (the "Merger Agreement");
B. The Predecessor has granted certain holders of its Series A
Preferred Stock and certain holders of its Series B Preferred Stock
(collectively, the "Existing Holders") registration and other rights under
that certain Amended and Restated Investors' Rights Agreement dated as of
December 22, 1993 (the "Prior Agreement").
C. Upon consummation of the Merger, the Company assumed the
obligations of the Predecessor pursuant to the Prior Agreement and the
registration and other rights thereby became applicable to and for the
benefit of the Existing Holders with respect to the shares of the Company's
Series A Preferred Stock and Series B Preferred Stock issued to such holders
in the Merger.
D. The Company proposes to sell and issue up to 3,676,471 additional
shares of its Series B Preferred Stock pursuant to that certain Series B
Preferred Stock Purchase Agreement dated of even date herewith (the "Purchase
Agreement").
E. As a condition to entering into the Purchase Agreement, the
prospective purchasers have requested that the Company extend registration
and other rights to them with respect to the Series B Preferred Stock of the
Company as set forth below, and the Company has requested and the Existing
Holders who are signatories to this Agreement are willing to amend the rights
given to them pursuant to the Prior Agreement by replacing such rights in
their entirety with the rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as
follows:
I. GENERAL
1.1 AMENDMENT OF PRIOR AGREEMENT. The undersigned parties, who
constitute the requisite parties necessary to amend the Prior Agreement,
hereby agree that effective upon the date hereof, the Prior Agreement is null
and void and superseded by the rights and obligations set forth in this
Agreement, and any application of the right of first refusal set forth in
Article V of the Prior Agreement or of this Agreement as to the issuance of
Series B Preferred Stock under the Purchase Agreement is waived.
II. DEFINITIONS
2.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"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 3.10 hereof.
"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 (i) Common Stock of the Company issued or
issuable upon conversion of the Shares; and (ii) 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
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferror's rights under Article III 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 either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.
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"Registration Expenses" shall mean all expenses incurred by the Company
in complying with Sections 3.2, 3.3 and 3.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements
not to exceed Ten Thousand Dollars ($ 10,000) 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); provided however, that in the case of registrations
pursuant to Section 3.2, "Registration Expenses" shall not include the
expense of any special audits incident to or required by any such
registrations except for the first such registration under Section 3.2 and
that in the case of registrations pursuant to Section 3.4, "Registration
Expenses" shall not include the expense of any special audits incident to or
required by such registrations under Section 3.4.
"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 Company's Series A and Series B Preferred Stock.
"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.
"SEC" or "Commission" means the Securities and Exchange Commission.
III. REGISTRATION: RESTRICTIONS ON TRANSFER
3.1 RESTRICTIONS ON TRANSFER.
3.1.1 Each Holder agrees not to make any disposition of all or
any portion of the Registrable Securities (or the Common Stock issuable upon
the conversion thereof) unless and until the transferee has agreed in writing
for the benefit of the Company to be bound by this Section 3.1, provided and
to the extent such Sections are then applicable and:
3.1.1.1 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; or
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3.1.1.2 (A) 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 (B) if 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. It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to RuLe 144 except
in unusual circumstances.
3.1.1.3 Notwithstanding the provisions of
paragraphs 3.1.1.1 and 3.1.1.2 above, no such registration statement or
opinion of counsel shall be necessary for a transfer by a Holder which is (A)
a partnership to its partners in accordance with partnership interests, or
(B) to the Holder's family member or trust for the benefit of an individual
Holder, provided the transferee will be subject to the terms of this Section
3.1 to the same extent as if he were an original Holder hereunder.
3.1.2 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 or as provided elsewhere in the Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON OTHER
WRITTEN EVIDENCE IN FORM Al SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH.
3.1.3 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 disposed of may lawfully be so disposed of without
registration, qualification or legend.
3.1.4 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.
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3.2 DEMAND REGISTRATION.
3.2.1 Subject to the conditions of this Section 3.2, if the
Company shall receive at any time after the earlier of the Company's Initial
Offering (as defined in Section 3.2.4 below) or March 15, 1996, a written
request from the Holders of more than fifty percent (50%) of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company file
a registration statement under the Securities Act covering the registration
of Registrable Securities having an aggregate offering price to the public in
excess of $5,000,000, then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Holders, and
subject to the limitations of Section 3.2.2, effect, as soon as practicable,
the registration under the Securities Act of all Registrable Securities that
the Holders request to be registered.
3.2.2 If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 3.2 and the Company shall include such information in the
written notice referred to in Section 3.2.1. In such event, the right of any
Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority, in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting by a majority in interest of
the Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this
Section 3.2, if the underwriter advises the Company in writing that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities) then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares that may be included in the
underwriting shall be allocated to the Holders of such Registrable Securities
on a pro rata basis based on the number of Registrable Securities held by all
Participating Holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawal from such underwriting shall be withdrawn
from the registration.
3.2.3 The Company shall not be obligated to effect more than
two (9) registrations pursuant to this Section 3.2.
3.2.4 The Company shall not be required to effect a
registration pursuant to this Section 3.2 during the period starting with the
date of filing of, and ending on the date one hundred eighty (180) days
following the effective date of, the
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registration statement pertaining to the initial public offering of the
Company's Common Stock (the "Initial Offering"), provided that the Company is
making reasonable and good faith efforts to cause such registration statement
to become effective. In addition, the Company shall not be required to effect
a registration pursuant to this Section 3.9 if within thirty (30) days of
receipt of a written request from Initiating Holders pursuant to Section
3.2.1, the Company gives notice to the Holders of the Company's intention to
file a registration statement for its Initial Offering within one hundred
twenty (120) days.
3.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the
filing of any registration statement under the Securities Act for purposes of
a public offering of securities of the Company (including, but not limited
to, registration statements relating to secondary offerings of securities of
the Company, but excluding registration statements relating to employee
benefit plans and corporate reorganizations) and will afford each such Holder
an opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable
Securities held by it shall, within twenty (90) days after receipt of the
above-described notice from the Company, so notify the Company in writing.
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 thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
3.3.1 UNDERWRITING. If the registration statement under which
the Company gives notice under this Section 3.3 is for an underwritten
offering, the Company shall so advise the Holders of Registrable Securities.
In such event, the right of any such Holder to be included in a registration
pursuant to this Section 3.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such 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 on a pro rata basis based on the total number of
Registrable Securities held by the Holders; and third, to any shareholder of
the Company (other than a Holder) on a pro rata basis. No such reduction
shall reduce the securities being offered by the
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Company for its own account to be included in the registration and
underwriting, except that in no event shall the amount of securities of the
selling Holders included in the registration be reduced below twenty-five
percent (25%) of the total amount of securities included in such
registration, unless such offering is the Initial Offering and such
registration does not include shares of any other selling shareholders, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no event
will shares of any other selling shareholder be included in such registration
which would reduce the number of shares which may be included by Holders
without the written consent of Holders of not less than seventy percent (70%)
of the Registrable Securities proposed to be sold in the offering.
3.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests
that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders; the Company will:
3.4.1 promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders of Registrable Securities; and
3.4.2 as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written 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 3.1: (i) if Form So is not available for such offering by the
Holders, (ii) 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 $500,000, (iii) if the Company
shall furnish to the Holders a certificate signed by the Chairman of the
Board of Directors of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such 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 one hundred twenty (120) days after receipt of the request of the
Holder or Holders under this Section 3.4, (iv) if the Company has already
effected two (2) registrations on Form S-3 for the Holders pursuant to this
Section 3.4, or (v) in any particular jurisdiction in which the Company would
be required to qualify to do
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business or to execute a general consent to service of process in effecting
such registration, qualification or compliance.
3.4.3 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.
3.5 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 3.2 or any registration under Section 3.3 or Section 3.4 herein shall
be borne by the Company. All Selling Expenses incurred in connection with
any registrations hereunder shall be borne by the holders of the securities
so registered pro rata on the basis of the number of shares so registered.
The Company shall not, however, be required to pay for expenses of any
registration proceeding begun pursuant to Section 3.2 or 3.4, the request of
which has been subsequently withdrawn by the Initiating Holders unless (a)
the withdrawal is based upon material adverse information concerning the
Company of which the Company was aware but the Initiating Holders were not
aware at the time of such request or (b) the Holders of a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 3.2 or Section 3.4 in which event such right
shall be forfeited by all Holders). 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. If
the Company is required to pay the Registration Expenses of a withdrawn
offering pursuant to Section 3.5(a), then the Holders shall not forfeit their
rights pursuant to Section 3.2 or Section 3.4 to a demand registration.
3.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
3.6.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to ninety (90) days.
3.6.2 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.
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3.6.3 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.
3.6.4 Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders, provided 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.
3.6.5 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. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
3.6.6 Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act 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.
3.6.7 Furnish, at the request of a majority of the Holders
participating in the registrations on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (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 and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities 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 and reasonable
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
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3.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Article III shall terminate and be of no further force and
effect five (5) years after the date following the Company's Initial Offering.
3.8 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article III.
3.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 3.2, 3.3 or 3.4:
3.9.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended, (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 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 1934 Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the 1934 Act or any state securities
law in connection with the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, officer or
director, underwriter 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; provided however, that the
indemnity agreement contained in this Section 3.9.1 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, underwriter or controlling person of such Holder.
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3.9.2 To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers, 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 or officers or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or
other such Holder, or partner, director, officer or controlling person of
such other Holder may become subject under the Securities Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner,
officer, director or controlling person of such other Holder 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 3.9.2
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 3.9
exceed the gross proceeds from the offering received by such Holder unless
the Violation is the result of fraud on the part of such Holder.
3.9.3 Promptly after receipt by an indemnified party under this
Section 3.9 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 3.9,
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 provided however, that
if there is more than one indemnified party, the indemnifying party shall pay
for the fees and expenses of one counsel for any and all indemnified parties
to be mutually agreed upon by such indemnified parties, 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
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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 3.9, 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 3.9.
3.9.4 if the indemnification provided for in this Section 3.9
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.
3.9.5 The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the amended prospectus filed with
the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any person if a copy of the Final
Prospectus was furnished to the indemnified party and was not furnished to
the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act.
3.9.6 The obligations of the Company and Holders under this
Section 3.9 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
3.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the-
Company to register Registrable Securities pursuant to this Article III may
be assigned by a Holder to a transferee or assignee of Registrable
Securities; provided, however, that no such transferee or assignee shall be
entitled to registration rights under Sections 3.2, 3.3 or 3.4 hereof unless
it acquires at least fifty thousand (50,000) shares of Registrable Securities
(as adjusted for stock splits and combinations) and the Company shall, within
twenty (20) days after such transfer, be furnished with
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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,
provided, however, that a Holder's failure to provide such notice to the
Company shall not in any way impair a Holder's right to make an assignment
under this Section 3.10, but until such notice is provided the Company may
continue to treat the original Holder (and not the Holder's assignee) as the
Holder of the registration rights. Notwithstanding the foregoing, rights to
cause the Company to register securities may be assigned to any person or
entity who is a subsidiary, parent, general partner or limited partner of a
Holder regardless of the number of shares transferred to such person or
entity.
3.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article III
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 seventy
percent (70%) of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 3.11 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this Article III,
Holders of Registrable Securities hereby agree to be bound by the provisions
hereunder.
3.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the outstanding Registrable
Securities, enter into any agreement with any person or persons providing for
the granting to such holder of registration rights pari passu or senior to
those granted to Holders pursuant to this Section a, or of registration
rights which might cause a reduction in the number of shares includable by
the Holders in any offering pursuant to Section 3.9 or in any offering
subject to Section 3.3.
3.13 "MARKET STAND-OFF" AGREEMENT. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, a Purchaser
holding more than one percent (1%) of the Company's voting securities shall
not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Purchaser (other than those included
in the registration) for a period specified by the underwriters not to exceed
one hundred eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:
3.13.1 such agreement shall be for a period not to exceed ninety
(90) days for all public offerings after the Company's Initial Offering; and
3.13.2 all officers and directors of the Company and holders of
at least one percent (1%) of the Company's voting securities enter into
similar agreements.
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The obligations described in this Section 3.13 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 (or securities) subject
to the foregoing restriction until the end of said one hundred eighty (180)
day (or shorter) period.
IV. COVENANTS OF THE COMPANY.
4.1 BASIC FINANCIAL INFORMATION AND REPORTING
4.1.1 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.
4.1.2 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 to each Purchaser a consolidated balance sheet of the Company, as at
the end of such fiscal year, and a consolidated statement of income and a
consolidated statement of cash flows of the Company, for such year, all
prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative Arm the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants
of national standing selected by the Company's Board of Directors.
4.1.3 The Company will furnish to each Purchaser, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within thirty
(30) days thereafter, a consolidated balance sheet of the Company as of the
end of each such quarterly period, and a consolidated statement of income and
a consolidated statement of cash flows of the Company for such period and for
the current fiscal year to date, prepared in accordance with generally
accepted accounting principles, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made.
4.1.4 So long as a Purchaser (with its affiliates) shall own
not less than two hundred thousand (200,000) shares of the Company's Series B
Preferred Stock or one hundred thousand (100,000) shares of the Company's
Series A Preferred Stock (a "Major Purchaser"), the Company will furnish each
such Major Purchaser (i) at least
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thirty (30) days prior to the beginning of each fiscal year an annual budget
and operating plans for such fiscal year; (ii) within thirty (30) days after
the end of each month, an unaudited balance sheet and statements of income
and cash flows, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made, but such
statement shall set forth applicable budget figures and variances from
budget; and (iii) such other information as such Major Purchaser may
reasonably request.
4.1.5 So long as a Purchaser remains a Major Purchaser, such
Purchaser shall be entitled to receive notice of and attend as an observer
all meetings of the Board of Directors and any committees thereof. Such
Purchaser shall also be entitled to receive any advance materials, including
meeting agendas, sent to directors by the Company with respect to such
meetings; provided, however, that the Company reserves the right to exclude
such Purchaser from access to any material or meeting or portion thereof if
the Board of Directors believes upon advice of counsel that such exclusion is
reasonably necessary to preserve attorney-client privilege, to protect highly
confidential proprietary information or for other similar reasons.
4.2 INSPECTION RIGHTS. Each Major Purchaser 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, all at such reasonable
times and as often as may be reasonably requested; provided, however, that
the Company shall not be obligated under this Section 4.2 with respect to a
competitor of the Company or with respect to information which the Board of
Directors believes upon advice of counsel should be excluded to preserve
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons.
4.3 CONFIDENTIALITY OF RECORDS. Each Purchaser agrees to use, and to
use its best efforts to insure that its authorized representatives use, the
same degree of care as such Purchaser uses to protect its own-confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Purchaser may
disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Purchaser for the purpose of evaluating its
investment in the Company as long as such partner, subsidiary or parent is
advised of the confidentiality provisions of this Section 4.3.
4.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of
the Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
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4.5 LIMITATION ORE FUTURE ISSUANCES. The Company shall not issue
shares of its Common Stock or grant options to purchase shares of its Common
Stock to any employees, consultants, advisors or directors if the sum of (a) the
number of shares issued to employees, consultants, advisors or directors
after March 25, 1993 (including shares issued by the Predecessor) and (b) the
number of shares issuable upon the exercise of options or warrants granted
after March 25, 1993 (including options granted by the Predecessor) exceeds
1,487,750 without the consent of the Holders of at least seventy percent
(70%) of the Registrable Securities.
4.6 STOCK VESTING. Unless otherwise approved by the Board of
Directors, all stock and stock equivalents issued after the date of this
Agreement to employees, directors and consultants will be subject to
five-year vesting with no vesting until the end of the first year and monthly
vesting thereafter. The repurchase option, to which all unvested shares of
stock shall be subject, shall provide that upon termination of the employment
of the shareholder, with or without cause, the Company or its assignee (to
the extent permissible under applicable securities laws) retains the option
to repurchase at cost any unvested shares held by such shareholder.
4.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company
shall require all employees to execute and deliver a Proprietary Information
and Inventions Agreement substantially in the form attached to the Purchase
Agreement as Exhibit H.
4.8 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" (a "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 agrees to 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. Section 1.897-2(h), or any supplementary or
successor provision thereto. Within 30 days of a request from an Purchaser
or any of its partners, the Company will inform the requesting party, in the
manner set forth in Reg. Section 1.897-2(h)(1)(iv) 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.
4.9 TERMINATION OF COVENANTS. All covenants of the Company contained
in Article IV of this Agreement shall expire and terminate as to each
Purchaser after
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the time of the closing of the Company's first firm commitment underwritten
public offering registered under the Securities Act.
V. RIGHTS OF FIRST REFUSAL.
5.1 SUBSEQUENT OFFERINGS. Each Major Purchaser shall have a right of
first refusal to purchase its pro rata share of 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 5.6 hereof. Each Major Purchaser's pro rata share is
equal to the ratio of the number of shares of the Company's Common Stock
(including all shares of Common Stock issued or issuable upon conversion of
the Shares) of which such Major Purchaser is deemed to be a holder
immediately prior to the issuance of such Equity Securities to the total
number of shares of the Company's outstanding Common Stock (including all
shares of Common Stock issuable upon conversion of the Shares) held by all
Major Purchasers. The term "Equity Securities" shall mean (i) any stock or
similar security of the Company, (ii) any security convertible, with or
without consideration, into any stock or similar security (including any
option to purchase such a convertible security), (iii) any security carrying
any warrant or right to subscribe to or purchase any stock or similar
security or (iv) any such warrant or right.
5.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Major Purchaser written 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 Major
Purchaser shall have fifteen (15) days from the giving of such notice to
agree to purchase its pro rata share of the Equity Securities for the price
and upon the terms and conditions specified in the notice by giving written
notice to the Company and stating therein the quantity of Equity Securities
to be purchased. Notwithstanding the foregoing, the Company shall not be
required to offer or sell such Equity Securities to any Major Purchaser who
would cause the Company to be in violation of applicable federal securities
laws by virtue of such offer or sale.
5.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Major Purchasers elect to purchase their pro rata share of the Equity
Securities, then the Company shall promptly notify in writing the Major
Purchasers who do so elect and shall offer such Major Purchasers the right to
acquire such unsubscribed shares ("Subscription Notice"). The Major
Purchasers shall have five (5) days after receipt of the Subscription Notice
to notify the Company of its election to purchase all or a portion of the
unsubscribed shares. If the Major Purchasers fail to exercise in full the
rights of first refusal, the Company shall have sixty (60) days thereafter to
sell the Equity Securities in respect of which the Major Purchasers' rights
were not exercised, at a price and upon terms and conditions no more
favorable to the purchasers thereof than specified in the Company's notice to
the Major Purchasers pursuant to
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Section 5.2 hereof. If the Company has not sold such Equity Securities
within such sixty (60) days, the Company shall not thereafter issue or sell
any Equity Securities, without first offering such securities to the Major
Purchasers in the manner provided above.
5.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal established by this Article V shall terminate upon the closing of an
underwritten public offering of Common Stock of the Company made pursuant to
an effective registration statement under the Securities Act.
5.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
of each Major Purchaser under this Article V may be transferred to any
constituent partner or affiliate of such Major Purchaser, to any successor in
interest to all or substantially all the assets of such Major Purchaser, or
to a transferee who acquires two hundred thousand (200,000) shares of
Registrable Securities.
5.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Article V shall have no application to any of the following Equity
Securities:
5.6.1 shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights, and the Common Stock 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 the
Predecessor or any subsidiary of either of the foregoing, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board, up to an aggregate amount of One Million Four Hundred Eighty Seven
Thousand Seven Hundred Fifty (1,487,750) shares of Common Stock;
5.6.2 stock issued pursuant to any rights or agreements
outstanding as of the date of this Agreement, options and warrants
outstanding as of the date of this Agreement; and stock issued pursuant to
any such rights or agreements granted after the date of this Agreement,
provided that the rights of first refusal established by this Article V
applied with respect to the initial sale or grant by the Company of such
rights or agreements;
5.6.3 up to 93,213 shares of Series B Preferred Stock issued
upon exercise of the warrant to be issued as described in Exhibit F to the
Purchase Agreement, the exercise price of which shall be not less than $1.70
per share;
5.6.4 any Equity Securities issued for consideration other than
cash pursuant to a merger, consolidation, acquisition or similar business
combination;
5.6.5 any Equity Securities that are issued by the Company as
part of an underwritten public offering referred to in Section 5.4 hereof;
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5.6.6 shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
5.6.7 shares of Common Stock issued upon conversion of the
Preferred Stock; and
5.6.8 any Equity Securities issued pursuant to any equipment
leasing arrangement, or bank financing.
VI. MISCELLANEOUS.
6.1 CERTAIN ADDITIONAL RESTRICTIONS.
6.1.1 The Company will not, without the prior written consent
of holders of at least seventy (70%) of the outstanding shares of Series B
Preferred Stock, hereafter authorize, designate or issue any shares of Series B
Preferred Stock. This Section 6.1.1 may not be amended without the prior
written consent of the holders of at least seventy percent (70%) of the
outstanding shares of Series B Preferred Stock.
6.1.2 For so long as the aggregate number of outstanding shares
of Series A Preferred Stock and Series B Preferred Stock, collectively,
exceeds 500,000 (as adjusted for stock splits, stock dividends, combinations
of shares and similar events), in addition to any other vote or consent
required pursuant to the Company's certificate of incorporation or bylaws or
required by law, the vote or written consent of the holders of at least
seventy percent (70%) of the outstanding shares of Series A Preferred Stock
and Series B Preferred Stock, voting together as a single class (with each
holder of shares of such preferred stock entitled to such number of votes as
shall be equal to the whole number of shares of Common Stock into which such
holder's aggregate number of shares of such preferred stock are convertible
pursuant to the Company certificate of incorporation immediately after the
close of business on, as applicable, the record date fixed for the meeting at
which such vote is held or the effective date of the written consent of
stockholders) (the "Majority Preferred Holders") shall be necessary for
effecting or validating the following actions:
6.1.2.1 Any amendment, alteration, or repeal of any
provision of the Company's certificate of incorporation or the Company's
bylaws (including any filing of a certificate of designation pursuant to
Section 151 of the Delaware Corporation Law), that affects adversely the voting
powers, preferences, or other special rights or privileges, qualifications,
limitations, or restrictions of the Series A Preferred Stock or the Series B
Preferred Stock;
-19-
6.1.2.2 Any increase or decrease (other than by redemption
or conversion) in the authorized number of shares of the Company's Common
Stock or Preferred Stock;
6.1.2.3 Any authorization or designation of any class of
shares or series of equity securities of the Company ranking on a parity with
or senior to either Series A Preferred Stock or Series B Preferred Stock in
right of redemption, liquidation preference, voting or dividends, or for any
action by the Company which has the effect of increasing the authorized or
designated amount of such shares, whether by reclassification or otherwise.
6.1.2.4 Any redemption, repurchase, payment of dividends or
other distributions with respect to any stock of the Company other than the
Series A Preferred Stock or the Series B Preferred Stock (except for
acquisitions of Common Stock by the Company pursuant to agreements which
permit the Company to repurchase such shares upon termination of services or
in exercise of the Company's right of first refusal upon a proposed transfer);
6.1.2.5 Any agreement to sell, lease or otherwise dispose
of all or substantially all of the assets, property or business of the
Company, or to merge or consolidate the Company with any person, or permit
any other person to merge into it, or any other reorganization except for
mergers, consolidations or reorganizations in which the Company is the
surviving corporation and, after giving effect to the merger, consolidation,
or reorganization, the holders of the Company's outstanding capital stock
immediately preceding such merger own at least fifty percent (50%) of the
outstanding capital stock of the surviving corporation;
6.1.2.6 Any increase or decrease in the authorized number
of members of the Company's Board of Directors;
6.1.2.7 Any action that results in the payment or declaration
of any dividend on any shares of Common Stock or Preferred Stock; or
6.1.2.8 Any voluntary dissolution or liquidation of the
Company.
This Section 6.1.2 may not be amended without the prior written consent
of the Majority Preferred Holders.
6.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.3 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of
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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.
6.4 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 X
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.
6.5 SEPARABILITY. In case any provision of the 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.
6.6 AMENDMENT AND WAIVER.
6.6.1 Except as otherwise expressly provided, this Agreement
may be amended or modified only upon the written consent of the Company and
the holders of at least seventy percent (70%) of the Registrable Securities.
6.6.2 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 written consent of the holders of at least seventy
percent (70%) of the Registrable Securities.
6.7 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.
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6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1)
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 hereof or at such other address as such party may designate
by ten (10) days advance written notice to the other parties hereto.
6.9 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth n the first paragraph hereof
COMPANY:
ENDOCARDIAL SOLUTIONS, INC.
0000 Xxxxxx Xxxx
Xxxxx 000
Xx. Xxxx, XX 00000
By______________________________
Xxxxx X. Xxxxxxx
Resident and Chief Executive Officer
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NEW ENTERPRISE ASSOCIATES V, LIMITED PARTNERSHIP
By: NEA Partners V, Limited Partnership
Its General Partner
By:_____________________________
General Partner
CATALYST VENTURES
By: New Enterprise Associates IV, Limited Partnership
Its General Partner
By: NEA Partners IV, Limited Partnership
Its General Partner
By:_____________________________
General Partner
ONSET ENTERPRISE ASSOCIATES, L.P.
By: NEA Management, L.P.
Its General Partner
By:_____________________________
General Partner
-24-
CHEMICALS & MATERIALS ENTERPRISE ASSOCIATES,
LIMITED PARTNERSHIP
By: NEA Chemicals and Materials Partners, Limited Partnership,
A General Partner
By:_____________________________
General Partner
SPROUT CAPITAL VI, L.P.
By: DLJ Capital Corporation,
Its Managing General Partner
By:_____________________________
Attorney-In-Fact
DLJ CAPITAL CORPORATION
By:_____________________________
Attorney-In-Fact
MARQUETTE VENTURE PARTNERS II, L.P.
By: Marquette General II,
Its General Partner
By: XXX, Limited Partnership,
or LDR, Limited Partnership,
or JP, Limited Partnership,
Its Partners
By:_______________________________________
a General Partner of one of the above
-25-
M.V.P. II AFFILIATES FUND, L.P.
By: Marquette General II,
Its General Partner
By: XXX, Limited Partnership, or
LDR, Limited Partnership, or
JP, Limited Partnership,
Its Partners
By:_______________________________________
a General Partner of one of the above
WA & H PARTNERS INVESTMENT, LIMITED PARTNERSHIP
By:_____________________________
WA & H INVESTMENTS, L.L.C.
By:_____________________________
THE COMPANION FUND
By:_____________________________
Its Managing Partner
-26-
XXXXX XXXXXXX HEALTHCARE CAPITAL,
LIMITED PARTNERSHIP (SBIC)
By: Piper Ventures Management IV Limited Partnership,
Its General Partner
By: Be Xxxxxx, Managing Director of Piper Ventures Capital, Inc.,
Its General Partner
CORAL PARTNERS IV, L.P.
By: Coral Management Parkers IV, L.P.
Its General Partner
By:_____________________________
General Partner
______________________________
Xxxx Xxxxxxx
______________________________
Xxxx Xxxxx
______________________________
Xxxxxxxxx X. Xxxxx
______________________________
Xxxxx X Xxxxxxx
______________________________
Xxxxxx Xxxxx
-27-
______________________________
Xxxx Xxxxxxx
______________________________
Xxxx Xxxxx
______________________________
Xxxxxxxxx X. Xxxxx
______________________________
Xxxxxxx X. Xxxxx
PSF HEALTH CARE FUND, L.P.
By:____________________________
Xxxxx X. Xxxxxxx, Xx.
Managing Partner
-28-
AMENDMENT NO. 1
TO
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
DATED
JANUARY 31, 1995
This Amendment No. 1 to Amended and Restated Investors' Rights Agreement
dated March 1, 1995, is entered into by and among Endocardial Solutions,
Inc., a Delaware corporation (the "Company") and the other undersigned parties
who are holders of the Company's Series A Preferred Stock, $.01 par value per
share (the "Series A Preferred Stock") and Series B Preferred Stock, $.01 par
value per share (the "Series B Preferred Stock") (together, the "Holders").
WHEREAS, the Company and the holders of the Company's Series A Preferred
Stock and Series B Preferred Stock (the "Purchasers") have entered into that
certain Amended and Restated Investors' Rights Agreement dated January 31,
1995 (the "Investors' Rights Agreement") pursuant to which the Company grated
certain registration rights and other rights to Purchasers; and
WHEREAS, the Investors' Rights Agreement grants certain additional
rights to holders of 200,000 or more shares of Series B Preferred Stock; and
WHEREAS, the Company wishes to grant such additional rights to holders
of 58,823 or more shares of Series B Preferred Stock; and
WHEREAS, the Investors' Rights Agreement may be amended by the written
consent of the holders of at least 70% of the Registrable Securities (as that
term is defined in the Investors' Rights Agreement); and
WHEREAS, the undersigned Holders hold at least 70% of the Registrable
Securities.
NOW, THEREFORE, in consideration of the above and the mutual covenants
set forth in this Agreement, the parties agree as follows:
1. The definition of a "Major Purchaser" contained in Section 4.1.4 of
the Investors' Rights Agreement is hereby amended to provide that a Purchaser
shall be a Major Purchaser so long as such a Purchaser (with its affiliates)
shall own not less than fifty eight thousand eight hundred twenty three
(58,823) shares of the Company's Series B Preferred Stock or one hundred
thousand (100,000) shares of the Company's Series A Preferred Stock.
2. The first sentence of Section 4.1.5 of the Investors' Rights
Agreement shall be amended to read in its entirety as follows:
So long as a Purchaser remains a Major Purchaser and such Major
Purchaser owns not less than two hundred thousand (200,000)
shares of the Company's Series B Preferred Stock or one hundred
thousand (100,000) shares of the Company's Series A Preferred
Stock, such Purchaser shall be entitled to receive notice of and
attend as an observer all meetings of the Board of Directors and
any committees thereof.
3. All capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Investors' Rights Agreement.
4. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph.
ENDOCARDIAL SOLUTIONS, INC.
0000 Xxxxxx Xxxx
Xxxxx 000
Xx. Xxxx, XX 00000
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
2
HOLDERS:
ENTERPRISE ASSOCIATES V, LIMITED PARTNERSHIP
By: NEA Partners V, Limited Partnership
Its General Partner
By:
-------------------------------
General Partner
CATALYST VENTURES
By: New Enterprise Associates IV, Limited Partnership
Its General Partner
By: NEA Partners IV, Limited Partnership
Its General Partner
By:
-------------------------------
General Partner
ONSET ENTERPRISE ASSOCIATES, L.P.
By: OEA Management, L.P.
Its General Partner
By:
-------------------------------
General Partner
3
CHEMICALS & MATERIALS ENTERPRISE ASSOCIATES,
LIMITED PARTNERSHIP
By: NEA Chemicals and Materials Partners, Limited Partnership,
A General Partner
By:
-------------------------------
General Partner
SPROUT CAPITAL VI, L.P.
BY: DLJ Capital Corporation,
Its Managing General Partner
By:
-------------------------------
Attorney-In-Fact
DLJ CAPITAL CORPORATION
By:
-------------------------------
Attorney-In-Fact
MARQUETTE VENTURE PARTNERS II, L.P.
By: Marquette General II
Its General Partner
By: XXX, Limited Partnership, or
LDR, Limited Partnership, or
JP, Limited Partnership,
Its Partners
By:
-------------------------------
4
a General Partner of one of the above
5
M.V.P. II AFFILIATES FUND, L.P.
By: Marquette General II,
Its General Partner
By: XXX, Limited Partnership, or
LDR, Limited Partnership, or
JP, Limited Partnership,
Its Partners
By:
-------------------------------
a General Partner of one of the above
WA & H PARTNERS INVESTMENT, LIMITED PARTNERSHIP
By:
-------------------------------
WA & H INVESTMENTS, L.L.C.
By:
-------------------------------
THE COMPANION FUND
By:
-------------------------------
Its Managing Partner
6
XXXXX XXXXXXX HEALTHCARE CAPITAL,
LIMITED PARTNERSHIP (SBIC)
By: Piper Ventures Management IV Limited Partnership,
its General Partner
By:
-------------------------------
Buzz Xxxxxx, Managing Director of
Piper Ventures Capital, Inc.,
its General Partner
CORAL PARTNERS IV, L.P.
By: Coral Management Partners IV, L.P.
Its General Partner
By:
-------------------------------
General Partner
------------------------------------
Xxxx Xxxxxxx
------------------------------------
Xxxx Xxxxx
-------------------------------------
Xxxxxxxxx X. Xxxxx
7
-------------------------------------
Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
PSF HEALTH CARE FUND, I.P.
By:
-------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Managing Partner
8
[Execution Copy]
____________________________________________
ENDOCARDIAL SOLUTIONS, INC.
AMENDMENT
TO
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
Dated April 26, 1996
____________________________________________
AMENDMENT
TO
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Amendment to the Amended and Restated Investors' Rights Agreement
is entered into as of April 26, 1996, by and among Endocardial Solutions, Inc.,
a Delaware corporation (the "Company"), and the other undersigned parties (the
"Holders") for the purpose of amending that certain Amended and Restated
Investors' Rights Agreement, dated as of January 31, 1995 (the "Investors'
Rights Agreement"), between the Company and the Holders. All capitalized terms
used herein but not otherwise defined herein have the meanings assigned to such
terms in the Investor's Rights Agreement.
RECITALS
A. The Company, pursuant to the Investors' Rights Agreement, has
granted to the Holders of the Company's Series A Preferred Stock and Series B
Preferred Stock certain rights with respect to the registration under the
Securities Act of shares of Common Stock issuable upon conversion or in
respect of such Series A Preferred Stock and Series B Preferred Stock (the
"Series A and Series B Registration Rights").
B. The Company proposes to sell to Medtronic Asset Management, Inc., a
Minnesota corporation ("Medtronic"), pursuant to an Investment Agreement (the
"Investment Agreement") to be entered into between the Company and Medtronic
shares of its Series C Preferred Stock, par value $.01 per share (the "Series
C Preferred Stock").
C. As a condition to entering into the Investment Agreement, Medtronic
has requested that the Company grant to Medtronic certain rights with respect
to the registration under the Securities Act of shares of Common Stock
issuable upon conversion or in respect of the Series C Preferred Stock (the
"Series C Registration Rights") that are PARI PASSU with the Series A and
Series B Registration Rights.
D. The Company has requested that the Holders who are party to the
Investors' Rights Agreement consent to the granting of the Series C
Registration Rights and to the amendment of the Investors' Rights Agreement
to grant the shares of Series C Preferred Stock registration rights that are
PARI PASSU with the Series A and Series B Registration Rights.
E. The Holders are willing to consent to such granting of the Series C
Registration Rights and to such amendment.
NOW, THEREFORE, in consideration of the covenants and agreements made
herein, the Investors' Rights Agreement is hereby amended as follows.
I. AMENDMENT
1.1 DEFINITIONS OF "SERIES C PREFERRED STOCK" AND "SERIES C INVESTMENT
AGREEMENT". Section 2.1 of the Investors' Rights Agreement is hereby amended
to add to the terms defined in such section the following terms:
"SERIES C PREFERRED STOCK" means the Series C Preferred Stock,
$.01 par value per share, of the Company.
"SERIES C INVESTMENT AGREEMENT" means the Investment Agreement,
dated April 26, 1996, between the Company and Medtronic Asset
Management, Inc.
1.2 "DEFINITION OF "REGISTRABLE SECURITIES". The term "Registrable
Securities" set forth in Section 2.1 of the Agreement is hereby amended to
read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) the shares of Common Stock
of the Company issued or issuable upon conversion of the Shares and the
Series C Preferred Stock, and (ii) any shares of Common Stock of the
Company issued (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 either pursuant to a registration statement or Rule 144
under the Securities Act or sold in a private transaction in which the
transferror's rights under Article III of this Agreement or Article 7 of
the Series C Investment Agreement are not assigned.
II. CONSENT
The Holders hereby consent to the issuance of the Series C
Preferred Stock to Medtronic pursuant to the Investment Agreement and to
the granting of the Series C Registration Rights to the holders of
Series C Preferred Stock pursuant to such Investment Agreement.
III. MISCELLANEOUS
3.1 INVESTORS' RIGHTS AGREEMENT AMENDED. This Amendment shall be
deemed to be an amendment to the Investors' Rights Agreement, and the
Investors' Rights Agreement, as amended hereby, is hereby ratified,
approved and confirmed in all respects. This Amendment shall be limited
to the matters expressly set forth herein and shall not be deemed to
amend or modify any other term or condition of the Investors' Rights
Agreement or any other document incident thereto or to
-2-
waive any right of any party thereunder. All references to the
Investors' Rights Agreement in any other document, instrument, agreement
or writing hereafter shall be deemed to refer to the Investors' Rights
Agreement as amended hereby.
3.2 SUCCESSORS AND ASSIGNS ON TRANSFERABILITY. This Amendment
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
3.3 GOVERNING LAW. This Amendment and the rights and duties of
the parties under this Amendment shall be governed by, and construed and
interpreted in accordance with, the law of the State of Minnesota,
without regard to principles of conflicts of law.
3.4 COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date and year first above written.
COMPANY:
ENDOCARDIAL SOLUTIONS, INC.
0000 Xxxxxx Xxxx
Xxxxx 000
Xx. Xxxx, XX 00000
By:
---------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
-3-
HOLDERS:
ENTERPRISE ASSOCIATES V, LIMITED PARTNERSHIP
By: NEA Partners V, Limited Partnership
Its General Partner
By:
--------------------------------------
General Partner
CATALYST VENTURES
By: New Enterprise Associates IV, Limited Partnership
Its General Partner
By: NEA Partners IV, Limited Partnership
Its General Partner
By:
--------------------------------------
General Partner
ONSET ENTERPRISE ASSOCIATES, L.P.
By: OEA Management, L.P.
Its General Partner
By:
--------------------------------------
General Partner
-4-
CHEMICALS & MATERIALS ENTERPRISE ASSOCIATES,
LIMITED PARTNERSHIP
By: NEA Chemicals and Materials Partners, Limited Partnership,
A General Partner
By:
--------------------------------------
General Partner
SPROUT CAPITAL VI, L.P.
BY: DLJ Capital Corporation,
Its Managing General Partner
By:
--------------------------------------
Attorney-In-Fact
DLJ CAPITAL CORPORATION
By:
--------------------------------------
Attorney-In-Fact
MARQUETTE VENTURE PARTNERS II, L.P.
By: Marquette General II
Its General Partner
By: XXX, Limited Partnership, or
LDR, Limited Partnership, or
JP, Limited Partnership,
Its Partners
By:
--------------------------------------
a General Partner of one of the above
-5-
M.V.P. II AFFILIATES FUND, L.P.
By: Marquette General II,
Its General Partner
By: XXX, Limited Partnership, or
LDR, Limited Partnership, or
JP, Limited Partnership,
Its Partners
By:
--------------------------------------
a General Partner of one of the above
WA & H PARTNERS INVESTMENT, LIMITED PARTNERSHIP
By:
--------------------------------------
WA & H INVESTMENTS, L.L.C.
By:
--------------------------------------
THE COMPANION FUND
By:
--------------------------------------
Its Managing Partner
-6-
XXXXX XXXXXXX HEALTHCARE CAPITAL,
LIMITED PARTNERSHIP (SBIC)
By: Piper Ventures Management IV Limited Partnership,
its General Partner
By:
--------------------------------------
Buzz Xxxxxx, Managing Director of
Piper Ventures Capital, Inc.,
its General Partner
CORAL PARTNERS IV, L.P.
By: Coral Management Partners IV, L.P.
Its General Partner
By:
--------------------------------------
General Partner
-----------------------------------------
Xxxx Xxxxxxx
-----------------------------------------
Xxxx Xxxxx
-----------------------------------------
Xxxxxxxxx X. Xxxxx
-7-
-----------------------------------------
Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
PSF HEALTH CARE FUND, I.P.
By:
--------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Managing Partner
-8-
